National Assembly for Wales

Back to Search

Y Pwyllgor Cydraddoldeb, Llywodraeth Leol a Chymunedau

Equality, Local Government and Communities Committee

09/01/2020

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Dawn Bowden AM
Huw Irranca-Davies 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

Alyson Francis Dirprwy Gyfarwyddwr, Is-adran Cymunedau, Llywodraeth Cymru
Deputy Director, Communities Division, Welsh Government
Amber Courtney Trefnydd Datblygu Gwybodaeth, Unsain Cymru
Information Development Organiser, Unison Wales
Ceri Stradling Dirprwy Gadeirydd, Comisiwn Ffiniau a Democratiaeth Leol Cymru
Deputy Chair, Local Democracy and Boundary Commission for Wales
Councillor Jan Curtice Cadeirydd, Gwasanaeth Tân ac Achub Canolbarth a Gorllewin Cymru
Chair, Mid and West Wales Fire and Rescue Service
Dave Daycock Clerc a Swyddog Monitro, Gwasanaeth Tân ac Achub Canolbarth a Gorllewin Cymru
Clerk and Monitoring Officer, Mid and West Wales Fire and Rescue Service
Dominic MacAskill Rheolwr Rhanbarthol, Unsain Cymru
Regional Manager, Unison Wales
Gary Haggaty Dirprwy Gyfarwyddwr, Is-adran Diogelwch Cymunedol, Llywodraeth Cymru
Deputy Director, Community Safety Division, Welsh Government
Jane Hutt AM Y Dirprwy Weinidog a’r Prif Chwip
Deputy Minister and Chief Whip
John Howells Cyfarwyddwr Tai ac Adfywio, Llywodraeth Cymru
Director of Housing and Regeneration, Welsh Government
Mike Payne Uwch-drefnydd, GMB
Senior Organiser, GMB
Rebecca Evans AM Y Gweinidog Cyllid a’r Trefnydd
Minister for Finance and Trefnydd
Reg Kilpatrick Cyfarwyddwr, Llywodraeth Leol, Llywodraeth Cymru
Director, Local Government, Welsh Government
Sally Chapman Dirprwy Brif Swyddog a Swyddog Monitro, Gwasanaeth Tân ac Achub De Cymru
Deputy Chief Officer and Monitoring Officer, South Wales Fire and Rescue Service
Shereen Williams Prif Weithredwr, Comisiwn Ffiniau a Democratiaeth Leol Cymru
Chief Executive, Local Democracy and Boundary Commission for Wales

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Catherine Hunt Ail Glerc
Second Clerk
Hannah Johnson Ymchwilydd
Researcher
Jennifer Cottle Cynghorydd Cyfreithiol
Legal Adviser
Jonathan Baxter Ymchwilydd
Researcher
Naomi Stocks Clerc
Clerk
Osian Bowyer Ymchwilydd
Researcher
Stephen Davies Cynghorydd Cyfreithiol
Legal Adviser
Yan Thomas 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 09:03.

The meeting began at 09:03.

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

May I welcome everyone to this meeting of the Equality, Local Government and Communities Committee? The first item on our agenda today is item 1, introductions, apologies, substitutions and declarations of interest. Apologies have been received from Caroline Jones, who's unable to be with us today. Dawn Bowden, I know, will have to leave at 1.45 this afternoon. Are there any declarations of interest? No. 

2. Craffu ar Gyllideb Ddrafft Llywodraeth Cymru ar gyfer 2020-1: Sesiwn Dystiolaeth 1
2. Scrutiny of the Welsh Government Draft Budget 2020-1: Evidence Session 1

Item 2, then, is scrutiny of the Welsh Government's draft budget for 2020-1, and this is our first evidence session, and I'm very pleased to welcome Rebecca Evans, the finance Minister, Reg Kilpatrick, director of local government within the Welsh Government, and John Howells, director of housing and regeneration within the Welsh Government. Welcome to you all. 

Perhaps I might start with a first question, Minister, which is whether you could explain how the local government settlement reflects the priorities identified within the Welsh Government's strategic integrated impact assessment, particularly in relation to supporting women.

09:05

Thank you, Chair, and good morning, committee. Thank you very much for allowing me to attend committee on behalf of the Minister for Housing and Local Government this morning. So, with regard to the issue of ensuring that women are very much considered at the heart of the local government main expenditure group, I think that the letter that the Minister sent to you that referenced the work that has been commissioned by the Women's Budget Group is really enlightening in terms of setting out how women in general are beneficiaries, more so than men, of public services. So, women are more likely to be the primary care givers to children, more likely to use services, then, to support those families and schoolchildren, and, if there is a single-parent family, the adult in that family is usually a woman as well. Women are usually less likely to be paid as well as men, so, then, will often be more likely to be recipients of housing support, for example. And women generally live longer than men, which means that, often, women become care givers as they become older themselves, and often they are the recipients of those social services. And, if there are cuts to services that local government provides, it's often women who step in to fill those gaps.

So, we're very aware of those particular issues and I think that that is very much reflected in the overall quantum that we have been able to provide to the local government MEG this year, but also to the health and social services MEG as well. I think there are significant increases to funding. We're very much guided by some of these particular concerns that I have and I know that the local government Minister also has.

Okay. Well, thanks for that, Minister. Just a follow-up from me: letters were sent to local authorities in Wales from Welsh Government asking for comments relating to the effects, whether positive or adverse, that the proposed settlement would have on opportunities for the use of the Welsh language. Shouldn't this assessment have been conducted by Welsh Government in considering the settlement and what the settlement should be? And what funding flexibility is there if the settlement is found to have an adverse effect in relation to those matters?

Well, the settlement is provisional at the moment, and it's subject to that formal consultation, which is currently ongoing with local authorities, and, as part of that consultation, we'll ask them to respond to a suite of questions, often related to protected characteristics and so on. So, we're very keen to understand their idea as to what impact there might be on those people who use the Welsh language as their first preference. We're also very aware this year that the uncertainty around the timetable has meant that we've tried to give local authorities as much certainty on as much of the budget as possible, albeit later in the day than normal. And so the room for flexibility is less, so we're very keen to ensure that we have made the right choices and look forward to hearing what local authorities tell us.

And, you know, the issue of whether the assessment might have been conducted by Welsh Government prior to deciding on the settlement.

Well, of course, the vast majority of funding for local authorities is unhypothecated, through the revenue support grant, so it will be decisions that they take locally that affect many of these issues in terms of those protected characteristics—Welsh language and so on. So, they'd obviously want to undertake their own impact assessments when they determine their own projects and their own priorities, based on their assessment of local need.

There is an identified issue, as we understand it, Minister, from a Welsh Local Government Association survey of the local authorities, which is that some local authorities in areas where the Welsh language isn't widely spoken have identified an impact on their budgets from the services expected of them. Are you aware of that?

I know that the Minister will be aware of the representations that have been made by the WLGA and by individual local authorities as well. And, of course, what you describe is very much a feature of the formula for local government in terms of deciding that settlement, and that formula is reviewed every year in partnership with local authorities themselves and with those independent members of the distribution sub-group, which then seeks to agree the formula for the next year. But, on the specific issue of the Welsh language and those representations, I'll perhaps ask Reg to add some comments.

09:10

Yes, I think we are aware of the issues, and the pressures around the Welsh language and how that's dealt with are amongst a number of pressures that the WLGA have raised, and some of those will be detailed in their evidence. The issue for the settlement, I think, as the Minister says, is that it's unhypothecated. There are local pressures, local priorities that need to be balanced with the RSG, but within the wider scope of income to local government, including council tax and other sources of revenue that they raise. 

Thank you, Chair. Maybe I'll pick up on that point first of all. There was a lot of sound and fury in the Senedd yesterday over the issue of the, not the uplift in the settlement, which after a decade is welcome, to have some uplift, but actually how that is allocated to each individual local authority under the formula that's agreed with the WLGA. Do you have any sympathy with the calls that were made for a rehash of the formula, for changing it dramatically, for putting some sort of floor in? We've got Monmouth at 3 per cent, we've got an average of 4.3 per cent, I think, uplift and so on. Are you hearing from the WLGA, as opposed to individual council leaders, who understandably will say, 'Look at me compared to somebody else', a demand for renegotiating the formula in some substantive way?

I think the first thing to say is that the WLGA itself has recognised that this is an exceptionally good year for local authorities in terms of the funding settlement that we've been able to agree. And, of course, we understand that one year's good settlement doesn't undo a decade of cuts, so we're very aware of the challenges and the pressures that they still face.

In terms of the agreement of the formula, as you say, every year the formula is reviewed in its own way through the distribution sub-group and there are opportunities to make some changes. So, for this year, for example, to stop volatility from the roll-out of universal credit and to smooth the impact of population projection, we've agreed with local government that certain elements of the formula have been frozen or phased, so there will be differences year on year in terms of some of the specifics of the formula. Overall, I know that the Minister for local government has said, and I've said also, that should the WLGA and local authorities come together with a strong view that they want to see some major changes to the formula, then of course we're open to having those discussions, but those representations haven't come forward.

So, I can see Mark wants to come in, Chair, as well, but can I just be absolutely clear on this? The door is always open for the WLGA, if it comes together and agrees collectively that it needs a re-jig of that formula, your door is open to them to hear that argument being put.

We're always open to having those discussions with the WLGA.

So, the 'losers' always tell me that the 'winners'—. Obviously, in bad years everybody's a loser, in good years everybody gets more, but those at the bottom always state that they will never get consensus because those at the top will not wish to concede the need to review what may result in the same outcome, which may result in a different outcome. But the Welsh Government is the organisation, the body, with the means to review or instigate independent review of this. So, what consideration does the Welsh Government itself give to anomalies, often unintended consequences, thrown up, when often the same councils with the lowest prosperity levels per head, or with the highest older people's populations, or the largest number of bottom-index-of-multiple-deprivation wards, and so on, keep coming out at the bottom? Does that not indicate, given the Welsh Government's priorities to focus the formula predominantly on tackling and targeting the areas with least resource and lowest prosperity, pause to think that there might be a leadership role for them to, after 20 years, commission a further independent review of the core formula itself?

Well, the core formula is extremely complicated and large. I can see Reg with his green book, which he likes to wave as often as possible. [Laughter.] We are open to having those discussions. But I think it is important to recognise that the formula does take into account so many factors that are important in terms of local authorities being able to deliver the services they need to. So, population measures, deprivation levels, population sparsity and need very much are at the heart of those. But the reason why some local authorities perhaps don't do as well as other local authorities is very much related to the relative change in population and the pupil numbers in comparison to Wales as a whole. That said, even the lowest increase this year is an increase of 3 per cent, which I think is a good settlement as compared to others, but I do understand, obviously, that there will be some local authorities who feel disappointed when they see that others have done better, but it's a function of the formula.

09:15

But doesn't that give you pause for thought when the authorities with the lowest prosperity levels or the highest older people populations and so on keep coming out with the lowest increases or, last year, cuts when the others have increases?

I think the issue to remind ourselves about the formula is that it is an objective set of measures that are constantly reviewed between us and the WLGA and agreed, actually, by the political leadership of the WLGA, which represents all political parties. I understand that individual councillors may have some issues with the formula, but from the Government's point of view it is very important that, however we allocate, almost a third of the Welsh Government budget is done in a way that is objective, that is open, transparent and understandable to all of those people who are subject to it—or all of those authorities, I should say.

Also, you're right that some authorities will continue to lose over years, and that is a function, as the Minister says, potentially of a reduction in their population relative to others, a reduction in their pupil numbers relative to others. So, there is an issue about there is less need for services in that area, because there will be fewer service recipients. So, in that sense, providing a varying level of funding makes sense and it is fair to those whose populations or relative needs are increasing.

We struggle, I think—and WLGA, I'm sure, would agree—to make sure that the formula remains fair. It takes of work, a lot of effort, to keep it running properly and in a stable way for authorities to be able to plan as best they can. So, while there may be what appear to be anomalies, those anomalies are actually the result of a very carefully planned and consulted-on model.

