Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd

Economy, Infrastructure and Skills Committee - Fifth Senedd

25/11/2020

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Hefin David
Helen Mary Jones
Joyce Watson
Russell George Cadeirydd y Pwyllgor
Committee Chair
Suzy Davies
Vikki Howells

Y rhai eraill a oedd yn bresennol

Others in Attendance

Alan Woods Dirprwy Gyfarwyddwr, yr Is-adran Addysg Bellach a Phrentisiaethau, Llywodraeth Cymru
Deputy Director, Further Education and Apprenticeships Division, Welsh Government
Ken Skates Gweinidog yr Economi, Trafnidiaeth a Gogledd Cymru
Minister for Economy, Transport and North Wales
Lee Waters Dirprwy Weinidog yr Economi a Thrafnidiaeth
Deputy Minister for Economy and Transport
Simon Jones Cyfarwyddwr, 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

Andrew Minnis Ymchwilydd
Researcher
Gareth David Thomas Ymchwilydd
Researcher
Lara Date Ail Glerc
Second Clerk
Phil Boshier Ymchwilydd
Researcher
Robert Donovan Clerc
Clerk
Robert Lloyd-Williams Dirprwy Glerc
Deputy Clerk

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

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

Cyfarfu'r pwyllgor drwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:47.

The committee met by video-conference.

The meeting began at 09:47.

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

Croeso, bawb. I'd like to welcome Members to committee this morning. In accordance with Standing Order 34.19, I determine that the public are excluded from this committee meeting in order to protect public health, but the meeting is being broadcast live on Senedd.tv. We have previously agreed that Joyce Watson will stand in as the Chair should there be any problems with my connection. We haven't got any apologies or substitutions this morning, and, if there are any declarations of interest, please say now.

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

No. In that case, I move to item 2, and there are a number of papers to note this morning. We have 2.1, a letter from the Minister for Economy, Transport and North Wales to a letter we sent on 25 February, and we just got a reply with an apology now on 17 November.

Then, 2.2, we have a further letter from the Minister for economy and transport in regards to an update on the decarbonisation of transport report.

And 2.3 is a letter from the Development Bank of Wales following the scrutiny last week. They had sent an earlier letter to us, and we made reference to that in the meeting, so that's just being published for information. 

And that's all the letters to note this morning, if Members are content to note those items. Thank you.

3. Craffu Cyffredinol ar Waith y Gweinidog
3. General Ministerial Scrutiny

I therefore move to item 3, and this is general scrutiny with the Minister for Economy, Transport and North Wales, Ken Skates, and Lee Waters, the Deputy Minister for Economy and Transport. So, I'd like to welcome you both to committee this morning. You've got three officials with you, and if I could ask them to introduce themselves for the public record.

Good morning. My name's Simon Jones. I'm director of economic infrastructure in Welsh Government. 

Sioned, you're just on—sorry, you're on mute. Sorry.

Apologies. Bore da. Good morning. I'm Sioned Evans, I'm director of business and regions in the Welsh Government.

Good morning. I'm Alan Woods, I'm the deputy director for further education and apprenticeships within the Welsh Government.

Thank you, and thanks to your officials for being with us this morning as well. If I can just start with asking some questions really around the commercial property market. I noticed, Minister, in the SQW report on commercial property, it's suggesting that there's a need for Welsh Government to plan to facilitate between 300,000 sq ft and 790,000 sq ft of floor space each year on a rolling programme over three years. I wonder do you agree with that analysis, and how does that compare to the amount of commercial property floor space that the Welsh Government currently facilitates each year?

09:50

Thanks, Chair; it's good to be with you this morning. The SQW work was extensive. Its report has essentially now superseded work on the property development plan, and is the property development plan. You're right, it points to the need for between 300,000 sq ft and 790,000 sq ft of floor space. We're on track at the moment to deliver at the lower end, the 300,000 sq ft of space, each year over a three-year period. But, given where we are with the pandemic, I think it was right that we conducted as well, internally, a mini-review of what is actually needed, particularly in regard to the increase in remote and multi-place working. So, we've been considering this internally. Just recently, actually, at policy board, we were looking at demand for office space in particular, and so 300,000 sq ft is a reasonable delivery size. I think it's also worth pointing out, actually, that, since late 2018 and the original property development plan coming into existence, we've delivered more than 0.5 million sq ft of new floor space, and that's been either facilitated, delivered, or is in the process of being delivered.

Can I ask, though, do you agree with the analysis of the SQW report in regards to the 300,000 sq ft to 790,000 sq ft—

Absolutely, yes. There's no reason to disbelieve that. I think, given that the landscape is so, so changeable right now, though, and there's a lot of work concerning the remote working hubs, for example, it's absolutely right that we further interrogate what is needed in the immediate future and at the same time deliver at the lower end of that scale, which we are doing. I don't know whether Simon Jones—

It's worth pointing out that there's a demand for industrial space that perhaps is not impacted so much by the remote working agenda, but nevertheless the volatility of the economy means that it's probably prudent to stay at the lower end for the moment, despite that healthy demand for industrial premises.

Yes, my own experience from a constituency point of view is very different. The example I would give is the Laura Ashley group, which went into administration, actually, and 350,000 sq ft of properties became available in just one town in Wales, and all were under offer at over the asking price to local businesses, medium and small businesses, and they've all gone. Many businesses were unable to be accommodated. So, what more perfect example is there of showing market demand? I don't know from my experience—I'm just asking Simon Jones and the Minister here for their view on this—but perhaps the lower end is not ambitious enough, even though we're in a pandemic and there are difficulties for businesses. As Simon Jones points out, industrial is very different to office space. But do you think there is room to be more ambitious there?

Well, you're right, Chair, in certain parts of Wales, particularly for light industrial space, the demand is quite considerable. So, we're monitoring demand constantly and, clearly, if demand is demonstrated to be increasing then we will increase the provision of space. But it's a rapidly changing and highly uncertain environment that we're operating in, so going for the lower, more prudent level is in the best interests of the public purse right now. But, as I say, we're constantly monitoring it.

It's also just worth reflecting on how we deliver this property. It's not all done by direct investment. It's not all directly delivered, which is the most expensive way for us to do this work. A significant proportion of the premises are delivered through the private sector, where we provide a top-up grant, a property development grant, to the private sector. So, we need the appetite from the private sector as well to invest the up to 75 per cent in the most economically—you know, depending on the area, up to 75 per cent of the cost of the scheme. So, it's not just about what we can do, it's about what the private sector can do. And a significant amount of this is also delivered using European funds, and we don't know what's going to happen to those European funds come the end of the year as well.

09:55

On that—and perhaps I could address this to Simon, as it's related, really—you're talking about the level of funding that would be required; have you got any view or estimates yourself in terms of the level of intervention that's needed from a cost perspective, compared to, perhaps, current expenditure?

There are quite a lot of variables in that, Chair. So, clearly, the volume that needs to be delivered is one. The mechanism that we use to deliver it—as I said, if we do this through partnership with the private sector, the public pound can go much, much further. Light industrial is a lot cheaper to deliver than office space, for example. So, it very much depends on what the demand in the market is in particular locations for different types of premises. It's quite hard to put a specific number on that.

Okay. I've got some further questions on that, but perhaps I'll bring Suzy Davies in on this point as well.

Just to follow up on some of Russell's questions there, some of the assumptions in the SQW report, as you've already mentioned, are blown out of the water now because of the pandemic. Have you got any views on why the report concentrated mainly on B1 development, and is Wales more at risk because of the pandemic in terms of demand for that type of property than other parts of the UK?

I'll bring Simon in to answer this; he's more of an expert on property. 

I think perhaps you're overselling me, Minister. [Laughter.] Well, we've gone with the expertise of SQW. The market for property in Wales is a pretty volatile thing anyway. The reason we're having to intervene is because the market doesn't do that. The reason Welsh Government is having to invest in a whole load of this stuff is because the normal commercial forces that are at work elsewhere in the UK don't happen here. So, there is a need for us to intervene, and that's why we've got these various different mixes of mechanisms for providing property across the country. 

Are any of the investments that have been made so far perhaps more perilous than they would have been before the pandemic? I'm thinking of Brocastle in my particular region, because of Ineos. That was an unexpected—well, you can call it a threat or opportunity. Does that mean that—

That's a really interesting point that you've raised there, Suzy. Right at the start of the pandemic, every submission that came up to us as Ministers had, right at the top, an assessment of the likely impact of coronavirus on any given project. So, from the beginning, we were considering it as best we could. Given the uncertainties, it's often difficult, with an event like coronavirus, to actually have a fixed, firm and categoric position and view on the likely outcomes of the pandemic, but we had an assessment right from the commencement of any submission as to the likely impact of coronavirus. 

