Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd

Economy, Infrastructure and Skills Committee - Fifth Senedd


Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

David J. Rowlands AM
Hefin David AM
Joyce Watson AM
Mark Reckless AM
Russell George AM Cadeirydd y Pwyllgor
Committee Chair
Vikki Howells AM

Y rhai eraill a oedd yn bresennol

Others in Attendance

Hannah Blythyn AM Y Dirprwy Weinidog Tai a Llywodraeth Leol
Deputy Minister for Housing and Local Government
Ian Williams Dirprwy Gyfarwyddwr Cartrefi a Lleoedd, Llywodraeth Cymru
Deputy Director of Homes and Places, Welsh Government
Mary Wimbury Prif Weithredwr, Fforwm Gofal Cymru
Chief Executive, Care Forum Wales
Neil Hemington Pennaeth Cynllunio, Llywodraeth Cymru
Head of Planning, Welsh Government
Richard Clifford Swyddog Gweithredol Materion Cyhoeddus a Pholisi, UK Hospitality
Public Affairs and Policy Executive, UK Hospitality

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Ben Stokes Ymchwilydd
Gareth Price Clerc
Phil Boshier Ymchwilydd
Robert Lloyd-Williams Dirprwy Glerc
Deputy Clerk

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

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

Dechreuodd y cyfarfod am 09:45.

The meeting began at 09:45.

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

Croeso, bawb, i'r Pwyllgor Economy, Seilwaith a Sgiliau.

Welcome, everyone, to the Economy, Infrastructure and Skills Committee. 

I'd like to welcome Members to committee this morning. I move to item 1. We have apologies from Bethan Sayed this morning, and I'm expecting one further Member to join us shortly. If there are any declarations of interest, please do say so now. 

2. Papurau i'w nodi
2. Papers to Note

Papers to note: we have a number of papers to note. One of them is a letter from Ken Skates, the Minister for Economy and Transport, in response to our letter on city deals. We have a further letter from Mick Antoniw, who is the Chair of the Constitutional and Legislative Affairs Committee, with regard to inter-institutional relations between the National Assembly for Wales and the Welsh Government. And we have a third paper, which is just for information, from the Welsh Government, with regard to Ofcom's consultation on the 700 MHz spectrum. Are Members happy to note those papers? Great.

3. Partneriaeth Sgiliau Rhanbarthol: Yr economi sylfaenol
3. Regional Skills Partnerships: Foundational Economy

In that case, I move to item 3, and this is the second week and the third session with regard to our inquiry on regional skills partnerships, and in this particular session we're looking at the foundational economy in particular. And I would like to welcome our two witnesses this morning. We're very grateful to you for providing your evidence to us to help us with our work and inquiry, and I would be grateful, perhaps, if you could introduce yourselves for the public record. If I come to you first, Richard. 

Good morning. I'm Richard Clifford, and I'm here representing UK Hospitality. 

Mary Wimbury, chief executive, Care Forum Wales.

Thank you ever so much for being with us this morning. What do you see as the role of regional skills partnerships?

I think, from our perspective, it's clearly in terms of accessing training, which is going to become, effectively, mandatory for the sector as Welsh Government introduces the registration of the workforce. We would see, obviously, they've got a wider role in terms of the economy and what skills are needed within the region, but from our narrow interest, it is very much about that mandatory training. 

And Richard, do you feel that you are aware of what the role of the partnerships is?

Yes, absolutely. We are clear on the role the regional skills partnerships play in identifying the skills needs of the Welsh economy. Despite some of the issues that we raised in our written consultation response, we do support regional skills partnerships facilitating that and providing an intelligence and evidence base to the Welsh Government. I think at a general level, we think it's useful to have that advisory body underneath the Welsh Government that can influence both attitudes and also influence funding as well. So, yes, we absolutely understand them and do support them, but there are a few issues in terms of engaging with our sector. 

I guess the first issue would be in terms of representation. The hospitality sector is incredibly important to the Welsh economy. It generates about £3 billion per year in terms of gross value added and employs over 174,000 people. So, in terms of us, we see ourselves as being a key part of the Welsh economy, but at the same time, in terms of the ability of the regional skills partnerships to reach out to businesses within our sector, it isn't quite as good as it should be, currently.

The hospitality sector in Wales is quite small-and-medium-sized enterprises based, which means, basically, a lot of small businesses. I think 54 per cent of businesses within our industry are microbusinesses, meaning they employ between one and 10 people. So, reaching out to these businesses is absolutely essential and, from feedback we've had from members, they don't feel that it is—. Well, regional skills partnerships have a reputation for being quite time-intensive, and they need to try and reach out, to get a full picture of the hospitality industry, to these small businesses, and I think that's the bit that we need to try and focus on, going forward. 

Right. I'm tempted to ask you how you can do that, but I won't, because I expect that will come up later in discussions. What about you, Mary? How do you engage with the partnerships?

I think we have similar issues in terms of—. Social care is obviously both a vital service but also a considerable contributor to the Welsh economy, firstly in terms of the people it employs but, secondly, in terms of the people it enables to work by caring for their loved ones as well. Our issue is, again, we are predominantly an SME sector in Wales, and it is about engagement with that sector to understand its needs. And our experience is that the regional skills partnerships know that they need to engage with health and social care as a totality, but too often that means just talking to statutory organisations about what their services and needs are, what they're commissioning, rather than directly to employers within the sector. 


In terms of the skills and the workforce needs in your sector, how do you impart that information to the partnerships? Do you tell them? Do they ask you? Is that what's happening? Tell us. 

It's happening, but through intermediaries at the moment. So, we've not had direct contact with the regional skills partnerships asking for that information, but we've done it, for example, through regional workforce boards. In north Wales, which I know best, we've got a health and social care regional workforce board, and we have contributed to the information that they have provided to the regional skills partnership, rather than direct contact.  

I think it's early to say yet. We certainly don't feel we're there yet, and probably it would be better to have that direct contact. 

Okay, right. And why would it be better to have that direct contact? 

Because we, obviously, and our members have a clearer understanding of the needs of the people that they're employing directly, and I think as soon as you put more intermediaries in place, the message can get diluted. 

Yes, I think there's a whole-scale message from health and social care about what is needed in terms of skills, but we're just a small part of that, effectively, and I think if they heard directly from employers within the sector, we would perhaps have a better understanding. And I think it's sometimes the tension as well between the training and skills that are looked at broadly across the economy by the RSPs versus the specific needs of our sector. I know every sector says it's different, but because—particularly as we're moving towards registration requirements for the workforce, and those are linked to skills and qualifications, actually there are different pressures coming from different places on our sector that aren't necessarily reflected more widely in the understanding. 

And how do you, Richard, get your—? How do your members get any data, skills information, about what they require that they pass to you, presumably—? How do you get that to the skills partnerships? 

So, from a UK Hospitality standpoint, we would feed that back through David Chapman, who heads Hospitality Cymru. UK Hospitality has a dedicated section of itself based in Wales. David Chapman has over 25 years experience within the sector, so he sits on the, I think it's the south-east regional partnership board, and is in the cluster as well on the south-west and mid Wales board as well. So, generally, if there's member data, it would be fed in through David Chapman. In terms of the sector as well, the sector is represented on all the boards, so that would be the best way to feed back information through those members.    

So, unlike Mary, you've got that direct contact through these partnerships. But I would imagine your members are quite—. There's a whole range of members on the spectrum. So, do your members feel that their requirements are being fed through—

Just through our mechanism. I think that's a difficult one to say, and that's one of the reasons why, in our response, we wanted to see more engagement from the regional skills partnerships with the sector in general, as opposed to it just being fed through that mechanism. We'd like to see more outreach, I think, from the partnerships to the small and medium businesses that I mentioned before. One of the key issues that have been raised for us is: try to engage more with the regional partnerships, and it needs to come from a business level.  

