Pwyllgor yr Economi, Seilwaith a Sgiliau
Economy, Infrastructure and Skills Committee16/07/2020
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Hefin David MS|
|Helen Mary Jones MS|
|Joyce Watson MS|
|Russell George MS||Cadeirydd y Pwyllgor|
|Vikki Howells MS|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|Andrew Clark||Dirprwy Gyfarwyddwr, Yr Is-adran Cyflogadwyedd a Sgiliau, Llywodraeth Cymru|
|Deputy Director, Employability and Skills Division, Welsh Government|
|Emma Watkins||Dirprwy Gyfarwyddwr, Polisi Economaidd, Llywodraeth Cymru|
|Deputy Director, Economic Policy, Welsh Government|
|Ken Skates MS||Gweinidog yr Economi, Trafnidiaeth a Gogledd Cymru|
|Minister for Economy, Transport and North Wales|
|Lee Waters MS||Dirprwy Weinidog yr Economi a Thrafnidiaeth|
|Deputy Minister for Economy and Transport|
|Simon Jones||Cyfarwyddwr ar gyfer Seilwaith yr Economi, Llywodraeth Cymru|
|Director, Economic Infrastructure, Welsh Government|
|Sioned Evans||Cyfarwyddwr, Busnes a Rhanbarthau, Llywodraeth Cymru|
|Director, Business and Regions, Welsh Government|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Lara Date||Ail Glerc|
|Robert Lloyd-Williams||Dirprwy Glerc|
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 13:31.
The committee met by video-conference.
The meeting began at 13:31.
Prynhawn da. Croeso, bawb. I'd like to welcome you all to the Economy, Skills and Infrastructure Committee meeting this afternoon. I'd like to welcome Members and members of the public watching in. In accordance with Standing Order 34.19, I have determined that the public are excluded from the committee meeting in order to protect public health. This meeting will be broadcast live on Senedd.tv. We have also agreed that, should there be a technical problem with my connection, Joyce Watson will temporarily chair the meeting. We're not aware of any substitutes or apologies this afternoon, and I invite Members to declare any interests now.
In that case, I move to item 2, which is in regard to COVID-19 ministerial scrutiny, and we have the Minister and Deputy Minister with us this afternoon, and officials. If I could ask the team to introduce themselves, I will start with you, Minister.
Thank you, Chair. I'm Ken Skates. I'm the Minister for Economy, Transport and North Wales.
Lee Waters, and I'm the Deputy Minister for Economy and Transport.
And then we've got Sioned, who appears as a blank screen. Sioned, do you want to introduce yourself?
Sioned Evans, director of business and regions.
I'm Simon Jones, director of economic infrastructure.
Andrew? Andrew, you're just muted, I'm afraid, at the moment. Go ahead now, Andrew.
Andrew Clark. Can you hear me now, Chair?
We can, yes. That's fine.
I'm Andrew Clark, deputy director, employability and skills division.
Prynhawn da. Good afternoon. I'm Emma Watkins, deputy director for economic policy.
Lovely. I'd like to welcome you all with us, and thank you for introducing yourselves. That was also a helpful way of doing a quick soundcheck, as well. Minister, if I can, perhaps, start with the first question: can you give us a top-line overview of the amount of applications received for phase 2 of the economic resilience fund and the start-up business grant, please?
Sure. Thanks, Chair. Before I do that, can I just thank you and commend you and the committee and your team on the way that you've been able to maintain scrutiny of the Government during this period, albeit in a virtual way? It has been incredibly impressive, and I'm sure that the public will appreciate the way that you've gone about ensuring that we are properly and thoroughly scrutinised in our actions.
In terms of the second round of ERF, you'll be aware that the application process closed last Friday, and we've received 6,648 applications, with a total requested amount of £96.76 million, I believe it is—but Emma's with us and she can correct me if I'm wrong on that figure. And with regard to the start-up grants, as of yesterday, the numbers were 2,597 applications received. So far, 531 have been approved and are in the process now of being paid. A huge number are still being processed. We have had to reject 601 applications, mostly due to those applicants being ineligible or because they had a high level of incomplete paperwork accompanying their application. We're particularly keen in ensuring that there is no fraudulent activity as well. We've had to exclude a number of applications from the second round of the ERF because of suspected fraudulent activity. I can provide a comprehensive briefing note on the data relating to ERF phase 1 and indeed to the outcomes of the first phase of the ERF, if Members would wish to receive that.
Well, I think that Members would be grateful for that, if that's work that's already been undertaken. It would be useful to have that information, so, thank you, Minister, and thank you for your kind words about the scrutiny of the committee. I should thank you as well for the response to our COVID-19 report, which is a very comprehensive reply from the Welsh Government in regard to all our recommendations, and helpful ahead of today's session, as well.
Minister, when you were previously with us you talked about the possibility of a discretionary hardship bursary, which was particularly interesting to our committee because we were concerned about those individuals and businesses that might fall through the gaps of phase 2. I wonder if you could provide us with an update on your thinking about that particular suggestion.
Sure, absolutely. The £500 million Wales-only economic resilience fund, as I've said on numerous occasions, was designed to fill as many gaps as possible that emanated or were resulting from the UK Government's interventions, primarily through the job retention scheme and the self-employment support scheme. We've always been clear that we probably won't be able to plug every single gap, but we are attempting to address as many challenges as possible using that £500 million, and we're continuing the review the ERF on a daily basis.
Now, as we look to the third phase of the ERF, we are obviously assessing the impact—the beneficial impact—of the first two rounds of the fund, but we're also examining whether there are any, no matter how small, gaps that could still be filled that are real and genuine. We're also awaiting still the response from the UK Government to the UK Treasury Committee's recommendations, which are incredibly important. What we don't want to do is jump the gun on too many fronts. We have actually advanced one intervention before the UK Government responds to the recommendations, and that concerns the start-up grants. There are other recommendations within the select committee's report, but I think we need to await the UK Government's response to it before we consider further interventions to plug further gaps.
We've also said that the discretionary assistance fund, which is managed by local authorities, is available for those who are placed in significant hardship, but we are maintaining a very close eye on any kind of areas of support that might be required for businesses or people who have slipped through the gaps. Now, we've also been clear that the purpose of the economic resilience fund is to target resource, target support at businesses that employ people. The UK Government's self-employment support scheme remains the place that individuals who are self-employed should go to first and foremost. And I said in the Chamber just yesterday, there are still 16 per cent of self-employed people in Wales who are yet to apply for support from that particular scheme. That amounts to tens of thousands of self-employed people who are eligible, who haven't had the support and who may be calling for the Welsh Government to intervene with the economic resilience fund, whereas, actually, we would wish to see every opportunity that's been presented by the UK Government fully exploited before we utilise our very precious and limited resource. So, for example—sorry, Chair I won't take up too much more time on this question—a lot of pressure has come from some market traders to introduce a sector-specific scheme, whereas, actually, provided they have up-to-date books and accounts and they're not generating in excess of £50,000, they're fully entitled to the self-employment support scheme, and we'd steer people, again, who haven't yet applied for that funding towards that particular intervention.
Thank you, Minister. I suppose my thinking on this is we would all have casework in regard to those who have fallen through the particular gaps, and I think the headline that you're saying is you're waiting perhaps for UK Government to come forward with perhaps some other schemes in order to address whether you decide to move ahead with a potential discretionary hardship bursary. But my thought would be, as this is evolving, there are always going to be, potentially, new schemes coming. So, how are we going to—. In terms of constituents that might be contacting us saying, 'Look, I've fallen through the net. I've heard the Government talk about a potential hardship bursary. When are we going to know whether this is happening or not and what the criteria is going to be?', what is the short answer to that?
There is a series of questions about them. One would be: have you really fallen through the net or have you just not yet applied for a UK Government scheme? Secondly, we have that third phase of ERF, which will be used to grow businesses, and there may well be within the third phase sector-specific schemes as well. However, if funding, if support is required for businesses that are still falling through the gaps, then of course we'll consider it as part of the third phase.
But, crucially important to our considerations will be the outcome of the UK Treasury select committee's recommendations and the willingness of the UK Government to accept those recommendations and act on them immediately. So, whilst we have taken forward the start-up bursary before UK Government responds to the recommendations, one of which was to do exactly as the Welsh Government has done, what we can't do is expose ourselves too much to what would be quite costly interventions that really are still the responsibility of the UK Government.
