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Y Pwyllgor Cyllid

Finance Committee

04/06/2020

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Alun Davies MS
Llyr Gruffydd MS Cadeirydd y Pwyllgor
Committee Chair
Mark Reckless MS
Mike Hedges MS
Nick Ramsay MS
Rhianon Passmore MS
Sian Gwenllian MS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Margaret Davies Dirprwy Gyfarwyddwr Cyllidebu Strategol, Llywodraeth Cymru
Deputy Director of Strategic Budgeting, Welsh Government
Matthew Denham-Jones Dirprwy Gyfarwyddwr, Rheolaeth Ariannol, Llywodraeth Cymru
Deputy Director Financial Controls, Welsh Government
Rebecca Evans MS Y Gweinidog Cyllid a’r Trefnydd
Minister for Finance and Trefnydd

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Bethan Davies Clerc
Clerk
Georgina Owen Ail Glerc
Second Clerk
Martin Jennings Ymchwilydd
Researcher

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

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

Cyfarfu'r pwyllgor drwy gynhadledd fideo.

Dechreuodd y cyfarfod am 14:00.

The committee met by video-conference.

The meeting began at 14:00. 

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

Wel, croeso cynnes i chi i gyd i gyfarfod Pwyllgor Cyllid Senedd Cymru. Yn unol â Rheol Sefydlog 34.19, dwi wedi penderfynu gwahardd y cyhoedd o gyfarfod y pwyllgor yma er mwyn diogelu iechyd y cyhoedd. Yn unol â Rheol Sefydlog 34.21, fe gafodd rhybudd o'r penderfyniad hwnnw ei gynnwys yn agenda'r cyfarfod hwn. Mi fydd y cyfarfod, wrth gwrs, yn cael ei ddarlledu'n fyw ar Senedd.tv, a bydd Cofnod o'r Trafodion yn cael ei gyhoeddi yn ôl yr arfer. Ar wahân i'r addasiad gweithdrefnol sy'n ymwneud â chynnal trafodion o bell, felly, mae holl ofynion eraill y cyfarfod a Rheolau Sefydlog ar gyfer pwyllgorau yn parhau yn eu lle.

Gaf i felly atgoffa'r Aelodau a'r tystion bod y Senedd, wrth gwrs, yn gweithredu drwy gyfrwng y Gymraeg a'r Saesneg a bod cyfleusterau cyfieithu ar y pryd ar gael yn ystod y cyfarfod hwn? Gaf i atgoffa hefyd y rhai sy'n bresennol i ddiffodd y sain ar unrhyw ddyfeisiau electronig sydd gennych chi? A gaf i ofyn os oes gan yr Aelodau unrhyw fuddiannau i'w datgan? Na, dim byd i'w ddatgan.

Dŷn ni ddim wedi derbyn unrhyw ymddiheuriadau, felly gaf i nodi os byddaf i am unrhyw reswm yn colli cysylltiad â'r cyfarfod, fod y pwyllgor wedi cytuno yn flaenorol, yn unol â Rheol Sefydlog 17.22, y bydd Siân Gwenllian yn cadeirio dros dro wrth i fi geisio ailymuno â'r pwyllgor?

A warm welcome to you all to this meeting of the Finance Committee of the Welsh Parliament. In accordance with Standing Order 34.19, I've determined that the public are excluded from the committee's meeting in order to protect public health. In accordance with Standing Order 34.21, notice of this decision was included in the agenda for this meeting. This meeting is being broadcast live on Senedd.tv and the Record of Proceedings will be published as usual. Aside from the procedural adaptation relating to conducting proceedings remotely, all other Standing Order requirements for the committees remain in place.

Could I therefore remind Members and witnesses that the Senedd operates bilingually and that interpretation is available during the meeting? Could I remind participants to ensure that any electronic devices are on silent? And could I ask whether Members have any interests to declare? No, nothing to declare.

We haven't received any apologies. I'd like to note, therefore, that if for any reason I lose connection with the committee, the committee has previously agreed in accordance with Standing Order 17.22 that Siân Gwenllian will temporarily chair while I try to rejoin the meeting.

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

Ymlaen â ni felly at yr eitem nesaf, eitem 2 ar yr agenda, sef papurau i'w nodi. Fe welwch chi fod yna set o gofnodion o'r cyfarfod a gynhaliwyd ar 21 Mai eleni i'w nodi. Wedyn mae yna dri papur arall, un yn lythyr gan Archwilio Cymru at Gadeirydd y pwyllgor ar ddiwygio etholiadol ynglŷn â chapasiti'r Senedd. Mae yna bapur i'w nodi sydd yn lythyr gan Awdurdod Cyllid Cymru ar amseru adroddiad blynyddol a chyfrifon yr awdurdod ar gyfer 2019-20. Ac mae yna drydydd papur i'w nodi hefyd, sef llythyr oddi wrth Gadeirydd y Pwyllgor Cyfrifon Cyhoeddus ynglŷn â lles cenedlaethau'r dyfodol a'r adroddiadau statudol. Ydyn ni'n hapus i nodi'r papurau yna? Ie, pawb yn hapus i'w nodi nhw.

We move on, therefore, to the next item, item 2 on the agenda, papers to note. You'll see that there is a set of minutes from the meeting held on 21 May this year to be noted. And then there are three other papers: a letter from Audit Wales to the Chair of the committee on electoral reform on the capacity of the Senedd; a letter from the Welsh Revenue Authority on the timing of the WRA's annual report and accounts for 2019-20. And the third paper is a letter from the Chair of the Public Accounts Committee on the well-being of future generations and the statutory reports. Are we content to note those papers? Yes, everyone is content to note those.

3. Cyllideb Atodol Gyntaf Llywodraeth Cymru 2020-21: Sesiwn dystiolaeth
3. Welsh Government First Supplementary Budget 2020-21: Evidence session

Felly, ymlaen â ni at y trydydd eitem ac, wrth gwrs, prif ffocws y cyfarfod yma heddiw, sef clywed tystiolaeth gan y Gweinidog ar y gyllideb atodol sydd, wrth gwrs, wedi cael ei gosod yn ddiweddar. Ac felly, gaf i groesawu Rebecca Evans, y Gweinidog Cyllid a'r Trefnydd atom ni, ynghyd â'i swyddogion, sef Matthew Denham-Jones, sy'n ddirprwy gyfarwyddwr rheolaeth ariannol, a Margaret Davies, sydd yn ddirprwy gyfarwyddwr cyllidebu strategol? Croeso i'r tri ohonoch chi.

Mae gennym ni dipyn o bethau i fynd drwyddyn nhw gyda chi yn yr awr sydd gennym ni, felly mi gychwynnaf i, os caf i, drwy ofyn i'r Gweinidog efallai i esbonio ychydig ynglŷn â sut ydych chi wedi bod yn gweithio gyda Gweinidogion er mwyn sicrhau bod yna ddull traws-sectoraidd gyda chi o flaenoriaethu a gwneud penderfyniadau yn y gyllideb atodol yma, yn enwedig, efallai, sut ydych chi wedi llwyddo i ddod i benderfyniadau ynglŷn â ble oedd yr arian ychwanegol yn dod oddi wrtho fe a hefyd pa elfennau felly oedd yn cael eu dadflaenoriaethu er mwyn rhyddhau'r cyllid hwnnw.