The next two sets of questions, just to explain, we'll be asking you separately about your sectors, so I'm going to open up by asking Richard, and a colleague of mine will be asking you then, Mary, about your sector. Richard, what are the current needs of the hospitality sector and are these being addressed? You made a comment in your submission that the sector is disadvantaged. What do you mean by that?  


So, the needs of the sector are quite wide ranging. The hospitality sector provides a wealth of jobs—from so-called higher level jobs in human resources to also the more entry-level positions as well. So, we have quite wide-ranging needs in terms of economic resource, in terms of employees that we need. So, that is something in terms of the sector—we have a wide range of jobs that are available. In terms of us being disadvantaged, it all links to what I mentioned before. We want to see the hospitality sector properly represented in terms of its engagement with the regional skills partnerships. But with so many of our businesses within the sector being small and medium enterprises, or microbusinesses, we need to see better engagement from regional skills partnerships with these businesses if we are to actually reflect the interests of a pan-Wales business—or a pan-Wales industry, rather—like the hospitality sector. So, for example, if you're the owner of a small business, or a microbusiness that employs 10 people, and you have to try and go to a committee session for a regional skills partnership, it's a three-hour journey there, you sit on the board for three hours, and it's a three-hour journey back; you've just lost a working day. So, I think that's why we need to see more targeted engagement with smaller businesses.

That's right. Because we understand now the Welsh Government's priority seemed to be for higher level skills, as such, didn't it? And that would impact your sector, because it tends to be in the lower skilled areas—

Yes. So, I think it would be a mistake to focus entirely on the higher level skills as well; there's always going to be a need within our sector for a consistent pipeline of willing workers to come in and fill the entry-level positions as well. That's not to say there's not adequate progression within the sector itself. You can come in at an entry-level role, and, within two years or so, you can go from being behind a bar to managing that bar. But, yes, we absolutely do have a need for entry-level positions across the board. So, I think too exclusive a focus on the so-called high-skilled roles would be a mistake, because we are always going to need workers to come in, throughout the sector, particularly in the short to medium term as well. If, after Brexit, there is likely to be less access to European workers, as these workers leave the hospitality sector in Wales, there's going to be even more need to have Welsh workers coming in and working in these positions. So, that's something that we need to try and focus on and communicate properly to the regional skills partnerships.

Yes, we hear that about the retail sector as well, obviously. So, do you think that the regional skills partnerships are reflecting your skills needs at the moment?

I think, having read the reports from last year—if you just bear with me one second—I know that all sectors have, or the north Wales regional skills partnership did make reference to the importance of the replacement demand in the economy, of replacing EU workers. As I said, we just need to have a consistent pipeline of workers coming through, and we need to make sure that that is reflected by the regional skills partnership boards. If there is too exclusive a focus on higher skills, then that wouldn't be necessarily reflecting the needs that we've identified for the sector. So, it's something that we need to focus on, and really making sure that we communicate that we do need this workforce coming through.

We've heard from other witnesses with regard to the fact that there doesn't seem to be a clear progression within your industry, as to the progression upwards, as such. And this is criticism that the Welsh Government has said with regard to that. Can you outline the possibilities for this, from moving from one level to another throughout the—

This is a really key challenge for the industry at the minute. I think we need to hold our hands up and say we could have done more, and we need to do more, in terms of upskilling the sector. Because the hospitality sector is a great one to work in, and it does offer great progression for people who come in and work there. As I mentioned before, the example of—you can come in and work behind a bar—two years, you're managing that bar. There's a real sort of meritocracy, in terms of, if you're going to put something into the work, you will progress up the levels, and you can progress high and earn a good salary, whilst gaining important life skills as well alongside that. So, we are working to try and show that the sector is one that offers good progression and good careers. And I think that's a way we can work alongside the regional skills partnerships, as we want to try and communicate this.

A recent initiative we took alongside Careers Wales was we had a webcast into 43 schools, where we had members from the profession talk to the children there, and basically go through the positive things that the hospitality sector can offer people, in terms of careers. We are also looking to try and show the skills that you can learn. In Westminster, we are working with Members of Parliament, taking them round to various different industries, and saying, 'These are the skills you get in the hospitality sector.' And that's an invitation we'd be happy to give the committee, if you were interested in coming to a business in Wales and seeing the skills that you could learn in the hospitality sector and really looking at the wealth of opportunities that it offers people to work in. That would be great. We need to try and break down this stereotype that the hospitality sector is one where it's short term or it doesn't offer a career, because it's just not true and it does offer good progression into careers.


I think we would all recognise the fragmentation that comes about because there are so many micro businesses in the hospitality trade, but is there a clear path for progress?

I think, obviously, the sector offers flexible work and that's always going to be the case if you want to work flexibly as a student or something, but there is very much the opportunity for someone who wants to get on within the sector to keep moving up. The industry itself has seven dedicated apprenticeship standards that go from level 2, which is just learning the baseline—basic skills—to work in the sector that is transferrable across different issues, to level 7, which is the equivalent of a diploma and has more management skills. There is a real clear progress up there within the sector and it definitely exists.

Again, I think it's something we could possibly do more on in terms of engaging with micro businesses and I'm not sure necessarily how that would relate to the model—I'm not entirely sure—but, I think, yes, that is something that they would do.

You might be aware that I used to work in this sector—it's been widely publicised. Anyway, what I would be interested in seeing, and I would certainly be interested in engaging with, is some evidence of that progression. It's great and we all use hospitality in our daily lives, but we need, here as a committee, to see an example of that progression and also some breakdown in terms of gender, which I'll get back to later on, within that. So, I for one would be very keen to take that offer up. 

Absolutely. That's something we can definitely offer to all committee members. In terms of the breakdown of gender results, maybe we can feed back in after the session as well. 

Thank you, Richard, for that offer, and Members can hear the offer and they can make individual connections with that or we can consider a committee visit at some point in the future as well. Thank you for the invitation.

Mary, you heard the questions from my colleague, David, to Richard. Have you got any—? There are very similar questions to you, really: what are the needs in your sector and do the partnerships reflect those needs?

I think it's fair to say that we have something of an image problem in the social care sector in terms of recruiting people. We're obviously working with Social Care Wales on their recruitment campaign at the moment and also their workforce strategy, which they're doing jointly with Healthcare Inspectorate Wales.

Our biggest issue is recruitment and retention at the moment. It's obviously a very people-intensive type of work. It's difficult to maintain that entry level at, frankly, the wages within the sector that we are able to pay based on the rates at which local health boards and local authorities commission at the moment. We have a high turnover of people moving either from entry level positions in the sector into other positions, such as hospitality or retail, or moving to work for the statutory sector within health and social care, which isn't necessarily a bad thing, provided we've still got a pipeline coming through and we can provide that level 2 training to people coming into the sector.

One of the issues we've had as well is that our typical recruitment pool tends to be women returners who've been out of the labour market, undertaking caring responsibilities, but needing training at a level 2 level, whereas the emphasis tends to either be on young people or higher level training. So, I think that's something that we, as a sector, need to get across better in terms of the requirements for the sector, for people to have that basic level 2 training, which, as I've said before, will soon become a mandatory requirement in terms of registering to work in the sector.

So, what you said, is that reflected in the skills partnerships? You've detailed the demand and the issues, but is that reflected in the skills partnerships? Or 'How is it reflected?' is the question.

Okay. There are certainly points we've endeavoured to make. I think the danger is, when you've got a skills partnership looking right across the wider economy, the specific needs of this sector, and in particular the registration and regulation aspect, sometimes get ignored in wider strategies. 