And has that affected any choices about where you might invest in the future? I'm just thinking of Russell's point earlier about Laura Ashley. That created a big hole in that particular community in a way, perhaps, that might not be felt in a more populated area. Is that also being taken into account at the same time as coronavirus, because that's affecting Wales in different ways, depending on location as well?

Yes, but we're still in relatively early days in terms of the economic impact of coronavirus and the response, and the issues that you raise about the geographical impact and the business type impact. I think probably if you were to revisit this with us in six months' time as more submissions come through to Ministers for approval, we'll be able to give you a better indication then of the change in operating environment for businesses and, therefore, the changing circumstances for property development. At this moment in time, it's still a little too early, though, I think, to really get a very, very clear picture of how the economy has changed.

10:00

That's a fair enough answer. And then finally from me, and I appreciate this may not be for you, Minister, but have you had any early sight of how this might affect land transaction tax take and any changes to rateable values for property, as commercial property possibly—well, I think it's likely to drop in value, certain types of it?

I can certainly ask colleagues in—. It would be for finance officials, I think, to provide more detail. I can certainly ask for that to be provided.

Thank you ever so much. Thank you. Thank you, Chair. 

Before we move on off this point, can I just check as well: have you got a timetable of when you're going to publish the new property delivery plan?

Well, to all intents and purposes, the SQW report has kind of superseded the PDP, and it has now become the PDP, effectively. And that's why we're working towards, for example, their guidance on 300,000 sq ft to 790,000 sq ft. That's why we're working towards that, because it is, essentially, to all intents and purposes, the PDP.

That's interesting. And, finally, the report talked about an asset bank development vehicle, and establishing that.

Now, that's interesting, and that's also really timely because we've just considered very recently at the ministerial policy board options for reinvestment. And we're looking at potentially utilising a funding mechanism that directly links the asset value that can be realised from the current portfolio and then links that to reinvestment and renewal. So, I've asked officials to come forward with firm proposals that we can then consider, and I'll certainly keep committee up to date on what we're considering, Chair.

That's very interesting. Thank you for that answer, Minister; I appreciate that. Okay, I'll come on to the next set of questions. Helen Mary Jones. Just unmute, Helen Mary.

You'd think I'd have got to used to that by now. Sorry. Morning, everybody. I'd like to ask you questions about the situation with Tata, please, Minister. So, can you give us an update on the latest discussions between yourselves, the UK Government and Tata, and how satisfied are you with the progress and with the level of engagement, particularly from the UK Government?

Thanks, Helen Mary. It's good to be able to discuss Tata; it's one of the most significant issues that we're facing within the department—massively important to our economy and communities in Wales. And committee are aware that I spoke with the chief executive officer of Tata Steel Europe on 13 November. Officials have been in very, very regular with the business since, and indeed were beforehand. I'm sure you'll appreciate that I can't go into any details about ongoing conversations with the company, because they're pretty confidential, but we have extensive contact with the company. I also have very regular discussions with UK Government Ministers, both the business Minister, Nadhim Zahawi, and also with the Secretary of State for Wales, Simon Hart. The last time I spoke with Nadhim was, I think it was, just last week, and I spoke with Simon Hart twice as well. So, we're in very regular contact.

Not so with the Secretary of State himself. That's quite a contrast to my relationship with Greg and with Andrea—Greg Clark and Andrea Leadsom, his predecessors. Greg, in particular, I spoke with on a very regular basis, and we worked very closely together as well, in trying to make sure that the economic action plan and the UK industrial strategy were as well aligned as we could possibly make them, and that, as we moved forward and refined and finessed them, we did it, as best as we could, in tandem. That relationship currently doesn't exist with the Secretary of State. I have been trying to reach out, and I really think we would benefit from a stronger relationship there, and hopefully that will materialise, but it hasn't to date. And, of course, you're aware that the First Minister has written to the Prime Minister asking for urgent talks. 

It's also worth saying, actually, at official level, from what I hear back from my officials, relations between Welsh Government officials and UK Government officials within the Department for Business, Energy and Industrial Strategy are now very, very strong. I don't know whether Sioned can validate this, but it seems to me, it's my perception, that the work that's taking place at an official level is very productive.

If I can come in. Thank you, Minister. Absolutely, the relationship with the BEIS team is very good. We've had some really good conversations with them since the announcement was made in particular, and they are looking to establish a group of the devolveds with BEIS, which will hopefully help us to better understand the UK's ambitions for the whole of the steel industry in Wales and in the UK, which is so critical to our economy.

10:05

Sorry, I won't—I'm conscious of time. Just before the pandemic began, we were really close with UK Government in agreeing some form of shared expertise. I was keen to make sure that, as they refreshed the industrial strategy, we perhaps seconded people in from BEIS, or had an exchange of officials, so that we were working as closely as we possibly could. Of course, coronavirus has had an impact in terms of human resource, with many officials having to take on additional roles. But I'm still hopeful that we can deepen our collaboration with BEIS at an official level.

That's useful to hear. But I'd like to explore a little bit further the extent to which you feel that the UK Government understands the seriousness of the Tata situation for the Welsh economy. Obviously, it's not only for the Welsh economy, but it's very serious for us. And is there a sufficient—. Sioned Evans mentioned the potential setting up of a group. Is there a sufficient sense of urgency about this? Because, obviously, the financial situation is quite serious, and it would—. I know that you would be the last person who would want things to be unsuccessful because time was allowed to run past, and not because of any intention on anyone's part.

So, two important points there: one about whether there's sincerity and an understanding of the impact of the announcement on Welsh steel operations, and then, secondly, the time frame that UK Government and Tata are working to. I think they'll be able to demonstrate their understanding and appreciation of steel, and the importance of steel to the Welsh economy, through the outcomes of the talks that are happening with Tata. I said on 13 November that every day that's lost in terms of negotiations puts jobs at risk, and therefore those negotiations have to be concluded as swiftly as possible. Again, my perception, having spoken regularly with the business Minister, he definitely gets it, I think, Nadhim Zahawi. The relationship that I have with him—I hope that he would agree—is incredibly strong and productive and constructive. Ultimately, this is going to be something that is determined by Treasury, though, and Treasury hold the pen on the cheque book. If financial support is going to be agreed, it's Treasury that will determine whether Tata receive the support that they may be seeking. But it has to be brought to a swift conclusion; the uncertainty can't continue—for workers, for the company, and indeed for the supply chain as well.

I'd certainly agree with that—it's obviously a very unsettling time for people who are working in the industry, but I also appreciate that resolving this isn't within your gift. And obviously, as you've said, Minister, the big investment will need to come from the UK Government. But, in support of those discussions, what might the Welsh Government be able to bring to the table to support transformation and sustainability of the steel industry? So, are there things that you can offer around, I don't know, research and development, the skills agenda? I think we're clear what Welsh Government's role isn't, but it would be useful if you can set out for us what Welsh Government's role could be.

Absolutely, yes. So, first of all, we need to understand more about what Tata Steel have planned for the future, and then they'd be able to make the firm request, and we would then be able to respond. But, certainly, we can play a very significant role in terms of skills training and R&D. And I think, over the last four years, we've provided about £12 million to Tata to support the workforce, in terms of training and employability programmes. So, it's a pretty significant sum of money that we've already invested in Tata over four years. We've also, crucially this—crucially—given what will happen when the company splits, we've invested very heavily in R&D facilities and R&D functions, whether directly, or indirectly through other bodies. So, for example, we've invested in the Steel and Metals Institute. We also know that the likes of the Flexible Integrated Energy Systems, the Reduced Industrial Carbon Emissions project, the Sustainable Product Engineering Centre for Innovative Functional Industrial Coatings as well, have been hugely important in building up capacity within R&D and innovation for Tata and associated steel companies. But, as I just alluded to, when they disentangle all of the functions of the Dutch and the British operations, what we're going to be left with is R&D functions that are going to be largely concentrated on the continent, and so we're going to have to see Tata build up R&D functions, capacity and expertise here in the UK, and we want them in Wales. So, that is where I would see the role of Welsh Government coming into play.