We move on, therefore, to the third item, and the main focus of the meeting today, namely hearing evidence from the Minister on the supplementary budget that has been laid recently. So, could I welcome Rebecca Evans, the Minister for Finance and Trefnydd, as well as her officials Matthew Denham-Jones, the deputy director of financial controls, and Margaret Davies, the deputy director of strategic budgeting? Welcome to the three of you.

We have several things to go through in the hour that we have available, so I'll start off by asking the Minister to explain how you've worked with Ministers to ensure a cross-sectoral approach to prioritisation and decision making in this supplementary budget, particularly in terms of how you've come to decisions about where the additional funding would come from and also which elements would be deprioritised in order to release funding.

Diolch, Cadeirydd. So, the approach that we've taken to prioritisation and decision making for this supplementary budget is very much akin to our usual process, in terms of Cabinet agreement and sign-off. I think what's unique, really, about it, being a first supplementary budget, is the scale of it and the importance of it. So, when I spoke to committee last, I described how our Welsh budget has increased by well over 10 per cent of our planned budget since we agreed our final plans at the beginning of March.

In terms of that reprioritisation exercise, we worked very, very quickly, and it was, in fact, one of our first actions as a Government at the start of the crisis, to undertake a rapid review of departmental plans in order to explore what could be released to support the COVID-19 response. So, I met with every Minister and Deputy Minister to interrogate their budgets, asking questions about what within their budget really is a legal commitment that we have to stick to, or statutory commitment; what in their budget is something that is really life-and-limb kind of stuff; and then also what within their budget is an absolute top Government priority. And beyond that, then, we explored what could be released to support the COVID-19  reserve. So, that was the kind of approach that we took in terms of exploring each of those departmental budgets, and then we agreed early on as well where our priorities should be in terms of allocations of funding.

So, clearly, our response, as you'll see in the first supplementary budget, was addressing the immediate impacts of the pandemic, particularly in terms of providing support to our public services to ensure that they were equipped to both respond to the direct and indirect harms of the coronavirus crisis. So, you'll see, for example, in the supplementary budget, £40 million to support the extra costs of adult social care and the challenges there; £57 million to support our test, trace and protect strategy.

And our second priority was helping the most disadvantaged people in society with those wider societal and economic impacts, often because of the measures that Government have taken to respond to the crisis. So, you'll see in the supplementary budget £15 million to provide food delivery schemes for the shielded people, and a further £2.3 million to establish a prescription delivery service for those individuals as well.

Then the third and final priority is protecting as much of the viable economy as possible, and the jobs that they provide, with a view then to the recovery. I know committee is very familiar with the measures that we put in place, both through the £0.5 billion economic resilience fund, but then also that £1 billion of funding that local government is distributing on our behalf in terms of non-domestic rate relief and grants to businesses. 

14:05

Okay. Well, thank you for that overview, and I know we'll be drilling down into some of those areas as we go along. I'd just like to ask as well—the Permanent Secretary has said that it isn't possible to produce a full, written analysis before decisions are taken, given the circumstances, so what level of assurance do you consider acceptable in these circumstances?

Well, it's true that we're working where we have to make decisions at pace, but we absolutely have to ensure that we maintain those essential safeguards when we are looking after public money. So, for that reason, since the start of the crisis, I've been convening a daily meeting, including officials, Ministers, in order to scrutinise plans and scrutinise those elements where colleagues are seeking funding from the COVID reserve, but also to scrutinise those elements where they're reprioritising funding within their own budgets as well, to give that extra layer of robustness in terms of the decision-making process. Beyond that, additional guidance has also been made available on a variety of subjects, including grants and governance, and all grant award letters, for example, allow for retrospective checks, and for money to be clawed back if necessary. So, that gives us that balance of being able to react swiftly, but also then to take the necessary steps, should we need to, further down the line.

Okay. Well, we'll get into the nuts and bolts of some of those grants in a minute, but we'll move on now, then, to Mike Hedges.

Sorry, it took some time to unmute me, then; that wasn't my fault. I've got a few questions. I think the first one is: how are you ensuring that you're targeting the right groups at the right time with your support? You know my concern about giving rate relief to medium-sized supermarkets, who are having Christmas every week. How are you ensuring that the right people are getting it, rather than everybody getting it?

Well, there are a range of mechanisms that we use, and I think that we're really seeing the benefits now from the partnership approach that we have taken in Wales, and those good networks that we've developed. So, we recognise, for example, that individuals with protected characteristics are feeling particularly vulnerable during the pandemic, so we're using the range of fora that already exist and have been established by the Welsh Government. Many of them are chaired by the Deputy Minister and Chief Whip or her officials, and they include the Wales race forum, disability equality forum, the Wales faith communities forum. So, we're using those opportunities to target support and to understand better the needs of the most vulnerable communities.

We're also ensuring that we capture early intelligence about emerging issues and we do that through our ongoing networks and discussions with groups representing business, for example. And then mental health is a particular concern as well, and officials have convened a particular group to look at mental health services. So, trying to offer particular support for the most vulnerable people. And, of course, we have our 21-day review of coronavirus restrictions, and that includes impact-assessing the options for easing the lockdown measures that are in place as we go through each of those reviews. Obviously, we'd have a focus on disadvantaged households there.

I do know Mike Hedges's concerns about our particular support for businesses, and this is one of the challenges that we face, really, and it's one of those balances, about creating a scheme that can be deployed urgently and get to as many businesses as possible, as opposed to creating something that is more laborious, where businesses need to provide evidence of certain things before being able to access that funding. So, I do understand those concerns, but it's a feature of the rapidity, really, with which we needed to move.

14:10

Well, we're going to disagree on this; I don't think it's particularly difficult to identify for somebody whether a major part of their business is selling food or not—people like Lidl, Aldi, people like Iceland and people like Tesco Express, but I won't take that any further.

The next question is, and can I thank you—

Sorry, Mike, before you move on, I think Alun just wants to come in on this particular point.

Yes, if I could, please. I’m grateful to you.

That's a very interesting answer, Minister. I don't know if you intended it to be that interesting. I was intrigued by the way in which you answered Mike there, because I'm interested in the conversations that you have with people such as Ken Skates and, of course, the First Minister. I'm interested in how you take some of those decisions about the sort of support that Mike is describing and what criteria you use in reaching those decisions. You've said that you will identify those people or those businesses and organisations that are in particular need, but, of course, they're in need because of other decisions that the Welsh Government has taken in terms of the wider restrictions and the regulations. So, I'm wondering to what extent you, as the finance Minister, are involved in those conversations about the restrictions. To what extent do you, as a finance Minister, have an input into those conversations, because although they're public health decisions and therefore led by the First Minister and the health Minister, they have real-life financial consequences. So, to what extent do you input to those decisions, and to what extent does the money available to you determine those wider decisions?

