National Assembly for Wales

I'd like to welcome Members to the Economy, Infrastructure and Skills Committee this morning. There are a couple of issues just to go through before we go to our first item. First of all, under Standing Order 34.19, I've excluded the public from the meeting in order to protect public health, but this meeting is being broadcast live on Senedd.tv. Joyce Watson is going to stand in should there be any problems with my connection during this meeting. We haven't received any apologies or substitutions this morning, so we've got a full house, although I appreciate some Members do have connectivity issues, so they are on voice only, but they will appear on the screen when they come to contribute to the meeting. If there are any declarations of interest from Members, which I expect there won't be this morning, then please say now. No.

In that case, I move to item 2, and this is in regard to the Organisation for Economic Co-operation and Development report on regional development, and this session is an opportunity to discuss, with the author lead, the report that was presented to the Welsh Government on regional development and public investment in Wales. And we have the report author with us this morning, who joins us live from Paris. It's not very often I've said that in committee before, but I wonder if the lead author would like to introduce herself for the public record.

Yes. Thank you very much. My name is Maria-Varinia Michalun—just 'Varinia' is fine. I'm a senior project manager and policy analyst at the OECD and led the work on this report with an OECD team. So, we were very pleased to learn more about Wales and to also work on this project with the Welsh Government and also with the local authorities. And we look forward to, and hope to continue to support Wales in its regional development and investment processes.

That's good, and I think it's going to be a fascination session this morning as well. You mentioned that you learned about Wales. So, what did you learn about Wales in the context of your report?

Well, we learned that much that is said about Wales is actually true, in that there are disparities across the region. We learned also that, indeed, Wales does have some productivity and competitiveness challenges. But we also learned that there is a lot of potential in Wales. We learned that the Government is very committed to a place-based approach to regional development, which is something that the OECD has spoken a great deal about in the last 10 years, or more—actually 20. And we learned about a very strong commitment at the Welsh Government and at the Welsh local authority level to do what they can to move Wales forward in its growth and in its well-being. So, it was a very nice perspective as to what we see and what we see as possible, and the level of commitment that's there.

Thank you. I appreciate that, and I suppose, from our point of view, we're interested to know how you think that the challenges that we have in Wales around prosperity and productivity and about regional variances across Wales—how you think that the report suggests that these challenges can be approached by the Welsh Government.

Okay. So, I think a couple of things. One—

Well, put it this way: how could the Welsh Government use your report to make good those challenges?

Well, first of all, I think that Welsh Government, in its commitment to take a place-based approach to regional development, is taking a very strong step forward, and in its commitment to look at development, not just from a growth perspective but from a well-being perspective. So, these aren't mutually exclusive concepts; they can be worked on together.

I think one of the things I do want to say, because it'll affect what I say throughout this conversation, and it's in the report, is that we considered Welsh Government as a national Government in this report, understanding that there are certain limitations and capacity constraints within that. So, when I talk about a national level in our conversation, that is in reference to Welsh Government. So, when we look at the concept of productivity and labour productivity, what we see is, in a sense, there are two broad models: either a country or a territory's growth is really dominated by a few key regions or a few key areas—and then the other places just sort of contribute a little bit or actually don't contribute at all; it's a negative contribution—or that the productivity and growth is more evenly spread across different areas or different territories. And what's interesting in Wales, and it's the same in the UK, is that what we see in Wales mirrors what happens in the UK overall. So, Welsh labour productivity levels and labour productivity growth, even though it looks positive, is actually led by a few regions in Wales and the other regions contribute very little or are negative contributors. And this we see also in the UK, where the greater London area is the main driver for growth. Other models, for example, in Germany, and I think also in Poland, the growth is more evenly spread across the territory and there are trade-offs to this. So, if you have growth that is coming from a few places, it may be stronger growth but it can lead to more inequalities. If you have a growth model that is more evenly distributed, you can adjust the inequalities, or you have less inequalities, but you have slower growth.

So, one of the things that we have said—it's not as clearly stated in the report, but what we have said—is that Wales may want to look, to the greatest extent possible, at what kind of growth model does it want. And one of the things that we do come out and say in the report is that productivity growth can be dependent on a number of factors, and what we see in Wales is that to boost productivity and growth in Wales, consideration can be given to supporting investments in high-performing transport networks, for example, or in boosting skills of the workforce and in investing more in research and development and innovation. What we see in the OECD area, in general, is that when it comes to trying to address growth from a regional-development perspective, increasingly, the policy tools that are being used focus on business development, competitiveness and innovation. There are often national networks, sometimes of regional development agencies, that are designed to support business development; they often focus on SMEs, which, I think, is something that is also important in Wales, this SME focus. And often, they use instruments that help promote innovation or boost firm productivity and can also increase public sector productivity, and these are sort of directed to non-leading regions.