I think, in terms of R&D, there's a huge opportunity as well. As we see the UK Government deliver on the R&D road map, there's going to be a massive increase in R&D spend in the coming years. It's going to rise to—I think it's £22 billion a year. In my discussions with UK Government Ministers, they're keen to make the point that the R&D road map is linked inextricably to the levelling-up agenda and, therefore, rather than have R&D and innovation spend concentrated in the golden triangle—in areas that already have capacity—what we need to do is ensure that capacity is built outside of the golden triangle, the south-east of England. That means investing in places like Wales, in terms of the key sectors to the Welsh economy, and, of course, steel is such an important sector. I think there is a major opportunity for us to draw down significant sums in R&D in the years to come for the benefit of R&D in steel here in Wales, and, as a Welsh Government, we're keen to lead on that.

10:10

Thank you. That's helpful and I think that, Chair, has answered another question that I had. But if I can come back to the discussions that are going on between the UK Government and Tata, and, obviously, that's about allowing for a sustainable future for the industry, I know that you don't want to get drawn on particular technologies and things at this stage—that may be too soon—but what are your expectations around what a transition to a sustainable future for the industry in Wales ought to look like? Because you must have—. I know, again, it's not in your gift, but you must have some idea about what you would want and what you would expect that to look like and, potentially, have some influence on it.

So, decarbonisation is key; competitiveness as well. For Tata itself, being self-funded, with no reliance on India, of course, is something that they've already outlined. So, they're the expectations, but also—. And you're right; I can't be drawn on the technology. That is for the business, and we need to understand what the business is examining and proposing. But any transition to that sustainable operating model that recognises the need to decarbonise must be done in such a way as to protect as many jobs as possible, and so the transition period must be a safe transition period—one that avoids unnecessary job losses and a haemorrhaging of skills from within Wales.

That's helpful. On this section, then, finally from me, obviously, part of a sustainable future is having strong markets for the steel that's produced, so can you tell us what you're doing to ensure that the steel industry in Wales can benefit from upcoming infrastructure investment? We're going to need a lot of steel, and what are you able to do, as a Welsh Government, to ensure that as much Welsh steel is used here in Wales, but, obviously, in the rest of the UK as well?

A really, really good question, this is. There are huge opportunities— huge opportunities—if procurement is sorted. The UK Steel newsletter that was published just last week identified the predicted value of steel demand in the UK by 2030. The rise in demand is quite astonishing, and so it does provide an opportunity for steel making within the UK, especially with the end of the transition period coming, the need to make sure that we protect ourselves in terms of national security—and I would consider steel to be important to our national security. So, there are major opportunities.

In order to actually realise those opportunities, of course, certain measures need to be taken, and the First Minister wrote to the Prime Minister on 13 November outlining what should be done at a UK level in terms of procurement. For our part, we were the first signatories of the UK Steel charter. As part of our actions to improve procurement practices, in addition to the public contract regulations, we've also implemented an additional mandatory legal position on our tender pre-qualification questionnaire, which states that no dumped steel can be used on any contract awarded by public sector bodies in Wales. Of course, coronavirus has had an impact, in term of deepening, extending, some of the actions that were taken in terms of procurement, but we are absolutely determined to make sure that procurement enables Wales's steel making to have a buoyant future. But it's at a UK level that the major difference will be appreciated. And there are also major opportunities in terms of some of the emerging and growing sectors—the industries of tomorrow, as we call them—particularly in terms of the green economy, renewable energy and so forth—major opportunities that we need to capture, and we can only do that if there is a sustainable steel-making operation within the UK, and if the procurement system is designed in a way that enables UK steel making to take full advantage of those opportunities.

10:15

All right. I'd like to move from big to small and to the support for a community bank. And where are we with Banc Cambria?

So, in terms of Banc Cambria, the approach that we've taken in Welsh Government is that we'll establish a community bank in Wales through private sector delivery, but it will be via Welsh Government seed funding, and Cambria Cydfuddiannol Limited are seeking to establish Banc Cambria. The team behind Banc Cambria, they're continuing to work with a variety of stakeholders and interested parties to refine their plans in the context of what we're experiencing now with the pandemic. The pandemic, as far as we are able to ascertain, has actually, if anything, increased the need for the community bank to be delivered, and so the work of Cambria Cydfuddiannol is absolutely vital.

We did a report, as you remember, on this, and you said in response that you expect authorisation to establish a community bank to be granted by regulators in mid to late 2021, early 2022. Do you think that's still realistic?

Well, the process of launching a new bank continues to change. It does take time, and it's incredibly complex as well. Getting a brand-new banking licence can take some time, but CCL are considering all options, and they understand this dependency. I think perhaps it would be best if we were to invite CCL to provide a briefing note on progress that's made and the time frames to which they're operating now.

Okay. And you mentioned—I think you said 'seed funding'. Did you say seed funding?

To date, there's been £600,000 awarded to support the creation, which was kind of a bit of venture money, wasn't it? How much more are you expecting to spend?

So, it was our intention to make available no more than £600,000 to support the creation of Banc Cambria, but, actually, up until today, we've only provided grants totalling, I think it's £165,000, in seed funding. No further revenue, no further grant funding, has been requested as of this time. But, of course, further support—we said up to £600,000, we've provided £165,000, so further support may be considered, but only as and when fully costed and commercial proposals are received by us.

Well, that was our estimated maximum fund that would be necessary. Given that we've only allocated £165,000 to date, we'd still expect that £600,000 to be sufficient to provide the seed funding. But, as I say, the landscape is constantly changing; the process of launching a bank continues to change, and it's complex, so what we're concerned with is making sure that, with the community bank being established, it's successful, and that we see it placed on a very, very sustainable footing, and, therefore, any requests for additional funding would be considered on the basis of value for money, on the basis of sustainability.

The First Minister and I had a meeting, I think it was October; I'd need to check the exact date. We had an update meeting with CCL. But I'd need to check the date. I think it was October. Sorry, weeks merge so fast.

That's okay. And how often do you meet? Do you meet monthly, or, you know, every three months?

On an ad-hoc basis. So, when they have updates on the work that's been undertaken by their team, then they'll report back to us.

Has anything ever been said in those meetings that's given you concern as to the amount of money that the Welsh Government's invested so far, the £100,000 plus? Do you ever feel—do you feel, 'Oh, actually, no, that money's going to a good place, and it is working out'?

10:20

Not to this point. Of course, we approach this with a keenness to see this a success, but we're also conscious of the need to make sure that we protect public investment. And so we rigorously scrutinise the proposals and the updates that are brought to us, but nothing that raises concern to date.

Okay. And is there any detail of those meetings? Are there any minutes or notes available of those meetings?

Now, I'd need to check whether notes are published. I'm not sure whether they—. I don't think they are. But I'd need to check on that, Chair, if I may.

I think it would be interesting to be able to see that.

Yes. I think it's worth saying as well that, aside from the discussions that take place direct between CCL and Ministers, officials also regularly meet with the team, and, from what I understand, no causes of concern have been raised with officials. Is that correct, Sioned? There's nothing that's—

Yes. Yes, that's fine. It's a very complicated establishment to set up, as you can imagine, but the team are very confident that where we've got to, and, indeed, the response that we've had, has been really, really positive.

Can I suggest that we ask CCL to provide committee with an update note, and perhaps address some of the questions that Members have raised today?

Yes. [Interruption.] Go on, Chair. Sorry, Chair, I'm interrupting. Go on. 

As I say, very grateful for that. Yes, that's fine. Thank you for the offer, Minister, there. Did you have any further questions on the bank?

Well, it's probably more appropriate to put it to the bank. I suppose I could ask a final question about the target of those 50 branches, and whether the COVID situation has changed that ambition—that you're aware of, Minister. Are you aware of any reigning in of the ambition to create 50 branches across Wales?

I think this is probably, as you say, best directed to CCL. But, certainly, in terms of the sudden emergence of coronavirus and the impact that it's had, if anything, it's heightened the need for somebody to be able to address market failure in communities across Wales. 

Okay. Thank you, Minister. If we could—if it is possible and ethical to have a note of the meetings you've held with them, that would be really interesting too. 

Thank you, Hefin, and thanks, Minister. Vikki Howells.

Thank you, Chair. So, I'm going to turn to regional development now, and specifically the recent Organisation for Economic Co-operation and Development report—

—on regional development and public investment in Wales. Firstly, I'm just wondering, with regard to the 15 recommendations included in that report, do you intend to publish a response to that, Minister, and, if so, when?