Well, I meet every single day with colleagues in order to undertake my role in terms of finance, but I'm certainly involved in those discussions about restrictions. Of course, the whole Cabinet has those discussions so that we can agree a Cabinet-wide approach there. I'm obviously involved in those discussions.

Our overriding priority always is public health in this sphere, but we're absolutely aware of the fact that the decisions that we make have those impacts on individuals and on businesses as well. So, those examples that I gave about the support that we've given to shielded people is an example of a necessary action that we've had to take, with financial implications, in response to curtailing those individuals' ability to access society more widely. Another example, I think, would be the £40 million [correction: £43 million] that we've provided for free school meals. So, to try to ensure that those children who would normally be having a meal in school but can't because of the decisions that we've taken, that they can still continue to access that food as well. So, we're always mindful that every decision we take will have serious impacts for people and then there will often be a financial knock-on that we will need to potentially address as well.

Can I thank the Minister for the detailed information we've been provided with on where the money's come from? I found that incredibly helpful, so thank you very much for that The danger of putting things in detail, though, is you get detailed questions coming back at you. [Laughter.] I've got two on where money's come from. Money coming out of the Higher Education Funding Council for Wales and money coming out of Natural Resources Wales: now, many of us, for several years, have been concerned about the funding of Natural Resources Wales. How has it worked out that both HEFCW—and I think higher education has got a serious problem, and the next question I'm going to ask you is going to be about that—and I think Natural Resources Wales, in order to fulfil the functions that we as an Assembly and you as the Government want them to carry out, are also in a difficult position?

14:15

So, I agree with Mike Hedges that HEFCW and NRW do face significant challenges, but you'll see in the supplementary budget that those particular areas where they were cut were cut due to specific streams of work not being able to be taken forward. So, those are some examples of where colleagues might seek future funding from the Welsh Government, but I've been—. Let's take the example of HEFCW, for example. Universities do have access to other resources, so we need to ensure that those opportunities are being exhausted. So, the coronavirus business interruption loan scheme that the UK Government has put in place—have universities sought to make the most of that? Have they furloughed staff where they possibly can? And what resources of their own are universities seeking to deploy in response to the COVID-19 crisis as well?

Unfortunately, there are several sectors where the UK Government has been resolutely, thus far, opposed, I think, to supporting. So, the aviation sector would be one; HEFCW—sorry, the university sector would be another. And obviously, we'll have to keep those discussions going on. I've had a few in-depth discussions with Kirsty Williams about the needs of the university sector, which I realise are quite acute at the moment. 

Margaret has indicated that maybe she'd like to come in, Minister, if that's possible. 

Yes, thank you, Chair. It was just to follow up on the question about Natural Resources Wales. So, our understanding is that the reduction is a reflection of the impact on programme delivery because of the restrictions, and the requirements around working from home. So, it's not a reduction to activity that could be undertaken at this point in time. And so programmes such as the flood protection programmes are being protected within that envelope. 

Could I maybe just as as well, then, on the back of that, clearly there are concerns not only if—. I think it's £7.5 million, isn't it, in terms of NRW not coming from Welsh Government? But, of course, there will be significant loss of income for NRW as well, for example from the timber work that they do. That could well have a more significant impact than the £7.5 million. I'm just wondering to what extent has that been taken into account.

I haven't yet had conversations with the environment Minister about any concerns that she might have about loss of income for Natural Resources Wales. I know discussions about loss of income for other sectors have been had, and we've obviously been able to find some additional funding for local authorities in respect of loss of income, but I haven't had discussions yet specifically relating to NRW.

Okay. Well, my understanding is that the loss of income from timber alone is potentially twice the cut that's being proposed by the Government. So, maybe that's something that needs to be looked at closely. Thanks. Sorry, Rhianon, did you want to come in on this? 

Thank you, Chair. With regard to additionality of costs during this short-term COVID period, Caerphilly County Borough Council has lost £4.5 million in terms of lost income and additional costs. What consideration is there around more flexibility for local authorities' capitalisation redirection and ability to borrow, so that there is that mid-term, long-term future resilience for local authorities? Because, obviously, in terms of this supplementary budget and the short-term position, it's clear, but there is great concern in terms of the pressures and the active duties of service delivery that local authorities are carrying out in the mid to longer term. 

Yes, this is a tremendously difficult time for local authorities and that's one of the reasons why, in this short-term period, we've put in place that £180 million hardship fund that recognises some of the loss of income, not all of it. So, local authorities have worked closely with local government officials within Welsh Government to identify what they feel is a reasonable amount to reflect loss of income, once they've taken into account things like deferred income that might come along later in the year if plans were to change, for example, and the furloughing of staff as well.

The Treasury was quite clear that staff should not be routinely furloughed in the public sector. However, they could recognise there would be cases where some staff might be. Examples I would give would be those staff who are involved in or working in theatres owned by local authorities, or staff working in catering and other areas. So, there are areas where some staff could be furloughed as well. 

In terms of the longer term outlook, I know that the Minister for local government is currently in discussion with local authorities, exploring their capital plans now for the next year, but also the following years as well, to explore what can still be delivered this year, but then where there might be some slippage and what support might be needed. She's also been really keen to ensure that they have cash flow at the moment as well, so they've brought forward payments to allow local authorities to have that money in the bank to deal very quickly with the additional challenges of the coronavirus. So, whilst the immediate focus has been on responding to the crisis, those discussions about longer term plans are absolutely taking place. 

14:20

Thank you, Minister. We'll come back to you now then, Mike, and thank you for your patience. 

I think it's been a very interesting discussion. You've told the committee that you're working with the Counsel General around recovery from the pandemic. Those bits that are the v-shaped part of recovery—hairdressers are one, which have queues around the block; we've already seen that with some fast-food outlets—these will recover back to where they were before and will have a big initial boost. There are other areas that have got problems, and are likely to have short-term problems, and some of these are key areas in our economy. These include things like aerospace, universities, and if David Rees was still on this committee, he'd say British steel. Are we in a position to be able to, within this supplementary budget, make headroom to start being able to support those as we come out of the pandemic, because these are a really key part of our economy?

I've been having weekly discussions, at least, with the Counsel General to discuss how the funding decisions that we're taking now will impact on our recovery priorities. And that's really important because there's a finite amount of money, so we need to be considering our response to the immediate crisis, but then also what we need to hold back for investment in the recovery. And the example I would give to you would be the economic resilience fund. So, we've had some discussions this morning between myself, Ken Skates and the Counsel General, talking about exactly that, in terms of where we focus the current funding or the next round of funding, and then how we make sure that the decisions we take now don't mean that our choices are limited later, in the sense of creating the recovery that focuses on particular sectors that are at particular risk and which will find things more difficult for longer. But then also that green recovery, which we've spoken about as well. 