So, if we have constituents coming to us, Minister, we would have gone through the options already—have you tried this, have you tried that?—and often they come to us as elected Members as the last resort. They're then saying, 'We've still fallen through the gap. What do we do?' I'm still not entirely clear. At the moment, I'd be saying to my constituent, 'Well, the Welsh Government have talked about a bursary or hardship fund, but we don't know when that's going to be and they're currently waiting for the UK Government to confirm if they accept the recommendations from the Treasury'—what did you say, sorry, Minister?
It's the UK Treasury Committee, yes.
The Treasury Committee, which is probably a bit cumbersome to—. I mean, what our constituents will want to know is when is the Welsh Government—? If they're going to decide to go ahead with the bursary, when is it going to be? I probably need a short answer to that.
Shall I try and add something?
Yes, please. Absolutely, yes.
A lot of this is around the foundational economy, those who have slipped through the gaps. We have done a lot of work on this. Ken and I are both concerned that there might be people still slipping through the gaps. We've worked closely with the WLGA to identify where there might be gaps, and officials have done a lot of analysis as well. I guess two things to say—and perhaps Sioned Evans would like to add something about the analysis that they've done—is that we're not in a position to help every single business. We've prioritised £500 million from Government budget on top of the UK Government support. So, businesses in Wales are getting the most generous package, but we simply don't have the resource to help every single business that is suffering from what is a 300-year peak in output collapse.
So, the analysis officials did for us is that they weren't able to identify any significant gaps, and as to those gaps they did identify, the risk of fraud and the administration cost of tailoring a scheme to a very small number would be disproportionate to the benefit. I don't know if Sioned wants to say more about that.
Sioned, because I can't see you, you're unmuted now, so if you do want to say something, then please do.
Thank you. I did have my hand up, but it's difficult in this pitch black. I think what I'd want to add to that is that we're working very closely with the WLGA on this. So, the WLGA have come back to us very recently—I think it was at the beginning of this week that their comments came back around a hardship fund. And as the Deputy Minister said, there is a limited amount of resources, and it's quite a challenge for us in the Welsh Government, where we don't have access to all the information that would help us protect public money—i.e. information around, perhaps, what HMRC would have, and like that you would have on a UK-wide basis—and to be able to ensure that we protect Welsh money in the best way possible in terms of the investment made into this and the outcome that we'd be seeking.
So, there are a number of challenges, but we are still working with the WLGA to see if there's a way that this could be addressed, and if there is a way, I'm sure that we would look to pursue that. I is quite tricky at the moment and I can't really hide that, but it is around protecting public money.
And just in terms of your point about constituents coming in, asking for help, we have been organising personal appointments with Business Wales advisors for those who feel they are in the gaps and come forward to their local Members of the Senedd. So, we're trying to tailor the support to those that come on our radar.
Okay. That's really helpful to know. So, they should just phone or contact Business Wales directly to arrange that one-to-one. Is that correct?
That would be ideal.
Okay, thank you. I could pursue that more, but I'm just conscious of time. But other Members might want to come back and come in on that. Sioned, can I just say, if you do want to speak, you can unmute the mike by yourself. So, as I can't see you, just unmute yourself and butt in because there's no other way—
I will do, okay. Thank you, Chair.
There's no other way of you doing it. If other officials want to come in, if you just lift your hand briefly, I'll know that you're waiting as well. Just finally, Minister—and I'll just speed up on this because there's a lot to get through—I'm just conscious that different sectors of the economy in Wales have come out of lockdown at different times and also Wales has come out of the lockdown at a different pace to the UK Government for England, and I'm not getting into the merits of that, but the fact is that there will be a difference in how the economy has reacted in terms of coming out of lockdown at different times across different sectors. Is there any initial analysis that the Welsh Government has done to look at the impact of how different parts of the UK and different sectors have come out of the lockdown?
Well, generally, Chair, because we still have the job retention scheme and the self-employment support scheme, that enables different parts and different sectors to emerge at different points. If those support systems were not in place, then, of course, there would be significant impacts in terms of regional divergence, but because we've got the safety nets still in place, then businesses can emerge at different times safely.
And it must be said as well that, in some respects, some sectors haven't really got started fully even though they've been permitted to start up. I noticed—I live in a border area—just across the border, many businesses that were permitted to open before businesses in the same sector in Wales had been permitted to open remain closed, and that's for a simple reason: it's because still too many people are too anxious about reverting back to old ways of doing things. Too many people are still too anxious to go into shops or to access services in order for businesses to open up and generate sufficient revenue to be viable.
So, those two primary schemes—the job retention scheme and self-employment support scheme—have enabled a cautious approach to be taken by the Welsh Government, and I've always been very clear that the Chancellor did exactly the right thing in introducing those schemes, and had they not been in place, then of course it would have created incredible difficulty in delivering a better, more cautious response to coronavirus and a very steady restart of the economy.
And can I just ask you about a specific? We were talking amongst ourselves as Members at the beginning of the meeting, and we all seem to be getting queries in regard to wedding venues. It looks like, Minister, that this may have already been raised with you. Is there anything that you could say to those involved in that industry in terms of when wedding venues will be permitted to operate again? Because it seems to be that—I looked into this myself—that the Welsh Government are effectively saying, 'Yes, you can open', but local authorities weren't convinced that that was the case because they were still waiting for some additional guidance. Is there anything you could say further on that?
I might bring in Emma Watkins at this point, because I know that this has involved officials as well as Ministers right across Government, given the nature of businesses that are involved and how they operate. Emma, do you have an update on this?
Thanks, Minister. If we're looking at wedding venues, I guess there's a different combination of them, aren't there? You've got churches and places of worship and you've also got hotels, and I guess what you're talking about is, kind of, a hotel that may want to host 70 people, for example. I think conversations are ongoing about that. Clearly, that's a larger gathering of people and, as a Welsh Government, we don't have a position as yet on opening up to larger numbers of people. Again, if there are specific examples, particularly for smaller organisations, please do get in touch with us. If it's a wedding venue that wants to host a small number of people, then there is the review ongoing around hospitality, so we could feed it into that.
And you just mentioned churches there. I've had a few queries on that, Emma. Can churches reopen again for normal services?
I'm afraid I'm not on top of that detail.
I know some churches and places of worship are open. I don't know if they're fully open as yet.
No, I appreciate I'm straying off, perhaps, the area of expertise. That's fine.
Chair, I think the finance Minister yesterday said that a statement would be brought forward regarding wedding venues. And I completely accept the pressure that a number of MSs are under from operators of wedding venues, and I completely empathise with the position that those businesses are in.
Yes. Thank you, Minister. Sioned, just to let you know, we can see you now as well, so, that's good. Helen Mary Jones. Helen Mary, you're just on mute, I'm sorry.
You'd think I'd be able to do this by now, wouldn't you, after all these months? Sorry about that. So, Minister, I just want to ask some questions about the type of additional business support that might be needed, going forward. I wonder if you can begin by giving us your views about the ending of the UK Government's job retention scheme in October and any thoughts you may have had about the possible impact of the job retention bonus that was announced very recently—8 July, I think.
Thank you, Helen Mary Jones. I think, to begin, I'll just restate what I said earlier about the job retention scheme—that that is vitally important in enabling a huge number of businesses to survive the initial shock of COVID-19. Without it, they simply wouldn't have made it through the past three months.
What we've said to UK Government repeatedly is that the job retention scheme should be maintained, particularly for vulnerable sectors that will take longer to re-establish themselves—principally businesses within sectors that involve tourism, hospitality, events, and aerospace. We've seen a precedent now set for sectoral-specific support in the form of the 'eat out to help out' scheme. That is specific to hospitality, so I see no reason why, after this precedent has been set, additional sectoral packages of support couldn't be forthcoming from UK Government. We've had no assurance over whether the job retention scheme would be reintroduced if there was a second wave, or whether it could be utilised for local lockdowns. We await confirmation of whether it will be reintroduced in those circumstances.
I think, in terms of the job retention bonus, it's very welcome, but I'm not convinced that £1,000 bonus is sufficient to bring back those people who are paid very well and therefore carry with them quite a significant wage bill for employers. And, equally, I fear that it could actually be leading to bonuses being given to businesses that were already intending to bring back furloughed workers. But we will await the outcome of that particular scheme. I'm sure that it will be scrutinised very thoroughly by the UK Treasury Committee. They'll assess the benefits and the value for money of this particular scheme.