Right, okay. Thank you. David Rowlands asked Richard a question about career progression as well. Do you want to touch on that at all?

Yes. So, I've said the sort of entry level we would be expecting people to gain is a level 2 qualification within six months of starting in the sector. Then there are, obviously, progressions to overseeing, managing a shift, et cetera, through to a level 5 qualification, which is required for a manager. We also have a shortage in Wales of qualified managers. And I think it's fair to say, and this is something—again, we're working with Social Care Wales on their workforce strategy—where there isn't a clear pipeline through from entry-level positions to level 5 positions. In part, that's because we have a relatively flat structure. Again, while we'd welcome the recent increases in the legal minimum wage, what that has eroded our members' ability to do is pay differentials for taking on more responsibility in the way that they would like, and we're not in a position, in the vast majority of Wales, where we set our prices—those are set by local authority and health board commissioners. 

Is this on-the-job qualification and skills? So, they go out with a partner and something and then the skills are assessed up to level 2?

Yes, although then the assessment is sometimes done through something that feels like a test or an examination, and I think it's fair to say, again, a lot of the people that we recruit into the sector have not had a great experience in school, and find anything that feels school-like or exam-like quite off-putting. And we have had problems with the linkage of the level 2 qualification to the literacy and numeracy qualifications, in the sense that then the way they are delivered isn't always directly relevant to people's jobs. So, whereas people are happy to do a course that's report writing in social care, notes in social care, et cetera, if it's a wider literacy course, sometimes people feel it's not relevant, and it's difficult to motivate people in that area.

Thank you, Chair. Mary, you've already answered some of the questions I was going to ask around the skills provision and qualifications for your sector. So, if I can just hone in on one specific point. I was surprised to find out a while ago that dementia training isn't mandatory for those in the social care sector. So, I just wondered what your views were on that.

I think it's clear that increasing numbers of people who are being cared for by our members in the sector have at least some stage of dementia. Mandatory training is set by the regulator, but commissioners often require their own training and, indeed, providers will provide their own training to be able to meet the needs of the people that they're caring for. My anecdotal experience is that the vast majority of people working with older people will have had, or at some point as they come into the sector will have dementia training, just because it is such a big part of what we do in terms of care for older people.

Thank you. Is there anything else that you wanted to add to that you haven't covered already about the skills provision and qualifications for your sector, and whether the programmes are fit for purpose, before I move on to ask the same of Richard?

I think, for us, it really is about understanding that it's about people having the empathetic skills needed to do the work, and then how they translate that in to the practical experience, and finding ways of testing that appropriately given the bad experiences that many of the people we recruit have had with formal education. But, actually, we can provide a route through that if it's done in the right way.

Thank you. And for your sector then—for hospitality—Richard. What are your views on the skills provision and qualifications that are out there now, and whether they are fit for purpose?

I'm not an expert on the content of courses themselves. I think, if we look at what came through in the south-west and mid Wales report at the end of the year, where they said that 65 per cent of businesses that had been surveyed had experienced some issue with the work-readiness of new entrants into the sector, and 48 per cent believed that new entrants were not ready for work or had poor attitude, I think it's important to make sure there's a vocational aspect of training. And, as I said, I'm not an expert on what is actually offered. So, I think it's important to make sure there's a vocational aspect to the training, and if that's there, that's great, and we need to make sure that we really double down on that, but I haven't heard any complaints from David with regard to this.


Okay, thank you. And, Mary, the Social Care Wales evidence submission stated that there's concern within the sector that universities are not best placed to cover the continuing professional development needs of the workforce. So, is skills training taking place in the right providers and places, and can you explain your thoughts on that? 

I suppose the place where universities are most appropriate within our workforce is for recruiting nurses in particular, obviously, and that's going to continue to be in higher education. In terms of the wider workforce, as I've said, people often find it difficult to engage with formal education, so the more we can remove people from something that feels like that sort of setting while still providing the education and training—. So, a lot of providers come in in-house, working with further education colleges, and I think that is the much more appropriate place, while there needs to be then progression going forward. But what we've also found—and I just had a message from a member about this yesterday, which I haven't been able to investigate further—but, for example, they had someone acting as an assistant manager who was doing a health and social care degree course at the same time, and they've just found out that apparently that degree course will no longer be accredited even to exempt them from the level 2 qualification, let alone the level 5 qualification, although they were hoping to move into management. So, as I say, it was just something that a member contacted me about yesterday. I haven't had time to pursue it, but there does seem to be a mismatch sometimes in terms of the more academic qualifications and whether they're providing what's both needed and recognised in the sector.

Thank you. One final question from me to both of you: we took some interesting evidence last week from ColegauCymru, who said that when we're looking at the FE sector we should be thinking more about the transferrable skills that people can get from level 2, level 3 qualifications. We accept that there are transferrable skills from degree courses, but that's not something that people have really focused on, perhaps, with FE courses. So, I wondered what your views were on that. Is this something that can be explored more? Are there transferrable skills that we should be beating the drum about a little more? 

I mean, I suppose, from our sector's perspective, it would be the, sort of, people skills elements, effectively. You obviously need a great deal of empathy and understanding of other people's needs to be successful within social care, and that would be a big transferrable skill, but what we're also finding is that the training within the sector is then used by some people as a transferrable skill to move, perhaps, into the health sector, some people go on to nurse training, et cetera. 

I think with work-ready you're absolutely right. I think work-readiness is something within the sector that is very valued. As I mentioned, the south-west and mid Wales report where they found that people were not necessarily ready for work when they came into the sector was raised and flagged as an issue. People skills and communication is another one; I would completely agree with that. I think, unlike retail, the hospitality sector is always going to be based on the service that's provided, and communication is a huge part of that. So, ensuring that we have these skills is absolutely essential for the sector, yes, you're absolutely right. 

Yes. I'm just trying to understand the specific sectors. Have you got a network of professional bodies in your sectors, along the lines of the Association of Chartered Certified Accountants, Chartered Institute of Personnel and Development, those kinds of organisations? 

'No' is the short answer. I mean, at the moment, it's managers within social care who have to register with Social Care Wales, and nurses are obviously registered with the Nursing and Midwifery Council as well. We're moving towards registration of the whole workforce, and what we've been looking at is trying to set up some sort of academy that would provide professional back-up, but it has proved challenging, not least because we're talking about a workforce that isn't well-paid and has a high turnover, and how we manage that process within that. So, no. I mean, I think it's something that, particularly as the workforce becomes registered, will become necessary. It's just how that can actually happen.

Yes. I mean, it would be an additional way to be a gatekeeper for the professions—I mean, there's not just one profession within care, there are lots of professions, but different gatekeepers for the professions can regulate the kinds of assessments that take place.

And what about hospitality?


I'm not entirely sure on that. I'll have to feed in afterwards as I'm not really sure.

Mark Reckless.

How happy are you with the courses that are currently being delivered?

The courses in our sector—we're happy with the content of the courses. Where we have had difficulty is with some of the assessment methods and, as I've mentioned, some of the linkages with wider literacy and numeracy qualifications, rather than something that's more appropriate to the sector that could then build up people skills in those areas. All our qualifications are currently under review, so we've been engaging both with Social Care Wales and Qualifications Wales on that review of qualifications, and I think I'd still say it's 'wait and see' at this stage in terms of how happy we're going to be with the new qualifications.