The Welsh Government website StatsWales's most recent figures for populations per county only go up to 2017-18. Do you have more up-to-date figures, because those figures do suggest perhaps contradictory pictures regarding population in some of the areas affected?

Population this year has been an issue that the distribution sub-group has had to get to grips with, because there have been some changes in the measures that are used. Our objective is always to use the most up-to-date information that we have and the best quality information that we have.

Can we see that, if it's more recent than the 2017-18 figures on the website? 

We can certainly show you the population information that we used to drive the formula, and we can explain why we used that population set.

Thank you, Chair. And thanks for that, because that was helpful as well. I think, in defence of the way this formula is arrived at, I would say, as a member of this committee, the fact that it is clear and transparent and that we can have these discussions is good. And I'm really glad today that, here on this committee, we're not repeating any insinuations that there is political chicanery going on around this. There is an argument to be had about how it's arrived at, and arguments have been forward, but we have faced very clear insinuations that actually this is a stitch-up. Well, we can argue around need, deprivation, rurality, sparsity of population, et cetera; that's the right to discussion to have, but not around some sort of stitch-up. But I think this has been a helpful discussion.

Could I move on to the issue of the five ways of working and to what extent the five ways of working were taken into account under the Well-being of Future Generations (Wales) Act 2015 in these deliberations on the local government settlement, and did it change anything?

So, throughout the process of developing our budget—the budget right across Welsh Government—we've been very keen to demonstrate our commitment to the well-being of future generations Act, and this is the first time that we've published a budget improvement plan. So, this is a five-year rolling plan, which will demonstrate how we will continue to embed the Act and its ways of working and its goals into our decision making right across Government. So, this will be something that the local government and housing portfolio will be looking at as we move forward to the delivery of the budget improvement plan.

I think that the settlement, as referred, is based on a long-embedded formula. There are those set processes that are in place to update and amend that formula every year, and the way in which the future generations Act is becoming embedded in that, I think as the previous finance Minister would have said, is that it is very much an iterative process. So, we are taking steps along the way. I don't think that we can say yet that we have completely cracked it, but we're keen to demonstrate improvement.

In terms of collaboration, I think this year's been absolutely excellent in terms of the way that we've collaborated with the WLGA through the finance sub-group and also through the partnership council in terms of ensuring that we have worked closely and in partnership to understand their needs. But also, importantly, to be as open and transparent as we can be. So, this has been an exceptional year, I think, in terms of setting budgets, because of the uncertainty due to the fact that we had a delayed spending round and all the complications with a potential Brexit, and the general election delaying the publication of the budget and so on. But, at every step of the way, we were completely upfront with local authorities that we would share everything that we had with them at the earliest opportunity, and then we'd work across Government to give as early an indication as we could of those big grants from other parts of Government as well. So, that, I think, in terms of the collaboration side, has been particularly good this year.

09:20

That's good. And it may be, Chair, that we return to individual Ministers to see how that's implemented within their individual policy areas. Could I move on to what you've suggested in response to the committee already—that this settlement offers an opportunity for local government to plan for the future? Now, I mentioned yesterday I'm seeing for the first time in a decade my two council leaders having the glimmer of a smile, but actually the reality is this is after 10 years of hacking away. It's not just the services at the front end, it's also the staff. We've lost 20 or more per cent of staff behind the scenes. So, realistically, to what extent can this allow local authorities to plan for the future in an optimistic way? Are you talking about planning for the future as in avoiding the worst cuts that they were thinking of doing, or actually investing?

So, as you've recognised and the WLGA have recognised, one year just simply can't reverse all the damage that has been done over the last 10 years. But certainly, an improved and exceptionally good settlement this year does give, I think, a bit of breathing space to local authorities. So, local authorities often tell us that they're firefighting, if you like, providing services at the acute end of things, dealing with problems once they've already arrived, and they really want to start moving towards a more preventative agenda. So, perhaps the space that this year will give them will be able to help them refocus some of that work.

And are you leaving it to them to decide what their priorities—beyond the thematic areas and so on, what areas significantly need reinvestment, which have been denuded over the last decade?

I think it is for local authorities individually to come to an understanding, which I know they have, of their local need and to explore what they can best do to meet that local need. But, that said, I think there is a role for us also to facilitate the sharing of best practice. So, the work that's going on in terms of preventing loneliness and isolation—you see different models being taken forward in different areas, whether they're community brokers or other people who work individually on that local basis with people who are experiencing loneliness and isolation to link them into all of the things that are there for them in the community. They do incredible work, they save a heck of a lot of money, but actually the most important thing is that they genuinely change lives as well. So, we see different models happening across Wales, so it's only right that we can learn from those different models to see which might be the best for local areas. That, I think, is more Welsh Government's role rather than directing the spending; it's about sharing opportunities to learn from one another.

I assume your message would be, actually, to really have confidence for the future in terms of a heads-up approach to providing local authority services. What we need is this level of funding sustained, at least maintained, in the years going forward and enlarged.

09:25

We would hope so. As I've said on a number of occasions, our budget overall for Welsh Government this year is still £300 million lower than it was 10 years ago, so obviously that still presents lots of challenges. One of my first actions with the new, incoming Government in Westminster was to write to the Chancellor setting out the need for increased good settlements year on year. We have a comprehensive spending review taking place later this year and we'll be very keen to impress upon the UK Government the need for further funding so that we're able to continue with our desire to give local authorities the best possible settlements year on year.

So, I would certainly hope for improved settlements, but then there are all of the considerations that we have to make in terms of whether or not the headroom that the previous Government thought that they had—does it actually exist? Because the spending round is based on financial information and forecasts from March, whereas the spending round took place much later in the year. So, whether that headroom actually exists at all, we don't know. So, we look forward to the budget in March, which should give us a better outlook for public spending over the coming years.

Thank you. Can I turn to the issue of capital funding and decarbonisation? You've written out to local authority leaders stressing to them the urgent need to decarbonise, and I think we would all agree with that, but in the capital funding it refers to the modest increase in capital funding for tackling decarbonisation. Do those two tally—the urgent need to decarbonise that you've told them about along with a modest increase in funding?

The increase in funding is modest this year, it's £15 million additional capital for local authorities, and that is spread across local authorities. So, I understand that that is a relatively small amount of money, but it's not the only money that local authorities are able to access in terms of decarbonisation. So, examples would be: the large sums of money that they're able to access through the twenty-first century schools programme; we're putting more funding than ever now into active travel; the funding that we provide for air quality; and those social housing grants, which are trying to build houses in a new way for the future. So, the £15 million is by no means the beginning and the end of the story. It's a small part of it.

Do you have an aggregate figure, then, if you've looked at those other areas? A sort of ballpark figure that, when you tally those other areas together, is indeed going to have an impact on decarbonisation.

I think there are two points. We can certainly try and work out a figure from that. We will have a number of grants that run alongside the budget this year that we could draw together. That won't be the totality of the investment, though. We do know that some of our local authority colleagues are already working quite hard on the decarbonisation agenda. And I think, as a Government, we would be looking for existing expenditure and existing planning to begin to take account of decarbonisation as routine. So, I think focusing on the grants is one thing, but there is another set of developments and another set of work that should be going on within an improved settlement and within existing business as usual.

Okay, well, I think an aggregate sum, if you can tally—I know it won't be completely comprehensive—to give a better idea would be helpful. If you could contact the committee with that. But can I ask, on that issue of making it the bread and butter, the core delivery of local authorities: one of the criticisms possible here is the criticism that's come from the future generations commissioner, which is that there isn't a clear process to classify or assess how much local authorities are spending, or need to spend, on decarbonisation actions to deliver statutory carbon budgets or targets.

This is one of the huge challenges that local authorities alone aren't facing, but actually we're facing as a Government as well, because we completely understand the desire now from people to see carbon impact assessments and so on, but actually when you try and go down that road—it sounds very easy to do, but it's actually extremely complicated. So, an example would be the additional funding that we're providing in the 2020-1 budget for the electric charging points, for example. Now, we know that that has the potential to save carbon but we can't put a figure on it, because we know that that will rely to a great extent on the uptake of electric vehicles, and that in itself relies on the decisions that UK Government might take in terms of restricting traditional petrol vehicles and diesel vehicles, for example, or any tax decisions that they might take regarding vehicles, and so on. So, there are so many different interdependencies that it is very hard to put an actual figure on some things.

Where we can, we do. So, for example, we're providing funding for local authorities of £1 million to replace those vehicles for the collection of refuse that are due to be replaced this year. So, the additional funding will meet that gap between providing diesel vehicles and low-emission vehicles. And we can demonstrate that those vehicles— currently 180 of them across Wales—are responsible for an estimated 4,000 tonnes of carbon dioxide emissions a year. So that would be an easier way of demonstrating—

09:30

Okay. I think you're absolutely right, there are certain ones like that where you can say, 'You put this money in, you get this outcome in terms of decarbonisation.' You're saying it's hard, and it is complex, it is difficult, but is it impossible? The worry is that, if we don't actually put the effort into really nailing down, with best estimates, what the investment we put in across a range of areas will actually give us in terms of decarbonisation, it's something of a cop-out, it's something of a, 'Well, this could happen, that could happen, so we're not going to go there. We're just going to try our best.'

I spoke to the Minister for Environment, Energy and Rural Affairs about this, because there is a desire across Government to better demonstrate what we're doing in this area and demonstrate the outcomes, and we are exploring what more we can do in this area. But part of the answer, really, is taking advice from the experts. So, we take our advice from the UK Committee on Climate Change, which has identified particular areas where it says that we need to take action if we are to meet our ambitious targets. They've identified, for example, transport as one of those key areas, and you'll see additional investment in transport in the budget. And they've also identified home heating as another area where we really need to be focusing attentions. And then, of course, you'll see within the Minister for Housing and Local Government's portfolio an additional £48 million being added to the social housing grant available, and that is very much about creating homes that are energy efficient, and so on.

So, we're taking advice from the experts, because they know what happens, but we're also looking at what other countries are doing. There's a reason why other countries aren't producing these carbon impact assessments as part of their budget plans, because it is so difficult to do it on an accurate basis. So, England don't do it, Scotland don't do it, but we're keen to explore what might be happening globally that we can learn best practice from. I think Reg wanted to add something. 

Could I just add that, in response to your point about what local government is doing, or what we are expecting local government to do, as part of the Welsh Government's decarbonisation programme, I'm leading a piece of work with the WLGA that will try to do exactly that: to draw together all of the work that is ongoing into a very coherent whole so that we can understand, if you like, the specific or the dedicated pieces of work on decarbonisation, and also to try and build up a picture, so far as we can, of the pipeline of developments for the future, but also what is happening as part of that business as usual? That's going to be really difficult to do, but I know that the WLGA, my colleague there, and I are really committed to trying to get a much better picture of what is going on in local government. And I think it's fair to say that many of our local authorities are acutely aware of the climate emergency, have declared climate emergencies themselves and are very willing and committed to act alongside Ministers to deliver this. 

And we recently launched our decarbonisation dashboard, which is a tool for local authorities to use. So, local authorities can look—it's a procurement tool, particularly—at their procurement spend and enter their details into the dashboard, and that will put a figure on the carbon impact of that spend, and then local authorities can look at the impact of their spend and potentially take different decisions in terms of the choices that they're making. So that's a useful tool for local authorities. 

Okay, thank you. That's helpful. Could I turn to the issue of the amount of unsupported borrowing and the associated servicing costs with this? Do you think that the additional capital you've provided in the settlement is sufficient to help local authorities, because we've seen the massive rise there in unsupported borrowing?

I think, as you've already identified, the increase within the settlement is £15 million in terms of capital. So, local authorities will inevitably have an appetite to borrow, and I don't think that that's a bad thing. The important thing is that borrowing is done in a prudential way, and there is a real robust set of regulations around the way in which local authorities can borrow, which requires them to do so in a prudential way, and to understand as well the long-term servicing requirements of those loans. Because it's all very well borrowing capital, but then you obviously have to factor in the revenue implications for the longer term in terms of servicing that loan. So, I don't think that we should be concerned about local authority borrowing, because it's very much part of the work that they do to develop their communities.