I personally would have preferred the UK Government, at this stage, to utilise national insurance as a means of maximising job retention. I would have preferred to have seen a reduction in national insurance contributions rather than the Eat Out to Help Out scheme or the £1,000 job retention bonus. I think reducing national insurance contributions or, indeed, increasing the threshold would have enabled a greater number of people to be assisted and to be retained in work. But this is something that I think you as a committee will probably take an interest in in the coming months and certainly that the UK Treasury Committee will take an interest in the months to come. The reduction in VAT was very welcome, I have to say. I would have liked to have seen it extended to alcohol served in pubs. A huge number of small community pubs will not benefit from this VAT reduction, and they are on the line right now. And, in many communities, the pub is the only venue where people can socially interact. Nonetheless, reducing the VAT levels for hospitality businesses was very welcome. I'm not convinced that the meal deal—the Eat Out to Help Out scheme—offers value for money, not least because I have a bank account that delivers me a free Tastecard, which essentially gives me the same benefit as the Eat Out to Help Out scheme, but I get it free, at no cost to the taxpayer, because I've got a certain bank account. So, I'm just not convinced that that particular intervention offers good value for money.
Thank you, Minister. I was going to ask about the sector-specific support from the UK Government, but you've mentioned that that's still being discussed. In responding to Russell George, you mentioned the very important report that the UK Treasury select committee brought out and you're waiting for the Government's response on that. I don't know if you know now or if perhaps you could advise us by when the UK Government needs to respond to that, because there were a number of issues around furlough in that. I know that you and I have often discussed the issue of the new starter for the people who are changing jobs. I know there were some recommendations around that. So, it would be helpful for us as a committee, I think, to know when we could expect that UK Government response. Of course, you won't know and the committee at Westminster, indeed, won't know what the UK Government response is going to be, but it might help us a bit with the time frame, if that's possible.
Absolutely. I imagine that the response is due around about now. I'll need to check, though, and then, of course, it will enable me as a Minister to be able to make a response as well.
Thank you. So, further to the July announcement, can you clarify whether your department has received or expects to receive any additional funds? Well, obviously, it would be funding to the Welsh Government and then you would have to decide how you used it, but are there any consequentials that we'd expect to get from that statement?
So, the £500 million overall figure that was talked about actually includes things that we've already had to pay for and also consequentials relating to programmes that have already been trumpeted. So, the actual additional consequential as a result of the summer statement is around about £12.5 million of new money. But, as you say, obviously, that's going to have to be dealt with by my colleague the finance Minister, and there are calls on that small amount of money from across portfolios.
Thank you. So, just a fairly broad question to finish my set of questions for now: can you give us a sense about what thought you're giving now to the kind of approaches that might be needed to be made to support business over the next year or so—those bits that are within your gift? Personally, today, I wish you were making those decisions about national insurance, but you're not, so we've just got to live with that. But in addition to the requests that you've been making to UK Government, which, personally, I would broadly support, what's your thinking about what you as a Government may be able to do?
Thank you. Well, I'll begin with the third phase of the ERF, and I'd welcome the thoughts and any further recommendations from committee members regarding how we can utilise that final phase of the ERF. I'm hopeful that we can use the remaining money to grow businesses, to accelerate the growth in job opportunities within the economy, but we're also going to be looking at how the Welsh Government can act as an enabling force, as well.
So, UK Government is responsible, primarily, for employment issues and for welfare issues, and that's why they've taken the lead in terms of the self-employment support scheme and job retention scheme. Our role as a Welsh Government is as a convener, bringing together businesses, establishing networks, strengthening supply chains. We'll be certainly doing that, but we're also looking at projects that can act as anchors or magnets to draw in other investment. So, we want to take forward programmes like the global centre for rail excellence as fast as we possibly can. We want to take forward the advanced technology research centre at maximum pace. I'm offering opportunities and incentives for businesses to be able to grow in Wales rather than to look elsewhere, and to ensure, of course, that we use our skills and employability programme to support businesses, because if we can improve the skills levels of people within the labour market, we will, in so doing, enable companies, businesses to be more productive, as well, and innovative and more creative.
Thank you. That's helpful.
Hefin David, you wanted to come in briefly on this one.
Yes. Can you hear me?
Yes, we can.
Okay. I've got a specific issue raised by a business in my constituency that they say applies to many other businesses—I just wanted to raise that. It's businesses that have missed out on support. In this instance it's Focused Recruitment, based at Tredomen business centre. They've been declined support for different businesses because they operate a group VAT structure, which they say is relatively common in the business world, but it precludes them from receiving support. I don't know if you've got any information about that now. If you have, it would be good to hear it; if not, can you find out about that for us?
Yes, absolutely. I'll probably have to make enquiries about this, because the criteria for the second round of the economic resilience fund contains three points. VAT is only one of the three, and you only need to qualify on the basis of two of the three points. So, I'd need to just make further enquiries if that's okay, Hefin.
Okay, and you'll get back directly to Hefin. Thank you, Minister. Vikki Howells.
Thank you, Chair. My questions are on the support available to large employers in Wales. So, firstly, what discussions or involvement have you had with the Treasury's Project Birch rescue scheme?
I have to say that the UK Treasury are very protective of this scheme. They own it, and I think that other UK Government departments are finding that the Treasury are ferociously resisting any attempt to draw down UK Government money unless it's absolutely essential. We've repeatedly said that we wish to be more thoroughly engaged in deliberations regarding Project Birch applications, but it is very, very heavily guarded, I'm afraid. We've been involved in discussions with the Department for Business, Energy and Industrial Strategy, primarily, regarding Project Birch-related matters, so we've been in very regular discussions with BEIS concerning Celsa Steel and other large businesses that may be eligible, and may end up being successful for Project Birch funding. But we've also said to UK Government that it's absolutely vital that Welsh businesses are given full access to Project Birch money, and that funding should be delivered on the basis of need. That's important, particularly with regard to energy-intensive businesses. That's important with regard to the manufacturing sector, where we have a higher proportion of workers employed than the UK average. And so it's vitally important that the UK Treasury, and not just BEIS, work with us with regard to Project Birch.
Thank you. So, would you be able to say what kind of potential you think there might be for other large businesses in Wales to be supported in a similar way to Celsa Steel? I'm thinking particularly of the aviation sector, because the potential job losses that have been announced there over the last week, when you take into account Airbus, BA and GE, are extremely worrying.
We desperately need an aerospace package of support, a sector-specific package of support, for aerospace. We've heard that there may be an aviation action plan in the autumn. Whether that would also cover aerospace is doubtful, I think, but what we need for the aerospace sector is an air scrappage scheme. We need support for a shorter working week for employees within businesses such as GE and Airbus. Action should be taken to ensure that research and development opportunities are secured for businesses within the aerospace sector here, recognising that many of them, including GE and Airbus, are competing with other facilities around the world. Perhaps what UK Government could do right now—and it would come with barely any cost whatsoever—is convene a UK taskforce for aerospace. We as a Welsh Government will be hosting a high-value manufacturing summit from the Advanced Manufacturing Research Centre, which we have financed, and we have built, which will secure the Wing of Tomorrow, and with it, thousands upon thousands of jobs. But UK Government, I think, should play a role in convening the UK aerospace taskforce, which could then assess what other interventions are needed, what other policies are required, to give the aerospace sector the best possible chance of competing successfully against other businesses and other parts of the aerospace family that are involved around the world.
And what role are the Welsh Government and the Development Bank of Wales playing in supporting large businesses in Wales, such as Airbus, Tata and others, possibly GE?
Our role is largely as a facilitator of networks to ensure that we have strong supply chain opportunities for Wales-based businesses that involve those big anchor companies, those large companies. In terms of direct support for large businesses, through the economic resilience fund we've provided around £12.5 million I believe it is, to date, for larger employers, but, you know, it's really the furlough scheme. It's UK Government that has had the macro fiscal levers at their hands to be able to intervene in a way that's required, recognising that these are large businesses that operate globally and that this is a global challenge.