Again, I'm not an expert in terms of the contents themselves and it is worrying with the report with south-west and mid Wales saying that they had some issues in terms of the experience people came into the sector with, but we know that, if we had to flag this we would go through David and the boards that he's on—

David Chapman. Sorry, he's our representative on the south-east board, and he's the head of Hospitality Cymru. I think one area where perhaps the hospitality sector is looking to try and engage more with regional partnerships, and I guess can communicate that back more, is there is nascent movement to set up a hospitality skills board, and I think, through that mechanism, if there are issues with the qualifications and issues within that that will be a better way to feed back into that. I know there's movement within the sector to try and create that sort of board that replicates the food and drink board, basically, in terms of feeding back to the Government.

And how do you, if at all, feed in to the regional partnerships? I'm slightly unclear about the reference to David on the south-east board. Is that the regional partnership?

Yes, on the regional partnership board.

So, that's your answer to that. Mary, how do you—if you've an issue you want to be taken into account by the regional partnership, how do you raise that?

We would normally raise it through the workforce board, or we've raised it through, for example, the North Wales Economic Ambition Board, which the regional skills partnership refers to. So, we haven't to date had that direct contact with the regional skills partnerships. It has been with bodies that either report into them or that they report to.

Okay. And finally from me, are there other structures or ways of delivering qualifications we should be looking at beyond colleges and apprenticeship providers?

We provide a lot of training beyond mandatory training, which would be done in-house, and for our sector that works very well. So we've got, perhaps, a train-the-trainer programme where people are trained in—it might be, you know, dementia care has been referred to or other areas of care. And then those skills are provided in-house and kind of continued and assessed and embedded through the workforce. One of the issues for our sector as well is that, if someone goes on a training course, they're not there, you've got to backfill and you've got to cover behind. Actually, you can fit in much more training, provided you can guarantee the quality of it, by doing it in-house.

I think, for us, the key need for the sector is just to continually get a willing workforce and continue to attract people to the sector, and if this is the mechanism—the current apprenticeship scheme is a mechanism to do that by—that's absolutely fine; we're perfectly happy with that. 

Finally—I apologise, but I did want to come back to one thing that just came to me. Mary, you suggested, I think, that the relatively low wage rates in Wales combined with the substantially increasing minimum wage meant that many employers in your sector were not able to provide material uplifts in wages and conditions for those who are taking on training and gaining other skills. So, I wonder if that's also an issue for Richard and his sector, and is that reducing the demand and desire of people to train up if they're not getting any extra money once they've done it?

The answer to the last bit is 'yes', and we are seeing that erosion of differentials. Also, employers who previously have felt that one of the things they've been able to offer is a higher-than-the-minimum wage rate, as part of their company ethos, are increasingly finding that difficult as well.


I think it's obviously an area that's been looked at within the sector, and there are shortages within the sector in certain positions. But, yes, I know it's definitely being looked at. As to whether it would stop people from coming in and wanting to work in the sector, I'm not entirely sure.

I want to look at the future skill needs of your organisations, recognising that the future is changing somewhat rapidly in terms of the way things might be delivered: automation—all sorts of challenges for you. So, what do you think those challenges pose for you and how do you think that the sector skills partnership is helping you to meet those?

I think, for the hospitality sector, the future skills that are required to work in the sector—the future needs for the sector—haven't changed, or won't change, particularly. I know in the short to medium term, there will be some shortages in terms of access to migrant labour, which are going to have to be addressed through promoting people from Wales to work within the Welsh industries. So, that's a clear trend that we are looking at.

You mentioned automation as well; that's going to be something that will impact on all jobs within the sector, including the so-called lower skilled roles as well. People are going to have to come in with computer skills and be able to actually work with technology to actually perform their day-to-day jobs. So, that's something I think that needs to also be looked at in terms of skills provision—making sure that people have a baseline in technology. But we don't anticipate a major change in the short to medium term in terms of the needs of the sector and the skills that are required to work there. 

And from our perspective, it's a people business and it's going to carry on being a people business. There are some innovations, so, for example, the introduction of hoists that will enable one person to be able to assist someone to move, whereas previously it would have required two. There are those sorts of issues, but the biggest issue in terms of training needs for us that I think is ongoing is just the increasing dependency of the people that are being cared for within the sector so we're able to keep people in their own homes much longer with much greater need. But that then means you've got domiciliary care workers undertaking tasks that would have been previously undertaken in a hospital, and extra training is needed and extra skills are needed for those.

Similarly, in care homes, we now have people in residential care homes who 10, 15 years ago would have been in a nursing home because their needs are greater, and, similarly, nursing homes catering for people with very extensive needs who would previously, perhaps, have been in cottage hospitals.

So, do you think that in terms of the skills partnerships there should be one single strategic voice for all skills? Or do you feel that having representation for the different sectors of skills is the way forward?

From our perspective, I think there are so many unique aspects to the sector that, actually, the understanding of those skills, needs, and, in particular, the impact of regulation registration on that—it can sometimes feel we're getting slightly conflicting messages from the broader skills agenda, as compared to the health and social care agenda. So, from our perspective, I think sector specific would be the best way to go.

Yes, obviously, I'd agree with the point in terms of the sector-specific skills. It's important to note that while there are transferable skills, the hospitality sector does have sector-specific skills that are needed to be looked at and promoted. So, I would agree with that point there, yes, absolutely.

We've had evidence from the north Wales regional skills partnership—and you mentioned them earlier on—that there's going to be a growing need for a higher level of skills within the hospitality sector. I was lucky enough on Friday to be at Coleg Ceredigion, where the students themselves presented quite a large audience of people with stuff that they'd prepared—so, right from the sea to the plate. And they clearly did have all the skills, all the constituent elements, and recognised that. So, in terms of the higher skills that were clearly demonstrated then, what is your view about the increasing need, as evidenced by the north Wales regional skills partner?


As I mentioned before in terms of upskilling, it is essential that we communicate that the hospitality sector does have careers that require high-level skills and there are a lot of roles within that sort of wheelhouse within the sector. But at the same time, I think it is a mistake to also focus entirely on the high-level skills, because the hospitality sector, as I've said, needs to have a continual pipeline of workers coming through to different roles, or people returning to work or entry-level work. We still are going to have a need for the roles that would perhaps not be classed as high-level skilled, but might have other life skills as well. So, there's always going to be that need and I know that the north Wales regional skills partnership also mentioned the replacement demand post Brexit. There's definitely still recognition of the fact that there is a wider need from the sector and that we do need to continue to attract people to all manner of roles, so too exclusive a focus on high-level skills I think would be a mistake, because you then risk, I think, shortages within other areas of our sector. It would be unfortunate if one of the partnerships adopted a position like that of the Migration Advisory Committee, whereby they focus exclusively, almost, on high-level skills and forget about the skills within the rest of the sector and the rest of the needs of the sector, so it might put more pressure on businesses in the short to medium term. So, yes, I think it would be a mistake to focus almost exclusively on that.

The other report that we've had is from Chwarae Teg, and they've argued—and it's appropriate for both of your sectors—that the gendered aspects of the foundational economy haven't really been addressed within the sector skills partnership and that there exists some clear gender imbalances. So, what do you think about that report? And what do you think could be done in terms of the sector skills partnerships working together to try and address that?

I think it's true. And it's clearly the case that within our sector, it is predominantly a female workforce. Actually, we've been making efforts to present role models of men working within the sector as well, and I think we can only continue to do that. As I said at the beginning, I think, we have significant difficulty in recruiting sufficient people to work in the sector. We need as wide a pool as possible to recruit from, and that needs to include both men and women, but we've got to I think change the image of working in the sector. And, frankly, I don't think we can continue and provide the care that people need across Wales without actually better recognising the level of the work that is done through the rewards package as well. 