And so, among these instruments are some of the instruments I just mentioned in the Welsh case. So, transport or other infrastructure investment, cluster policies and supporting the development of centres of expertise, focusing on skills training—not just skills training for youth, but also retraining for older workers; capacity building for local governments. These are all different tools that governments are adopting to help promote their growth and their productivity. And one of the reasons why we focus on productivity and on labour productivity is because it does have an incidence on GDP; it also has a series of other effects on well-being.

I'm just bringing Helen Mary in at this point. Helen Mary Jones wants to come in. Helen Mary—you're on mute at the moment.

Thank you, Chair. I was interested to—. Croeso cynnes aton ni; a very warm welcome to you, and it's great to have you with us. I was interested in what you said that countries could either focus on levelling up between regions, or in—I may have misunderstood—just focusing on driving up productivity, and not focusing on whether that delivers inequalities. I think I heard you say or imply that you can't do both, so what I'm asking, I guess, is it is possible to develop public policy interventions that can drive up overall economic performance across the whole of a country, and address inequalities at the same time? Or is your experience that there's an inevitable trade-off there? 

No, sorry, that is absolutely not what I'm wanting to say. I don't think there is a trade-off. What happens is that—. The trade-off isn't that you won't grow or you won't promote well-being; the trade-off is in how fast, or the rate of growth.

Right.

So, in these countries where the productivity growth is more distributed across territories, what that means is that leading regions aren't necessarily the only drivers, or one of the few drivers of growth. The growth comes from a lot of regions, but your growth curve may not be as sharp; your rate of growth may not be as high. It doesn't mean that you're not growing, it just means that the regions are all growing—they're all contributing more, or they're all contributing. Whereas in the growth model where the growth is really concentrated in a few regions, in one or two or three, that's where you have most of the labour productivity growth happening. And it doesn't mean other regions are—I don't know, I want to say 'forgotten', but—

Say forgotten.

[Laughter.]—but you're not seeing that same level of productivity growth, so that the economy of the place is more dependant on a few areas, and so the challenge then is what you do with these other regions. So, this is where we say that a place-based approach is really important, because it can—it doesn't mean you shouldn't help, let's say, driving regions, but it also doesn't mean you should forget the regions that are having more difficulty, so the lagging regions. 

That makes sense, thank you.

At this point, I'll bring in Hefin David.

Can I just refer to the Welsh Government document, 'A Framework for Regional Investment in Wales', which is intended to consider what happens post EU? Can you hear me okay?

We can. You're just a little bit—but as long as we can work out what you're saying, that's fine, Hefin—go ahead.

Okay. My Wi-Fi is terrible. The document, 'A Framework for Regional Investment in Wales', given what you've said about regional disparities and some of the driver regions in inequalities, one of the recommendations in the document is a regional economic framework for different regions. Does that not sit differently with your report, which suggests that there are areas that may be left out as a result of a regional economic framework?

No, so let me—. No, not in what my understanding of what the economic regional frameworks are. But let me take a step back for a minute, which was something I wanted to say at the very beginning, and then I will come to this question. When we talk about regional development at the OECD, we take a very broad perspective of what that means. So, we don't say—. There is the economic component to it, but it's not just about economic development, there are other factors that play into it, so it's a very multidisciplinary, very cross-sector effort that goes into regional development—No. 1.

No. 2, just to wrap up our conversation a little bit about these different models for productivity growth, sometimes countries can—. I want to say that the models are there—it takes time to adjust or shift; it's not something that happens overnight. So, sometimes, it's also a question of how you want your entire territory to develop, and that takes time and that takes a vision for territorial development overall, and there are countries that have spent 20 or 30 years working on this. France is a good example of that.

Now, to come to this question about the framework for regional investment and the regional economic frameworks, no, I think my understanding and our interpretation of the regional economic frameworks in each region are a way—depending on how they're designed—to bring forward what those regional needs are for their development, growth and well-being that should help prioritise the investment in that region, but also, ideally, link and support higher level national strategies or objectives, and that the framework for investment that is being developed is one way to help ensure that national objectives are met and there is coherence in investment.

So, you're not saying a place-based approach would lead to gaps?

No. In fact, the notion of a place-based approach is to limit those gaps, to minimise those gaps, because the idea behind a place-based approach is very much where you don't take a blanket approach or a one-size-fits-all approach and say, 'We're going to invest in this everywhere,' or 'This is what we need for the development.' It's much more nuanced. If you look at the development needs of mid Wales, those development needs and the tools and the mechanisms to support development in mid Wales are going to be very different than in south-east Wales.