So, at the moment, the supplementary budget that you have in front of you is very much focused on the immediate issues of the crisis, but that future work now is going on. And the reason I work so closely with Jeremy on this is because it's all very well having wonderful plans for recovery, but, actually, they'd be meaningless if we don't have a budget that supports those plans. 

I think that recovery won't just be this year, so we'll have to be considering the recovery process certainly into the next financial year and probably further beyond that as well, given how difficult things might be. And there's a real conundrum, in the sense that, whilst we're focusing very much on the work looking towards the recovery, at the same time, we have to not rule out the chance that there could be potentially further peaks later on in the year. So, we need to ensure that we're able to respond financially to that as well. So, it's a difficult balance to take, given that so much remains unknown. 

Iawn. Diolch yn fawr iawn. 

Right. Thank you very much. 

Thank you, Mike. 

Ymlaen â ni nesaf at Siân Gwenllian. 

We move on now to Siân Gwenllian. 

Diolch, Gadeirydd. Hoffwn i holi ynglŷn â'r gwahanol gyfnodau yn ystod y cyfnod clo. Ydy'r gyllideb atodol yn cymryd i ystyriaeth y gwahaniaethau mewn gwariant fesul tair wythnos, er enghraifft, wrth i'r rheoliadau gael eu llacio yn raddol?

Thank you, Chair. I'd like to ask about the different periods during the lockdown. Does the supplementary budget take into consideration the differences in spending per three weeks, for example, as the regulations are eased gradually?

Well, most of the items in the supplementary budget take a three or six-month, or even a 12-month look. So, in that sense, they don't have that very short-term approach. But the items that you'll see in the supplementary budget are things that will require support for longer periods than those short review windows. So, I think that it's an appropriate balance really. So, some of the items, as I say, will be three months because we recognise that we can review things again at that point, but some of the other items are longer term. But I think that we've tried to do things in an appropriate way. And also, in terms of how the funding is spent—so, local authority funding, for example—in that hardship fund, we've allocated in discussion with local authorities what we think might be needed, so, for social care, for example, or for the free school meals, but then the funding is drawn down by local authorities when they actually have the actual figures, which need to be reflected. So, in that sense, we're able to accurately spend the correct amount, and if there is underspend available, then obviously we can recycle that, either towards further responses to the crisis or as part of our recovery work.

14:25

Sut mae adleoli staff i ddelio â'r pandemig yn cael ei adlewyrchu yn y gyllideb atodol, ac ydych chi'n hyderus bod yr adnoddau yn y llefydd cywir i ddelio â'r argyfwng?

How has the redeployment of staff to deal with the pandemic been reflected in the supplementary budget, and are you satisfied that the resources are in the right place to deal with this crisis?

So, staffing matters are the responsibility of the Permanent Secretary and there's no reduction, or there's no cut in the staffing budget within the supplementary budget. I know that the Permanent Secretary has written to the Public Accounts Committee, setting out the measures that she's taken in terms of responding to the coronavirus crisis. And that included setting up a new group that the Permanent Secretary chairs to co-ordinate the work across Government, and that meets weekly.

Of course, we have the emergency control centre up and running, in terms of being the facility that helps us disseminate and manage information throughout the crisis particularly. So, it's been inevitable actually that large numbers of staff have been taken off their day jobs and have been redeployed in terms of responding to the crisis. So, that has implications, I think, for what Government might be able to continue to deliver and achieve over the course of the remaining part of this Assembly, but, obviously, we have those discussions in the context of what the priorities are that we still want to deliver.

Ond o ran y gyllideb atodol, dydy'r newid dyletswyddau yma ddim yn cael ei adlewyrchu mewn ffordd—hynny yw, mae pobl yn dal i gael eu talu drwy'r un gyllideb adrannol ag yr oedden nhw cynt.

But in terms of the supplementary budget, the change of duties isn't reflected in a way—that is, people are still being paid through the same departmental budget as they were previously.

Yes. So there aren't any changes reflected in the supplementary budget there. I don't know if Matthew or Margaret might have something to say on this, because, as I say, this generally is the responsibility of the Permanent Secretary.

So, I don't pretend to be a DRC expert, but all of the DRCs sit in one budget line within the central services and administration main expenditure group. So, you wouldn't see changes on the face of the budget anyway, because all of the resources are funded through the one budget stream.

Ie, diolch am yr esboniad yna. I droi, felly, at y gyllideb gyfalaf, lle ydych chi arni o ran symud cyllid o gyfalaf i refeniw?

Yes, thank you very much for that explanation. I turn therefore to the capital budget: where are you at in terms of moving funding from capital to revenue?

So, we're in the middle of that process at the moment. I've written, or the First Minister has written, to all colleagues, setting out how important this is, that we do this piece of work, and we're doing it within those same parameters that I described to Llyr at the start of this session: so, looking at those items where we have a statutory or a legal duty to deliver; looking at those items that are life-and-limb things—so, I'm thinking of flooding, capital funding for flooding there—and then also those items that remain a top priority. So, beyond that, we're looking to colleagues, again, in every department, to bring forward funding to either a capital reserve or a capital-revenue switch, which we're still hoping we will successfully negotiate with Treasury.

A beth ydy'r amserlen ar gyfer hynny? Yn amlwg, mae'n ddibynnol ar gael y caniatâd yna, ond pryd fyddwch chi mewn sefyllfa i wneud cyhoeddiad ynglŷn â pha brosiectau, er enghraifft, sydd yn cael eu tynnu allan yn llwyr o'r gyllideb?

And what's the timescale for that? Evidently, it depends on having that permission, but when will you be in a position to make an announcement about which projects, for example, will be removed entirely from the budget?

Hopefully, it won't take too long to go through this piece of work. We'll have to, as I say, have those meetings with colleagues and so forth. I don't think it will take very long, because I've already had some informal discussions with colleagues and they've identified areas where they'll be putting forward funding. But they won’t be reflected formally until the second supplementary budget. So, if it's helpful to committee, I'd be keen to provide you with a letter detailing those changes, so that you have that information much earlier.

14:30

Byddai hynny'n ddefnyddiol iawn, dwi'n meddwl. Diolch. Ac wedyn, jest i orffen ar y cyfalaf, pa raddfa o newid fydd yna o gyfalaf i refeniw os ydych chi'n cael y caniatâd? A faint o hyn fydd yn cael ei gyllido o gronfeydd wrth gefn?

That would be very useful, I think. And then, just to close on the capital issue, what scale of switch will there be from capital to revenue if you gain this consent? And how much of this will be funded from reserves?

So, in terms of our existing budget for this year, you'll be aware that the capital programme had borrowing of £125 million. We could consider increasing that to the full amount of £150 million, so there's some potential there.