Okay. So, how are you going to change the perception when—? Because, going forward, we could very, very soon be in a position where we've almost got 50 per cent of the workforce excluded from the growing demands, and your sector is one of the ones that's recognised as a growth sector. So, how is that going to be addressed, particularly through the skills partnership, but also the sector?

It's not something we've addressed with the skills partnership, but it's something we've been addressing in terms of the wider recruitment strategies, as I said. I mean, it isn't—. You know, 50 per cent aren't excluded, but we don't get the proportion of men applying to work in the social care workforce that we would like to see, and it is about finding ways to present role models, I think, and making that more acceptable. We know from research amongst our members that the best way to recruit is by people who actually work in the sector giving an example, both to people they already know, but also by doing things like going into school careers fairs et cetera, and this is something that has been done through the ambassador programme previously. And I think it is just keeping presenting those role models.

No. Could I ask you about the Welsh language, in terms of how you are ensuring that the needs of the Welsh language are addressed in your sectors through the partnerships?

We recognise, from our perspective, it's absolutely vital to have Welsh speakers in the sector. In particular, we have people who need care and support from the sector who either have lost or are losing their ability to communicate in English, or are just much more capable of communicating in Welsh. It is much less of an issue in the more Welsh-speaking areas of the country. In Gwynedd and Ynys Môn, for example, it is relatively easy to ensure you have sufficient Welsh speakers on any shift to meet the need. But what we find harder to meet are the needs of Welsh speakers who are outside the traditional bro Gymraeg areas, effectively. 


It's not something we've engaged with the skills partnerships specifically on. I think what we have done is engaged with the Welsh Government strategy 'Mwy na geiriau' about promoting the Welsh language within the sector. We know we have a lot of hidden Welsh skills amongst the workforce, who are not fluent and not confident to use what they have, and that's the area we've been working in with Social Care Wales and Welsh Government. 

I think what you're saying is that there are needs in the sector in terms of the Welsh language, but you haven't provided that data to the skills partnerships so you're not aware how that data gets from your need to the partnerships. 

Yes. I think there's work that's been done with Social Care Wales, and I'm not aware of what data they have provided to the regional skills partnerships. 

The Welsh language is obviously key to tourism. It serves as almost a conduit between the economy and culture. Wales's history and its culture are an important part of the appeal of Wales as a tourist destination, so it's of vital importance to the tourism economy, the visitor economy of Wales. 

In terms of how skills partnerships address the Welsh language and the provision of data, I'm not entirely sure of that, but that's something that I'll happily feed back after this session. I'm not entirely sure. 

Okay. Thank you. In terms of the partnerships—we're coming to the end of the session—could I just, perhaps, have a summary from you? Are the partnerships the right model to address the needs of your sectors?

I can understand from the wider economic perspective wanting to address the skills and economy on a regional basis, effectively. I think, because of the unique needs of our sector in terms of the interaction with regulation and registration, in terms of the older but low-skilled workforce coming in, in terms of the fact that it's a necessary sector, there is an argument for having a national sector approach to skills within social care, rather than a regional skills partnership approach.

I think so, yes. 

So, I think what you're saying is you don't think the regional skills partnerships are addressing the specific needs within your sector.

And as for how that can be done, you're saying that should be done on a national scale, rather than on a regional skills partnership basis. Is that what you're saying?

Yes. I think the differences between our sector and other sectors and the pressure of requirements are greater than the differences between the regions within Wales in terms of meeting them. 

But if it is done on a national basis, how are you going to reflect those regional needs, then? How would you address that?

We, as a professional association, have a board that represents members across—. We use that to feed information up and down, effectively. So, we would be feeding in information from members on the ground to a national body, if that was the way it was done. 

But then that would go back, then, addressing regional—. So, a national board, then, would have to report back on a regional basis. Is that what you're suggesting?

I've not got a thought-out proposal in terms of replacing regional skills partnerships on this basis, but it seems to me the differences between the regions for our sector are much less than the differences between our sector and other sector in terms of requirements. 

That makes sense. Thank you. And, Richard, the same point to you. 

I think we do support regional skills partnerships and believe that they can play a very important role in terms of identifying the needs of the sector and the needs of the Welsh economy in terms of skills. But I think it's again the issue of engagement that I raised at the beginning. We need to see the regional skills partnerships have the ability to engage more with our sector throughout Wales and reaching out to the small and medium enterprises, the microbusinesses as well, and we need to ensure that the data they are providing is reflective of the whole situation in Wales, and not just reflective of other industries or other areas where maybe people are better resourced to respond to surveys, or actually make sure we get the information out there. 


Sorry, I think you started by saying that the regional partnerships can do so. Are you suggesting they're not reflecting the needs of your industry at the moment? 

If they don't, I think, engage better with smaller businesses and all the businesses as well, I think there's a danger that they wouldn't necessarily reflect the interests of the industry. But it's important that we continue to work and make sure that we are able to communicate the needs of the hospitality sector to the partnerships. I think we do understand they are the best means to do this, but we just need to make sure, for a pan-Wales industry, that these bodies, these boards, are actually able to properly find out what the needs are.   

How can the needs of SMEs that you talked about be reflected in the regional skills partnerships? 

It is a good question. I think that one way possibly in terms of improving communications with them would be through some sort of bespoke survey. We need to provide them with something that they want to read, so that they actually feel it has a genuine influence or impact. I think that's one way of almost— 

So, surveying the SMEs perhaps in your sector directly, to feed into the regional skills partnerships. That's what you're suggesting could be a model. I'm surprised that isn't done now. Is that not done now in any way at all? 

Sorry, I think the question was how we can best facilitate the engagement of small and medium—

I think there will be some smaller businesses that are able to feed back, but in terms of getting the wider response from all industry that we need to actually accurately show a picture of the skills needs of the hospitality sector, we need to reach out to all small and medium businesses to make sure they have the resource to actually respond to surveys or engage within partnerships, so that we get an accurate picture of the whole sector. Because, at the minute, with so many of them being microbusinesses and with regional skills partnerships having that reputation of being potentially time consuming, there are other more centralised businesses where, potentially, they have more resource to respond. They, therefore, may be able to get their needs across to the skills partnership boards better than the hospitality sector, which is a lot more interspersed with small and medium enterprises.    

I'm just looking for an example of how one of your members—perhaps a bed-and-breakfast somewhere in mid Wales, for example—how best is it for them to provide the needs that they have in their own business through yourselves to the partnership? 

At the minute, it would be through a body like ourselves, or it would be going through the surveys et cetera that were sent out by the skills partnerships. I mentioned that there was a movement in terms of creating a hospitality skills board. That might be a possible option in terms of getting a wider scope of the needs of the business. 

Sorry, do you mind if I just add something to that? Having gone down the national route in my last answer, we obviously have a lot of SMEs in the sector as well, and exactly the same time pressures are on them in terms of contributing. But I think the other thing is that the skills for the sector are better addressed on a national level. There are the skills in terms of running a small business that are needed on a more local basis as well. So, having said from a sector perspective that things are better addressed nationally, I think those wider skills for just running a small business in terms of things like marketing, employment, payroll, et cetera, are as needed in the sector and are probably better delivered on a more local or regional basis.  

Okay, but I've got to be clear, though, because your suggestion a moment ago was to have a national body. So, are you rethinking that? 

It's not something we've got a clear position on. I think there are advantages and disadvantages, and I think, whichever route we're going down, what we need to do is try and mitigate the disadvantages through that. 

Okay. Do Members have any final questions, or do either of our witnesses want to say anything that's not been drawn out in questions that you think is important? No. There we are. In that case, thank you for your time this morning; we really appreciate it. If you've got anything further, you will be sent a Record of Proceedings transcript, so please review that and if there's anything you want to add or change what you said, then please do let us know. Thank you for your time this morning.