09:35

Just to echo the Minister, local authorities have generally got very well-developed financial functions. They have section 151 officers with legal responsibilities to look at financial decisions, not just in the present, but in the long term. So, in that sense, borrowing decisions should rightly be at a local level in response to local priorities and local investment needs, rather than something that, as a Government, we would want to get involved with.  

Okay, thank you. But you've clearly expressed the fact that you don't have concerns over the level of exposure to unsupported borrowing. So, right, okay, that's fine.

My final question then, Chair, is in relation to the local services spending round survey that was produced by the WLGA looking at the 22 local authorities' reductions in proactive maintenance to infrastructure: highways, buildings and so on. Are you concerned about that—the fact that we're storing up problems for the future? 

Well, these kinds of issues are ones that reflect discussions I've had with the Minister for Economy and Transport within his portfolio, because like local authorities, Welsh Government also has statutory duties in terms of maintenance of the road network and it is really important that we ensure that the network is maintained and that it is safe for those people who use it. I understand, of course, that, after a decade of austerity, local authorities do have concerns that they need to bolster that—

Should we be worried that we have de-invested, now, in routine maintenance of buildings, roads, bridges et cetera? 

I think that there is obviously a great deal of maintenance that needs to be undertaken, and I recognise that in-year this year, with the additional funding that I put forward through two separate capital investment stimulus projects, and both of those had funding that allowed local authorities to undertake maintenance. So, where we're able to offer that extra support we do, but I appreciate the challenges that local authorities face in that particular area. 

Thank you, Chair. A couple of questions, Minister, if I may, on workforce pressures. You stated in the revenue settlement for this year—and there's been a substantial uplift in that—that you had tried to make some accommodation for the increase of the teachers' pay awards and pensions. But I'm also conscious that that money, that revenue funding, goes into the RSG, so local authorities are free to spend that, basically, as they wish. So, can you tell us: what was the proportion that you allocated to the revenue budget that was specifically for teachers' pay awards and pensions? 

My understanding is that the Minister for Housing and Local Government and the Minister for Education are jointly preparing a letter for both this committee and the Children, Young People and Education Committee, which will provide further details on those technical arrangements for prioritising funding for teachers' pay and pensions within the local government formula, and I know that they hope to get that letter to committees soon. 

So, will that lead to some form of hypothecation? Is that what you're suggesting, or do we need to wait and speak to the local government Minister about that? 

No, I think the intention is that the overall uplift to the local government RSG should cover that. 

It's worth saying that Councillor Anthony Hunt, the finance member for the WLGA, has given some very clear undertakings that, within the RSG and the unhypothecated grant, the money that was made available or has been made available for teachers' pay and pensions will be spent in that way.

09:40

On that, yes. Okay, that's fine, that's helpful. Thank you for that. So, can you tell me, then, whether the additional revenue provided within the settlement is sufficient, considering the funding gap that authorities face on workforce pressures as a whole, because we were looking at an increase from 2020-1 to 2022-3 of, I think, something like £147 million to £424 million? Is there going to be sufficient revenue within the uplift to fill that gap?

I think the uplift will provide is a sufficient contribution towards meeting that particular pressure, but also, it's important to recognise that the revenue support grant is only one of the forms of funding that local authorities can avail themselves of. So, of the £7.4 billion gross revenue expenditure that local authorities expect to spend next year, £4.5 million comes through the revenue support grant and the rest will come through council tax, fees and charges, and so on. So, local authorities will consider all of their revenue-raising opportunities in responding to the pressures that they face.

Okay, that's fine.

Now, the WLGA’s local services spending survey stated that salaries for local authority social workers and occupational therapists have not kept pace with salaries more widely in Wales or the NHS, resulting in recruitment and retention issues. To what extent do you accept, and are you concerned about the difficulties that local authorities will continue to have in terms of recruiting those professions where there are mirror professions, particularly in the NHS, that are being paid a lot more?

Perhaps Reg will say something about the Fair Work Commission, which is looking particularly at the area of social care, as I understand it. But that particular issue sits within the portfolio of the Minister for Health and Social Services, so, if the committee's content, I can ask him to write with a response to that issue about the pay question.

Thank you, Minister. I think we'd all accept that recruitment and retention is a challenge across the workforce in general, and I think it's quite well documented that social care is a particular issue there. In response to that, we as a Government are going to establish a fair work forum for social care to look particularly at some of these issues and look at how we might address those recruitment and retention issues through a social partnership approach.

I think one of the issues, it seems to me, is to be giving almost like equal status to these professions and these jobs. If you say to somebody that you're a care worker in the NHS, people go, 'Great.' If you say that you're a care worker in social services, it's almost like you're the bottom of the pile. So, there's something about status as well, isn't there?

It's just a very small supplementary, Chair. Would you accept that, actually, it was foreseeable that one of the consequences of the health and social care 10-year plan of having integrated teams on the ground—and this was foreseeable—is that it has highlighted, now, the disparities in pay and terms and conditions amongst integrated teams on the ground? So, at some point, Welsh Government is actually going to have to step up and find the funding to raise the terms and conditions to parity. This is like the old stuff we used to do in NHS, where you had people on three or four different things. At some point—

I think I'm back in my previous job now, Huw. [Laughter.]

—at some point, are you not going to have to, as Welsh Government, accept that your wise decision to integrate health and social care is going to force you to actually find the money to pay the team members the same?

I think that pay itself is, as you know, only one part of the package of support that people receive, but I take the point, absolutely, that people are now starting to work much more closely across health and social care. And it's important—Dawn's point—about the kudos and the respect for people who work in social care. So, not from a budget side, but from a policy side, you'll be aware that we're registering now the social care workforce, and I think that that is important in terms of giving the workforce a kind of recognition that it deserves. There's much more focus now on progression and learning within the profession, which I think is also really important.

So, I think there's a lot going on within the Minister for Health and Social Services's portfolio, and I'll perhaps ask him, when he does write on that specific issue, to give a broader picture of the work that's happening from a policy perspective as well.

09:45

My final question, Chair, is just on the social care workforce and sustainability pressures grant, which you've increased quite significantly. Can you just explain why you've increased it by the amount that you have, and how you are going to use it and what outcomes you're expecting from that increase?

So, again, this is a grant that sits within the Minister for Health and Social Services's portfolio, but I think that his decision to increase that grant was very much led by a recognition of the importance of social care, but also of the pressures that local authorities are feeling within this area. So, in terms of understanding what it might be spent on in the next financial year, perhaps if we look back at how it was spent last financial year, we'll get some flavour of what might be in store next year.

It was used, for example, to fund some adult and older people's services, maintaining business continuity in an out-of-hours service, increasing wages across the sector and supporting domiciliary care services as well. So, local authorities took different approaches, depending on what their particular local pressures were. But, as you say, the funding's been increased from £30 million to £40 million this year, and I think that's positive.

So, would it be fair for the committee to write and ask the Minister for Health what his intentions are in terms of the uplift in that particular grant?

Yes, I think his intention is to provide local authorities with additional support, and then it would be for the individual authorities to respond to what the priorities are and their pressures are locally, but I'd be happy to ensure that he includes all of the detail after reviewing the transcript and the areas of interest.

Thanks, Chair. Can you tell us how the settlement takes account of the increasing demands on local authority children's care services and whether the allocated £2.3 million to the adoption service as a specific grant is sufficient to ensure improved outcomes?

So, again, the adoption grant is within the Minister for health's portfolio, so I'll ask him to add anything in his correspondence to you that I don't cover today. The WLGA, in their representations to us ahead of setting the budget, were really clear on some particular areas of pressure. So, pressures on children's services and on teachers, and workforce pressures in general relating to pay, were the issues that they particularly wanted us to consider. Those were very much, then, at the forefront of our thoughts when we made that £196 million uplift for local authorities in the next financial year.

So, we provide flexibility to address some of those issues, but then, obviously, the Minister for health has provided that particular grant. Again, I will ask him to reflect on any concerns you might have about the quantum of it.

Do you accept that it's equal to the grant that was provided in 2019-20?

So, there have been grants, if you look across the draft budget, that have been maintained. Actually, maintaining grants over recent years has been difficult when we have been subject to so many deep cuts. But, yes, if the budget has been maintained, then that is demonstrated in the documentation.

So, there's been no major increase to improve outcomes, really, then. I wonder if you can expand on the work undertaken with the future generations commissioner and the progress made to explore social impact bonds as an outcomes-based investment model to reduce entry into care for looked-after children.

Yes. So, this is something I'm taking forward within my finance portfolio. I'm keen, really, that we demonstrate leadership in Welsh Government on this particular issue, because I'm aware that there is some potential reluctance, perhaps, amongst local authorities to take what they see as a risk with social impact bonds. That's why Welsh Government is proposing to underwrite the initiative that we're developing so that, if outcomes are not achieved, then those who do participate in commissioning the schemes won't lose out financially. So, we see the area of looked-after children as a particular point at which we can really make some early in-roads, really, into social impact bonds. Committee will know that the costs of providing these services to individuals have escalated rapidly for local authorities over recent years, but we still aren't seeing the kind of outcomes that we would want for these most vulnerable people. So, we know that young people leaving care are more likely to become homeless, more likely to suffer from alcohol and substance misuse, more likely to become involved in the criminal justice system, and clearly these aren't the outcomes that we want. So, we were happy to try something different, and we think that working with the future generations commissioner and social impact to explore what we might be able to do with social impact bonds would be another, perhaps, tool in our armoury on this particular issue. Obviously, if local authorities want to explore testing these ideas out in other areas themselves, we're very keen to support them to do that, but we do understand there's some reluctance on their part at the moment. 

09:50

Thank you very much. Your paper recognises the impact of increasing demand for reactive services in terms of putting pressure on preventative services delivered by or commissioned by local authorities. How does your settlement, you believe, build up their ability to deliver preventative services, particularly in the context of that pressure for reactive service funding?

Well, I think we've seen a case made consistently by the WLGA throughout the last few years of different settlements and austerity, which has meant that they have become quite focused on delivering that sort of acute end—so, responding to pressures as they emerge—and they would argue that their ability to maybe focus on more preventative services or move resources from the acute into the preventative area has become more and more difficult as they have come under further financial pressure. We hope that this settlement—generous settlement—will give them, as we said earlier on, breathing space that will enable them to plan and to think a little bit more and maybe begin to move some of the focus in their activities from the acute into the more preventative area. So, the idea is that the settlement should support a bit of refocusing from, as I say, responding to the immediate issues to planning ahead, or being able to plan ahead.

We've seen over many years organisations delivering front-line services, whether that's hospices, palliative care, autism support, disability support and so on, seeing their statutory funding disappear or reduce significantly, even though that was relatively small in many cases but delivered a massive multiplier in terms of savings for statutory services, as well as clearly improving lives for individuals. What consideration, if at all, have you given to how you can help local authorities—albeit with local decision-making being the priority—to think smarter about how they allocate their spending to reduce pressure on reactive services? 

I think there are probably two issues there, one of which would be for the integrated care fund, which is run by the health department and health Minister, which does provide an opportunity for people to come forward with new and different and innovative models to do precisely what you're saying or to reduce overheads, increase services and increase efficiency. In my area—we'll probably come on to this a little later—in the legislation and transformation fund, we have money centrally that we can use to respond to authorities that come forward with ideas for changing or improving or making more efficient some of those services.

Well, how are you therefore monitoring their delivery in the context of the Social Services and Well-being (Wales) Act 2014 and well-being of future generations Act, which requires them to design and deliver services with other local providers and community representatives amongst others, as well as individuals with lived experience of particular conditions? Where, despite that, we've seen, I'd argue, dumb funding, where tiny pots of money have disappeared despite them—a few thousand sometimes—potentially saving millions for health and social care.