I think the amount that we would look to switch will depend to some extent on how successful we are in terms of finding those items that we can put forward to the capital reserve. I don’t have a figure that I'm able to share just yet in terms of how much we would be wanting to switch, but, again, it's something I'm keen to share with committee as soon as we are able to have some more clarity on that.

Diolch. Nick has indicated that he'd like to come in at this point. I think he might—

Thanks, Chair, and good afternoon, Minister. Just on this issue of capital and revenue—and I understand you're wanting greater flexibility—of course, capital spend itself does have spin-off effects. If you're talking about building projects, for instance, at the one end of the capital spectrum, then you'll have construction companies involved who may have factored in capital spend into their own budgets. When you're spending revenue, then you're not always having those effects.

So, when you're making these decisions about switching from capital to revenue, are you taking into account the possible consequences of removing money from that capital budget, and is it your longer term aim to simply say those projects aren’t going to happen? Or are you looking at borrowing further down the line to try and replace some of that capital funding?

I think there are several potential scenarios. So, one could be that projects might go ahead as planned in a budgetary sense, but actually might be reprofiled over a longer period. So, it could free up money early on, but those projects then would still continue or might continue at a different pace.

But at the same time, I think the point you make is a really important one, because it's at the heart of the dilemma that we will have when switching capital to revenue, and that is really that every penny that we switch from capital to revenue is money that we're not investing in that work on infrastructure and all other kinds of capital spend, which is so important in terms of the recovery. So, I think, whilst we very much need more revenue in order to respond to the crisis currently, actually, we do so in the knowledge that there are implications of it and it's not an easy thing to do.

And I think Margaret would like to add something as well.

Yes. Sorry. So, just to amplify that, in terms of the capital expenditure. So, I don’t know if the committee members are aware, but the UK Government's Cabinet Office issued updated guidance on procurement advice, which allows public bodies to make relief payments in the short term to support service delivery if it's disrupted. So, the impact on the capital budget may not be as transparent in these first few months if certain areas are making full use of that temporary relief. So, yes, in some cases, there will be payments still being made, even though the actual delivery isn't on-stream at this stage. That may take a couple of months to understand the impact of that.

Ocê. Diolch yn fawr.

Okay. Thank you very much.

Thank you, Nick. Thank you.

Right, we'll move on to Rhianon Passmore next.

Okay, that's great. In regard to—. I'll keep the question for Margaret to the end, in terms of that temporary relief then, if I may. In regard to capital reprioritisation and the impact on funding allocations, obviously, in terms of the final budget, we were extremely committed and are still extremely committed in terms of the climate change and the climate emergency agenda. So, will there by any expected impact on that funding allocation around climate change matters? That's my first question to the Minister.

14:35

So, as I say, the exercise to reprioritise funding is going on at the moment, but I'll be asking colleagues the same questions that I asked during the revenue exercise, and that was about impact on Government priorities. The First Minister's been quite clear that his work that he particularly is passionate about on decarbonisation and biodiversity are very much priorities. So, I'll be having those discussions with colleagues as we try to ensure that we release funding but then also are able to deliver on those priorities, and clearly the climate change agenda is absolutely critical, as are the opportunities, I think, that we have for that green recovery, and I know this is something that Jeremy Miles is really putting some strong focus on in his round-table discussions and the work that he's doing in terms of exploring opportunities for the kind of recovery that we want. 

And I think, completely, in terms of those opportunities, if we think of the phoenix in the fire—as long as we don't have too many—I think, in terms of those opportunities, they're absolutely paramount in terms of a greener and cleaner Wales as we move forward. 

You've previously touched upon flooding and life-and-limb issues. There are obviously questions around that in terms of reprioritisation, but I would presume that from what you've said—I'd like you to answer that—that those flooding allocations are going to absolutely remain.

Flooding allocations, I definitely see as life-and-limb allocations, but alongside that, of course, we have the ongoing discussions with the Treasury regarding the floods that we had earlier on this year. So, we're finally coming to a figure now with local authorities and a profile over a number of years in terms of the additional funding that will be required from Treasury because they've previously given that commitment to providing that funding. So, as I say, we're almost at the stage now where we have nailed down exactly what the quantum is and the period of time over which it's needed, and I will be addressing this again with the Chief Secretary shortly to hold them to that promise.

Additionally, there is also ongoing work to undertake the assessments of the coal tips across south Wales, and again, I see that very much as life-and-limb kind of work, which is remaining a priority.

And in regard to those timescales, this committee will be updated in terms of the communications back from the UK Treasury, I presume.

Yes. As soon as I have a response on the quantum of funding and the timescales that we are able to agree, I'd be very happy to share that.

Thank you. In regard then to the present COVID and post-COVID landscape, and in regard to what you've already inferred in terms of taking advantage of behavioural change and harnessing changes in behaviour around transport, modal shifts and active travel, how do you feel that that is going to play out in terms of this supplementary budget in regard to, for instance, the social distancing issues and also in terms of footpaths and cycle paths and how they can be married together?

So, there aren't items in the supplementary budget specifically relating to active travel, but the agenda has been pursued through the normal budget allocations that we agreed in March this year. So, you'll have seen—I think it was just last week or the week before—there was an announcement from Ken Skates and Lee Waters in relation to Safe Routes to School, Safe Routes in Communities. That work is still ongoing, but from existing transport budgets. You'll also be aware that Lee Waters has written to all local authorities, inviting them to submit expressions of interest to implement sustainable transport measures in response to the COVID-19 crisis, and that's about improving the conditions for safe and comfortable walking and cycling as well as allowing for social distancing when using public transport. I think that we've had expressions of interest from all local authorities, collectively submitting over 200 proposals, so those are currently being considered. But the expectation is that those would be met from existing transport capital budgets.

Thank you, Minister. I would presume accessibility to those funds is going to be a priority for Welsh Government. Finally, do you expect that further funding will become available, and I presume here, innovation funding from the UK Treasury, in order that authorities and agencies have proactive innovative schemes in place as the lockdown restrictions ease, and, obviously, that landscape is unknown, as you've already stated, bearing in mind the concern around future spikes?

14:40

When I have my discussions with the Chief Secretary to the Treasury and then also my counterparts in Northern Ireland and Scotland, we have started now, at every meeting, to have those discussions about what recovery might look like, and I absolutely see innovation as being part of that. We need to ensure that the funding that we've already allocated in terms of R&D is spent in a way that helps us with the recovery, and we need to ensure also that we get our fair share of UK-wide R&D funding. I know that this is an issue of particular concern to the education Minister, who has overarching responsibility for this agenda, but in terms of the recovery, clearly innovation, doing things differently, making use of or the best of opportunities that arrive will be really important.

What assumptions have been reflected in the change to the funding for core NHS allocations, and how are you ensuring that the NHS has the resources to cope with the unprecedented strain being placed on it?