Thanks, Vikki. I loved the OECD report. I think the work that they've done has been incredible. I was really excited from the outset, actually, when we invited them to get involved in this agenda. We're going back a couple of years ago now, and the very first meeting I had with them, I could sense their enthusiasm was really, really strong. So, the work that they've done has been pretty incredible, and the report is certainly a stimulating piece of work. What we're going to do next with the report and the 15 recommendations is that we're going to be working with the OECD through to 2021. We're going to be working with stakeholders on the recommendations, and then, once we've gone through the process of engagement with stakeholders, further work with the OECD, we'll be responding to the recommendations. And that will be—the aim is next year.

Thank you. And I think the question everyone's most interested in is that of the suggestion of a regional development agency. You've said previously that you're very sympathetic to the idea of creating a regional development agency, including the suggestion of a Valleys development agency, which has been mooted by several Members. So, could you expand on that for us, please?

Yes, sure. First of all, I should say I'm not dogmatic about this. If a certain model can be proven to operate better than the status quo, then, clearly, it should be given very, very serious consideration. I think we're on a journey as well; 20 years into devolution, we are at what you might call the dawn of devolution mark 2—the rise of the regions, the emergence of regional bodies, regional collaboration. I can see my colleague laughing at that; it does sound like the title of a Star Wars movie, perhaps. But the regions are taking a much stronger role in terms of both public service delivery and in terms of shaping place-based economic development interventions. And so I think the recommendation in regards to regional development agencies merits full consideration and that's exactly what we're going to be doing as part of the work with stakeholders in 2021.

And specifically with regard to the suggestion from Members concerning a regional development agency for the Valleys, again, because we're moving in the direction of place-based economic development, it makes perfect sense to consider such a recommendation. I'm not saying that it will be adopted and implemented, but, as we look to decentralise and deconcentrate, I think it's important that we do consider all ideas and innovations. I can see Lee is keen to come in.

10:25

Yes, just on this specific point, because this is a discussion we've been having on the Valleys taskforce, about whether or not a Valleys regional development agency is the right thing to do, and I think there's a lot of sympathy for the idea. Certainly, the Bevan Foundation, who've published this suggestion, took part in those discussions in the taskforce. So, it's a live question, it's up for grabs; we all need to pitch in on it, really.

I guess the judgment is that, at this point, when we are setting up corporate joint committees and we're going into a new phase of regional development funding—we'll have an announcement today from the Chancellor on what the shared prosperity fund looks like—and given that austerity and the pandemic are putting an enormous strain on the capacity that we have—I can't overemphasise this point enough that there just are not enough bodies around in local government or in the civil service to do the things that we really need to do—whether or not now is the right time to be creating another separate delivery layer, given those other things—. It's an open discussion. I think you can argue either way, but just to inject that update, really, of where the discussions within the taskforce have got to.

Yes, Lee's absolutely right. There is huge movement with the CJCs right now and we anticipate—we expect—that growth in city deal arrangements will be taken forward through corporate joint committees in the future. So, whilst we will be considering the RDAs—the suggestions that have come forward—we already have in train a very major piece of work to support regional development.

And in terms of that piece of work, are you any further forward, Minister, in formulating the decision as to whether there will be three or four regional areas? I note that the OECD has called specifically for a pilot for a mid Wales economic region. So, where are you with your thoughts on that?

Yes, and, to be honest, Chair, Vikki, we've long considered mid Wales to be an economic region in its own right and so the emergence of the joint committee governance arrangements in mid Wales between Ceredigion and Powys, and heads of terms are due to be signed soon. We consider that the fourth region is absolutely vital. Again, we have to recognise place and functional economies in terms of how we arrange governance arrangements, and mid Wales is a pretty well-defined geographical area.

I'm pleased to hear—pleased to hear that, Minister. Helen Mary Jones wanted to come in. Are you on mute, sorry, Helen Mary?

I don't know what's the matter with me today; I'm clearly not concentrating on the technology. 

The Valleys has obviously got to be a major priority for economic development, going forward—I think nobody would disagree with that. But, of course, the other part of Wales that has been stubborn—it has been really difficult to shift its economy—is the rural north and west, when we think that Dwyfor Meirionydd was the area in the whole of the UK, when the pandemic hit, where you had the highest range of people claiming universal credit, because they couldn't start their tourism jobs, so they couldn't be furloughed. So, I just wonder, in terms of the place-based economics that you've been talking about, Minister, what considerations you're giving to what can be done to shift that persistent economic development problem, that over-dependence on the wrong kind of tourism—the lower value tourism—those sorts of things. Is that in your thinking, as well as the obvious priority for the Valleys?

Most certainly. It's timely that—again, this question is very timely—I'll be outlining next week the economic reconstruction mission that we've developed. We were keen to recognise and to support the fact that regional stimulus plans may be required—regional stimulus packages may be required—to overcome the economic impact of coronavirus. And, as you've outlined, there are certain geographical areas of Wales where, because of the high prevalence of tourism and hospitality businesses, the economies have been highly impacted. And so we're going to be trying to respond to that and I'll be outlining more details next week.

And it's worth saying, as well, that the Resolution Foundation recently reported on geographical inequalities and found that, in the past few years, those geographical inequalities in Wales have shrunk, whereas, in contrast, across the UK they've increased. Now, we've been operating a model of economic development that is aligned with regional working for several years now, and I think we're beginning to see the fruits of our regional place-based economic development model. Of course coronavirus is going to impact quite considerably on that, given the reasons that you've already outlined, but I think, nonetheless, we are heading in the right direction to drive down the inequalities that we see, both across the regions and within the regions as well. Because, actually, some of the biggest inequalities exist within regions, not across the regions of Wales. But if you look at parts of Gwynedd, as you've outlined, claimant numbers for universal credit skyrocketed, and so we would therefore anticipate that between some parts of that region we will see inequalities further widened. So, that needs to be addressed. And, as I say, as part of our work on the economic reconstruction mission, we're looking at how regional plans can become ever more important in this regard.

And I've got to say, in terms of the north, the degree of collaboration that's taken place between Welsh Government, in particular the chief regional officer's team and local government, working together, it has to be said, as six local authorities, through the economic ambition board, has been very impressive indeed. Coronavirus has necessitated collaboration and co-design of plans, and I think the outcomes speak for themselves. The response has been pretty incredible.

10:30

Can I just quickly come back there, Chair? That's encouraging to hear. To what extent, as you're developing these plans to redevelop the economy, come back from where we've been—? Are you looking at the impact on Welsh as a community language when you're doing that?

Because that, obviously, if we're going to get to the million speakers, we've got to protect—people have got to be able to live and work in those communities where Welsh is a day-to-day language.

Absolutely. So, the work that we've undertaken, and the plans that we're formulating, are designed against the Well-being of Future Generations (Wales) Act 2015, so they take full account of the need to drive up, as you say, to a million, the number of Welsh speakers in Wales.

And, sorry, I should have just answered the point that Helen Mary raised about quality of jobs as well within certain sectors. So, the previous tourism strategy, 'Partnership for Growth', and, indeed, the new strategy for tourism, has, as top priority, increasing the quality of the offer, therefore increasing the quality of employment, raising standards of employment, raising wage levels. So, we've been operating to a model that has rewarded the best employers, those employers that are investing in people for quite some time. But, actually, this is a long-term endeavour. In order to raise employment, the quality of jobs, to the point where we would wish them to be, it's going to take quite some time, but we are moving in that direction. Lee. I can see Lee's keen to—.

Yes. Just on the language point, really—and this ties in to the work we're doing on the foundational economy, because the whole point of that scope of work is to try and strengthen local economies, particularly, in the first instance, looking how we can shift public spending, which is currently leaking out of Wales, back into local areas. So, take food, for example. So, food production, clearly an important area in large parts of rural Wales. Our analysis, with the Centre for Local Economic Strategies, shows that 49 per cent of food spend in the NHS in Wales goes to firms outside of Wales, when there are firms within all the regions who could be doing that work. So, the conversations we're now having with the public services boards—and Carmarthenshire is leading a project for us as part of the foundational economy challenge fund on trying to get food production back into the areas. Now, clearly, that will benefit the whole economy. It'll benefit areas that rely on Welsh speakers being retained in their areas. And, in the spirit of that, the Arfor scheme that we agreed jointly, as part of the coalition agreement with Plaid Cymru a few years ago, is, in effect, a foundational economy challenge fund of its own, and we're working to bring that into the broader work we're doing. So, we've set up a community of practice for the challenge fund project, and we're bringing the Arfor scheme within that community of practice so that we can learn from the work they've been doing a year in advance of the other challenge fund projects, and they can learn vice versa.