If I can ask Members to stay, we'll have some feedback on this session quickly. That'll be followed by a break, and then we'll be back at 10:55.  

Gohiriwyd y cyfarfod rhwng 10:39 a 10:59.

The meeting adjourned between 10:39 and 10:59.

4. Rhwystrau sy'n wynebu cwmnïau bach sy'n adeiladu cartefi: Y Dirprwy Weinidog Tai a Llywodraeth Leol
4. Barriers facing small home building firms: Deputy Minister for Housing and Local Government

I move to item 4, and this is in regard to our last session in our inquiry into barriers facing small home building firms. And I'm very pleased to welcome back to committee, not as a member this time but as a member of the Government, Hannah Blythyn. And I wonder, Deputy Minister, if you could ask your—or I could ask your officials to introduce themselves for the public record.


Hi. I'm Neil Hemington. I'm chief planner.

I'm Ian Williams, deputy director of homes and places, which is regeneration and housing supply.

Lovely, thank you. I'm very grateful that you're with us this morning. The house building industry is facing a crisis, the likes of which have not previously been experienced. That's what Hygrove Homes told us. Do you agree with them?

I'd like to say thank you for the opportunity to come before the committee—although it's slightly surreal to be back in the committee I was once on. I'm not sure right now whether I prefer to be sat over there or over here. But, in all seriousness, I do welcome this inquiry that the committee is doing; I think it's incredibly important. And I look forward to seeing the recommendations and the outcome, and how we can take them forward, following the inquiry.

I think, in written evidence, we acknowledge that there are barriers and challenges faced within the housing sector, particularly for small builders. I don't think those challenges are particularly unique to Wales, but I think what's important is that we are starting to take steps to take action to address this, whether that's action around the barriers of access to funding, access to appropriate land, the planning process, and obviously the skills agenda as well. And I think we also recognise there is more that can be done, building on the work we've done already—introducing the Wales property development fund, the stalled sites fund, and there are also issues around where small developers can develop as well.

Thank you. And thank you for your written paper that you provided to us as well. In that written paper, you said there that there are barriers to SME house builders, particularly in terms of speculative development for profit. What do you mean by that?

Clearly, we know that small to medium enterprises face larger challenges than the bigger enterprises in terms of access to finance, access to land, and being able to go through the planning process. We've tried to take steps to recognise that, in terms of how we brought in the stalled sites fund and supporting SMEs. And we recognise the SME sector is key in terms of reaching our target of more affordable and social housing as well. I don't know whether—

They keep telling us that access to finance is a key issue, and that's why, a few years ago, we introduced the property development fund, which initially was a general fund, but housing was where it's taken off. That's one of those funds where the demand has well outstripped the supply, and, quite honestly, we could be doing with another property development fund it's been that popular. So, I think that's been very successful. It's very straightforward—quite a vanilla scheme. The stalled sites fund, you get into a little bit more innovation, quite honestly, and then self-build, we're in unchartered territory, but I think it's exciting territory. Certainly, that's what the SME sector is telling us and the Federation of Master Builders, which I believe spoke to you, is telling us. But it's more innovative.

Okay. Thank you. I appreciate that clarity. What do you believe would be the benefits or the advantages of having increased homes being built by small firm developers?

Well, we know that SMEs are more likely to be rooted in the community that they're looking to develop in. It links to our ambitions around the foundational economy, local supply chains, and also actually looking at how we develop in areas that perhaps are not currently seeing the development that they need as well. And also the focus on sustainable communities and place making as well, which SMEs can be central to.

Can I put a question to Neil Hemington? In your experience of these things, would you say that small firm developers are more likely to build a greater proportion of affordable housing in the areas we need it than large developers, or is that something that isn't necessarily the case?

I think it depends on whether they've got access to land, and it depends on a number of other factors in terms of how viable the development is. They don't necessarily employ the same sort of consultants who can drive down the affordable housing contributions on particular sites. They may be more amenable to matching those affordable housing requirements. But it's not consistent across the piece. There are good volume house builders, there are good SMEs, there are not so good of both. So, I think the issue here—one of the key issues for SMEs and some of the large house builders as well—is actually about getting access to land and getting access to land that is affordable.


Okay. And just on that issue of the difference between providing different kinds of housing, is there any research out there that you would direct us to that might be useful in the course of this inquiry with regard to that issue?

I think there's some interesting research that has been done in England and done elsewhere. So, some of the work that Oliver Letwin has started looking at, for example, large sites, is very interesting. There's an interesting piece of work, again, undertaken in England by Nick Raynsford, who looked at the planning system in England and what can be done to improve the planning system in England. Some of the things that they're proposing in England, we've already done. There are a number of things there about how, in particular, the local authority moves away from a position where it allocates land and grants consent, but actually gets more involved in the active developing of sites, so acting as a master developer, parcelling up larger sites to allow access to SMEs to service sites, and making the process work easier, better, for them.

Can I address Mr David's question as well? There may be an opportunity as well in terms of—. Council house building at pace is something that we're hoping to see over the next five to 10 years and SMEs have a role to play there as well. I know they won't make quite the same level of profits on council house building that they would maybe on speculative build, but they can have a role to play and it's lower risk for them. They're part of the supply chain and could play a big role in council house building at pace. So, I think, with some creative thinking, we can bring them back into that supply chain.

When you say 'lower risk', because risk seems to be the biggest factor here—. Do you want—? Can you further explain?

Well, I guess the thing to always remember—SMEs is quite a big definition: it goes from two people working for you to 250. But, for the micro builders, they can lose their house on a speculative build, if they're waiting on being able to build it for 18 months. My father was an SME house builder. It's not just a risk financially, it's emotionally risky for them. Doing a deal with a local authority, they know they're going to get paid—it means stage payments with them. I think there's an opportunity here for SMEs to be part of the supply chain, in a sense, in a lower risk mix. They know that that planning is going to get given for council house building. I think that's what I was trying to get at.

And also, Joyce, there's also the link to—. If there's more stability and less risk, there's more ability then to actually develop the skills agenda as part of that supply chain as well.

Can we look a little more in depth at the financing side of things? First of all, Deputy Minister, will you agree with the evidence put to the committee, in this case by Hygrove Homes, that the traditional high street banks have all but stopped lending in Wales—not really reflected, actually, in England as such, or certainly not to the same extent? Would you agree with me that that—?

I don't actually have any specific numbers that demonstrate that high street lenders are unwilling or unable to lend money to SMEs, but, from the conversations we've had with the Federation of Master Builders—and the evidence from the Development Bank of Wales also demonstrates this—there seems to be a lack of appetite to make financial support available for what they would perceive to be lower value schemes in both England and Wales and it's a situation that we've not seen change and was worsened by the credit crunch and financial crash over 10 years ago.

As I said earlier, I think the fact that the property development fund is flying off the shelves does indicate that, even though we don't have hard evidence that it's happening—it's anecdotal evidence that it may be happening. 

Okay. Have you identified any specific examples of market failure that you might be able to address? For instance, the Federation of Master Builders said that gaps do remain and

'it is nearly impossible to borrow money before planning permission is granted’.

They're right in general terms. I think, as I mentioned earlier, property development is fairly vanilla and you do need detailed planning to be able to access it. Stalled sites goes a little bit into, as I said, the innovative space where you are able to access that money on outline planning—so, not no planning at all, but going a little bit further. I think the level of risk maybe that we would have to take as a Government or as a development bank to lend with no planning at all—it may be too rich for us at the moment, but—.


And also it's important to note—. The stalled sites fund—there's also, as well as loans, there is an element there—. There is a potential element of grant funding as part of that as well.