09:55

Well, the requirements, I think, of the future generations Act will apply to local government, and it will be up to them to make sure that they monitor the outcomes of the work that they're doing. We wouldn't do that. Essentially, we don't have a sufficiently detailed understanding or knowledge of the whole range of every local authority's activities, and neither should we. They are local, democratic organisations and ought to be able to choose their own work and be held accountable through their councillors and through their councils for delivering that, and delivering those projects or those initiatives effectively. 

What about the social services and well-being Act? That's law. It is quite clear in its codes and regulations what must be done. How are you monitoring that as a Government—not personally, but as a Government?

Shall I ask the Minister for Health and Social Services? Because that, again, is within his portfolio, and it's more of a policy than a budgetary issue. So, for today, if I could take that away and ask the Minister to provide a detailed answer on that. 

You mentioned the integrated care fund, which of course is distributed on a regional basis, and of course there are concerns expressed by third sector representatives, in particular charities representing older people, that they're being given little respect and little representation at those bodies. How do you respond to the auditor general's report on the ICF, which said that the overall impact of the fund for improving outcomes for service users remains unclear, and how, if at all, has that report influenced your decisions in this budget?

So, the Minister for local government and housing has responsibility for the capital element of that, and I was really pleased, when I was in the housing portfolio, to announce three-year capital funding of £105 million, which had prevention at its heart. When I was talking about it at the start, I was talking about wanting to see housing-led solutions to social care issues, and I think that is very much what the scheme is already delivering. It's focusing on older people, people with dementia or learning disabilities, or young people with complex needs, to ensure that they have the appropriate housing that meets their social care needs as well.

As I say, it's a three-year programme, and the regions, as you've just described, are working on identifying their particular programmes that should be delivered. But we're already seeing some of these intermediate care facilities, which are providing step-up, step-down provision so that that helps to avoid hospital admission where possible, but then also to get people out of hospital as soon as possible on their journey back to the community. We're also seeing things that support people being able to have reablement more quickly, and also the refurbishing and new build of various housing-led solutions again. So, I think that's an exciting part of the agenda there, and I think that the WLGA have recognised the contribution that it is making in terms of being able to support people more locally for longer, which I think is one of the things that we'd like to achieve through that fund as well. 

Okay. Well, in that response you detail a list of inputs, and I quite agree—I've been arguing since I first arrived here from the housing finance sector that housing should be key to sustainable community regeneration and the well-being of individuals. But the question was about the auditor general's findings that the impact of this funding remains unclear, particularly the integrated care fund. So, how if at all have you responded to that in this budget, or will you be responding in changing the way you do things in the future, including monitoring impacts?

So, I think the auditor general's comments related to the ICF as a whole rather than the capital element for which the Minister for Housing and Local Government is responsible, because, as you know, the integrated care fund is about much more than that—it's about commissioning of services locally and doing things differently locally, and ensuring that health and social care work more closely together. Obviously, we take the report seriously and will want to ensure that we are able to demonstrate those outcomes for what is a considerable spend. But, again, this is something that I will explore with the housing Minister, and I'm sure that he will obviously be giving evidence to his own subject committee, which I'm sure will take an interest in these areas as well.

10:00

And finally, concluding on my opening point, the Future Generations Commissioner for Wales has stated that there's only limited evidence that the Welsh Government has tried to apply the prevention definition across spend in a systematic and robust manner. So, again, to what extent have you taken account of her concerns, following budget scrutiny in the past, which call for a better balance of spend in relation to primary, secondary and tertiary prevention—and that's cross-sector?

I've had the opportunity to meet with the future generations commissioner a number of times over the course of the year and two things, I think, really were the focus of our discussions. So, decarbonisation, as we had the opportunity to talk about earlier, and prevention. And I do think the commissioner has recognised that we are on a journey and we are making significant progress, because we've come to an agreed definition of prevention with the future generations commissioner previously, and I think that is looking at, or helping us look at, the way in which we spend money and it's certainly helping local authorities themselves look at the way in which they spend money. 

We've discussed the acute services, as Reg has just described, and the local authorities feeling that they are firefighting, in many ways, dealing with problems once they've arisen, because they've had such deep cuts for so long. But local authorities now have a year where they have an improved settlement and they have a bit of breathing space, potentially, to start refocusing some of that towards the preventative spend, because I think we all recognise that the prevention agenda is a long-term one, because some of these ships are quite slow to turn. 

They're very slow to turn and it shouldn't just be about the size of the budget, but about how this works, because even before the financial crash, some authorities were less funded than others and had to be innovative, and in many cases, delivered improve services as a consequence. But the question was more about not just the definition, but the application of the prevention definition, and that was where the focus of the question lay. So, again, in terms of your dialogue with the future generations commissioner and your future work with her, what evidence will you be providing to show that you've addressed the concern that there is only limited evidence that the prevention definition across spend is being applied systematically?

Our budget improvement plan, which you'll have seen, was laid alongside the budget for 2020-1 and includes a five-year outlook as to how we will be embedding the Well-being of Future Generations (Wales) Act 2015 within our work. And one of those key issues is how we can demonstrate and deploy our resources in a way that does shift to prevention. And you'll see, then, a series of actions over the years to come, over the five-year outlook, as to how we will be seeking to do that.

Much of this is about trying to prevent those problems before they arise. So, the example of the community co-ordinators, or the community brokers, that I gave earlier in response to tackling loneliness and isolation is a really good example. So, Swansea University, I know, have done some analysis of the investment that's been done in Swansea, and I think, for every £1 spent, £11 was saved. And that is a really good investment in terms of supporting older people, usually, but not exclusively, to become more active within their communities to tackle that loneliness and isolation, preventing, then, the need for more acute services and preventing that individual's well-being from deteriorating and, in fact, improving it instead.

So, I think there are good examples, but clearly we need to be demonstrating them well and we need to be building on those good examples so that we can start, or continue, to put that investment in at the preventative end and then reduce the need for the more acute end. And the work that I described, for example, on looked-after children is really important as well, and that's an area where we really do need to be investing in prevention. So, again, within my own portfolio, we've got the innovate-to-save fund and invest-to-save, and you'll see some work within those funds of trying to do things differently, particularly in innovate-to-save, for young people who are in care—just trying to explore different ways to improve the outcomes for those individuals in a preventative way.

And do you believe those approaches should be sustained and developed whether budgets are going up, down or sideways in the future?

10:05

Well, certainly, if we can invest more in prevention in the future, then the cost of the tertiary care obviously goes down. So, it's clearly, from a financial point of view alone, where we will want to be. But, as I say, as long as the tertiary need is there, that has to be serviced whilst also trying to prevent need, which does develop over time.

Okay. A few final questions from me for this part of our scrutiny, Minister. We touched, earlier, on the transformation and legislation fund—£8.9 million, with an additional £2.7 million within it. Could you tell the committee what you expect that money to be used for—what the expectation is?

Shall I answer that, Chair? This is not a grant to local authorities. This is a fund that the Minister has set aside to deal with a range of issues as they arise. So, for example, we use that to fund research. So, we've done a lot of research over the last four to five years to inform the Local Government and Elections (Wales) Bill and to make sure that we've got the provisions of that right. That's where we funded the research from.

We also used this fund to provide support to local government. So, if authorities need support or improvement activities and they come to the Welsh Government asking for formal help—so, at the moment, Merthyr Tydfil County Borough Council is working with us, and we have worked with a number of others over the years—this is the fund where some of that support will be funded from.

The Minister hasn't made final decisions about the way that that will be allocated next year. But clearly there will be things that will emerge from the implementation of the local government and elections Bill as we move through scrutiny and then into implementation, and, particularly, lowering the franchise will bring other costs with it, including costs arising from extending the canvass, for example. So, it may well be that we fund some of those costs from this budget.

Okay. So, in part, it's responding to demand from local authorities, is it, in terms of help that they feel they may need? 

In terms of support and intervention that's true. Another example that I might give you—we're currently working with Powys County Council on, I think, a fairly significant programme of digitisation of their services, and that will be an exemplar for others and will be available to other authorities to use and to learn from once that's implemented. So, we're funding that from this budget as well.

No. Thanks for that. So, you mentioned that it would help also, perhaps, to deal with some of the financial implications for local authorities with the Local Government and Elections (Wales) Bill. Are you content that, in terms of that particular fund and indeed the settlement generally, there is provision to deal with the additional costs that would result if it was enacted as currently formed? 

We've set out the costs for the Bill in the regulatory impact assessment. I think those were £17 million over 10 years. Clearly, we developed those costings in quite close consultation with local government over some time. So, we're fairly confident about those, and this budget, to the extent that the Minister will take decisions in due course, could be used to support those costs.

Okay. Could I ask about contingency funds, in terms of legislation in general? Again, does that transformation and legislation fund contain provision for that? So, if there is adverse financial impact on local authorities as a result of Welsh Government legislation generally, as seen with the Additional Learning Needs and Education Tribunal (Wales) Act 2018, for example, are you confident that Welsh Government has contingency funds to cover for those costs?

Well, I can only speak for legislation that the local government Minister is putting forward. As a Minister, she's made provision and will make provision to deal with the costs of that legislation, as they arise and have been quantified in the regulatory impact assessment. Other Ministers, as they bring forward legislation, will go through the same process of costing and developing regulatory impact assessments, and having discussions around how those costs will be met from within their own portfolio.

10:10

Okay. You mentioned the regulatory impact assessment for the Local Government and Elections (Wales) Bill. Would you say that lessons were learnt in drawing up that regulatory impact assessment, in terms of adverse financial impacts on local authorities of previous legislation, including that additional learning needs Act?

Well, speaking for our piece of legislation, it's the same—the Bill has been in development for some years, and we've had a number of iterations of the regulatory impact assessment, depending on which approach to reform Ministers were taking. So, I am confident that we have developed those costs in partnership and through consultation, and can be as confident as we can be that they are a reasonable estimate of the costs of implementing that Bill.

Okay, thanks very much. A very measured response. Okay, well, thanks for that.

If we move on, then, to housing, regeneration and poverty, perhaps, again, I might begin with one or two initial questions. And firstly on homelessness, how has the new homelessness strategy influenced budget allocations?

I think you can see significant additional funding provided to the homeless budget in the 2019-20 budget, and that's been maintained and baselined now into the 2020-1 budget, and I think that we have come quite a long way. So, if you look back at the baseline in 2017-18, it stood at £5.9 million, and last year alone we saw an additional £10 million, and the year before that we also had that additional £10 million. That was part of the agreement that we had on the budget with Plaid Cymru. And recognising the importance of that now, we've baselined that additional funding, and that gives us a good basis, I think, on which to implement the strategic approach that the Minister is taking.

Alongside that significant funding, the approach to the movement to a housing support grant, which incorporates both the Supporting People and the homelessness prevention grants, also allows a better degree, I think, of flexibility for local authorities to look to optimise the outcomes for individuals there.

I think that we should also remember that there is an additional £6 million transferred to the revenue support grant in 2018-19. And although that's now not identified as a separate item within the budget, it is still within the budget, and that's provided a permanent uplift in that part of the RSG for the local authorities' resources.

I hear what you say about the more general picture, Minister, but in terms of the homelessness strategy, maintaining funding at the 2019-20 level—it's obviously a reduction in real terms, isn't it, given inflation? Throughout the recent period, I think we've seen a growing level of concern about homelessness generally in society and reflected by Assembly Members and indeed, I think, Welsh Government. So, in those circumstances, it does seem odd that that direct funding for the homelessness strategy has been maintained rather than increased.

I think the Minister made the point about the significant increases that we've received over the last two years, and that's now coming through the system. I would also emphasise the point that Mr Isherwood made earlier about different ways of using existing funding. There have been really important discussions under way with the local authorities that are seeing the most pressure of rough-sleeping, about how to approach these issues in a different way. The advisory group that's been working with us on this has had a strong influence on policies, and we're still playing through how that's going to emerge on the ground through joint working with a range of organisations. So, there's a really important agenda around how do we use the funding that we've already got in a more targeted and effective way.