Okay, and did you have an input into the 'A Framework for Regional Investment in Wales' document?

Our input was—. So, throughout the process of developing this report, which is truly a process—we come to Wales, we speak with stakeholders, we speak with policy makers, we speak with different Government representatives at the national level. So, throughout that process, we met with members of the internal and external steering committee, for example, and held conversations with them about what we were hearing and seeing and thinking and finding. So, the input was not direct input, but it was input through meetings and discussions that could help inform the process.

And they were quite open with you about the intentions of the document and the strategic aims and all the rest of it?

Yes. I mean, the list of priorities for investment.

Yes, okay. It's just to understand the process, that's all. And in the context of the double shock of leaving the EU and the coronavirus pandemic, do you think that makes it difficult to design a regional strategy, or do you think a regional strategy sits above all of that and that you can develop your regional strategy based on a set of principles and ideas that is, in some way, immune to economic shocks and pandemics? I'm thinking of the principle of the foundational economy, for example. Do you think that how the policy develops is largely unaffected by those two huge things that are happening here in Wales at the moment?

So, let's—. The short answer is 'yes', but let me nuance that a little bit more, in that one of the things that we talk about a lot is the notion of a strategy and a policy. And a regional development strategy is a long-term plan—15, 20 years, maybe 10; let's say 10 to 20 years. And it's designed and intended to achieve very specific territorial goals or a goal, and it brings together strategies of different policy sectors. But it should also be developed based on significant consultation and a consensual perspective of where Wales wants to go, how it wants to grow and develop as a territory over time. And so—

Can I just interrupt at that point? What you're talking about is a set of high-level principles that rely on a consensus in order to operationalise them. Not least, we've got an election next year, but also we're in the most divided times that I've ever seen since I've been in politics, since 2007. These are the most divided times I've ever seen. Isn't it hard to get a consensus, even around a place-based approach, for example? So, what you're talking about is a set of ideas that sit above that. It is very difficult to reach through the fog to achieve it. 

Okay, let me—. So, I'll answer you in a moment. Just to come to Brexit and coronavirus, I think the impact is going to be felt over a longer term, but I think that the need for knowing where Wales wants to go and developing a consensual basis for that is even more important given these challenges. One of the things that we're seeing with coronavirus responses is that the places that managed this more effectively are places that are clear as to what they want to accomplish and there is agreement between different parties and levels of government as to what they want to accomplish. It's not a top-down, bottom-up thing; it's very much a co-ordination thing. 

So, this notion of—. Yes, what I'm talking about is a vision for where Wales wants to go, and, yes, we are in extremely divided times—I grew up in the United States—so, division is rampant. But I think one of the things that happens is that, when you're thinking about growth and development, there are short and medium-term gains, and then there are long-term gains. So, when I'm talking about a vision—. Let me just give you an example—do not take this as the OECD saying, 'This is what has to happen'; it's just an example. There is a lot of concentration of economic activity in Cardiff—Cardiff and the Valleys, Cardiff, south-east Wales. And one could argue that, in a sense, Wales as a territory is rather monocentric, because all of this economic—the bulk of economic activity is happening there. Maybe it's there and in north Wales. The question is: does Wales want to remain that way, or does it want to be more polycentric?

This was the case in France. France was seeing that there was so much pressure on Paris—and this is in the 1950s; really, the 1960s and 1970s—that it needed to do something, and so it undertook a very long-term strategy, which was place-based, to relieve that pressure off of Paris and help develop other parts of the country. So, when I'm talking about this sort of vision for where and what Wales wants to be in terms of a territory, it's that, and it's what kind of—. So, not only sort of spatially, but the types of industries it wants to continue to develop, where it wants to go with education, where it wants to go with environment, where it wants to go with energy—all of that contributes to regional development.

I think there's a lesson there for this cross-party committee, Cadeirydd, and I think it might be worth you taking note of that. But I'm done now.

Thank you.

Sorry, did I answer the question?

I think you did. I think the issue is the great deal of nuance that is required in these very difficult times. And nuance doesn't sit well with the kind of society that we've got at the moment.

Okay.

I know Joyce wants to come in. Suzy wants to come in, and then Joyce. Suzy first, then Joyce. But if I can just say—just quick questions and answers, because we've got a lot more on our agenda as well. But Suzy Davies.

Actually, Chair, I'm more than happy to leave my question to the next section.

No problem at all. Joyce Watson.