We've had early discussions, as you can imagine, with health and ongoing discussions throughout the crisis, trying to identify what might be needed. In terms of the assumptions, we were very, very mindful of that reasonable worst-case scenario that was set out for us, and that was a challenge, really, to provide the services and the support that could be in place should such a situation arrive. And that will be reflected, as you'll see, in the supplementary budget in terms of the additional funding for the field hospitals, the additional funding for PPE, the additional funding for staff within the NHS as well, so we explored what support health might need over and above its normal activities.

I'd might ask Margaret to come in and describe some of the monitoring that is in place with local health boards. It's led by the officials in health, but I know that there are monthly rhythms in terms of the reporting of data and so on.

Yes, thank you, Minister and Chair. So, local health boards have very established reporting mechanisms into the health department in Welsh Government, so I think they've recently updated their forecast for the current year, and that's now being analysed, working with the NHS finance delivery unit and looking at how that sits against the additional funding that has been provided so far, and what additional cost and need there may be in the future. But I think, as the Minister said, it's very challenging at the moment, obviously, because in terms of understanding the path that the pandemic will take and whether there is another peak and at what point, and—.  I think the health Minister yesterday said about starting to restart normal health activity, and obviously, that's a very delicate balance, then, versus establishing and maintaining the capacity to deal with a future peak. So, NHS finance people are trying to work through those possible scenarios with the local health boards at the moment.

Okay. Can I just perhaps take an example to try and clarify that? I represent south-east Wales, and most of that region is in the Aneurin Bevan Health Board, and their papers from April through to the end of July period, they have an increase in funding related to COVID, at least from their definition, for approximately £30 million. I just wonder how that relates to, and how you'd reconcile with the changes for health and social services generally. [Inaudible.]—million pounds, I think, is the fiscal resource response to COVID. We've also got the £21 million from the immigration health surcharge and a £114 million that you've released from elsewhere within the main expenditure group. How much, perhaps, overall increase in funding could Aneurin Bevan expect, and how does that compare to the sort of £30 million that they've projected for the April to the end of July period? 

14:45

Well, I don't have that level of information available, personally, and I think the health Minister was at the health committee this morning going through in terms of what the financial impact is likely to be on health boards. So, it's up to the Minister. We could follow that up, but I haven't got that detailed information to hand.

If you were able to follow up, then we'd be very grateful, I'm sure. Could I also ask perhaps another way of trying to get at this—I'm not sure whether it's you, Margaret, or another official who spoke at the 21 May session, but I think the reference was to substantial additional funding throughout the year. Is that what we've seen within the supplementary budget, or can we expect additional allocations to the NHS still to come?

I think that so much depends, doesn't it, on whether we get a second or a third spike. So, it's difficult to say, at this point, how much additional funding might be needed by the NHS. Because, as Margaret said, we don't yet know what path the pandemic might take, which is why it's so important that we're able to respond in an agile way and have those flexibilities from the UK Government. Because we want to make the most of the resources that we have rather than relying on consequential funding that may or may not come. So, we need several things, really; we need all those flexibilities that I've talked about before, but also a more open discussion, I think, with colleagues in the UK Government about their planned spending, so that we can factor that into our plans, as well. But, I think, inevitably there will need to be additional funding for health, for things such as the test, trace, protect scheme, even if there's not a second or third peak. 

The £91 million for increased staff resource; can you give us any more details on that? I think there was quite a lot of publicity around bringing medical students graduating into the workforce earlier; bringing back some retired doctors, presumably there's also been some extra resource to agency staff. Are you able to give any breakdown of how that £91 million has been spent? 

I understand that there's been a first set of monitoring reports now received by the health Minister in terms of those returns from the NHS. We allocated £91 million—I think they're predicting or projecting that it might cost £96 million for that first six months. So, it's slightly over what we had allocated for this. And it's a combination of funding for those students, funding for people who have been returning to work in the NHS, but then also additional funding for bank and agency workers, and overtime for existing staff, as well. So, it's a combination of all of those things. But, I think that that level of breakdown will be available from those monitoring reports.

So, you said before that whether or not there'd be additional allocations would depend on whether there was a second or third peak. Your answer just now, if I understood it correctly—what had been £91 million is now expected to be £96 million for the first six months of the financial year. Do I infer from that that any additional spending beyond the usual budget that may be required from 1 October onwards would be a matter for additional allocations—at least on this staff resource number, rather than from the supplementary budget? 

I think that would need to be decided in discussion with the health Minister, so, if he brought forward a proposal demonstrating that that higher level of staffing was still needed. So, again, it's a question isn't it, if we have those peaks, to what extent we're able to resume more of the elective and routine work within the NHS? Because, you know, some of those staff could be used for that, then. So, I think, beyond this initial six month period, it will depend on what the need is in terms of what additional funding might be required. 

And the number referenced for setting up and equipping—I think was the phrase—the 19 field hospitals was £166 million. Given that reference to setting up and equipping, is there any budget for running the operations of those hospitals within the health boards, or is that now not taking place given, thankfully, that the capacity hasn't been needed in the way that we feared?

14:50

Well, a large part of that funding would be in terms of staffing, so, that £91 million goes towards that as well, in terms of the additional staffing that would be required to service those field hospitals. I think that is part of the running costs, but, again, it depends now in terms of how long we decide we need to keep them in place, what we think might happen later on in the year in terms of the pandemic and what our response might need to be.

I know that the health Minister was giving some evidence to the health committee on this earlier on today, setting out that he thinks that we need to keep this provision in place to ensure that it's there should we require it for a second or third peak later on in the year. 

So, provision is being kept in place. Presumably, at some point, we would expect these hospitals to return to their normal use. Is there any budget for the costs of that returning to as it was before? Just to take, for example, the Principality Stadium in Cardiff, presumably there'd be pretty substantial costs in returning that to how it was before. How will those costs be met?

Margaret will correct me if I'm wrong, but I understand that the decommissioning for the Principality hospital is included in the funding that we see in this first supplementary budget. However, for some of the other field hospitals the decommissioning costs aren't included. Officials are working on that to agree what would be a suitable and appropriate cost for that.

And the £166 million—. The Principality Stadium, the decommissioning cost of that, is that within the £166 million or elsewhere?

I believe so. I think Margaret will correct me if I'm wrong.

Minister, sorry, that was my understanding is that the decommissioning costs are part of that for the Principality, but, as the Minister says, other field hospitals haven't been part of that envelope as yet.

Thank you, Mark. I can see that Rhianon has asked to raise something. I am mindful that time is very short and we have two other Members who wish to follow their own lines of questioning, so I'm afraid, Rhianon, we're going to move on to Alun Davies and we'll come back at the end, if we have time, to pick up on it. Alun.

Thank you very much. I'd like to pursue the point that's just been raised by Mark Reckless, actually, because one hospital, of course, that's been established very quickly over the last few months, which we hope won't be decommissioned but commissioned, is the Grange University Hospital, of course, in Cwmbran. Now, one of the options that's being discussed there has been the early opening of this new facility serving the people of south-east Wales. Have you had any conversations with the health Minister to discuss how the health board may be helped to continue operating this new hospital and this new facility in a financial year when it wasn't due to be open at all?