Okay. On the subject, then, of partnerships and the networks that help deliver services and respond to need, that homelessness strategy notes that all public services and the third sector have a role to play in delivering the new homelessness strategy. So, would you be able to point to budget allocations in terms of how they promote that integrated and cross-portfolio approach, particularly in terms of preventing homelessness?

10:15

Perhaps I'll ask John to say something about the youth support grant and our work on mental health through the mental health delivery plan and the cross-Government nature of that, but I think it is important to recognise that providing resources is only one part of the story. So, the way that we administer our grants is also a really important one, and to try to simplify that and provide local authorities with the maximum flexibility that they tell us they need in order to respond to the needs of homeless people, but also to prevent homelessness locally, is really important. Alongside that, of course, is the approach through legislation and other policy levers that we can use.

I think it's important to recognise all of the key aspects of our guidance, on which I know the Minister for Housing and Local Government has just recently consulted, are designed to ensure clear planning processes that engage the full range of functions; and also—very, very importantly—to learn from those individuals who have a lived experience of homelessness. 

I know that this is an area where the local government and housing Minister is keen to ensure that everybody is brought on board. You'll see that through the group that she has established on homelessness, chaired by the chief executive of Crisis. That very much pulls together people from all areas to play their part. 

I guess the two points I'd make—. The actual allocation perhaps doesn't do full justice to the discussions that are underway between local authorities and third-sector organisations about how we're going to utilise these grant sources, particularly the housing support grant, more effectively in future. The design of the new housing support grant has involved an awful lot of engagement with that range of organisations. This has been heavily co-produced, with a view to them all being involved in more effective service delivery.

I do think that the way that we've approached the challenge of youth homelessness over the last two years is a good example of that in action. We've not invented a housing set of services. We're working with youth support officers, youth justice officers, colleagues in the education department in Welsh Government, and colleagues responsible for looked-after children in Welsh Government behind that new funding. So, it's been a cross-portfolio effort within Government, designed to deliver integrated working outside Government, albeit that it comes through one budget allocation.

And the mental health delivery plan and the substance misuse delivery plan, which are both led by the Minister for Health and Social Services, actually have strong elements there in terms of preventing and tackling homelessness as well. So, there are specific actions on homelessness within both of those plans.

Mental health teams and substance misuse teams have been able to align with housing to access £1 million of projects that can demonstrably bring together those three services, because we know that there is such an interrelation between homelessness, substance misuse and mental ill health. So, trying to tackle one part of an individual's need will inevitably not work if you're not there supporting them right across multiple needs, if they have them.

Okay, thanks for that. I'll just bring in Mark before Leanne.

Thank you. Mr Howells referred to some local authorities, particularly those with the highest levels of homelessness, working together across sectors to seek innovative solutions. Clearly, we've heard evidence already from Dr Karen Sankey in a different context regarding the Wrexham hub, and we know that's now developing through the health board and local GP practices, and we'll cross our fingers that it delivers the outcomes we hope for.

When the Supporting People revenue grant was scrapped and the new Supporting People system went under the previous change, after heavy campaigning by Cymorth and Cymorth housing-related-support members, a body was incorporated into each region to have a final decision on the funding bids. So, I hear what you're saying about design of services locally, but how will those decisions on funding be made? Will there still be an equivalent cross-sector—including third sector—representation body for that?

And in terms of the Chair's reference in his question to a cross-portfolio approach, and your references, for instance, to substance misuse, how is the Welsh Government ensuring integrated decision making over, for example, residential detox and rehab, of which there's a dearth in Wales—the framework, tier 4, has ended, and it was primarily dependent on suppliers in England anyhow—to ensure that integrated joined-up approach, reflecting not only the lived experiences of people and what they say, but also drug and alcohol charities in Wales?

10:20

You'll be aware that the evidence we had about the effectiveness of regional governance arrangements on Supporting People highlighted variability in the effectiveness of those regional governance arrangements. We fought hard to involve third sector organisations in that process, but the actual delivery was pretty patchy. The question about how we're going to oversee housing support grant alongside the regional partnerships that are now emerging, where third sector organisations are also playing an important role, albeit that some of them aren't too impressed about the way they're being involved, and the other funding arrangements that the Minister highlighted, does underline the complexity of funding seeking to reach really vulnerable individuals.

So, I think there are going to be some really important decisions we face over the next few months on how to build on the best of what we've seen in this area, but not expect people to turn up to multiple meetings having almost the same discussion in separate rooms, because that's unfair on all those organisations who really want to make a difference to the vulnerable individuals that they're working with.

I think there's a duty on us to look and streamline those arrangements, working across portfolio, because the challenges that the people in the drug and alcohol teams are facing are not a million miles away from the challenges that homelessness teams are facing. I think the example of the medical support for homeless people in Wrexham is an excellent example of where a practitioner has taken the initiative to make a real difference. We want to see more of that. We don't want the governance structures to get in the way, and sometimes they do. That's not a complete answer to the question, because this is work in progress. 

Thank you. The 2019-20 budget saw a specific allocation for youth homelessness—you did touch on the youth homelessness question earlier—and that was welcomed by this committee. Is there a specific allocation for youth homelessness in the 2020-1 budget, and if not, why not?

So, as I understand it, the funding for that has now been mainstreamed into the homelessness prevention grant, so that's where you'll see the funding, but actually, the activities that were taking place in 2019-20 are generally continuing. So, the work on the youth innovation fund, for example, is continuing, the communications campaign, the tenancy advice, and so on; that's all continuing into this year, but it doesn't have a discrete line. Is that correct, John?

We were anxious not to establish artificial barriers between services for young people and services for older people and we were concerned that having a separate pot for young people at risk of homelessness, separate from the people more generally at risk of becoming homeless, was something we needed to avoid. So, although the services that we were supporting under the additional funds last year are, just about all of them, still in place, we haven't got a separate budget heading for youth homelessness any longer. 

So, when you say 'just about all' remain in place, can you tell us that the amount of money that went in last year is the same? It's just in a different—

We can reassure you that the whole of that £10 million is into the homelessness prevention fund, yes. 

Okay. The strategic integrated impact assessment identified that men are more likely to be homeless than women, but those approaching local authorities and who are successfully prevented from becoming homeless are more likely to be women. So, how are budget allocations targeted to address that inequality?

10:25

Shall I start? This is another one of these really fluid areas, where an awful lot of the people presenting to homelessness services are women with families. But if you look at the numbers, actually, year on year, the pattern does change subtly, and again we wanted to make sure that we're delivering a service that responds to the needs of homeless individuals irrespective of the kind of individuals they are. And so we don't have a separate pot for females presenting as homeless, or families, or single adults. 

So, children are not looked at differently, then, in—?

Families receive a priority, rather than the sex of the parent.

So, it's not on gender, it's on the fact of the children that are there.

Yes, it's the family issue that is prioritised. 

I think, if I'm right, the largest proportion of people coming forward and securing support through priority need are those families, or women with children, and pregnant women. 

Because it tends to be the mothers that present with the children. That seems to be the pattern. 

Yes, that makes sense.

Given the action plan to accompany the homelessness strategy has yet to be developed, what flexibility do you have to align budget allocations in the 2020-1 budget with the action plan when it's published?

Well, I know that the funding through the current budget, or the draft budget—and this year's budget, in fact—is already supporting the delivery of the strategy. So, for example, £1.6 million has been allocated to the Housing First programme. That's supporting that move to the more rapid rehousing approach, and we've talked about the youth support grant supporting the shift to earlier intervention and prevention as well. But I know that the Minister will be reviewing the recommendations from the next report of the homelessness action group before developing the start of that action plan, but I also know that she's keen to ensure that there is flexibility on her side in terms of supporting that action plan. 

The team is working hard to make sure that we do retain a degree of budget flexibility to respond to the further phases of work that that group are involved in.

Okay. And then, in relation to homelessness, have any changes been made to the way that the Welsh Government invests in prevention for this draft budget?

Well, I mentioned the integration of the youth homeless work within the wider homelessness provision. I think the other thing that's probably worth mentioning is that the housing support grant arrangements are subtly different. The work that we've been doing with a whole range of organisations on how the housing support grant will work is placing a stronger emphasis on prevention, but we've not overhauled the whole budget structure to reflect that changed emphasis. They're still the same broad budget headings. 

Which section was I on? Supply. Sorry, yes. 

Obviously, we've seen a series of updated estimates of housing need and demand over recent months and years. How do your budget allocations support the delivery of both market and affordable housing at the volumes indicated by these updated estimates?

Taking the two separately, in terms of market housing, I understand that the current number of homes being built continues to broadly align with what we understand to be the estimates of housing need and demand within the market sector. The additional £35 million that we're putting in through the Help to Buy scheme this year will allow us to honour our commitment to building those additional homes for people to purchase through to 2020-1. The scheme has currently supported more than 6,500 people to purchase their home, and more than three quarters of those have been first-time buyers. So, I think that that's very positive. 

That said, I think it's fair to say also that we're still quite short of meeting the number of social homes that we need to build here in Wales, which is one of the reasons why we've allocated the additional £48 million in the 2020-1 budget for the social housing grant scheme. And that will mean that it brings our investment in the housing agenda over the course of this Assembly, in terms of house building particularly, to £2 billion. And, of course, we look forward to meeting our target then of those 20,000 affordable homes being built over the course of this Assembly term, and houses for social rent will make up the majority of those houses, which I think is also really positive as well.

Really excited, as I know committee is, by the housing innovation agenda that the Minister's pursuing in terms of innovative housing, and again you'll see additional investment of £25 million in the next financial year in the innovative housing programme. And I know the Minister's really keen now to move from exploring the exciting innovation and the new ways of doing things but actually to start doing it at scale. And I know that there are some interesting projects coming forward through the innovative housing programme now, which will start developing larger numbers of homes rather than small pockets of exciting innovation. 

10:30

You referred to Help to Buy. Certainly, when it was launched, this was funded with recyclable Treasury loan funding. Is it still the case that it's entirely being funded by Welsh Government through recyclable loan Treasury funding? And, if so, what's the timescale? Is it 20, 30 years to repay? And will it be recycled in the meantime? 

Yes. So, all of our financial transactions capital money is supporting—. Sorry. All of the Help to Buy is being supported through our financial transactions capital, which does need to be repaid over the course of 20 years, although the details have yet to be finalised, but we understand it to be a period of 20 years, to the Treasury. But it does mean that we're able to recycle that funding. So, obviously, Help to Buy might be slower to recycle than some other schemes. The town centre loan scheme, for example, allows us to recycle that funding much more quickly, probably over an 18-month period rather than over a course of a number of years. So, it is a useful form of funding for us, but equally it's much more difficult to use financial transactions capital than general capital because of the rules attached to it. So, local authorities themselves can't spend financial transactions capital, for example. We would always prefer to have traditional capital, but we will still always look to innovative ways to use the financial transactions also. 

We're still learning about how people are dealing with their Help to Buy equity loans and our ability to recycle within Help to Buy is going to be influenced by how that pattern emerges over the next couple of years.  

Have you looked at what actually happened with the 1995 low cost home ownership scheme, which was basically effectively the same model, funded on the same basis?

Yes, we're looking at it, but it's the run rate on Help to Buy that is really driving our—and the actual cash in our coffers that is beginning to influence our ability to be creative on recycling that cash.

Okay. The Minister referred to social housing and social housing grant provision specifically and increased allocations for that. Obviously it has a target for 20,000 over the full Assembly term, but that includes intermediate rent and Help to Buy and the other low-cost emerging schemes. So, within that 20,000, given that the projected estimates seem to indicate the need for 4,000 to 5,000 social houses per annum, how many actual social houses do you forecast will be delivered during the five-year Assembly term, inclusive of this increased budget? And how prepared are social housing providers, whether they're RSLs—registered social landlords—or councils as strategic providers or providers themselves? How prepared are they to actually spend this money in this way within that term?