Are you saying that there's no finance available prior to planning permission? I mean for things like investigating the site—if we're talking about a brownfield site—for pollution levels, et cetera. Is there money at all available?

I think we're back to the point around risk and reward here. There is a place, I think, for local authorities to look at things like local development orders to start to de-risk some of these sites, but that comes at a cost to the local authority. Obviously, if you get consent, you see a large value uplift on that site, so how can you share that process to actually make it work for everybody? So, if a local authority or some sort of public body were to do that work, that would be a way of freeing up some of these sites, potentially. We also need to move the banks towards thinking about the development plan as giving an indication that that site is appropriate for development. We've gone through the development plan process in Wales. We've got two plans left to go through that process. We're much further forward than they are over the border in England, where I think it's under half that are in that position. So, we need to get to a culture amongst the financial institutions of 'when the site is in a plan, we are prepared to lend against it.' We should not see situations where a local authority overturns what they've just put through their own plan-making process. So, that's another thing we need to do as well: actually get the plan-making process to work properly, see how local authorities can start to be a bit more active and start de-risking those sites, which will attract back in some of the SME house builders that are perhaps happy to make their profits on building the homes, rather than the land value uplift, or the speculation that takes place when you grant planning consent.

So, the self-build plot shops idea starts that process, but that will be on public land, so, in a sense, the local authority will be getting the uplift themselves. Where you get really radical is if you allow some kind of agency of some kind or a unit to be able to do that, something similar, on private land. But then that idea has to be that you're getting planning on it, it's remediated, it's ready to go. That costs, but it has value, and we need to work out some sort of way where the developer and the public sector share that value. Otherwise, it's unfair.

Let's just think of a parcel of land that may or may not be contaminated—it's a brownfield site, et cetera—and you advance money to a private developer, a private person, on that land for investigations with regard to contamination and, say, the feasibility of the services, et cetera. That would not be lost to the public purse, as such, because it would then be part of data that the local authority would hold, so there is some value in what you've done with that parcel of land, either to eliminate it from the processes or to say, yes, this can very well go forward. So, there is something to the public purse, isn't there, in doing it?

Or a land agency could do that work for the parcel of land anyway, as long as there was some way, if it was to go on to have a development, to be able to reclaim that money from the developer, to de-risk it for them. 

I think these are all—. These are all great ideas that we have to develop.

That could be done as a loan, but it would get over this hurdle of upfront money that perhaps a small developer might be reluctant to do.

David, have you got any further questions? Can I just bring Joyce in, because Joyce wanted to ask a question?

There's a step before this, and the step before this is that the previous tenant of that land ought to have had within the occupation a 106 agreement to return that land back to the state in which they found it, so that these questions would be answered in the first place. So, in terms of going forward under the planning system, and the need, as we've recognised, for 20,000 homes, are we confident that that policy that is in place is being implemented, so that we don't have these situations going forward?


To be honest, I think, at the moment, it's probably not there. I think we're still in the situation where local authorities feel that they have finished their job—certainly when it comes to plan making—by identifying a site in a plan. Some are doing a little bit more around promoting those sites and seeing those developments take place. There are very few who are, if you like, sharing in the risk and the reward around that at the moment. That's a particular issue, I think, for the SME sector, where they haven't got deep pockets like some of the volume housebuilders or, what we do see on the planning side as well, some of the strategic land companies that are becoming involved now that are looking to promote large-scale sites. They're quite significant—. Well, they're becoming more significant players in Wales than they have been in the past. So, there's a cultural change thing here that planners need to think about. They need to be perhaps a little bit more creative, perhaps a little bit more visionary, around actually creating places and how their plan-making process fits with that.

Who did you say are becoming bigger players than they were?

So, we are seeing in Wales and elsewhere in the UK much more operation by strategic land companies who will talk to landowners and bring forward sites for development either through the local development plan process or outside the development plan process. So, some of the speculative housing developments we've seen outside the plan-making process have been promoted by strategic land companies. So, they'll go to an owner and say, 'I can get consent for you on that land'; some of them will advertise the fact that they can perhaps reduce the affordable housing contributions on that site. So, they are operating in that sort of market. They will then sell the site on to a volume housebuilder. Other volume housebuilders do it from beginning to end. So, there's another group who are playing in this process.

Right. If I can just push again because I think perhaps my question was misunderstood. The question I was asking, really, was that a brownfield site, at the point of application to put a business on it—whatever that business might be—ought to have a condition placed on it at that time that they return that land, whatever use they've had, back into the state that they found it. So, if it was the case that it was land that could clearly have been built on without any levels of pollution whatsoever on it, it should have been returned back into that state, and that would remove all of the questions we're asking now, because it—. That was my question. 

Yes. I think a lot of those sites are probably historic sites, some of which may predate the need for planning permission. So, we can think about—

Not all, and, certainly, we do tend to use those sorts of requirements for things like opencast coal sites, but we have had issues around them not being restored either. So, yes, in theory, yes, you can do that. 

I think, Ian Williams, you said just now—you referred to Self Build Wales and the support that was giving to SME builders. That's great; I think it's a really good scheme. But, generally, I think it applies to single units. Why not expand that approach to five or 10 units per site and support SME builders in that way?

To start with, Self Build Wales is a new and innovative scheme. I think we're really excited about seeing how that comes about. As Ian said, initially, it is about public sector land. I think we're keen to see how—. All local authorities have indicated that they're keen to get involved and want to be part of this, and, obviously, even though it's about self-build, it does offer that opportunity for SMEs to carry out that work, but, actually, like we're saying, this is the first stage and I think we want to learn from that. There is absolutely a possibility for that to be expanded in the future.

Nobody's quite tried this anywhere yet and this is our first go at it. I think your idea has an awful lot of merit in it, but possibly—I'd like to just see that it works first and then review it and then think how could we expand it. It certainly is an idea that seems to be getting a lot of traction with both the local authorities and the SMEs, and I can see why. It's the fact also, for an individual, that they can borrow on fresh air, which nobody can do at the moment.


Yes. I think it is getting a lot of interest, and I think the key thing for me with it is that it addresses three of the key barriers, so the access to land, the access to finance and planning. I don't know if Members are familiar that people taking part in the scheme will be able to—there will be pre-approved patterns of particular houses that people then can take so that planning stage is already gone through.

I first became aware of this several months back. I'm sorry I don't remember his name immediately, but I think the head of planning at Rhondda Cynon Taf council—

—and he was taking that role also for the capital city region and was presenting, I think, to small house builders what the capital city region was doing. And then I think that, some time after that, I heard this announced as a Welsh Government scheme. Can you perhaps clarify to me the roles of RCT versus capital city region versus Welsh Government in the genesis of this scheme?

Sure. The genesis of the scheme was that RCT had been thinking in terms of 'plot shops' for a while, and RCT have been very innovative, we have to admit, in this field. They'd been thinking about this for a while, but they were thinking probably that they would need to form a bank or some kind of financing outfit and they were a bit stumped about how best they should do that. We said, 'Well, let's not have 22 financing organisations. Let's use the development bank, which we've got there, and, together, we can put together this whole package', which I think seems innovative—we haven't tried it out yet, so I don't want to oversell it because, as with any scheme, it may not take off, but it should do. So, that's the genesis of it: a good idea from RCT added to another good idea with the development bank, all put together.

Now, the city regions are thinking in very similar terms for both the ambition board in the north and also—is it the Cardiff city region or the Cardiff city deal? They're thinking about something similar with a property development fund, stalled sites and self-build. Our advice is that we should still use the good offices of the development bank to build up real skill there rather than people setting up their own funds and their own fund management. It seems logical. And, so far, everyone seems to be wanting to work together. Does that give you a sense of where it came from and where we are?