Our role in supporting larger businesses also concerns the development of those enabling projects as well. So, if we look specifically at the Advanced Manufacturing Research Centre, we developed that on the basis of what businesses within the aerospace sector and automotive sector primarily were saying was required in order to futureproof businesses within Wales, in order to make sure that they are capturing future investments, rather than allowing their competitors elsewhere to. We will be taking forward other enabling schemes, but, again, the UK Government has a role in supporting some of those schemes. So, the advanced technology and research centre requires support from the UK Government, so too the global centre for rail excellence, and the automotive transformation fund is going to be hugely important if we are to deliver a gigafactory for Wales as well.
And then finally, and probably most important of all in terms of our support for large employers, is our skills system, or skills network, if you like—making sure that we are able to deliver enough people with sufficient skills levels to be able to meet demand. And if you were to ask a company like GE or Airbus what the most important role Welsh Government can play in supporting them is, I'm sure that they would say it's in making sure that a good pipeline of skilled people is available for them to thrive.
A few more questions, if I can beg your indulgence, Chair. On that note, Minister, thinking about apprenticeships, I know, for example, that the Welsh Government intends to go ahead with its apprenticeship scheme with GE, starting in September, and the Welsh Government has obviously invested heavily within GE as a company. What are you expecting to see from GE in return to show their commitment to the workforce, of whom now almost half—that's almost 600—have their jobs under threat?
Well, Vikki, can I first of all say that I think the news is obviously devastating at GE? It demonstrates the urgent need for an aerospace sector-specific support package to be developed and a UK aerospace taskforce to be convened. But I have to say that I commend the way that GE have gone about negotiating with the workforce, in contrast to some other businesses within the aerospace and airline industry. I think Airbus and GE have proven themselves to be very responsible. I think that's in stark contrast to some other businesses—British Airways are often pointed to with regard to how not to go about dealing with industrial relations and how to avoid getting to the position where workers accuse the business of not caring about their future prospects and welfare.
In terms of apprenticeships at GE, I understand that GE will proceed with around 18 to 22 new starts in 2020-1. I think that figure is lower than usual, for obvious reasons. Nonetheless, to commit to continuing to provide apprenticeship opportunities, even in these uncertain times, is commendable.
Finally, is there something to be said about the psychology of the sector? And how can the Government break down those kinds of barriers, because I understand that the forecasts show that, by the third quarter of this year, the aviation sector will have fully recovered? How easy or how difficult is it for you as a Minister to try and have that kind of dialogue with the sector, to try and encourage them not to rush to redundancies but to hold the workforce, perhaps on reduced hours?
shWe have the Aerospace Wales Forum, which is a superb sector body that brings together all of the key players—all businesses of all sizes—and gives Welsh Government an opportunity to impress upon businesses within this sector the role that we can play, the role that UK Government can play, also to enable to us speak to businesses in a pretty candid way, as you've already outlined we should do. And also, Aerospace Wales acts as a horizon-scanning machine as well, looking at what future technologies, what future developments are required in order to support Welsh businesses. As I've said, we've invested heavily in skills, we've invested heavily in facilities, not just the AMRC but other aerospace facilities. We've helped GE in recent years financially. We've obviously helped Airbus as well.
But my call on the aerospace sector would be not to rush to redundancies if there are alternatives that can be considered and, of course, the shorter working week is one that is being touted very regularly, and that is something that I think has great merit and should be examined by any business within the aerospace sector that faces considering redundancies. But it obviously would require financial support, and that's why we've said to the UK Government that, as part of an aerospace package, a shorter working week intervention would be highly desirable indeed. And we're hearing that it could take until 2023 or even beyond before aviation really gets back to what it was in pre-COVID times. So, that's quite a time lag between now and when you would then see order books begin to expand. Yes, orders are pretty healthy still for many businesses within the aerospace sector, but largely they've been deferred—they've all moved to the right—and in spite of there being some healthy order books out there, they have nonetheless shrunk quite dramatically.
Thank you very much. Thank you, Chair.
Thank you. Hefin David.
Are you concerned, Minister, that the role of businesses in the test, trace and protect strategy has implications for data protection?
Well, as part of the guidance, Hefin, that we've published, we've insisted that businesses should comply with data protection. Through Business Wales and through other channels, we're assisting businesses in understanding the implications of TTP in data gathering. So, whilst I would have had concerns had we not been able to support businesses, had we not been able to produce guidance, I'm actually pretty confident that businesses have all the intelligence, advice and the guidance to hand to be able to operate in a responsible way. But, of course, if any business is uncertain or unsure, they should access support from Welsh Government in order to guarantee that they are utilising data in a safe way.
And this is a huge culture change for many businesses, who wouldn't be allowed to do this in normal circumstances.
Yes, it is, but it's absolutely vital if we are to make sure that we can keep the virus under control, that we can avoid local lockdowns. TTP is going to be vitally important in containing the virus if and when there are breakouts, and we've seen this on Anglesey. We've seen how TTP was utilised on Anglesey when there was something of a local lockdown, but it was utilised very successfully in preventing community transmission of the disease, and in so doing Anglesey was able to recover more swiftly. So, you're right, it is a very big culture change that will require new ways of working and a recognition of data protection rules. However, it's absolutely vital and it's in the interests of businesses to take part in this scheme.
I suppose the concern that I would have, especially if I was a business owner, is: is the guidance enough? Shouldn't it be accompanied by some form of, perhaps, online training, some form of certification? Are you concerned that guidance is a pretty abstract thing for many businesses?
Well, they should also have support from—it depends on the sector, obviously, but they should also have support and mentoring from relevant bodies and from sector organisations. I think you're raising very, very legitimate concerns, but we do have, across the economy, sector-specific organisations. I've already pointed to Aerospace Wales; we have them for all advanced manufacturing businesses—
I'm thinking of things like small bars and restaurants and little, you know—
UKHospitality, for example, will be important in this regard. Those sector bodies do this for pretty much every business, and we're working with as many as we possibly can to ensure that they get information out, that they offer advice, that they offer mentoring if required. And a number of businesses, actually, as a result of coronavirus, are now required to offer advance bookings only. If you take hairdressers, for example, they have to take only advance bookings, therefore they are taking people's data. They have been reminded of their obligations and their duties under the law, but that is absolutely vital, taking that—
Have you got any plans to monitor this over time?
So, monitoring of the data wouldn't, I don't think, come under my—
Monitoring how the data is gathered and how it's stored.
Yes. I'm not sure that would come under my portfolio responsibilities, but it is absolutely vital that businesses do gather as much data as they possibly can to assist TTP—that they do so in compliance with the law.
We'll keep an eye on it. Chair, Helen Mary had her hand up.
I did see, yes, thank you. Helen Mary.
Thank you, Chair. In addition to the questions that Hefin David has raised about the retention of this information, there are obviously data protection implications, but it's been put to me by some women's groups and organisations that there are safety implications too because there are situations where members of staff in hospitality businesses may have made inappropriate approaches, for example, to women and girls on a night out and these groups are really worried about those potentially predatory individuals having access to personal details of those women and girls, their home address, their telephone number. Does the guidance include any reference to those potential safety risks? I must say that the vast majority of responsible businesses would deal with those appropriately in a kind of human resources way, but I do feel obliged to raise it because it's been raised with me. Have those potential safety as well as the more technical data protection issues been addressed with businesses in the guidance, and they haven't been, is that something that you might consider issuing a small amount of additional guidance on, given that it is a worry for some?
I think, in the round, we have been impressing upon businesses why careful and secure management of data is so important. I'd need to check on whether we have made those specific points very clear to businesses. This requires the involvement of officials from more than one department, so I'd need to just check on whether that has happened, and if not, whether it could be undertaken, as you outline. Sorry—Sioned.
Sioned. You're just on mute, Sioned.
There we are. I just wanted to add to that, of course, there is a responsibility on businesses here to make sure—. The general data protection information is available on Business Wales and it's incredibly huge and complex if you think of all the different areas and businesses that we need to work with. There are probably 100 plus bits of information and guidance that we have produced. And the same as with our financial support, we can't hit everything, but certainly, in terms of contacting Business Wales to fill the gap, there is a service there that can help individual businesses if they have particular questions around some of this area. But the general data protection regulations should absolutely cover the responsibility in terms of the data that's captured and what is done with that data in terms of who has access to it. And that is something that would be beyond, really, what we could do, no matter how much information and data advice we gave for that. So, there is that responsibility on businesses to manage this as best as possible and take as little detail as they need to, actually, because the key to all of this is not just to take copious amounts of information; it's to take just the right amount in order to ensure that the TTP can work effectively, and no more than that.