Thanks for that, and it's all fascinating, but the model—when we're talking about growth, the existing model that's used in the UK is GDP, and GDP is very much predicated on what is now, and might not be tomorrow, in terms of industry, et cetera. If we spread the wealth and the opportunities and the experience to bring up, as I understand it, the areas that somehow feel left behind, do we then have to rethink what we see as growth? Does the current GDP growth model currently satisfy an understanding of what we're trying to do?

I think if—. I mean, here, I think we need to split out the GDP growth—how much the UK GDP growth model drives the Welsh growth model. Because Wales doesn't act in a vacuum, and that's where this notion of what kind of growth model Wales wants—it may be somewhat limited in its choice. But it can do what it needs to—. There is room for action within the territory. So, I think the answer there is 'yes and no'. For example, within the territory, if more is done to support research and innovation, to support skills, to help entrepreneurs continue to develop, regardless of where they are in the territory, that, with time, will have a positive incidence, and so that positive incidence should be positive on the GDP, but also positive on the well-being.

Diolch. Thank you. Vikki Howells.

Thank you. I was just waiting to be unmuted. So, in the report, you talk about the difference between policy and policy implementation, and quite rightly so, I think. So, what are your views about how the Welsh Government can develop regional development policy in a way that addresses and overcomes those challenges that we have seen in policy implementation?

I think there are two items there. One has to do with how the policy is designed, and one has to do with the tools available to implement the policy. So, when we talk about policy design for regional development, I think that it's really important—and going back to the fact that we look at regional development policy as a very cross-sector concept—it's important to bring diverse stakeholders on board ex ante. So, designing the policy means first speaking to a broad number of sectors, sectors being different Government departments—environment, energy, transport, education, lots of sectors, because the objectives also have to align. So, that's first in terms of: where is it that we want to go?

So, taking a step backwards, we were talking about strategy being very long term, and that strategy should be able to transcend political cycles, it should be able to transcend crises, and help to provide a basis for how to respond to a crisis. A policy is going to be more short- or medium-term; it's usually a Government cycle or two. So, if we're talking about a regional development policy—which should help achieve the strategic objectives—if we're talking about the regional development policy, it's bringing these actors together at the initial point of the design, and also bringing in different levels of actors, so, cross-sector and multistakeholder, in order to get an idea as to what the objectives, the desires, the needs are, because in order to properly implement the policy, there needs to be a certain level of buy-in by the different people who are responsible for implementing it. If they don't agree with it, they're not going to want to contribute to it, or it's going to be harder to get them to contribute. So, that's my short answer on the policy design process, and that needs to be very multilevel. It can't just rest at Welsh Government level, it needs to go down.

In the policy implementation process, there is the issue of the tools that are available for implementation, and one of the things that we did spend time in the report discussing is this need for reinforcing implementation tools. So, while policy design needs to be well co-ordinated, broad based and with broad-based support, policy implementation needs to be thought of in terms of: what capacity is there and what are the capacity gaps? And how do we, as a Government, help bridge those gaps? What can we do?

Now, this brings us to a concept that we talked about in the report about the changing role of Government, and how what we're seeing, especially in more devolved contexts with greater decentralisation, is that national Governments are playing more of a co-ordination role. They're playing more of a role of guiding strategy and co-ordinating policy and monitoring and evaluating, and also giving the tools to subnational authorities, and it's the subnational authorities that are then taking the role for making decisions on a day-to-day basis—planning, implementation and moving forward with it. 

One of the things that we say about Wales, and it's come up in different presentations I've given, is that among the different implementation mechanisms that need to be thought through are, in some cases, greater scale for delivery. So, this is where, for example, the corporate joint committee concept was coming in—undertaking some effort at a regional level: supporting more learning by doing, giving subnational bodies and local authorities room to stretch their wings. I think that there's always—it's not just in Wales—this paternalistic approach between national and subnational Governments, and subnational Governments are often much more competent than they're given credit for, and much more creative, but subnational Governments often also don't have the capacity that they may think they have. So, it's meeting halfway on that.

So, that's why in many different instances we talk about building capacity of the subnational level through agreements or contracts, or other sorts of formal partnership mechanisms. It's why we talk about building scale. It's why we also talk about making better use of fiscal decentralisation, or fiscal devolution. So, there is room there for adjustment as well. So, the idea here is to give local authorities some more space to grow into their implementation role, and help that process, but everyone, again, has to be on board with this and like what it looks like.

And just quickly, because I know that there are lots of other questions Members have as well, looking at the top of the model that you envisage, then, you say that you think that the First Minister's office should have overall responsibility for regional development and investment, and that that would—. So, can you explain just how you think that would enable the development of more coherent policy and cross-Government working? 