I can give a really practical example as well of the success of the challenge fund: Môn Shellfish. They were successful, and based out of, I think, Bethesda. I visited them, actually, and I was astonished that the produce essentially goes to Europe and is not utilised by local communities, because, for some reason—I guess it's taste—shellfish goes abroad generally from Wales. So, the challenge fund proposition that they were successful with seeks to stimulate interest in changing tastes and so forth, but seeking to stimulate interest in their produce so that we retain it in Wales. And, of course, as Lee said, a huge proportion of the people involved in Môn Shellfish are first-language Welsh speakers. Growing the opportunities for their produce to be used more in the local community strengthens the business model that they operate to and provides sustainable work, therefore, for an increasing number of people. It's a really good example.

10:35

Good morning, both. I want to look at—following on and keeping with regions—the regional economic development that we first announced way back in December 2017, and, really, we followed that through in January this year, and looked at the regional economic forums and their indicative budgets, with the expectation that they could be published in March. So, my question, really, is about any progress that is happening in that region, in the forum, that you would like to give right now.

Thanks, Joyce. I should say that I'm really pleased with the move to regionalism within Wales. The creation of our regional teams has been very successful. At times, they've been overwhelmed, the teams, by the pressures from both Brexit and coronavirus, but it's certainly led to a much deeper relationship with local authority partners, and that, in turn, has helped to address—it hasn't fully addressed it, because capacity is still relatively low, but it's helped to address some of the capacity issues within local authorities as well. So, in terms of engagement, in terms of communication, in terms of co-working, I've been really impressed by the work that's taken place since the EAP was published.

Also, in terms of regional indicative budgets, I think Sioned will be able to give a little more detail, but we've been adopting regional budgets for the business and economy side, and also, in terms of one other piece of work, the regional economic frameworks, the work on the REFs has been undertaken in parallel with the work on CJCs, and also the ongoing collaboration—the deepening, the strengthening relationships—between Welsh Government officials and local authority officials. So, work on the REFs is continuing, but, in all honesty, because we're increasingly co-designing and co-working, the need for the REFs, if anything, since 2008, has been reduced, because we're moving in that direction anyway on a voluntary basis—on the basis of need, actually, if truth be told, on the basis of necessity. Because of coronavirus, we need to make sure that we're aligning our investment correctly, that we are making decisions together, that we do recognise what our roles are, and our roles shouldn't duplicate or compete, that we should all be working together, supporting one another. Sioned, is there anything more you'd like to add on that?

Thank you, Minister. Yes, indeed. Certainly the initial work on the regional economic frameworks, the REFs, meant that the relationships with all the partners had been developed in a way that—frankly, I don't think we'd have been able to deliver our response to the current crisis if we didn't have that in place initially, and it has strengthened as the last few months have gone on, and we've seen that in terms of the way the grants have been deployed by local authorities, particularly in support of non-domestic rates. That's been really successful, and the money was able to get out really quickly. I think a lot of that is based on trust, and the relationships that were built beforehand.

There is, certainly, a potential now, and I think it would be the right time to perhaps review the need for REFs, based on what the Minister has just shared with you. There's a lot of activity that is ongoing. Everything we've done to date has been in collaboration with the partners, so, from that point of view, the timing, which we often come back to, in terms of the timing of this, is very much done in partnership. So, while it may not have been our original ambition, actually, I see it as a positive that we've reflected what our stakeholders wanted to do, and we are taking a more measured approach to that. So, it is probably the right time to review the REFs now, in the context of everything else that's happening, and particularly in terms of any funding settlement that comes through.

10:40

Thank you. What I want to explore a little bit is the role of the REFs in the shared prosperity fund, not that we know what the shared prosperity fund is, of course. But nonetheless, were we to find out something today, what would their role be? I have to say, I'm having difficulty hearing you, Sioned. I don't know if you can adjust the mike.

Sorry. I'll try to move it even further towards my mouth.

You're right, Joyce; there's ongoing uncertainty over the shared prosperity fund, but our position remains the same. It's well rehearsed. But the regional economic frameworks could obviously play a role in influencing the delivery of the shared prosperity fund because the REFs are designed to ensure that we are making decisions in a way that maximises the outcomes of our investment, so that our investment decisions are all aligned. So, obviously, the frameworks would have a key role in that. Notwithstanding the development of the frameworks, though, because of coronavirus and the deepening and the strengthening of co-working and collaboration, I think we are in a much better place today than we were in 2019 in terms of being able to align all of our investment intentions to make sure that we are contributing to one another's plans in a mutually respectful way.

Can I ask one final question? You've sort of alluded to it. We've got the regional economic development plan that was set up in 2017, and now we've got corporate joint committees trying to deliver, it seems to me, the same thing. So, will it be the case that the former will morph into the latter? Because you already said that people were stretched in terms of their capabilities at local government level to be able to facilitate all these different levels of involvement.

I've asked the chief regional officers, actually, to answer that very question: are they actually required in the way that they were envisaged back in 2018 or have events overtaken us, has work in other areas meant that, actually, the purpose of REFs as was initially intended has now been left behind and we need to move on? So, I won't be able to answer that question right now, I'm afraid, Joyce, because I haven't had the answer back from the chief regional officers, who really, I think, are the people who need to be able to inform me as to whether the REFs are needed in the way that I'd initially intended. They're looking at that very much right now, and they'll be engaging, obviously, with key regional stakeholders.

We can put that in our letter to you, Minister, so you can respond once you've had that response yourself. I'm just conscious of time—are you okay, Minister, for one more section area before we take a break?

Thank you. Minister, I wonder if you can just give us an update on where we are now with the apprenticeship framework review.

Absolutely. We had planned to publish the outcome of the consultation when COVID hit. So now, because, obviously, we've had to act flexibly and be fleet of foot, we intend to respond—. Alan Woods is on the call, but I think the plan is that we'll publish the outcome of the consultation early in 2021. Alan, is that correct? Are we still working to that time frame?

Yes, that's correct. The original consultation ended in December last year. We were due to publish in April, but, because of the COVID situation, everything was up in the air. But, as it happens, that worked to our advantage, because we have seen how the economy has responded, and we just need to understand was the actual push in what we were trying to do correct.

So, one of the major things that we're looking at—the consultation was recommending a move away from generic frameworks to more occupation-focused frameworks. For younger people who have been impacted most by the pandemic, there is a real issue there that the generic frameworks allow them a stepping stone into employment, give them the transferrable skills, but we're just reviewing that to see whether we should be looking more at allowing more generic frameworks. We're talking about things like customer service and business administration. But, ultimately, what we'll be looking at is fewer frameworks, a more simplified process and that frameworks will be reviewed on an ongoing basis.

The other thing that we were looking at—we had a series of reviews planned and, of course, with the pandemic, the question is: was that right? So, for example, what we're looking at is bringing our digital review forward so that we can meet the needs of the emerging economy as we come out of this economic downturn. So, those are the sorts of things that we've been looking at. 

10:45

Okay. That's very helpful background. So, we're looking at publication in the new year. Will your Government response be on the heels of that, or are you publishing both together? The responses and your response, if I can put it like that. 

It will be done both—

Right, okay. I understand now. Judging from what you've said, do you have any concerns that sectorising this—and I can understand why you're doing that—will limit the opportunities of people entering onto the apprenticeships to flip between employers? I think we're all very conscious that employers, despite Government support on this, are maybe not as keen to keep apprentices or offer apprenticeships as they might have been pre COVID. So, is that flexibility being—will it be introduced?

I think what we're touching on there is a shared apprenticeship model, and certainly one of the things that has worked, and it's worked up until this point, has been the shared model. We are reviewing that. We are looking at whether we should be expanding that. Again, that's a work in progress in terms of how we take that forward. But, yes, you're talking about a shared model, and, yes, we're looking at that to see if that will have benefits as the economy improves. 

Okay, thank you for that. Is this going to run into the procurement element of the apprenticeship programme? Because we were due a note on that for August, weren't we?

It was launched in August, the procurement exercise. I think it just ended in mid October, and we'll be communicating the results to bidders in the first quarter—it'll be March next year.

Yes, 1 March. 

Suzy, can I just bring—? I was going to bring Helen Mary in, but do you want to ask your last question?

No, that's fine. It was just to say that, if you're going to talk about a sectorised demand, whether there are any particularly high and low demand areas where you might be wanting to concentrate any new attention. But I'm happy for Helen Mary to come in. 