I would have thought, surely, that there's a potential way of an app or a website—where information is put into that app or website where the businesses can't access directly that information themselves. Is there—?
I think the point worth stressing here is we're developing these things at pace. I can't emphasise enough to you the effort that goes on within Government to try and deal with these issues as they're coming at us in the middle of a crisis, when we are dealing with a whole range of issues that, in many cases, we haven't had to deal with before. So, we're trying to do is to get something that is going to meet the immediate needs of dealing with the spread of the virus, that is fit for purpose. As the First Minister says, we plan first and then we announce, so there's a huge amount of stakeholder work going on. The social partnership spirit that the First Minister has committed to is really being acted out in practice. There's a great deal of joint working going on with local government especially. The Minister for local government holds a daily meeting with all the local government leaders on a range of things where these things are being dealt with. We meet with different business bodies. So, in a steady state, with 12 months to plan, you may say, 'Okay, well let's design and an app and let's do A, B and C.' We're not in that position. As Sioned says, businesses themselves have a responsibility to act. Through Business Wales, we have a source of advice as well that businesses are free to take up and the guidance is available for all to see. We're doing the best we can in very difficult circumstances and we mustn't let the perfect be the enemy of the good.
Helen Mary wants to come back in.
I just want to respond very briefly to that, because I think we all know how incredibly difficult it must have been, both for you as a team of Ministers, but even more so for your officials, to respond. But I'm sure that the Deputy Minister would acknowledge that it's also our job to try to ensure that, as a committee, where there are issues and where there are concerns, you are made aware of those so you can retrofit them even if you haven't been able to. Nobody would expect any of this to be perfect, but it is our job to point out where there are difficulties.
And I would concur with those comments. I'd also add that, as Ministers, you ask us as a committee to come forward with suggestions and recommendations as well, of course. But I know you appreciate that.
I think the safeguarding point is a very valid one, and I'm sure it has been thought of, but why don't we go away and discuss with colleagues any mitigations they've already developed and report back?
That would be really useful. Thank you, Deputy Minister.
The next set of questions is from Joyce Watson. Joyce, if I can remind you to just pull your microphone down to your mouth as well. I'm sorry, Joyce, we can't hear you. You appear to be unmuted, but we still can't hear you. Can you just try unmuting again? If you can just—. No, Joyce, we can't hear you. You've done everything right, I think, Joyce.
Can you hear me now?
We can. We can, yes.
I just thought I'd dispense with that, because I stood on it, so I might have put something—. Anyway, just while we're on the—. Just following on, I'm only just going to make a comment. I went shopping this morning—that's not the comment I want to make—but I noticed at the end of my receipt that there was, from a supermarket that I'm not going to name, actually advice if you were suffering domestic abuse at the end of the receipt. I've not seen it before, so I thought it was really, really good.
It's really good, yes.
It's one of the major supermarkets and I refuse to name it. So, I just thought I'd add that—that businesses are helping us well.
But I want to particularly focus here on, and explore, the role that skills can play in tackling youth unemployment, and also the wider economic recovery. You have said that £40 million of the economic resilience fund will be used to upskill people and help find new employment for those people. So, could I ask what your plans are?
Thanks, Joyce. I should just start by saying that skills are going to play a massive role in the recovery, in making sure that we can avoid the sort of long-term unemployment that was suffered in the 1980s, particularly by young people, and that left many communities pretty devastated, with devastating scars. We've been able to learn, obviously, from the success and the lessons of all interventions post 2008, and also it's worth just acknowledging that since devolution we've seen the proportion of people in Wales without qualifications more than halve. Now, in terms of young people, around about 25 per cent of people employed in sectors that have been forced to shut down are young people, whereas across the economy young people account for about 12 per cent of the workforce, and therefore young people are incredibly vulnerable right now.
If we look at back at what happened after the financial crash, we introduced various schemes to support people all of all ages, but in particular we introduced Jobs Growth Wales, which has assisted around 19,000 young people up to now. We're going to be using the Working Wales initiative to support young people with their careers advice, careers development, job facilitation, CV writing, mentoring, interview techniques. We'll be advised by Working Wales experts. We'll also be looking for opportunities for young people through Working Wales in terms of volunteering, in terms of training or employment via the community employability programmes. Working Wales also has a jobs bulletin; that is a live bulletin, it's updated very regularly indeed with vacancies right across Wales. There's going to be a Working Wales jobs fair hosted this month, and for those who are NEET, training and support is available through the traineeship scheme with the intention of making sure that anybody who goes through a traineeship programme ends up in work or in an apprenticeship.
So, there are huge interventions that will come through our network of skills provision and employability programmes, but I would like to just impress upon committee members how much of a challenge this is going to be. We've not seen the sort of scale of joblessness that will likely happen in the autumn, certainly not since 2008 with the financial crash, and possibly even before then. We could go back perhaps to the 1980s and only parts of Wales where we saw such significant job losses. So, the challenge is enormous; we recognise that. It's helpful that the UK Government has now indicated where it intends to intervene, for example with Kickstart. We carefully and, I think, correctly guessed what would be made available from UK Government when we were considering what options they had and what they may do, and I think we can confidently say that the offer in Wales will at least match and in all probability go beyond what is available in England, particularly for young people.
Part of this is apprenticeships; lots of young people are going through the apprenticeship scheme, and lots of young people have equally gone through doing A-levels. We've been asked particularly to ask you for assurances that those people going through apprenticeship schemes won't be disadvantaged.
No, no, absolutely not. Individuals who are undertaking vocational qualifications won't be disadvantaged compared to A-level students. Examination outcomes, as you're aware, have been determined by in-year assessments, and that's been enabled as a result of work-based learning providers reopening face-to-face learning back in mid June. So, I can assure you that they will not be at a disadvantage.
We also note that the first supplementary budget reduced the allocation to the apprenticeship programme by £11.8 million, and the employability and skills programme by £5.9 million. Again, we understand that some of that money might have been redeployed somewhere else, but if you could give us some explanation around those figures, and also some reassurance that it's not going to negatively impact on the area we're discussing.
I'll bring in Andrew Clark in a moment if that's ok, but just to say that, as you can imagine, apprenticeship recruitment fell quite considerably as a result of COVID-19. Therefore, there was a 5 per cent reduction in contract value to apprenticeships for 2020-21 to providers, but I can assure Members that that won't lead to individuals being unable to access apprenticeship opportunities. Andrew.
When we made those transfers through the first supplementary budget, it was because we anticipated a significant decrease in demand during the initial COVID period. We have seen that—we've seen a reduction in apprenticeship starts as people have been going on furlough and businesses have been shut. We're not yet seeing a reversal in that, but part of the £40 million COVID commitment will help us to restore funding to those activities sufficient to cover the likely recruits in those areas. Of course, it's only now for part of the year, rather than for the full year.
Okay. We also note that, within the sector, there has been some growth. It's not all shrunk; there has been some rapid innovation that's come about, and I know it probably interests Lee, because lots of it has been in our area. So, it's going to be tough—there's no question it's going to be tough, in terms of employment opportunities, particularly for young people, because they haven't even got any experience behind them. In terms of the new innovations that have come out and our focus that has been on that, are there specific opportunities that might be created through your Government's schemes to help those young people have at least an opportunity to start whetting their appetite and gain some experience?
Indeed, there are, Joyce, opportunities; it's not all desperately grim. There are some significant opportunities, particularly in terms of green growth. So, a green housing-led approach to the recovery will enable us to focus on creating jobs within the housing sector, improving skills and making sure that some people can reskill or upskill in order to gain employment and to gain training opportunities within that important sector. So, construction will, obviously, play a very significant role.
Businesses have already shown incredible innovation in how they've responded to the coronavirus, whether it's through adapting what they do ordinarily or regearing in order to produce different goods. There has been an incredible degree of innovation, and there has also been an unprecedented degree of collaboration, not just between businesses and across sectors, but between Government and business as well. So, on the personal protective equipment front, I think the work that's been carried out by Welsh businesses really has been exceptional.