Well, on the second part of the question, and I'll let John answer the first in terms of the kind of proportion that we would expect to be for social rent out of that 20,000, but local authorities and RSLs have been really clear that there is appetite to spend more money in terms of social housing grants. We work with local authorities to have that proactive look towards the future, to have a pipeline of schemes that are ready to come through. So, local authorities do have a responsibility to maintain what's called a programme delivery plan, and that takes a three-year outlook in terms of the homes that they would want to build, but actually some of them take a five-year outlook and potentially could look even further ahead. So, local authorities will have their main programme of house building that they want to see, but then they'll also have some programmes in reserve. And on a three-monthly basis, they will review those programmes to explore what could potentially be brought forward should there be additional funding available.

So, we look forward to providing local authorities with their additional allocations for 2021, hopefully by the end of this month, so that they can start factoring that spend in. But I know the appetite is there, the pipeline of projects is there, so we are confident that the additional funding will be able to be spent. 

10:35

I would like to acknowledge the hard work that local authorities and registered social landlords have put in to enabling me to reassure Ministers that we are going to deliver against the target. The finance Minister has been good enough to put money into the social housing grant budget, but unless we had really enthusiastic partners we wouldn't be able to turn that into a significant number of social homes, as well as the other tenures that you mention. I'm not going to go beyond what the Minister said about it being more than half the target, because that's just asking for trouble. We are confident of hitting the target. We are confident that more than half that number will be social homes as a result of the excellent work that's been done to date, and which continues to be done, including responding to the uplift in funding provided in this budget for the next 12-month term. But we're also already gearing up for our new expectations around the social housing grant programme from April 2021 onwards, as a result of the affordable housing review, which, as you are aware, reported last year. So, we are both working hard to deliver the target for this term of Government and cranking up new arrangements for the next Assembly term.

And finally, just referring back to Help to Buy, how comfortable are you that the Help to Buy investment is being targeted effectively in terms of both house buyers and developers?

So, an applicant's income will be assessed when they seek support through Help to Buy, and that is to ensure, really, that we're not setting people up to fail and to ensure that, actually, they will be able to maintain their payments, and so forth. So, we are confident that the people who are able to access Help to Buy are able then to continue to support the agreement that they've made, essentially. So, we don't want to set people up to fail. And as I mentioned earlier, more than three quarters of the people are first-time buyers, which is obviously a very positive thing in terms of ensuring that people who otherwise would not have had the opportunity to get on the housing ladder are able to do so, and people do frequently say that were it not for Help to Buy then they wouldn't have been able to realise their aspiration to own a home. 

Help to Buy—Wales have worked really hard to get 200 developers signed up to the scheme, but it remains the case that a small number of house builders build the majority of market housing in Wales, and so we are dependent on them for getting as far as we have in relation to the number of market homes being built. But it is encouraging that people have responded to the Help to Buy offer, and you'll be aware that there are other support mechanisms available through the Development Bank of Wales, getting small builders building again. 

Because the concern is that this is primarily being delivered through larger section 106 requirements on larger scale commercial development. 

Primarily. That's why the housing Minister has made some important announcements of late about a different development model moving forward. 

Just on Help to Buy, in terms of helping people to buy who might be struggling otherwise, it goes up to properties worth £300,000.

At the moment. 

We are committed to the current scheme up until April 2021. There's an important decision that will be made later this year regarding the arrangements from April 2021 onwards. 

And there might be a change of Government of course.

Correct. All sorts of things might occur. [Laughter.

Can I return for a moment to the innovative housing programme? I've seen a couple of examples of this leading some of the sort of development that we'll see. And you've made decisions, along with the housing Minister, to focus some additional funding within this area. But can I ask you: to what extent have you considered this through the seven well-being goals? Now, clearly, in terms of Wales being a globally responsible nation, and so on, and leadership on carbon reduction, yes, I get that, but it's the other ones—resilient communities. It's places that people want to be and all of that. So, to what extent does the innovative housing programme take into account those other factors of the seven well-being goals?

10:40

I think the innovative housing programme is actually an example of good practice as to how we can ensure that the seven goals and the ways of working are embedded in the way that we do things from the very start. So, the technical specifications for those who would like to come forward with projects to be undertaken through the innovative housing programme includes each of those well-being of future generations Act goals, and every project will have to demonstrate how it contributes to every one of those goals. I think that that is challenging and it's stretching, but it does mean that we are supporting some really exciting projects that will change, I think, the way that we think about housing in the future. And they do have things like community at their heart, so we're not just building homes and houses; we're building communities and we're building resilient communities for the future. So, all of those things are considered very much at the heart.

And the ways of working: it's about collaboration. So, you'll see registered social landlords and others working alongside more traditional house builders to try and come forward with exciting projects. So, teaming up people who perhaps wouldn't always naturally be working together to do things differently and learn from each other.

So, going forward, do you see other financial levers at your hand in your discussion with Ministers, but also in allocations to local government, that could make that approach in line with the well-being of future generations Act the norm across all investment decisions on development of housing supply, not just within the innovative housing programme, but general development of housing supply?

Yes, so, John referred to the considerations for what might come next in terms of Help to Buy following 2021. So, there's a huge range of things that we can consider in the mix, and that could be learning from these kinds of programmes and our aspirations for low-carbon housing, for example. But I don't want to put anything in the mouth of the local government Minister who I'm representing today, but I do know that she's particularly passionate about decarbonisation and the potential of low and zero-carbon homes as well.

Could I just add to that? You mentioned the importance of place making and that's at the heart of the further change that the housing Minister wants to see, both in relation to the next phase of the innovative housing programme, now confirmed, but also in a range of exemplar developments where we are deliberately integrating the housing contribution alongside the active travel contribution and the circular economy contribution, with a view to creating places that really are good places for people to live and generating communities. And that does involve all sources at our disposal and working with developers so that the work that private sector house builders do is not seen as something over there whilst what local authorities and ourselves are doing is over there. We have to make this part of an integrated whole if we're going to pull this off.

Well, this is what I wanted to test because there is a question here—and we're looking at the allocation of budget decisions today—about this element of cross-Government thinking in line with the well-being of future generations and your commitment as a Government, of which you are a Minister, to near-zero-carbon homes, that that thinking is taking place; that Redrow, Persimmon and everybody else, alongside social housing—bearing in mind that 80 per cent or thereabouts of housing within Wales is privately owned or landlord privately owned—that you are saying that it won't simply be relying on the innovative housing programme, but that there are moves afoot to ensure that the regulation and so on, that everybody delivers that near-zero housing commitment.

The housing Minister published important proposals on building regulations just before Christmas that will impact on the environmental standards of all homes, and so, all developers (a) are invited to comment on those proposals, but (b) will be required to move towards zero carbon over the coming period. And that will be a challenge for all developers. What the IHP has shown is that we can do it.

There we are. Thank you. Could I turn to the issue of that large part of our stock that is, of course, existing homes? Since the publication of 'Better Homes, Better Wales, Better World: Decarbonising existing homes in Wales' back in July 2019, can you tell us what progress has been made in retrofitting homes and what allocations there are now, going forward, in the 2020-1 budget?

10:45

I think the housing Minister recently issued a statement that published the report but also gave some thoughts on that. I know that her first concern in the first instance is about Welsh housing quality standards. All local authorities will have to meet the Welsh housing quality standard by the end of this year and that's very much where investment is currently being targeted to make sure that we do meet that. I think that we're on course to do so.

So, that has been an investment of £108 million per year. We've been spending that every year for nearly 20 years and that does indicate our keenness to ensure that the housing stock we have currently is up to standard, but then I know that the Minister will be thinking about where we go next in terms of the retrofitting, because that is a huge project. And it's not just about retrofitting the social housing stock that we've got; it's about what do we need to do to incentivise and support individual home owners to undertake any work that might be necessary to their own homes.

So, that is the clear question that arises from this. You can work with, in a much easier way, financial incentives towards social landlords to get on with this business, but are you confident that the allocations that you've got, together with other levers that you have across Government, are going to actually shift private owners and private landlords to retrofit?

I've got to be careful what I say in front of the finance Minister. [Laughter.] I am confident that we do not have enough money because what you're talking about is the most enormous challenge for all of us. And what we've got is a pot of money that has demonstrated that it can deliver effective change in the social housing sector. We now need to address decarbonisation for all homes in Wales and that's going to cost an awful lot of money. Chris Jofeh has flagged up the importance of this work; Government now needs to respond to that working group. Government is responding. We are developing specification for WHQS beyond next December, but the numbers are eye-watering and Government will not be able to respond to all of those costs. It's going to involve all of us in contributing and thinking about different ways of heating homes and we don't know what all the technological solutions are going to be, so this is going to be a really enormous agenda, but there's an awful lot of work going on, partly as a result of the recommendation from Chris Jofeh group, beginning to point us towards where we can make safe investment. Because the other thing that we don't want to do is to pretend today that we know all the answers and start investing in inappropriate solutions.

No, but you raise a critical issue. If the Minister was sitting in your place now, I'd be asking her directly. Is she having discussions with you, Minister, about what mechanisms, fiscal mechanisms, we have in Wales, or budget mechanisms, to do this beyond the regulatory? Because we know that the attempt to do this in England was done through the new Green Deal and it failed, and we'd pointed out why it would fail before it even happened. Now, are these discussions ongoing between you and the housing Minister to say, 'Well, what do we have in our fiscal measures and our budgetary measures in the way we can incentivise private owners in a way that didn't happen with the new Green Deal to actually retrofit private properties and private landlords' properties?'

I think it is potentially just a little bit too early to have those conversations because, as John says, we don't yet know what the technological solutions are to that. When I spoke to this committee in my role as housing Minister, the committee understood, really, and described itself, that this was a 30-year kind of programme that we would be looking at. So, we haven't had any discussion yet about any fiscal measures that there may or may not be to support this or regulatory measures or other things that might be in place. But I know that the Minister is keen to explore—

She's preparing to send some chunky proposals in the direction of the finance Minister.

It doesn't sound like you're responding to an emergency here.

So, this is one conversation that I haven't yet had with the Minister, but, if the Minister were here talking about the work that she's doing in response to this report, there is a lot of work going on.

And we need to be—. We're going to be driven to some extent by the UK budget decisions, which will determine Wales's baselines for the coming period. And we were—this was last year—operating on a very short budget planning timetable. This needs a long-term view and that will be coming through in the next budget and the budget after that. What we're doing at the moment is making sure that we're beginning to generate the technical understanding of these issues, so that we can spend money wisely.  

10:50

And this year, as I say, the funding that is there within the budget for 2020-1 is very much focused on achieving the Welsh housing quality standard, which we need to do in the first instance, before moving on to that retrofitting work. 

Okay. We're rapidly running out of time I'm afraid, so we will have to write on some of the questions that we'd hoped to ask this morning. We'll conclude with some questions on poverty from Dawn Bowden. 

Thank you, Chair. Discretionary assistance fund—you've increased that by £1 million this year, but it's not clear from your paper what the total budget for the discretionary assistance fund is. So (a) can you tell us that, and can you also tell us how much was actually spent from the discretionary assistance fund last year? 

So, the fund this year, this financial year, is £10.2 million, so it will be increasing to £11.2 million in 2020-1. And of that fund in this financial year—. So, the last financial year, 2018-19, we spent around £10.5 million. So, this year we expect— 

Yes, this year we expect to spend it in full again. 

Okay. And so how have you targeted additional funding, whether you've used any of this funding or whether it is proposed that you use any of this additional funding, to support people moving on to universal credit? 

So, later on today I'll be publishing a report that was commissioned to explore the impact of universal credit on people's ability to access the council tax reduction scheme, and that will be really, I think, an eye opener in terms of demonstrating which kinds of households are likely to lose out as a result of universal credit. It does come forward with some suggestions, then, as to how Welsh Government might want to adapt the support that we offer through the council tax reduction scheme for individuals who are affected, and we'll be obviously considering those ideas alongside the suite of other research that we've commissioned on local taxes—so, council tax and non-domestic rates. So, that's a piece of work that will be launched or published later on today. 