Thank you. One of the challenges in this area, in vocational training, I think, is that so many of the awarding bodies for vocational qualifications aren't based here. That's presented an immediate potential unfairness in that we've decided not to have exams for students studying academic courses, but we don't have the ability to make a similar decision if we wanted to, or if it felt fair, for young people—and others, but particularly young people—studying vocational courses. Are you giving any further consideration as to how fit for purpose that awarding framework is now and whether we should be looking to develop over time, obviously not immediately, more Wales-based awards so that we can make sure that those qualifications really fit the needs of the Welsh economy and of Welsh learners?

That's really something that's a very long-term aim. What's going on in England at the moment is the development of T-levels, and that will have an impact on the whole qualification structure, and there will be an impact in terms of apprenticeship delivery because of the introduction of T-levels and the whole award landscape that's happening. We are working with Qualifications Wales in terms of reviewing awards, and how awards should be taken forward, but, because of economies of scale, this is a long-term thing that we're looking at. We've already looked at construction in Wales. We've looked at health and social care. And so, in time, we will be looking at other sectors as well. 

10:50

Thank you. That's all your questions as well, Suzy. Thank you for that. Minister, I appreciate it's a two-hour meeting—. Oh, Joyce Watson, did you want to come in? Sorry, it looks like—. Just briefly, if you can, because we need to get to a break, I think. 

I'll be very brief. Back to shared apprenticeships. We had Carmarthenshire Construction Training Association Limited, and we now have Cyfle delivering out of Neath Port Talbot College. And, if we're short of time now, I'd like to know a little bit more about the shared apprenticeship model particularly, because this can nicely fill the gap in terms of regional economic development, because those people are pinned very much to their local area, and we all know that those very, very small companies have significant challenges in delivering apprenticeship programmes in those areas. 

Shall I write to you with a pretty full update on where we are on the shared apprenticeship programme?

I'd be very grateful, especially as we're short of time. 

We'll take a 10-minute break, so we can be back in 10 minutes. 

Gohiriwyd y cyfarfod rhwng 10:51 ac 11:04.

The meeting adjourned between 10:51 and 11:04.

11:00
4. Craffu Cyffredinol ar Waith y Gweinidog
4. General Ministerial Scrutiny

Welcome back. We continue with general ministerial scrutiny, now under agenda item 4. And I come to Helen Mary Jones.

Good morning again, everybody. I want to talk a bit about the transport strategy. You've already told us we'll have an opportunity to question you in Plenary about how the draft was developed. But I wonder if you can tell us a bit more this morning about the next steps—how it goes from a draft to a completed strategy—and what's your timeline for that.

Well, it's a 10-week strategy, and we're intending to publish the final version in early March. We've published, as well as the main strategy, a series of mini plans, so the consultation will cover the whole of that. So, that's the high-level answer.

That'll do. To drill down into that a little bit, you mentioned the specific plans. Can you tell us a bit more about how you're going to ensure that those plans work together and that you can deliver, because the point of the overall strategy is to deliver a coherent whole, isn't it, but you've obviously got to have specific plans for specific areas? So, how will you make sure that they don't go off in different directions?

11:05

Well, we've done quite a lot of work in coming up with the consultation, in consulting with different groups and different departments, and different sectors. So, I think a fair bit has been done about that, and spatially incorporating the national development framework into the vision—I think there's been quite a bit of work getting that right. And, in terms of its delivery, I guess, and making sure that's coherent, I think we're hoping that the corporate joint committees will play a significant role in aligning the transport and economic development side, even though transport's not formally fleshed out in the CJCs. We're hoping that, in practice, those relationships will be coherent from the get-go. 

That's useful. Would it be helpful if that was more explicit? Would it be helpful if their role, with relation to transport, was clearer? Would that help with the plan delivery?

That was our hope, but, because of the impact of coronavirus, the Local Government and Elections (Wales) Bill wasn't able to be as developed as we wanted it to be. So, we just had to make a pragmatic judgment there. So, transport will certainly touch on it, but there's nothing stopping the CJCs setting up shadow regional transport delivery committees as part of that. That's something, I think, we'd certainly encourage. Simon, anything you'd like to add? 

It's perhaps just worth reflecting on what happens once the strategy is published, because there will be a need to develop a national transport plan, and, as the Deputy Minister says, regional plans as well that will feed into that, which will need to take into account the modal activities that are set out in the mini plans at the moment. And it will really be a matter for the delivery partners who are going to be helping to prepare those plans, subject to the views of a future Government, on the extent to which those future plans are put together. 

Thank you. I guess you've begun to touch on this, Deputy Minister, so I wanted to ask about how the strategy will help improve the integration of transport policy with other wider policy areas like health, education. You've already mentioned land use planning. Will there be some practical changes in Government processes to make sure that that integration is enabled to happen?

Well, I think this is a really good area to press us on, frankly, because this is something Government has struggled with: moving beyond the silos to make sure that transport is an essential consideration in how that's done. I guess remote working is one example where we've done that, where the transport element has very much fitted alongside town-centre regeneration in terms of the impact other sectors have, and certainly in terms of easing pressure on the health service by reducing commuting and therefore reducing traffic and accidents. So, I think that is an example that does cut right across different areas of Government. 

In terms of formal policy-making structures, maybe Simon can answer me there. I think that's one for us to reflect on, and I think it's a really good question. Simon. 

I think that's where the next phase of the plans come into play, because putting the strategy together and putting that on a shelf, that's not going to take us anywhere. We now need to develop detailed delivery plans, and those detailed delivery plans will have to be, as the strategy was, put together in partnership with other policy areas. So, the strategy contains a whole series of measures and objectives that we want to achieve. One way through this will be to say 'Well, with the likely available funding that we might have, what's the best was of maximising the outcomes, the measures that we've set out in the strategy?' And that can only be done by working across policy areas, not just within Government, but beyond Government as well. 

And I think this is a real challenge for us all, and, in fact, an imperative when it comes to delivering on our climate change ambitions, because, for too long, transport has been seen as somewhat other to the discussion around climate change. It produces 17 per cent of our emissions, but, 'It's too difficult, so let's not go there', and that just carries on as it is. That's typified the British approach for decades, really. If we are going to meet this next level of interim targets towards the 95 per cent reduction by 2050, that, clearly, can't be sustained. So, when it comes to those discussions this time next year, the next Welsh Government's going to have to publish a new low-carbon plan, and transport's going to have to meet its share of those objectives. Then the questions you ask, Helen Mary, are absolutely bang on the money, and I think the honest answer is, 'We're working our way towards that.'

11:10

That's really helpful. You mentioned the piece of work around homeworking and the way that you'd worked across departments on that. Did you learn anything through that process that you think will help with the cross-departmental approach? I think you're really right to acknowledge that it is really difficult. From the point of view of scrutiny, we scrutinise you, in a sense, as a Government, in silos, don't we? There's an inevitability about that. Did that process provide any lessons that you might be able to upscale in terms of the wider agendas?

Well, it's a live process—the work is going on now. I guess there's always a trade-off, isn't there, between making sure you involve all the different areas and think of all the different implications and pace; you concede to one, you lose a bit in the other. On the homeworking, I think we are working across Government and I think a consequence of that is pace. So, things aren't really moving as fast as Ken and I would like, in terms of delivering on homeworking, but I think there are very good reasons for that. And I guess, in a sense, because the pandemic is still with us, and because traffic levels are naturally suppressed, that does give us a little bit of breathing room in order to take the time to make sure the process is done properly. And I think homeworking is a really good example, but it's devilishly difficult in implementing it, because what we don't want to do is wade into an area with a half-baked policy objective and start spraying money around that (a) we haven't got, and (b) then having all sorts of displacement effects, both on the private sector but in a way where we create white elephants, which, after the pandemic, maybe people will be looking at and saying, 'What the hell did they spend the money on this for?' So, I think it's right that we are taking a methodical approach, and that is a cross-Government approach. I'm not sure if that's really answered your question, though.

I sort of think it has, because, when we are scrutinising you, we are, obviously, asking for both—we're asking for integration and cross-Government working and pace.

You're right to remind us that that's a challenge. Once we get to the stage when the strategy begins to be implemented, can you tell us a bit about how you intend to monitor progress towards the objectives that are set out? You've talked, for example, about the role that regional structures might have in this. What will that process look like? How will you know whether we're getting there? Or, I guess, how will the next Welsh Government know that we're getting there?

That's another good question. Simon, do you want to talk a little bit about the mechanics of what we're planning?