So, there will be opportunities—there will be very significant opportunities in certain areas. If we look at the way that particularly start-ups have responded to coronavirus, we've seen a 60 per cent increase—a 60 per cent increase—in smart innovation projects year on year. I can't recall that ever happening—since I've been in Government, that has not happened. That demonstrates the creativity, the imagination and the innovation that's out there, and how, perhaps, as a result of necessity, businesses are responding in a way that was pretty unimaginable before coronavirus.
Just finally from me, you talked about collaboration, and one thing that has happened in the past is about shared apprenticeships and giving a spread, if you like, to businesses but also to the apprentices themselves to have an opportunity on both sides to carry, if you like, or share the burden and share the experience. I know it's early days, and I know, as Lee quite rightly said, a lot has been done in an extremely short time, but do you think that that might be one of the useful tools that could be used, going forward?
Yes, absolutely. I'll bring in Andrew Clark again, if I may, but we've operated some very successful pilots in recent times—the shared apprenticeship scheme and the personal learning account pilot as well, which, I think it's fair to say, will now be utilised, they'll be broadened, they'll be widened in terms of who can access those schemes, and they will offer an ideal opportunity to many, many young people. Andrew.
Indeed, Minister. The shared apprenticeship schemes have proven to be pretty effective at sharing an individual across several different employers during their training period, and there are two or three different models for the way we do it in Wales, and they all seem to work. So, where we have a collective of businesses that would benefit from one or more apprenticeship recruits, we can expand that process quite easily.
There are also many other things that we can do to assist on the apprenticeship programme, the biggest perhaps being an incentive to employers to recruit that apprentice in the first place. Because we know that, once somebody enters an apprenticeship and then successfully completes it, whether it's shared or not, they stand a very, very, very good chance of being retained by the business that has employed them. It's probably got the best outcome, for certainly a young person, of any of the interventions that Governments across the United Kingdom have available to us. So, we actively encourage, shall we say, the taking on of an apprentice, as opposed to what the Chancellor announced the other day, which was £1,000 to take on a trainee for a certain amount of time, because that outcome, we know, isn't going to be as good.
So, it isn't just the apprenticeship programme; there are other interventions as well, and it's important to think about Working Wales, where we have the most professional of advisers for independent advice and guidance through all ages of the population. It's probably worth saying as well that the careers company has now trained all for their qualified advisers in the Working Wales arm of the business. They've taken everybody who would normally be working in the schools or the college arena and upskilled them to enable them to work in Working Wales, in the anticipation of a significant increase in demand, which of course is unfortunate but we have to plan for. And through that advice and guidance, they should be placed onto the appropriate route, per individual, that will suit their particular need.
I think it's fair to say that, just as we had the broadest and probably the thickest and deepest shield to protect businesses through the UK Government's support and the ERF of anywhere in the United Kingdom, also now, as a result of that network, all of the programmes that we've been able to outline, the establishment of Working Wales, we've probably got the best battleship to combat the threat of mass unemployment. It is going to be a massive challenge, a huge challenge, of that there is no doubt, but we do have all of the systems and programmes in place.
Minister, just a couple of weeks ago in Plenary, you said that,
'we'll also need to refashion and reprioritise the apprenticeship programme, further education and university offerings'.
What did you mean by that, just briefly?
Well, in many ways that's already happening. We're seeing how a lot of online learning is taking place. The Open University has been remarkable in this regard, and more blended learning as well. We know that, as a result of coronavirus, certain sectors will see some shrinkage, other sectors will see growth, some sectors will see accelerated growth. The focus that we'll be placing on people, place, green recovery and additional recovery will mean that training providers that are HEIs and FEIs are going to have to respond to what businesses need, and we will be focusing on those parts of the economy related to digital growth, digital innovation and green growth. It stands to reason, therefore, that education and training providers will have to respond accordingly.
Thank you, Minister. We've got 20 minutes left and we've got four subject areas to cover, so that's approximately five minutes for each subject area, if Members asking the question and the Ministers responding can take that into account. Vikki Howells.
Thank you, Chair. So, it's bus services from me. The bus emergency scheme—an overview of that was recently announced by the Deputy Minister, Lee Waters. What will each phase of delivering the scheme actually involve, and how will the funding for that be allocated?
I'll ask Simon Jones to come in, because he's involved in the day-to-day conversations with the operators. I'd just say, in general, again, we've been developing at pace a package of response to keep buses—a core network—going for key workers at a time when passengers have largely abandoned public transport right across the world; this is not exclusive to Wales. As these are commercial operators, clearly, their business model has collapsed. So, we're trying to step in to provide some stability. The amount of funding from the Welsh Government has not declined; it's the farebox, as it's been referred to, that has fallen away, and that clearly places them under great strain. So, we've been developing these different schemes at pace and in dialogue with the industry. Simon, perhaps you can talk through some of the details of the different phases.
Sure. The first phase was over the last three months or so and where we were, as the Deputy Minister said, trying to stabilise the industry, putting in funding that was based on historic levels of mandatory concessionary fares and bus services support grant. We used that as a proxy, really, to put money in in the short term, but we recognise that that isn't really satisfying the needs of different operators. So, we are moving to a world where we are trying to fill the gap between lost revenue and operating costs from the operators. So, we've spent quite a lot of time working with the operators to understand exactly what their revenues and costs have been and what they will be in future, and then using that as the basis to provide future funding. Now, that isn't straightforward because it's quite a dynamic environment—as, potentially, more passengers get onto buses, the revenues will increase, but, as operators bring people back from furlough, so will costs. So, there's quite a dynamic going on there.
You will recall from previous discussions that service levels have been massively suppressed during the lockdown. We're exploring with operators how they can begin to increase service levels, and the first step was taken recently with the announcements about how operators could, with suitable mitigations, relax the 2m rule on buses, as long as those mitigations were in place, to allow them to be able to carry more passengers and generate more revenue. So, it's quite a dynamic situation, but it's highly likely that BES, in some form or another, will be with us for a little while, because we're not anticipating that we will see pre-COVID levels of passenger demand and, therefore, pre-COVID revenues for the bus operators any time soon. There's been quite a lot of analysis done on passenger sentiment. We've got to work to continue filling that gap.
Just to be clear, BES is 'bus emergency scheme', and not the dancer from the Happy Mondays.
I'm glad you clarified that for us, Deputy Minister. [Laughter.]
With regard to the funding itself, then, would you be able to give us a quick breakdown of how much funding will be available for each phase of that, and to give us some information about whether it's additional funding or whether it replaces existing funding streams like the bus services support grant or the concessionary fares scheme?
So, as we sit here now, the money that operators are receiving is money that was in the original budget for paying mandatory concessionary fares and bus services support grant. But, clearly, the operators are not doing the miles and so they're not qualifying for the bus services support grant, and they're not carrying the number of concessionary fare passengers. So, that money isn't going to the operators through those scheme, and so the BES, as we call it, is providing that money in a different way to operators.
Okay. Will there be any obligations placed upon operators in order to access the funding, and how might those obligations change as the delivery phases develop?
So, there are obligations, and the number of obligations has been increasing as time has gone on and as we've understood more about what we need to be able to take this forward. I talked about the financial information. The requirements for financial reporting have become more onerous as we've moved into the latest phase of the BES. Clearly, we need to understand that public money is being appropriately used. We need to make sure we understand exactly what costs and revenues each operator has. We're also asking operators to provide much more detailed information about their operations, and that will gradually increase. We're doing things like requiring operators who receive the BES to follow our COVID guidance, to make sure that that safer environment is provided, and things like the travel safer guidance that you might see on the trains—the Transport for Wales travel safer guidance—we're asking operators to carry that as well so that passengers have a consistent understanding of what are quite complex rules, which are changing because of things like the 2m social distancing. We want to be able to explain that concisely but consistently to passengers, because we realise how difficult this stuff is.
Okay, thanks. Two more quick-fire questions: did you consult—did Welsh Government consult—with bus operators and, indeed, community transport operators in designing the scheme?
Lee Waters, did you want to come in, or are you happy for Simon to—?
I'm conscious that time is short, so I'll let Simon—
Absolutely. Thank you. I appreciate that. Simon.
So, since the start of the crisis, we've been meeting with bus operators on, approximately, a twice-a-week basis. The Ministers have both met with the Confederation of Passenger Transport and some of their members as well a few times. We've had a number of consultations with wider groups, including community transport operators, when we've introduced new guidance, most recently on the 2m stuff, and we've got more sessions with them next week, where we're talking about face coverings.