More generally, we've recognised that tackling poverty is crucial, and in the response to the budget debate earlier this week I was able to set out that Welsh Government, within our draft budget for the next year, can identify around £1 billion-worth of spend that will support people who are in poverty or on low incomes. And, in addition to that, we have the £19 million of extra new projects that we're funding this year: so, extending pupil development grant access, for example, the period poverty work and other things that we're doing to explore free breakfasts, for example, for those in year 7 in secondary school. So, there are several things that we're trying to do in addition this year whilst maintaining the things that we already know work.    

It's quite sobering, isn't it, to think that, within Wales, 400,000 households are going to be moving on to universal credit in the next couple of years? I think it's something like 100,000 already, another 300,000 to come—something like a third of households. That's going to place a huge amount of strain on the Welsh Government budget in terms of supporting that, because that's something that's outside of the control of Welsh Government. So, presumably, you're not just thinking of the here and now, you are thinking about where this is going to have to go in the next few years as well. 

Yes, and that's one of the reasons that we commissioned the particular piece of research, because the council tax reduction scheme is one of the major ways in which we can support low-income households, and we needed to understand what the impact is, and it is quite severe on some types of households. So, that will allow us then to explore what changes, if any, we need to make to our own schemes to ensure that people don't find themselves in a worse situation.  

Okay. My final question, Chair, is just on the Communities First legacy grant. Has it now been extended? 

Yes, I think you'll find that as part of the funding within the budget for next year. It's being maintained at the same level, I believe, for 2020-1, and some of the schemes that I know it supported previously include enabling people to upskill to become more ready for the workplace and things. So, we recognise the importance of those grants—

10:55

I'd be happy to add—

It's within the children and communities grant. 

Sure. Okay. So, I mean, obviously, we understand what the legacy grant was aimed at: trying to ensure that those groups, projects, recipients of the legacy grant would become self-sustaining as time went on. Have you seen a measure of success in that regard? Have you seen that a number of those organisations, groups, projects have got to the point where they will be able to continue without further Government assistance?   

I think that would be a step beyond what we've seen, because local authorities are continuing to support those projects through the grant. I wouldn't want to say that, without that support, they'd be able to sustain. And, actually, history suggests they would not. 

Okay. Okay. So, that's something we need to keep an eye on. All right. Thank you, Chair. 

Okay, thank you for that. Thank you very much for coming in, Minister and officials, to give evidence to committee this morning. You will be sent a transcript to check for factual accuracy in the usual way. Diolch yn fawr.  

Gohiriwyd y cyfarfod rhwng 10:56 ac 11:04.

The meeting adjourned between 10:56 and 11:04.

11:00
3. Craffu ar Gyllideb Ddrafft Llywodraeth Cymru ar gyfer 2020-1: Sesiwn Dystiolaeth 2
3. Scrutiny of the Welsh Government Draft Budget 2020-1: Evidence Session 2

Welcome back, everyone, to this meeting of the Equality, Local Government and Communities Committee. The third item on our agenda today is our continuing scrutiny of the Welsh Government's draft budget for 2020-1, and I'm very pleased to welcome Jane Hutt, Assembly Member, Deputy Minister and Chief Whip; Gary Haggaty, deputy director of the community safety division within Welsh Government; and Alyson Francis, deputy director of the communities division within Welsh Government. Thank you all for coming along to give evidence today.

Perhaps I might begin with an initial question on the strategic integrated impact assessment process and ask what practical steps have been taken to improve the SIIA in this year's budget process.

11:05

Thank you very much, Chair. Clearly, the strategic integrated impact assessment is crucial to getting our decisions right, particularly in terms of impacts on equality, and, obviously, equalities and human rights are my main concerns in terms of those impact assessments. But the finance Minister published the SIIA alongside her budget on 16 December. I think in terms of practical steps from my perspective, it's laid out, actually, in that assessment that we've got to work to improve and evolve the way that we assess impacts. We are consulting—not just the finance Minister, but myself as well—particularly with the equality organisations, on how we can improve those impact assessments.

But also, I think for me, the Equality and Human Rights Commission, who I've been working with very closely—we're working with them to take forward a distributional impact assessment approach, which actually tries to look at the impacts of our spending decisions on every aspect and every part of society and our population, understanding impacts of spending on all our households, regardless of their—well, relating to their income distribution. But I suppose the key thing in terms of equality, I would say, is our gender budgeting pilot that is coming through as a way of seeing whether there is a more specific way we could also improve our impact assessment of budgets.

Okay. We'll come on to the gender budgeting pilot later on, Minister, but at this stage, sticking with the SIIA generally, we know that there has been a considerable amount of criticism of the process, I think, hasn't there? Three of our commissioners, in fact—the Children's Commissioner for Wales, the Future Generations Commissioner for Wales, and the Equality and Human Rights Commission—along with three Assembly committees, and, indeed, I think the Welsh Government-commissioned gender review have criticised the process. So, could you tell committee what you think the main issues have been, the main shortcomings that have led to that level of concern?

I very much welcomed—in fact, I was sitting on the Finance Committee as a member when you, and obviously this committee, the finance committee, and the Children, Young People and Education Committee undertook that review, which I think is an important review, and that's about how we improve and develop the way forward for how we do impact assessments. In fact, the Government did respond positively to all the recommendations. There's one where there's more work to be done to respond fully, but I think we've also, since that time, because that was published last year, had the benefit of the gender review, as you say, working with Chwarae Teg.

So, I think it is an evolving process, but I think probably—and, again, it's finance Minister territory, but we must all own it—the budget improvement plan is very important to this, and the influence of the future generations commissioner and the work that she's been doing with finance Ministers back to 2017 on how we can improve our understanding of impacts on future generations, particularly on the goals and objectives, and how we can improve the way that we assess impacts. And, of course, that's where we've got to implement—. And I would like—hopefully, there'll be an update on how we have responded to the recommendations of that report, which might help this committee and the other two committees.

Well, obviously, in terms of Government response to committee reports, I think this is something where you don't have another debate, obviously, but I think it would be useful, probably—and I would have to do ask the finance Minister whether we could do this together—to take stock of how we are progressing. It does link very much to the budget improvement plan, as well as to the strategic impact assessment, as was published.

Now, one thing that I did want to say in relation to my responsibilities is that the Cabinet did consider the Chwarae Teg 'Deeds not Words', the next stage of the gender-equality review, and the outcome of the decisions at Cabinet. I did do a written statement before Christmas, but also, it's now in the public domain and it was published on 20 December, because that's six weeks after a Cabinet discussion. And you will find, then, in that paper—and committee might want to access that—how we are already responding to those recommendations of the committee report.

11:10

I see. Okay, Minister. Well, thanks for that. And Huw.

Thank you, Chair. Minister, good morning. You've mentioned already, several times now, the budget improvement plan, and there's a commitment within the budget to implement and improve—. You've made a commitment to implement an improved impact analysis of the budget for 2023-4, which I think is sort of welcome, but a lot of people would ask the question, 'Why does it take three or four years to get to that point?'

I was reflecting on the fact just now that, actually, I was finance Minister when we produced the first equality impact assessment, back in 2010, and there is a—. And actually, we were the first Government to do it in the UK. So, it is about getting it right, evolving and moving forward in relation to the impact assessment. But the budget improvement plan—again, it's the finance Minister's territory—is very clearly built on working with the future generations commissioner and the five ways of working. So, it does have short, medium and longer term objectives and processes. It does link to the annual budget and tax process, and I think also it links to the journey-checker process that the future generations commissioner has developed. That's had a huge influence, but obviously we've got to get it right, and it is an evolving journey. It might not be a good enough answer for you, but it is—

Well, I think the fact of—. It shouldn't be three or four years in order to get an improved impact assessment. No, absolutely not. Next year, you should see a better one. But I think the improvement that is developing is coming through the budget improvement plan, which is a development that came out of work with the future generations commissioner. But also, obviously, there are impacts.

So, our gender budgeting pilot—we're not going to know what the impact of that is within a year; it's going to take some time. I mean, I'm keen to have more gender budgeting pilots, not just one, which is the one that's obviously acknowledged in this SIIA. But, yes, we need to get on with it, but also we are consulting—. We've had—again, working with the finance Minister—a budget advisory group on equality. So, we're working with outsider partners, particularly in the equality field, and the commissioners are working with the commissioners. So, I think they do see that it's not going to be improved overnight, but we have to take the evidence and then—. Did you want to say something else?

Yes, I was just going to say—. And this is a five-year plan that is going to be—. It's a rolling plan, so there'll be iterations as learning from each of the elements happen. So, the budget improvement plan already sets out things we've done in previous years, how we've learned from them to inform what we're going to do over the coming years. And I think my understanding of this is also that it's not just about one thing because it's about a number of different things, as the Deputy Minister mentioned. There's gender budgeting, but there are other elements in this, so it's essentially a bit of a toolkit to help with the improvement of the budget process and we'll just continue to see developments of that and improvements.

Well, if we haven't already had that detail, because that gives us a lot more explanation than the overall idea for 2023-4, if you could communicate that to us about what those iterations and what those major milestones would be on the journey to that much more comprehensive, fully-rounded finished review, that would be really helpful.

Can I ask you—? There was a specific recommendation that's been made before, including by the commissioners, to publish all individual impact assessments in one place online, and Welsh Government have rejected that. I'm conscious that I'm gamekeeper turned poacher now, because if I were sitting in your position, I might have a different line here, but what is the defence about why you wouldn't? 

11:15

Well, actually, yes, I was a committee member and you were a Minister, but I think in terms of that, this is a serious point in terms of transparency, because this is what this is about—it's making sure you can find out what's going on. But we didn't actually reject it, we accepted in principle. So, I want to reassure the committee that we are working on that, because we did accept it in principle. But I think the officials are looking at digital solutions, which is probably the best way to get all of that, because there are so many individual impact assessments too. And so to make it accessible and transparent, we are looking at that, and not just internally, but also consulting with other partners in the equality field particularly, and to commissioners, who are very interested in this, as to how they feel it could be most usefully presented to the public and to interested partners.

Do you have a broad timeline for when you'll come to a conclusion on that?

Well, there's a service designing practice cohort looking into this. I can certainly come back with you with a timeline, but this is also mentioned, actually, in the gender review as something that we're working on at pace.

Okay, thank you. My final question, Chair, is in respect of the way in which you work with the commissioners, because previously, all of them have been critical about how meaningful and deep their engagement has been with Welsh Government in terms of developing the SIIA. Now, has that changed this year?

The finance Minister I know has met with all of the commissioners specifically about the budget, but I think the work—and I reflected on this when I was on the Finance Committee—with the future generations commissioner has been particularly important because, way back in 2017, she was saying that she felt that the budget was a crucial point of influence that she could have, particularly in relation to preventative spend and impact assessments. So, I would suggest that there's been ongoing work with the future generations commissioner and with the finance Minister. I've certainly met with all of the commissioners, but obviously on equality issues, not just on budget issues. But when I've met, for example, with the children's commissioner, we've discussed the new youth justice blueprint and residential arrangements of children with the complex needs. And as a result of that meeting, I've been visiting Hillside, for example, and put some more money into that. I mean, that's direct influence of—and also officials, obviously, and evidence. I mean, I think it's crucial that the finance Minister is seeing this as a priority in terms of meetings.

But also, there are a lot of recommendations in the Chwarae Teg gender review, the road map, relating to budget and impact assessments. So, we've got responses to all of those, and I hope, actually, Chair, that you could just perhaps draw a link to that outcome from our decisions at Cabinet so you can see the progress that has been made, particularly with commissioners, who have all got a strong view about their particular areas of concern—children, older people and future generations—which I think you then have to look at that and say, 'Well, does the strategic integrated impact assessment reflect the outcome of those discussions?' And that's obviously for you as a committee.

Yes, I'm sure we'll be interested to take a look at that, Jane. Thanks. Okay. All right, Huw? Okay. Dawn.