I think what we're envisaging here is, once the strategy is complete and adopted, then we need to move into the planning phase. Again, this is a matter for the next Government, so this is a proposition, really, rather than a policy. The proposition is that we would identify a budget envelope for a five-year period, which wouldn't be an absolute number, because we don't know what the block grant will be over that period, but it will be an approximation of what might be available. And we would set that statement of funds available—SOFA, as the vernacular goes. We would set out that SOFA, and we would ask Transport for Wales to develop a plan against that statement of funds available for what are the best set of interventions that best achieve the measures in the strategy in the time available with the money available. And then we would move to a monitoring regime where the role of Government would be to ensure that Transport for Wales were delivering those objectives that are set out in the plan that would have been agreed.

And at the end of the financial year, we'll be looking for money that's fallen down the back of the sofa. [Laughter.]

That's right. 

11:15

Yes, I could see you wincing a bit at that, Lee. I'm not a massive fan of acronyms myself.

Final question from me, then, and it builds in a sense on what Simon Jones has just said. Some of the ambitions in the strategy are big; some of them will require a lot of financial investment to make them happen. Obviously, you're not in a position of knowing what your budgets yet are going forward, but how confident are you that, insofar as these things are within Welsh Government's gift, across Government there's an understanding about how important it is to make some of that investment?

I think this is a stretch strategy, frankly. I think we have set out a sincere commitment in words, which is not easy to do, and to get cross-Government buy-in for that. But the most difficult bit is the delivery bit, because to sincerely deliver what we've said in this strategy will require considerable culture change in society and right across every level of Government, and that is going to be devilishly difficult to do. So, it's not as simple as publishing a strategy and then publishing a delivery plan, because a lot of this is going to fight every instinct.

So, to take an example—nerdy stuff this committee's talked about before—the way transport appraisal decisions are made in Welsh transport appraisal guidance. So, WelTAG has been reviewed by the Future Generations Commissioner for Wales to make it compatible with the FG Act and it's consistent with the objectives set out in this new transport strategy, so it ticks all the boxes strategy-wise, does all the right things, we've published that; 'Aren't we great?' Of course, in practice, it's only as good as the people operating it and the assumptions they bring to the table. So, time after time, in practice, the results WelTAG churns out are the results it's always churned out, no matter what sort of strategic checkpoints and objectives you put in it. So, that, I think, is an example of how difficult it is to set a strategy that is different, but then to get an outcome that goes in a way that it wouldn't have gone before. I think WelTAG is really struggling with that, not because WelTAG doesn't have all the right objectives, but because the professionals who are operating WelTAG come to the table with an assumption about the transport outcome that they have in mind, and it's the one that they've always had in mind. Now, if we're going to really deliver what's in this transport strategy, that won't do any more. How do you bring that about? That's not as simple as a delivery plan and a strategy. That involves a behaviour-change culture at every level, which is easier to say than to do.

And I think, Chair, how you achieve that is something I'd like to explore another time with the Deputy Minister, because it is a huge challenge but it can be done, but I'll come back to that again.

Can I ask about the bus emergency scheme, and some detail of the structure and approach to planning and funding the bus services in the future, and how the new approach to funding is going to be administered?

These are things that we are working on now with the industry. We've got to move away from the current fragmented system into a more strategic system, in which the values and the objectives we want are tied into funding arrangements and backed, frankly, by our willingness to exercise our muscle. Simon, do you want to talk us through where the conversations are at with the industry and the different phases?

Yes, sorry, I'm going to sink into acronyms again. We've created this thing called the bus emergency scheme, or BES, as we refer to it. So, we're on version 1.5 of the bus emergency scheme at the moment, which has given us access to a whole load of data and information from operators, and has allowed us to influence some of the kind of here-and-now activities. What we're negotiating with the operators at the moment is version 2 of that scheme, and the intention is that operators sign up for that over the next month or so, certainly by the new year. The BES 2 scheme will see us signing lasting partnerships with the operators and allow us to move into what they call public service obligations for the provision of bus services across Wales.

So, it will be a lasting contract for the next few years with operators, where the public authorities—so, Welsh Government, Transport for Wales and the local authorities—will be able to exert more influence over future routes and services than we're able to at the moment. That arrangement—the public service obligation part of it—is a reaction to the failure of the market, because, frankly, the market has failed in the last nine months. The regulations say that we're only allowed to have those PSOs in place for two years, so thoughts are now moving to what is the successor for that, and that would have been the measures that are in the bus Bill that was published and wasn't able to be taken forward. So, I think it will be a matter for the next Government to think about whether some of those measures that were in the bus Bill, such as franchising, which will effectively provide a long-lasting vision of what we're trying to do under BES, can be put in place.

11:20

Can I—? So, that new agreement that you're referring to; that is in place for two years, you just said.

Well, we're negotiating that now with the bus operators. That's the intention. The PSO part of it, the public service obligation part of it, the regulations say that they can only be in place for two years.

And will the consequence of that mean that things like Sunday routes will be reinstated, and the less profitable routes will be retained?

So, then it becomes a question for the public funders to decide how much money gets put into the pot, and how that money is used. It becomes easier, if you like, for the public funders to have a conversation with operators about what services should run, but, ultimately—

Well, there's a cost to running services. So, if we want to enhance services and run more frequent services, or services on days when there are fewer passengers, that will come at a cost. We'll be able to exercise that ability to be able to do those kinds of things, but we will need additional funding to be able to do that.

So, I guess, Hefin, there's a mix of things going on at the moment. In effect, we wanted to achieve a set of strategic objectives through legislation; we haven't been able to achieve that through legislation this term. So, what the BES is allowing us to do is to try and achieve some of those objectives, which we couldn't achieve through legislation, through contract—so, the fact that we are funders at a time when the bus industry is distressed and isn't able to operate its traditional model, and is requiring money from us to stabilise its business. So, they come to us saying that, 'Without help, passengers have gone away, this social distancing makes services unviable, please bail us out.' To which we say, 'Yes, we will for a core network, but we want some changes in return.' So, that helps us to change the structure and set a new relationship, but, of course, for the foreseeable future we're still going to be in emergency measures, where we're not going to be running a full suite of services, and we're not going to have the fare box back to where it was to try and get the commercial operators back to a viable model of their own. Once we get to that point, which will hopefully be within the two-year window, then the dynamics shift slightly, don't they, because—

So, can I just clarify, then? Does BES 2, the next phase of the bus emergency scheme, run parallel to a new agreement, or is that actually the new agreement? I'm sorry if it sounds like I'm not—

No, sorry, it is incredibly complicated and my explanation probably didn't help.

BES 2 is the new agreement.

It is the new agreement. Okay. That's helpful to understand. So, effectively, it's the bridge to post COVID, and then post COVID you'll need further arrangements after that.

But hopefully on a similar model, and then, in parallel, we hope that the next Senedd will pass a Bill on bus regulation, which is still needed. But to your question of will the Sunday services be returned, I guess that's the next question, as Simon said. Once we've got the wiring in a better position, there's still a question of how much, the quantum of money, we, as Members of the Senedd who vote on budgets, are willing to put into public transport. Because it can achieve all of those things, but 'How much are we prepared to spend on it?' is the next question.

I think the last non-COVID interview I did was back in March about the bus Bill, when we were anticipating it was going to go ahead, so it was very disappointing that it had to be pulled, although understandable. So, given this—I refer to it as a kind of a bridge towards that Bill, depending what happens after the next election, obviously—are we able to see the guidance that is being issued with regard to the BES 2, and are we able to have some insight into how that dialogue is happening before the specific routes are discussed?

Well, on the first question, I'm sure we'd be happy to share with the committee the letter that we have sent to the companies. In terms of insights into the dialogue, I'm not sure how much we can share of that, because it's ongoing and, inevitably, it's confidential. Simon.

11:25

Yes, but I think—

Are you involved with that dialogue, Minister, or is it one that is delegated to officials?

Simon is team leader on it. I get wheeled out occasionally to frown.

And a very good job of it he does. 

Once we've reached the agreement with the operators, I don't think there will be any secret about sharing that, because there will be 80 different operators that will be signing up to it, so there will be a document that will be in pretty wide circulation and so I don't think there will be a problem sharing that. But really, as the Minister says, that just provides us a basis to be able to have a longer term relationship with the operators.

Just as a final point on this, if the BES does all the things that we would like it to do and the operators really buy into it, there may not be any need to legislate in future, because if we create a partnership where the operators are willing to work with us for the long term in the spirit that we're aiming for, we might not need to go down that route, but I guess this is a significant step.