Thank you. My last question is about the fact that there's obviously been insufficient legislative time for the Bus Services (Wales) Bill to go through now. If you don't think you can provide us with a quick-fire response to this, maybe a written response might be better, if the Chair agrees, but what we're really looking to find out as a committee is what alternative options are being considered now—or different contingencies—because of the fact that that Bill will not be going through.
So, I think we have been quite clear about this. This is part of our something-for-something approach to business that we've advocated from the economic contract and beyond. We are significant funders of the industry in normal times; some half of the funding comes from the Government, not from their own commercial revenue-generating arms. We had hoped to work with them for a more strategic reform of the regulations, and it's still our hope that the next Welsh Government, whoever forms that, will want to take forward the franchising approach, because we still think that is needed. But, in the meantime, there are things that we can do to try and get a more strategic approach through the funding conditions. So, as Simon has set out, we've got a series of short-term packages we're putting together and feeling our way through this crisis, not really knowing where the demand will peak and flow and what support's going to be needed from us as we go through that. But we want to get onto a longer term footing. That's about a five-year contract with the companies, which will have a series of conditions set to it, which allows us as representatives of the taxpayer to make sure there are safeguards in place about fare rates, about standards, about routes, so that we can make sure that for the money we're putting—significant money we're putting—in, we're getting public interest returned.
Okay. Can you hear me?
Okay. So, with regard to Transport for Wales and the train service, what action is the Welsh Government taking to spread the peak in the service, and what dialogue has been had with employers to enable that to happen?
So, a number of things here: Transport for Wales themselves have been engaging with various large employers and industries. I separately have been engaging with large employers to see how we can shift the more remote flexible-working model that we've all had to adopt during the virus onto a more medium-term footing, because that does allow us to ease congestion at peak times. As we've demonstrated—as we're demonstrating now—there's no need for people to be moving around unnecessarily for meetings to be all at the same place at the same time when we can work in different ways. So, that, I think, has significant benefits, and the South East Wales Transport Commission report, in their work today, point to this giving us some breathing space in easing congestion that we need to make the most of. So, as part of that, Hefin, we are looking at how we can both avoid congestion on the roads, but also avoid peak-time demand on public transport, where it's almost impossible to accommodate the levels of people we've seen before with the social distancing measures.
Okay. I wouldn't over-egg the benefits of this method of communication, mind. It's not ideal for everyone. Can I ask about dialogue on working hours and flexible working? Is there a discussion about that as well?
Yes. I think we all recognise this is not something—. Like you, I certainly wouldn't want to be sitting behind my desk at home all day every day, but the ability to work flexibly and remotely to suit people's circumstances and the business interests as well—
I'm thinking hours flexibility rather than—you know, some people have to be in work, but hours flexibility.
Yes. So, some businesses are telling us that 75 per cent of their employees don't need to be at their desk every day. Welsh Government's own calculation, for example, is that something like only 20 per cent of Welsh Government employees need to be at their desk every day. So, there'll be some churn in that. It'll be different for different businesses, but I think, as we go forward, the old patterns fall away but we're still feeling our way on what the new pattern looks like. But 'flexibility', I think, is the right word.
I think this has huge—[Interruption.] Sorry, I was going to just add that this has huge potential benefits beyond transport in terms of decarbonisation, in terms of renewing town centres, if we can create working hubs, remote working hubs, on the high street and so forth. This is a huge policy agenda that draws together Lee, myself, Hannah Blythyn, Julie James and others in our endeavour to use remote working in order to revitalise communities.
These new community venues are very interesting. I don't think working from home is good for everyone. I think that could be unhealthy for some people.
Yes, there's a lot of evidence that supports that.
For example, yesterday we announced some repurposed Valleys taskforce funding to bring disused buildings in Valleys towns outside of the main hubs—sort of secondary towns in the Valleys—to use that funding to bring buildings back into use, and to particularly look at co-working spaces within those towns. So, it may be that someone in your constituency, Hefin, wouldn't need to be driving into Cardiff every day. They may want to come into Cardiff once or twice a week, and the rest of the time they may want to be in Bargoed high street, for example, in a hub. So, I think there are real opportunities as well to regenerate our high streets.
Well, you've given me the opportunity there to say that the Caerphilly Miners' Centre has benefitted from Welsh Government funding to create community spaces, so that's a good bit of news there—credit where it's due.
The management of Transport for Wales's emergency measures agreement—is that ongoing indefinitely? Because at the moment there's no commitment beyond October. Are you likely to extend that?
I think I'll ask Simon to come in here.
Simon, just unmute.
Simon, you're muted.
Sorry. Yes, the emergency measures agreement was a temporary arrangement to buy us time to figure out what to do next, so we are working through that. There are intense commercial negotiations going on with KeolisAmey. You can imagine that—you know, the crisis has massively impacted the financial model that was the basis for the contract, because they've lost so much passenger revenue over the last few months, and those forecasts that I was talking about earlier on will have a significant impact on that. We've created a programme structure inside Welsh Government to look at the options, and work is happening at pace at the moment to give advice to Ministers on where we go next with this, but this is a live issue that's being worked on as we speak.
And any idea—the perennial question—when we're going to know?
We are aiming to get a solution before Christmas on this, and it may well happen considerably before that. It depends on the commercial negotiations, which are taking place with the operator at the moment.
Okay. And we've got concerns about the new and refurbished rolling stock, which requires driver training—could that cause problems for the ability to deploy new rolling stock?
Shall I take that? So, it has been a challenge. Ministers have spoken with ASLEF, amongst others, about this over the last few weeks. TfW have now advised us that ASLEF is expected to be releasing its requirements for how crew can be trained this week, so we are expecting the training to commence over the summer so refurbished stock can enter service in the autumn.
So, we shouldn't expect to see any reductions in rolling stock as a result of the crisis.
Not because of driver training.
Helen Mary Jones.
Thank you, Chair. Just a couple of questions about safety on public transport. I'm very glad to see the announcement about the introduction of masks. Ministers will be aware that Unite has called for screens in taxis and public hire vehicles to become mandatory to protect drivers. Has the Welsh Government considered introducing any legislation or changes to the current licensing regulations and possibly providing financial support for drivers to install screens?
Well, vehicle safety is a reserved matter, so the Department for Transport is in the position to provide advice to operators and local authorities on the best risk-based approach to take on that.
That's helpful. Would the—? Dependent, obviously, then on what they say, would the Welsh Government consider making financial support available to provide for the introduction of screens, whether or not they become mandatory?
Well, again, this is not something that's devolved to us, so we don’t have budget for that. We obviously work closely with the trade unions in the taxi sector and are obviously part of an ongoing dialogue with them about all safety matters.
Thank you. That's helpful. During a previous evidence session, Unite referred to a trial being undertaken through the Welsh Local Government Association on the use of screens on buses. You'll obviously be aware of that, Deputy Minister. Do you have an update on that and do you have a view of how useful that's likely to be?
Well, there are some operators who have come up with some innovative ideas, but these need to be tested and approved by the Driver and Vehicle Standards Authority to make sure that they are compliant and they're not accidentally counterproductive. Obviously, the way the virus moves around is still a source of discovery, so that needs to be done very carefully. I'm not sure if Simon has anything to add on that.
Yes, just to say that cleaning and maintaining these things is a real challenge for operators. Some of this stuff might be easier on coaches, where the gap between the top of the seats and the luggage compartment is shorter, but, on buses, it's much more of a significant problem to maintain what might be flimsy plastic screens. There are other safety concerns, then, that need to be taken into account.
That's helpful. Thank you. And finally from me, how would you respond to the comments from the RMT that some UK train companies have introduced stronger protective measures for their staff compared to those that have been introduced by Transport for Wales? I think they were referring, for example, to certain parts of the trains being screened off for only staff to access. Do you have any comment on that, and are there any additional safety measures that you believe need to be introduced?
Well, we've been meeting regularly with the RMT and the other transport unions and having an open dialogue about the best way to proceed. RMT in particular have been calling, for example, for all passengers and staff to have masks from early on, so I'm not surprised to hear them say that. They've been consistent in their position, and we've been explaining our thinking as it's evolved with them. We've had a good relationship with them. I'm not sure if Simon wants to add any further—.
Thank you. That's helpful.
Sorry, just to say, a lot of the discussion with the RMT in particular has been about face coverings.