I can go back a bit further. [Laughter.] So, the starting point for this, really, is this idea of local development orders, which mean legislation. So, we have undertaken work to try and promote their use, and one of the authorities that expressed an interest was RCT, and we did support them in a local development order for employment purposes on the Treforest industrial estate. So, you can do things on the Treforest industrial estate to your existing employment premises without the need for planning permission, so there are limitations around that. RCT were then keen and started to talk to us about whether they could start to develop it further, and that's where the idea of the 'plot shop' came up, and we sent them in the direction of our housing colleagues to talk to them about that process, and it's developed from there.

A good idea has many fathers.

Yes, I know. Well, congratulations to everyone—the Government and RCT and the particular individual who has pushed it. I'm very, very impressed.

Can I just clarify, in the paper, you referred to the £82 million of funding from the property development fund helping 62 SMEs? Can I just clarify? You mentioned it was housing that had sort of taken off within the property developing fund, but how much of that, if any, is commercial rather than housing?

So, the original £10 million property development fund—over £30 million was available, you're right, for housing and for commercial property. Throughout the life of that scheme, which was 2013 to 2018, the vast majority of support went to housing schemes. So, that's—398 homes were built compared to 5,346 square metres of commercial buildings.

What we found was—. Originally, with that £10 million—it was dipping our toe in the water—it was available to both commercial and housing. It's residential housing that's taken off, and that's why the next £30 million was all for residential housing. It'll be up to the Minister, but I think that, if we went again and there was a big demand for us to go again, it would be just residential housing I'd be suggesting. It seems to be where the demand is, as you were earlier alluding to—

It's a market interest rate, so it's not particularly cheap. I think the intervention here is about the access to the finance rather than it being particularly cheap. I think that we would be getting into state-aid issues if the development bank was offering it at a particularly cheap rate. Earlier on, you were suggesting that perhaps there is a market failure in the high street banks not lending, and whilst we don't have data for that, that's anecdotally the case. So, our intervention is to make this finance available. It isn't particularly cheap.


And up to what proportion of growth development value does the bank lend for this type of work?

We'd have to check that and get those figures for you.

I'll come back to you. I can't remember.

I think—just in terms of the transparency of the scheme, I wonder whether Welsh Government, the Welsh development bank, could make more information about these types of issues available just to help our scrutiny, but also for people considering using it.

I'm more than happy to follow up and provide a paper for the committee, outlining all of that.

It is interesting because the bank doesn't particularly market this. It's flying off the shelf without particularly big marketing because they've only got £40 million at the moment. If they had a lot more, they would market. But we can certainly provide a single-page briefing on exactly what it is and the rules of the game.

The Residential Landlords Association has suggested that there's a postcode lottery in terms of rates of support across local authority areas. Now, that phrase is usually used pejoratively, but I don't necessarily say that it is different in areas, whether that's the intention and are some areas needing more support than others, or is the intention of Welsh Government to have the same schemes available on the same basis across Wales, without exception?

It's difficult for me to comment on individual local authorities and what they're doing, but in terms of the schemes that we're bringing forward, it's intended to have the same access and impact across the country.

It's available everywhere in the same way. I think what you might be getting at is that house builders aren't building in certain areas to the level that we need them to be.

What's the balance of your motivation between improving the range of houses available to people who need them and supporting economic growth and employment in construction through these schemes?

Clearly, I think it goes back to the opening, that we know that when we support—. We want this initiative hand in hand with our ambitions on the foundational economy. That's why we're keen to support more SME builders to have access to the market, and, actually, because we know they will build in places where perhaps some of the bigger volume builders aren't tending to go at the moment. And we also know that that will further support the local economy, local supply chain, create skills and opportunities. I don't have any data on the economic impact to hand, but—

No, but house building and construction is always known in almost any economics class as a very good short-term economic stimulus. Certainly, we understand that there is a need for housing for the market, and certainly social, so this is something that we can use as a generator of jobs and value in the areas that need them the most. So, it is a very good tool for economic regeneration as well as for meeting housing need.

Can I take that question and perhaps turn it on its head and say: to what extent would the Government say it's the morally right thing to do to dismantle the housing cartel that is dominating 75 per cent of the market?

Yes, I'm sure you would be, Hefin. It goes with what we said before. There's no binary big always equals bad and SME always equals perfect. But we would say that, actually, our emphasis as a Welsh Government—we recognise we want more SMEs to be part of that and to be able to access the market because we want to support those house builders who are about place making, responsible building, and actually, sustainable communities as well, and to be part of those communities and recognise the value that they bring, and, like I said, the wider employment opportunities and access to the supply chain as well.

So—[Interruption.] God, I've just tipped my water. Sorry, Chair, I just tipped my water everywhere. I would argue that it would be the case that if you've got house builders who say, 'Yes, we'll deliver you 400 houses', but people in my constituency can only afford, if they're lucky, 40 of them. That's the problem we've got. Do you think that the steps you've outlined so far will change that?


I think the steps we've outlined so far won't necessarily change that, if I'm honest with you. I think Help to Buy helps people get into it, certainly if they're first-time buyers.

It does. Certainly, 65 per cent of Help to Buy has gone to the big five—

It's almost like this problem is bigger than Government.

I think, coming back to the point, we need to diversify the market; we need to start building more social homes. I've got a graph on my wall that goes back 20 or 30 years now. It's got a line for where the need is and the only time we ever got anywhere near that need was when there was a big public sector building programme. What we have seen over the years is much more consolidation within the sector, so we have fewer and fewer companies. We've seen SMEs go out of the sector, sometimes because it's a risk, sometimes it's through acquisition and the numbers have come down. We now have a house building model on the public limited company side that isn't based on volume, it's based on the profit they make per unit. So, things like the market absorption rate become very important to them. Socially, we might see more houses built, but you get to a point where, if you build more, it might depress the price; that's linked into the land value, the equation that they work on. So, the emphasis here is trying to diversify as much as we can. It's very clear from the First Minister that he wants to start to get into building social homes as well, much more to start to fill that gap. There's not one answer to this; we need to start pulling on all of the levers. We can't see social housing as a residual of market housing anymore. We need to start to reverse stats, think about what's the need and how we actually address that need for market and for social housing.

Social housing works best when it's mixed into a mixed tenure, mixed in with market housing at the same time.

But I accept you're fighting against the tide of a market that is very badly structured. When we asked Redrow—. I specifically asked Redrow about the economic—. Whether they'd done—. I was giving them the chance to showcase good practice and I said, 'What analysis have you done on your impact on local supply chains?', and they said, 'We haven't done any.' That was the frank answer. Do you think that—? Have you done any assessment of the economic benefit that these house builders have—perhaps SMEs compared to large builders? And, can you give an assessment of what that might be?

To my knowledge, there hasn't been an economic assessment of the impact of large house builders—

We're aware that there is somewhat of a positive impact on the local economy if they use SMEs, local subcontractors and local companies, but we're also aware that the likelihood is that not as much of the economic benefit will stay in Wales, as opposed to if you were using SMEs instead.

You're right. And, where we are making a large intervention in terms of grants, registered social landlords, for example, and housing associations, we do an enormous amount of analysis about how many pence in the pound stays in Wales in the local economy, and we publish that information as well. But for market housing and the volume house builders, as you know, the big five, we do not and have not, certainly thus far, analysed exactly how much of the profitability—. As the Minister says, they tend to use subcontractors, so there is a benefit, but of course, that 20 per cent or 25 per cent profit—other than Redrow, of course, which is a Welsh company—but the others will naturally flow over Offa's Dyke.