Thank you, Chair. So, my first question is on the Government's commitment to being a feminist Government. Can you provide us with some specific examples of how gender has been at the forefront of your budgetary decisions? You've mentioned a couple of times the new gender budgeting pilot, so I'm assuming that will be one of them. So, if you would perhaps expand a little bit more on that pilot and what that's doing, but also tell us a bit more about any of your other initiatives.

11:20

I have, obviously, quite a small budget compared with all the other Ministers, but I think it's very important to say that I have managed to get an uplift in my budget, and I think that you'll see that in the paper for committee in terms of funding, specifically on equalities.

I think on the issue about the gender review, particularly relating to the Chwarae Teg review, I'm very keen to say that this should be intersectional. It's a gender perspective, but it must be an intersectional perspective as well in terms of race, disability and other protected characteristics. So, that has had an influence on how we have allocated the funding. We want an equality perspective, clearly, at the heart of our decision making.

So, gender is critical, and I can, obviously, give you some examples of how that's reflected: domestic abuse, violence against women. I think the funding that we've allocated for safe accommodation for people, for families fleeing domestic abuse—capital—that's very important, but also the fact that I did secure the funding to continue our work on period dignity, because that was something where the local authorities—. I had a round-table and met with not just local authorities, but also lots of the community groups, and the Trussell Trust who are doing work, and charities—we've got a very good one in Bridgend and all around Wales—to secure that money, that £2.3 million and the £220,000, because that's making a difference particularly in relation to gender.

But, other Ministers have responsibilities for gender, as well, so we have to say that that other funding that's coming through in health and social care, particularly, for example, the Welsh gender service, and also health and social services and education in terms of Flying Start—. But I think the gender-budgeting approach is important. It is only a pilot. It's going to be looking at personal learning accounts, it's part of a two-year pilot, and it's supporting employed adults in low-paid and low-skilled work to support them to switch careers or enter work at a higher level in a priority sector with known gender effects.

So, I think there's been quite a lot of learning from Iceland doing their gender review, because they're seen as international leaders on gender budgeting, but they also advised taking this pilot approach, and they actually said it took seven years from the initial pilots to make this change. As far as I'm concerned, the low pay, low skill and gender segregation of our labour market is something that we haven't dealt with. We've still got so much to do, particularly in relation to women and young girls going into science, technology, engineering and mathematics subjects and also employment. So, I think the personal learning accounts pilot—I hope you will be monitoring it carefully; I certainly will be.

But I think it's allocation of funding—as I've said, I've given you some examples and I can give you others as far as gender is concerned, but also recognising that we want to take an intersectional approach as well in terms of allocations. So, we're putting more money into race policy development, for example, as well as disability organisations particularly affecting women.

So, did you draw on any lessons from the Government's two-year gender project from 2007 in terms of informing what you're doing now? I'm just wondering, really, why that wasn't continued and why that didn't roll out after 2007, but there must have been some lessons learned from that at that time.

Well, having been in different roles over the years and remembering times when we have tried very hard to look at the best ways of doing impact assessments, I recall—I mean I haven't got a briefing today on this particular point, but I can certainly share it with you. But I think it's a bit of learning from history. I do recall, and I think I was education Minister at that time, that we tried to do a children's budgeting pilot, for example, and what we learned from that, what we did, was assess how much money we were spending on children, rather than what impact that spend was having—that spend on children. So, we must try not to get into too technical a sphere in terms of how you do the best kind of approach to impact assessment and gender budgeting. Children's budgeting—people are still saying that's something we should be looking at in terms of the impact of our spend, and in fact, the point of the pilot will be very much learning from experience internationally rather than trying to develop our own rules from now.

11:25

See how it's worked, learn from Iceland in particular, but the Nordic countries, who are much more engaged in this. There are feminist economists who also we've engaged with, particularly in the budget advisory group, to use their expertise. But we will still be breaking ground. I'm going to Scotland to meet the equalities Minister to talk about the way that they're approaching this as well, but I think our gender budget on personal learning accounts will be very fundamental.

Okay. And can you confirm that the departmental equality leads are involved in the budget advisory group? Are they involved in discussions?

They are crucial in terms of mainstreaming equalities across the Welsh Government. They meet as a network, and Alyson is very involved as well as far as they're concerned. But also, actually, there were some recommendations in Chwarae Teg's gender equality review about strengthening the role of equality leads, and as a direct result of that, we are looking at their roles, and there's a job evaluation being carried out looking at the appropriateness of grades. We all know, those of us who have been involved in this, that equality can be an add on, it can be seen as something that isn't a crucial point. And I'm very happy to be back here banging the drum for equality, as I have been for many decades, but wishing that we really could make a difference, and the difference has to be made partly by the way our officials are given the strength and the power to take this forward. So I don't know, Alyson, if you feel that you would like to comment on that, and Gary perhaps too.

Yes. I think you've covered the key points there. We do engage with the equality leads, and as the Deputy Minister said, they are across all different portfolios, so it really helps with cross-portfolio working. They input into a whole range of work that we do. The Minister was right—the gender equality review that Chwarae Teg did identified that actually, we could look at how we could strengthen that role, and there's a team that will be looking at that, so that will be in our implementation plan as well, along with other things such as, certainly in the budgeting part of the gender equality review, there were things around training and upskilling and bringing this more into consciousness where it might not be in some cases, because there are a number of competing, different elements. And that also will be picked up as part of the review of the integrated impact assessments that the Deputy Minister talked about earlier, so it's about a lot of work that's being integrated, I suppose it's fair to say, around those.

I'll just perhaps bring Gary in, because it's important that this is seen to be not just an equality role in a particular department. One of the good new things that we're doing is putting money into the female offending blueprint and the youth justice blueprint, and Gary's been taking the lead, supported by another official, on these issues. I think this is where we are also breaking new ground here—we are working and we are testing out how, with the new Secretary of State for Justice, Robert Buckland, shortly, how we're going to move forward with actually implementing our female offending blueprint and youth justice blueprint, and it's absolutely critical that we get that right. So there is more funding going in, which is important for women and gender, but also for young people as well. But I think, Gary, it's been an important learning process, hasn't it?

I think it has, and I think what's been most helpful is the way that we have worked really closely with a number of departments within UK Government, right across departments in Welsh Government, also the police and crime commissioners, to bring all this work together. You'll have seen that there are various things that we've issued, including a written statement around the blueprint on youth justice and female offending. They were really ambitious documents, and it's right that they were. And we're now in the process of bringing all of that together, looking at how we deliver those recommendations, a number of which, I've got to say, quite helpfully, are already being taken forward by parts of Welsh Government. We're starting to put the governance around that so that we can deliver, and I certainly feel that it's working really well. And because the action is directed at youth offending and also female offending and the way that we're bringing together the work around the women's pathfinder, for example, really gives you some sort of reassurance that we're looking at this and doing this in a really focused and effective manner. 

11:30

As you know, this year, the community rehabilitation companies are ending and services will be integrated into the prison and probation service Wales, and the consultation document from the UK Government launched last year—or was it the year before—indicated that the prison and probation service Wales would be going out to commission service delivery in certain key areas, particularly from third sector providers. To what extent are you able to have input into that process to ensure that these issues are factored in?

Of course, the reunification took place in December, and we were very, very welcoming of that. We called for it and we were extremely welcoming of that. It was way overdue and the consequences of the disintegration we know well, in terms of the adverse experiences and impact. I've been working very closely with the key people in Her Majesty's Prison and Probation Service and the National Probation Service coming together. In fact, I had a meeting with them only a few weeks ago. And also looking at issues around the points and parts that still haven't come into the reunification. We're meeting with Napo and Unison, for example, because this is a chance now for a reunified national probation service. So, these are issues that I'm looking at very carefully, but the amount of influence that I've got—. It's still not devolved, but clearly, in terms of the service areas where we can have influence, that's where we will make our mark, I hope. 

Okay. Moving back to the agenda, the joint committee inquiry referred to earlier concluded that the strategic integrated impact assessment is often used to retrospectively justify decisions about the spending, rather than informing or steering them. What examples can you provide to show how the Welsh Government has responded to that in budget allocations to reduce inequalities this year?

I think I probably gave some examples at the start of the questioning this afternoon about the fact that the strategic integrated impact assessment does have to look at and learn the lessons, particularly in terms of strategic budget decisions, as to where we can most usefully allocate that funding. And I think if you look at the strategic integrated impact assessment for this year, we have recognised that there is a need for more spending, for example on race policy, which has come out of not just policy issues and impacts but also budgetary constraints and, for example, the decision I've made to extend the equality inclusion grant funding for another year—more than a year—because I felt that it was premature, as a result of the work that a number of organisations were doing across race, disability and gender, to cease their funding. So, those are two examples, but I do think that moving towards the gender budgeting pilot and responding fully to the Chwarae Teg gender review is an example of how we've taken into account those points. 

I think this is an area, again, where external advice, evaluation and also evidence are crucially important, because none of our budgetary decisions should be made without evidence that they're going to make an impact. And that's where the Wales Centre for Public Policy, the evaluation framework we're developing for the female offending and youth justice blueprints all help us, then, in deciding those difficult decisions about budgets in the following year. 

11:35

Okay. The impact assessment states it's expected that the biggest positive impact from funding being directed to education could fall on those children and young people who have the lowest educational outcomes, including those from lower income families and certain ethnic minorities. How therefore will the Welsh Government monitor the actual outcomes of its additional funding in this context, and also more broadly in terms of compliance with public sector bodies with the public sector equality duty and, of course, more broadly the requirements of the Equality Act 2010 itself?

I'll give you a few examples of my bulging caseload in this area: pupils on the autistic spectrum still being excluded from school, but then winning when it goes to the special educational needs tribunal. I've been written to this week by a clinician within the child and adolescent mental health service very concerned about the number of exclusions of autistic students from a further education college, who effectively had been disciplined for being autistic. And I've got two cases on the go at the moment of autistic girls who allegedly are being sexually abused, and in both cases it would appear that the relevant public agencies are failing to make reasonable adjustments to ensure that their communication needs are met, which means that they are still at heightened risk.

So, it's all very good having the budgets, but how do we ensure that those delivering on these agendas actually understand what the law and the Welsh Government's commitments require them to do?      

Obviously, some of those issues are about the implementation of strategies, particularly relating to the strategic autism integrated development strategy, for which, of course, there is funding. As it is a strategy, it has to be very carefully monitored. That is crucial. It's not just a matter of an impact assessment in terms of our budget decisions; that is about having a clear and authoritative credible monitoring and delivery of an implementation plan. So, that obviously is a policy matter, and it is a policy matter for Ministers because funding has been allocated in order to deliver. I know that you monitor that very carefully, Mark, in terms of raising those kinds of issues and those particular examples. 

But I think it is very clear that, for example, the Minister for Education has continued to fund the ethnic minority, Gypsy, Roma, Traveller funding, and recognised that that funding needs to be protected. That is a budgetary decision that she has made as a result of the impact of the importance of that funding for that particular cohort of children and young people in education. So, clearly, the impact of the investment in a policy area then has to inform decisions for the following budgetary-making era.

I think the child poverty report that was delivered before Christmas is useful in terms of looking at the work that the Minister for Housing and Local Government is doing on child poverty, because in the statement, I think, she made in December, she did say we are reviewing the impact of our spending on policy in terms of tackling child poverty. You need to see those words from a Minister, obviously, to be confident that we are learning from our spend, our policy priorities, and that they're making an impact. But some of this is about implementation.

I think that's a key point, because much of this—. The Welsh Government itself doesn't deliver on the majority of its policies; it requires other agencies, many of whom are accountable to the Welsh Government, to do that, and it's how we implement that, because no matter how well meaning and how many pieces of paper we have to support this and how many letters we all write, there are too many people still who don't want to get this.

And then regional partnerships are crucial. You know, accountability with local government in terms of delivery, but that is ongoing work of Government, quite clearly. 

Thanks. The joint committee report raised concerns about the tendency to pass on responsibility for impact assessments onto local authorities and to health boards. So, can you tell us how local authority and health board budget assessments are brought together so that we can fully understand the equality impact of all Welsh Government spending?