Okay. Thank you, Helen Mary. If I could just ask perhaps three or four final questions: what assessment have you made in regard to what further support Cardiff Airport might need?
Shall I come in on this?
Just to say regional airports, Chair, right across the UK are in a pretty desperate state as a result of coronavirus but also because of the historic debt that they're carrying and with barely any fares having been generated over the past few months. Cardiff international airport is in a different position. It's under incredible pressure, obviously, but, as a result of not carrying so much debt—anywhere near as much debt—having gone through quite an incredible transformation, it is, metaphorically speaking, something of an Aston V8 compared to the Citroen 2CV that a lot of regional airports around the UK now are.
Cardiff international airport does have a strong future. However, of course, given coronavirus, we are working very closely with the executive team, with the board, to determine future funding requirements for the airport. That second tranche of the loan that has been discussed on a very regular basis is now out of date. We will assess what sort of support is required for the airport, moving forward. But, really, the gift is in the hands of UK Government in regard to aviation and the future of regional airports, including Cardiff international. I've written on numerous occasions to UK Government Ministers regarding the need to address, first of all, the disproportionate safety and security costs that small regional airports are shouldered with. They can equate to more than 30 per cent of their operating expenses. That is huge, huge, for small regional airports, and, of course, we've asked for public service obligations to be introduced for entry into UK and European routes. We've asked for devolution of air passenger duty, as I've already said. We've heard that there may be an aviation action plan later this year, in the autumn. If there is one, we would hope to see within that plan these requests being addressed directly and those interventions being made.
And when will you know what the future requirements of Cardiff Airport are?
Well, officials are working with the airport right now to understand the future funding requirements of the airport, and how it could most likely be provided. Do you have a time frame at all, Simon?
It's a very, very difficult issue for the airport. Like all airports, it's very difficult to forecast into the future what COVID is doing to demand. It depends on things like second waves, it depends on people's confidence returning. So, we've got some very rough and ready estimates, but it's really difficult to forecast the future and what future passenger demand is, and revenue is absolutely directly linked to passenger numbers. That's a real challenge, but costs are not linked to passenger numbers. So, if we see passenger numbers decline dramatically, that means revenues go down. That doesn't mean that the costs of operation of the airport go down. So, it's quite a complicated picture.
I understand the complications of the questions I ask, of course; it's difficult to predict. But if I can move on to something else, perhaps, when will the business case regarding the transfer of functions into Transport for Wales be published, and what impact has the pandemic had on the plans?
COVID has had an impact on this work. We've been looking in the first phase at active travel and bus-related responsibilities transferring over, but, Simon, do you have any sort of time frame now on this?
So, the work that we're now doing on buses, particularly around the bus emergency scheme and how we draw work more closely with our colleagues in local authorities will have an impact on functions that get transferred into Transport for Wales and how those functions get discharged. I think the lion's share of the rest of the work that we were considering transferring is around highway functions. Because of COVID, we've had to pause that work, and that will be reconsidered in the next Senedd term because we simply cannot devote the resource required to transferring those functions now whilst we're trying to deal with COVID.
Thank you for that, Simon. I notice that your framework for recovery document says, 'It is vital that we seize on the changes resulting from the pandemic which can have a positive impact long into the future'. How is that going to be achieved for transport in particular, and what are the challenges?
Shall I have a go? The Deputy Minister just talked about things like the remote working activity and the remote hubs activity. That's potentially a profound change to our transport networks and the loadings that the transport networks might carry. We've talked about buses and the potential restructuring around buses. So, there are significant challenges with these, particularly trying to do these during a pandemic, when resources are really stretched. But there are significant prizes as well.
Yes, okay. That's a big question that probably demands a bigger answer, so I think, given the time, it hasn't perhaps done it justice so perhaps we'll pick that up following the meeting. Last question—a brief question—from Helen Mary Jones.
Thank you. This is on a completely unrelated matter, and it's just that some correspondence has come into my inbox literally while we've been talking, and I know that this is a matter that Joyce Watson has raised in other contexts. I've just been contacted by a constituent who's told me that a major supermarket in their area has removed all their social distancing. They're not requiring people to queue outside and come in in certain numbers, and they've taken away the one-way systems. I'm sure the Minister will be really concerned about that and I'm going to name the particular one that I've been told about: it's Tesco in Cardigan.
Just responding to this constituent's concern, I'm really worried that these big businesses may not be aware—and they jolly well should be—that the 2m rule is still a legal requirement, and I'm concerned about the staff safety, because they're not in a position to complain, perhaps. Now, obviously, I will write to the particular store that this constituent's mentioned to me, but I wonder if Ministers would be prepared to see if this is a broader problem—if this is just one store that's gone rogue or if this is a broader problem, and, if so, perhaps make some representations at the highest levels because you may be able to reach people at a level that we can't. It may not be widespread, but, if it is, I'm sure you'd share my concern, Minister.
That's fairly unusual, isn't it, because you would have thought that Tesco would operate on a UK-wide basis, as well?
Absolutely, and just to assure members of the committee, I wrote to supermarkets just yesterday.
Sorry—Lee Waters, did you want to come in there?
I picked it up, yes.
Thank you, Minister.
Just to reinforce that, really, we're conscious, as part of the changes we're bringing on 27 July, on the introduction of masks on public transport, part of that is tightening of the regime for supermarkets, which we've written to them about, where we're reminding them of their obligations on social distancing and suggesting a range of measures they need to introduce, and one of them could include masks. So, even though we've not saying at a Wales-wide level we're going to make it compulsory or required, it could be that an individual supermarket may decide that the best way of dealing with social distancing in their context is to do just that. So, just to underline the point, we're conscious that, as time goes on, people's behaviours lapse. People get the sense that everything is back to normal, and clearly it isn't, so we're reinforcing to supermarkets their obligations under Welsh law to put in a series of measures to make sure that people behave safely.
And, as always, of course, we should just be conscious that the information that we've been informed of might not be true. So, we better check that out. Joyce Watson.
I can tell you that it is true because I've been at the Tesco this morning and, whilst some things were really good before, it's a free-for-all. Also, trying to get out of the way of anybody was an absolute nightmare—and I mean a nightmare—in terms of possible transmission for myself, for other people, for the staff. In terms of masks, I think I spent four occasions trying to dodge someone with a mask who suddenly became superwoman and was so close to me it was just really scary.
So, the point here isn't about my experience; the point here is about people's experience, but more importantly about all the good things that they were doing, because they were one of the best, in my experience, in terms of their one-way systems, in terms of the marking, queuing up before you went in and also queuing up before you went to pay for your goods, but it's disappeared. And what worries me—and I know that you've written to them—is it's feeding into the very time when we're going to expect more people into mid and west Wales because of the easing up of people's movement and it's—
Okay. I'm just conscious that time is short.
So, if you can, urgently ask local authorities to take some action because that's where the action should be taken.
Okay. I think that's probably more of a statement. Is there anything you'd like to conclude with, Minister or Deputy Minister?
All I'd say is it just reinforces why we've been so cautious about seeing face coverings and masks as a panacea to this because there is the unintended consequence of people's behaviours, thinking that they are somehow more protected. And we're not relying on one intervention. As I say, we're relying on supermarkets and other shops themselves to make sure they're adhering to the guidelines. They have some flexibility in how they do that in their own setting, but social distancing must be maintained because the disease has not gone away.
Okay. Can I thank the Minister and Deputy Minister for attending this afternoon? And as we are at the end of term, I think it's also worth saying a thank you to the Welsh Government officials and the wider civil service for everything that they do. We appreciate it's been a difficult number of months and we appreciate the extra work, commitment and, no doubt, stress that's been placed on you, so thank you for all your work as well. And I should also say, of course, thank you to our staff at the Senedd, particularly our own clerking team, the researchers, the translators, the IT and broadcasting team, the wider integrated team—we know the efforts that you've been putting in over the recent months as well, so we appreciate all that you do.
So, with that, can I wish Members, as well, as stress free a recess as possible? I appreciate that we're back a number of times during the summer, but I hope that Members will be able to take a break as well during this period. So, thank you. And thank you, Ministers.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).
that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(ix).
Cynigiwyd y cynnig.
And with that, I move to item 3, and, under Standing Order 17.42, I resolve to exclude members of the public from the remainder of the meeting.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 15:11.
The public part of the meeting ended at 15:11.