This is my last question. Can I check that with the Deputy Minister, who, obviously, at least before next May, is responsible for making those legislative decisions? Do you support that, Deputy Minister, or did you have bigger ambitions for a bus Bill?

Well, as Simon says, if we can do things without legislation, then it would be better, but we suspect some of the flaws in the system are fundamental, and this goes back to the privatisation of the mid 1980s and the competition law it has set up. So, in a sense, what Simon and his team are doing is doing their best to work around those, and let's see where we get to. We're not there yet. If we're not able to do it, then we still have the option to legislate.

Thank you, Chair. I've got some questions around the longer term future of bus travel, and you've made my line of questioning inordinately easier, actually, by suggesting that options are open and it doesn't all depend on a bus Bill in the future. So, my opening question is this: is there a utopian future for bus travel in Wales, and could that utopian future be Transport for Wales taking control of buses?

Well, I guess the future that we're all trying to get towards is the one we've been talking about for donkey's years, which is integrated transport, which means that people don't have to have a car to make the journeys they want to make; they can make a series of choices through different modes, which properly link up. So, they can walk and cycle to a point, they can jump on a bus or in a taxi—an important part of the transport system still—or a train. That's the utopian future we want to get to, and Transport for Wales absolutely has a central role in joining these things up. The conversations we just talked about on buses do open up a role for Transport for Wales that they didn't have when it started out. Again, we are feeling our way towards that with them. They don't currently have the capacity or the capability to take on, fully, that role tomorrow, but we are working towards it, and the opportunities thrown up through the bringing back into public control of the rail franchise, similarly, has speeded that up. We are very fortunate to have the arm's-length shell of Transport for Wales, because the DfT in England doesn't have that, and isn't able to do it—a planned and coherent operation—in the way that we have the potential to do.

I guess, also—. Sorry, I was just going to say, within the utopia that you outline, there would have to be—have to be—a degree of local accountability as well. I think many communities, many parts of Wales, would push back against a highly centralised system, and, indeed, local authorities would as well, I imagine.

Okay, thank you. Can you just give us an outline of the kind of work that Transport for Wales is currently undertaking with regard to bus services and how you see that progressing?

So, for example, TfW are leading on a lot of the work with the operators to shape the BES 2 contract. They are working very closely with the local authorities on the reconciliation of the payments under the existing BES agreement. There is a huge amount of administrative work, as you can imagine, that needs to take place there. There are an awful lot of operators and an awful lot of local authorities that we need to talk to, and TfW are—. I think, without TfW, it would have been incredibly difficult for us, frankly, to be able to engage with so many people and have so many parallel conversations. So, they are playing a significant role in support of what Ministers are doing at the moment. 

11:30

Just to add to that, in the integrated spirit, we are also increasing their role in active travel funding and the planning.

Thank you. Looking at the Plenary Record, Deputy Minister, you had said in Plenary that TfW could directly run bus services if that was necessary. Under what circumstances would you see it being necessary, and how might TfW need to develop to directly run services?

Well, our preferred model is to work in partnership with the sector, but the sector is diverse. It has a large number of SMEs and local firms and it has a small number of larger commercial operators, and they have different sets of dynamics and pressures on them.

The conversation we've just been telling you about, the negotiation we're having around the BES, assumes it's all going to work, and we hope it does. If it doesn't, we need a plan B. And we are sincere in our conversations with the bus industry that we expect something for something and, if they don't want to play ball, we have other options. Now, that's not our preferred plan, but we need to have it as a contingency. So, in that scenario, then there would be a role for TfW to act as an operator of last resort, really, because, if the private sector decided that they couldn't run bus services in Aberdare, for example, the people of Aberdare still need buses. So, there would need to be a stepping-in function by the public sector to provide a service in the meantime, and, in that theoretical scenario, TfW would have a role, but that is not something, as I say, that we are pushing as anywhere near our first option, but it has to be a fallback plan. 

And regardless, really, of what model is on the table or does arise, one of the major things that constituents complain to me about—and I'm sure that I'm not alone in this—is the fact that our transport services don't link up with each other. Buses don't meet other buses, and buses don't meet trains. Is this the kind of role that Transport for Wales could be undertaking, even if the private sector still predominates, in using some powers or formulating some powers to ensure that there is that more joined-up approach?

Well, that's exactly what we want to use our power through funding for the BES to do, and that's the design that Simon and his team and TfW are working on with them now to make sure that we use our funding to go against the market impulse of a free-for-all to say, 'If we're going to fund these routes, these are the routes we want to fund and we want a timetable that aligns both with other buses and with trains.' Now, that's something that the market has no natural impulse to try to do because they're out to try and maximise their own profit in the short term. So, that's why, if we get this right—and it's quite a task to pull off—we could achieve this without needing legislation.

Thank you. My final question is that, Minister, you've previously told the committee that there would need to be legislation to underpin the progress made through the BES and that work is under way to consider exactly what legislation may be needed. In light of the comments that we've had here today, is that still the approach that you would stand by, or have circumstances changed? Can you provide us with an update on that? And, if you still think legislation is definitely needed, what specific type?

And just a brief reply to that, if possible, please.

Okay. Well, as I said, we are still working on a piece of legislation that could be introduced in the next Senedd, if the next Welsh Government wants to do that.

I guess the real test is going to be whether any of the operators break away from the partnership arrangement that we're going to be signing under BES 2. That's really the strongest indication that we could expect as to the strength of the legislation that's needed in the next term of the Senedd. But, without any further legislative changes, currently the framework just doesn't lend itself to the totality of Welsh Government policy in terms of contracting all services, including commercial services.  

Thank you, Minister. We're a bit pushed for time. The next section is with Suzy Davies—probably about seven or eight minutes, if that's all right, Suzy.

11:35

Yes, that's fine. I've only got two essential questions. 

Minister, you mentioned that you thought that local communities would not be happy if local plans were developed and administered centrally. The new corporate joint committees aren't the same as the joint transport authority that was originally considered. The role that's currently anticipated for the CJCs isn't as wide as would have been taken on by the joint transport authorities. Back in February, you said you were working through this with the WLGA. Can you give us some steer now about what the CJCs will be taking on and who will be picking up the missing links, if you like?

—if I may. You're right, Suzy, in what you said at the outset of your question. The transfer of transport planning functions is the subject of consultation at the moment on regulations to establish corporate joint committees. So, we're out for consultation on that. And which transport functions might be transferred to CJCs and when they might be transferred is going to be discussed between Welsh Government, TfW and local authorities as part of the process of building on the CJCs. So, we're creating a vessel first of all and then determining exactly what functions should be transferred to it.

Okay. That's a helpful and very short answer. I'm sure the Chair is delighted.

Can I ask you, then, about what you're already discovering about what's likely to be different from the proposals in the original White Paper? We're not going to have a single authority here—there's going to be a relationship with TfW of some kind. That presumably needs to be captured in legislation for certainty, because governance of an increasingly complicated picture is going to be pretty critical.

So, an example of how this is part of a progression is the work that we're doing on the BES—the thing that we were just talking about. So, under that we need to be clear about who does what, because there are some functions that sit best at different levels. So, for example, managing a ticketing system is best done at a national level because we only really want to have one of those. If we're thinking about maintaining a traffic model, again, we probably only want to do that at a national level. Determining the network of routes to be able to link residential areas, workplaces, health settings and those kinds of things, that's probably best done at a regional rather than a local level. And there'll be some functions that are best done locally.

Yes, and maintaining bus lanes and putting in new bus lanes—those things are best done on a local authority level—

Yes. There's a piece of work that's going on now, under the BES work, to identify where these functions should best sit, and that really will lead into the conversations about the CJCs and what functions should sit there in future.

Okay. That's helpful. It's a bit early for me to have asked the question, effectively, but perhaps I can ask you, then: how does this fit in with the roles of public services boards under the Well-being of Future Generations (Wales) Act 2015? I'm thinking back to Helen Mary's earlier question and what the Deputy Minister was talking about earlier about needing culture change here. It doesn't matter at which of those three levels the activity happens, it still needs to be part of a bigger strategic picture.

It's about the co-ordination, isn't it, of those various bodies at each level—so, the public services boards, TfW, the CJCs, the local authorities and, of course, Welsh Government. It's essential that we co-design an approach with stakeholders at each level. And, as I say, the legal definitions and the roles and responsibilities of CJCs are out to consultation at the moment, so that won't end until, I think, 4 January, and then we'll be able to respond to it.