I've had no requests from the health Minister for a discussion regarding additional funding for that. Whether or not additional funding would be required to deliver what you've described, or whether it could be met within the existing resources, either of the main expenditure group or of the health board, I think remains to be seen, but I haven't had an approach for additional funding.

Okay, thank you for that. In terms of the additional £57 million that has been identified to support the testing programme, which started this week, can you outline to us how many tests would be bought, if you like, with that amount of money and the sort of key indicators that you would put in place? You'd expect the health Minister to be able to demonstrate the good and proper use of that additional funding.

The £57 million funding doesn't just relate to the procurement of tests—it relates to several aspects of that test, trace and protect project. It's my belief that further funding will absolutely be required for this, because £57 million is, basically, the start-off cost to start this particular project, which could be—well, it will be huge and significant over time. 

There are questions, really, as to what extent we can expect additional funding from the UK Government for this. This feels like an area where we will, potentially, see some consequential funding coming from the UK Government. It seems—I don't believe that this could be met from within existing resources from the UK Government's health department. So, it's an area where I hope to see further funding, but the £57 million is just the start, really, of this particular piece of work.

Okay, I'm aware of the Chair's patience with time. Could I perhaps ask you, then, Minister, if you could write to the committee with the key performance indicators that you would anticipate from the health department to measure this spend and to measure the effectiveness of this spend, both in terms of the capital required to establish the programme and then the running costs of that programme over the coming months? 

14:55

Yes. I'd be very happy to provide committee with more detail.

That might be a more efficient way of expediting things.

But, in terms of the wider additional costs, one of those has been met by local government, of course, and I think you've included £78 million for local government in terms of providing support for it, for its response to the COVID epidemic. Can you explain to us how you've reached that figure of £78 million and what you believe it represents in terms of meeting the additional costs incurred by local government?

So, the £78 million is only one part of the wider funding we've provided for local government, which is £180 million in total, but that £78 million is the funding that is in respect of loss of income, which we've discussed previously in the session, and that loss of income was determined through discussion with local authorities in terms of them demonstrating the income they would lose but then netting off what they think that they might be able to make up later in the year. And that funding will be drawn down from the pot, so it's not an allocation that we hand out to local authorities; local authorities draw it down when they're able to demonstrate the income lost through, for example, not being able to get funding from the theatres that they run, as an example.

I'm interested in that, because the impact of COVID, of course, will be in terms of the services that you've just described, and the impact will be seen in terms of their ability to both raise and then spend finances in the short term, but, as you replied to Mike Hedges at the beginning of this session, there will also be ongoing costs in terms of the impact—the economic, the social impact—of COVID on communities. We've seen the Centre For Towns, for example, saying that there will be particular communities, such as the one I represent, that will be especially badly impacted by COVID. So, have you given any thought to the sort of methodology that you will use in order to determine funding priorities for the post-COVID work in terms of local government, but also in terms of place-based programmes, to ensure that those communities that suffer the worst impact are those communities that then have the greatest support from Welsh Government in the time moving forward?

So, this, I think, makes it even more incumbent on us to accelerate the work that we were doing in terms of the foundational economy and in terms of refocusing our work in terms of town centres—so, the town centre first policy, for example, in terms of where we site Welsh Government and other public sector services in future to increase the footfall and so on. So, I think that all of this ties into work that was already being undertaken. In terms of the supplementary budget, you'll see other items in the hardship fund relating, for example, to free school meals and obviously some communities will need that support more than others. You'll see additional funding—so, £43 million for free school meals, £40 million for social care, for example, and, again, this is a case where local authorities draw down from that fund when they're able to demonstrate to Welsh Government what they have spent in those particular areas. So, again, it's about trying to ensure that the funding through that hardship fund is based on need, rather than anything more arbitrary. 

Okay. I won't push that this afternoon; I know time is against us. But I will say this: I think you need to do more thinking than simply the foundational economy and town centres. This is a real impact to the fundamental economy of these areas, as well as the health and well-being impacts.

But I would like to abuse the Chair's generosity and leave you with one more question. When I was the Minister with responsibility for the armed forces, I established the armed forces liaison officer scheme project, which put in place armed forces liaison officers across the whole of Wales, funded through the Welsh Local Government Association. Could you just reassure me that you will be continuing this scheme?

15:00

Certainly. I will reassure you that I will speak to the Minister with responsibility for this area.

That's not quite the reassurance I was asking for, I have to say. [Laughter.] I was asking for reassurance about the scheme, not conversations that you might have.

Well, it's not a scheme that I'm responsible for. So, I would be—

—loath to make promises for things I'm not directly responsible for, but I will promise to have that discussion.

And perhaps you could write to committee with the consequences of that conversation.

Diolch, Chair. It had slipped my mind that Alun Davies was the Welsh defence Minister during that time, but it was a very nicely put question, Alun.

I think most of my areas have been covered, actually, Chair, but just following on from Alun's question about local authorities and the issue of the monthly settlement payments and the replenishment of their funds to support their cash flow at this time, I'm assuming that at some point that's going to be reviewed and stopped. Are you concerned that, then, local authority budgets, Minister, are going to take a hit at that point? Because they're obviously not going to be recovering their normal cash flow for some time, perhaps a long time to come. So, what are you planning for a readjustment at that point, or will local authority budgets simply go off a cliff?

So, the Minister for Local Government and Housing came to an agreement with local authorities, at their request, in terms of responding to their concerns about cash flow, to bring forward their May and June settlement payments to April in order to assist them with the immediate response to the pandemic. So, the remaining nine months' settlement funding has been reprofiled over the remainder of the year. But, as I say, that came about as a result of a request from local authorities in terms of supporting them with their cash-flow issues at the start of the pandemic.

Thanks. It just strikes me there'll need to be some sort of arrangement with them over the medium and longer term to make sure that they are able to adjust. 

Secondly, the supplementary budget includes—you've already mentioned the economic resilience fund, which is being closely monitored to assess the impacts it's having on the different sectors and businesses in Wales. Can you share with us any lessons that have been learned from the monitoring of the economic resilience fund and how it's providing value for money?

So, before I do, I'll just respond to your comment there in terms of the desire for medium and longer term certainty. That's something I very much share. Obviously, we've had discussions before, so I won't labour the point about the importance of the comprehensive spending review, which obviously we'd been expecting last year but which we hope will take place this year in order to give us some confidence for the future, which we can then give to local authorities as well. 

But, in terms of the economic resilience fund, there is a formal evaluation of the first phase being undertaken. It hasn't yet reported, but when it does I'd be happy again to ask Ken Skates to write to committee with the details of the evaluation.

And very finally, Chair, with your indulgence, to use Alun's expression, in the broader sense that we now know that the lockdown within Wales is deviating, at least slightly, over the shorter term from the UK position, it's not so much—. Although it's still a four-nations approach in many respects, it's not altogether. If that process continues, then surely there are going to be issues with a lack of consequentials coming from Westminster to support the Welsh Government. Going back to the fiscal framework, the no-detriment issue, if the Welsh Government is taking decisions and choosing to continue a longer lockdown, then the Welsh Government will bear accountability for those decisions. Are you as finance Minister centre stage in discussions about the easing of the lockdown and providing a financial input to make sure that other Ministers and those taking lockdown decisions are aware that, over time, there's possibly going to be a financial issue in terms of Wales needing to raise more funding, whether that's from borrowing or taxation or whatever, itself to support its own decisions?

I think we're still very much at an early stage in the pandemic and how the situation in Wales differs from that across the border, I think will obviously be seen in due course. But, you know, we've had a more cautious approach to moving from lockdown as compared to England. We're asking ourselves what that means for us in Wales in terms of the economic impact, but, equally, what does a faster move out of lockdown in England mean from a public health perspective? So, you get economic costs; you also have health and public health costs, which inevitably have a knock-on effect on NHS funding as well. So, I think that there are so many different sides to this.

In terms of the overall economic situation, the Chancellor has been clear that the job retention scheme is in place at least until August in its current form, when there'll be changes then, incrementally, through to October. August is a very long way away, actually, since we're only in June at the moment, and to what extent, by that time, we find ourselves in a different situation to England, I think remains to be seen.

But, clearly, we have all these discussions as a Cabinet in terms of lockdown. The last meeting we had was talking about, as the First Minister's described—you know, we can loosen one thing, what is that one thing going to be? On this occasion, it was about allowing two families to meet, because that's what people had been saying was their priority. So, for people who have family within a close area, they needed, really, to see them. So, that was the thing that we looked at there. But he's also—the First Minister has also—set out what we might look at now, at the next stage, so that's those things around reopening non-essential retail and so on. There, obviously, is a particular area of interest for me as well. But the discussions are constant and ongoing, and the financial impacts are very much at the front of our minds when we make these decisions, but public health is the overriding thing.

15:05

And very finally, have there been any discussions about tax rates? I know that the Welsh Government has said there won't be any increase in income tax, for instance, at least until after the next Senedd election. Has there been any discussion about whether, if the situation doesn't improve, or worsens, there might be pressure on Welsh rates of income tax?

Well, we've already agreed our Welsh rates of income tax for this financial year, so there was no change in those rates, and I wouldn't want to make a change to that during a crisis situation. I think people are having enough of a hard time at the moment without seeing an increase in tax at the moment.

Thank you, Nick. Thank you, Minister. I'm mindful that we're a couple of minutes over. Would you allow Rhianon just to ask the question that she wanted to come in on? Have we got a couple of minutes?

Thank you very much. You've partially addressed this. It's really in regard to the comprehensive spending review and the reassurance of longer term spend, and my question simply is in regard to Welsh Government's understanding and recognition of what it needs from the UK Government and Treasury in terms of flexibility, agility, borrowing, et cetera is exactly the same in terms of local government. What sort of understanding from Welsh Government is there that local government, as the arms and legs of Welsh Government, is in exactly the same position?

So, I meet really frequently with local government leaders, with the WLGA, with the finance leader of the WLGA, to understand the things that they need in order to operate most effectively. Some of that—or a lot of that, actually—is about more certainty for the future. So, we're not in a position to give that certainty at the moment, but we hope to be, should a comprehensive spending review take place later on this year. Again, we have those discussions about the potential for local government. So, local government can borrow in a way that Welsh Government simply can't, so they're going to be absolutely crucial partners in terms of the recovery. So, we've been having discussions with local government as well in terms of what they can bring to that recovery work through their borrowing ability.

Okay. The other area, of course, where you will need flexibility, I'd imagine, is around the fact that the EU transition period is looming, isn't it, really, coming to an end of that period. Whatever the outcome, then there's likely to be demand on Welsh Government resources. How much flexibility do you have to be able to respond to some of that, potentially?

So, I've been quite clear with colleagues that, whilst we've got the and developed the COVID-19 reserve, what I don't want to do, certainly at this early point in the year, is to be going into our normal reserves, so the in-year contingency funding that we hold. I see that very much as being part of the recovery, and part of the recovery, I think, will be part of the potential 'no deal' Brexit as well. So, those will be huge economic challenges for us, which is why I need to keep that funding aside, certainly until we get some more clarity as we move through the year for spending that. So, as tempting as it is to deploy it early on in the year, I think it's important to hold that back.

15:10

Ocê. Iawn. Wel, diolch yn fawr, Weinidog. Diolch ichi am eich amser, a'ch swyddogion. Rŷm ni'n gwerthfawrogi'r ffaith eich bod chi wedi dod atom ni, a diolch am eich tystiolaeth. Mae yna rai pethau penodol rŷch chi wedi cytuno i ddarparu i ni; dwi'n siŵr y gwnawn ni ysgrifennu atoch chi i'ch atgoffa chi o'r rheini, ac os oes gennym ni unrhyw gwestiynau pellach, mi wnawn ni anfon y rheini yn ysgrifenedig atoch chi hefyd. Felly, diolch o galon i chi, y tri ohonoch chi, am ymuno â ni y prynhawn yma.

Okay. Thank you very much, Minister, and thank you for your time, and your officials. We appreciate the fact that you have joined us, and thank you for your evidence. There are some specific things that you've agreed to provide to us, and I'm sure that we'll write to you to remind you of those, and if we do have any further questions, we will send those to you in writing as well. So, thank you very much, the three of you, for joining us this afternoon.

4. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o weddill y cyfarfod ac o'r cyfarfod ar 15 Mehefin 2020
4. Motion under Standing Order 17.42 to resolve to exclude the public from the remainder of the meeting and the meeting on 15 June 2020

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod ac o'r cyfarfod ar 15 Mehefin 2020 yn unol â Rheol Sefydlog 17.42(ix).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting and the meeting on 15 June 2020 in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.

Mi wnaiff y pwyllgor, felly, symud nawr i mewn i sesiwn breifat, ac felly, yn unol â Rheol Sefydlog 17.42(ix), dwi'n cynnig bod y pwyllgor yn gwahardd y cyhoedd am weddill y cyfarfod hwn a'r cyfarfod, hefyd, ar 15 Mehefin, ein cyfarfod nesaf ni. Felly, os ydy Aelodau yn fodlon â hynny—ie—mi wnawn ni felly fynd i sesiwn breifat, a bydd yn rhaid inni oedi am ychydig eiliadau, ac mi gawn ni ein hysbysu pan fydd y pwyllgor yma yn breifat.

The committee will now move into a private session, so I propose, in accordance with Standing Order 17.42(ix), that the committee resolves to exclude the public for the remainder of the meeting, and also the meeting on 15 June, the next meeting. So, if Members are content with that—yes—okay, well, we'll therefore go into a private session, and we'll have to delay for a few seconds and then we'll be notified when the committee is in private session.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 15:11.

Motion agreed.

The public part of the meeting ended at 15:11.

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