And before you start to answer that, Maria, I'm just conscious we're about three-quarters of the way through our session but we're only halfway through the questions we've got for you, so just keep that in mind, if you can. 

I'll be quicker with my answers. 

Thank you, I appreciate it. 

So, what we are proposing or what the report proposes is establishing an office within the First Minister's office that is really responsible for overseeing and co-ordinating this effort. So, the reason why we say that is that our feeling is that if it's in the First Minister's office, it's at the centre of Government, and increasingly centres of Government are playing a co-ordination role, so that this office will be able to work with the different sectors to ensure that the effort and their sector objectives and their sector policies are also aligning to move the regional development objectives and processes forward, and also for investment. What happens is that what we're seeing in Wales is that regional development efforts are very fragmented; they're spread across lots of different departments, and they have lots of different channels of funding. This isn't to say that that's a bad thing; it's just it requires a lot of management and co-ordination. And right now, that's not really resting with anyone. 

So, the proposal for this office is to provide that nucleus for greater co-ordination and management of regional development, and we see offices like that, maybe not just for regional development, but there are these types of offices in different Governments.

Lovely, thanks.

Thank you very much.

And Varinia, do you mind, as well, if Members asking the questions want to just pinpoint on something, if they interrupt you as you're talking? Is that okay?

It's fine.

Thank you very much for that permission. Helen Mary Jones.

Thank you, Chair. So, can you talk us through a bit the rationale behind re-establishing a regional development agency, rather than things staying inside the Government, and tell us a bit more about what benefits you believe that would bring to making regional development effective?

I think that the rationale behind a regional development agency is another one of those matters of greater implementation support, because regional development policy—actually, almost any policy—is really delivered at the local level. And in terms of regional development, especially when it comes to growth and productivity, it's delivered by local actors, not just local authorities, but by businesses and by the third sector, and they need support also, and especially when it comes to designing and developing a project or requesting funding—the investment dimension behind this also. That can be really difficult to navigate.

So, the rationale, the idea, behind reintroducing a regional development agency is the idea that there needs to be some sort of strategically oriented support that understands the different regions, their needs, and their actors, and that has good links between the different levels and can speak for the needs of the local actors and the region, but also understands what's happening and what the constraints may be at the national level and helps navigate that. What we see in general across the OECD is an upward trend in the use of regional development agencies, so this is considered a good practice right now, and it can foster greater understanding and stronger working relationships between national and subnational levels and between different types of actors. But I think the other thing I want to make really clear with the regional development agency concept is that there are a lot of different forms it can take, and Welsh Government needs to determine what is the best form for it, based on—

Okay, that's helpful. Of course, some of us are old enough to remember when we did have the free-standing agency, and one thing that the Welsh Development Agency was not very good at was about sharing wealth. It was quite good at generating prosperity, but as you've found, of course, most of that development was in very particular parts of Wales—the south-east and bits of the north-east. So, do you think there are—. In terms of—. You said that there are lots of different models that could be used, lots of different ways to approach this. Do you think there are lessons that the Welsh Government can learn from that past experience of what did and didn't work with the Welsh Development Agency, and indeed if we go back a little bit further, because of course, before that, we had the Development Board for Rural Wales, which had a slightly different job to do? And I guess, within that, I'd ask the question of whether—. I know Wales is a very small country, but its regions are very diverse, and you mentioned in an earlier answer that what might be the right approach to promoting productivity in the rural mid and west might not be the right approach to do in the post-industrial communities, for example. So, is there an argument for more than one? Do we need regional agencies, rather than an agency, and can they learn from the WDA experience?

I'm sure they can learn from the WDA experience, because I think you can learn from just about anything if you want to, so it's a question of wanting to learn. I really would encourage you not to throw the baby out with the bathwater. I think that there were some really positive—. Let's say—. I'm sure there was—. I did not study the WDA in depth. There are other people who have studied it. But I'm sure that there were some very positive aspects to it, and there was a lot of goodwill. When we spoke to people, specifically in south-west Wales and also in mid Wales, and this concept came up, there was a lot of goodwill towards the WDA. 

Again, it depends on the model. So, you could have a model where there's one regional development agency office in each of the four or three or however many regions, but really, let's just say four—in four regions that are not necessarily independent of each other, but they may report up to this office for regional development—or agencies tend to be independent, so somehow maybe link up, someone has to oversee them. And each one may understand better what's happening in their area. I think that if they act—. And I'm just thinking this through right now, so, again—. If they act entirely independently, they may be generating some competition there for funding and that may not be precisely what you want. That's something that has to be thought through.

But Canada has a model where there are six regional development agencies across the territory that then link up to the federal level. There are other models where it's just one; it really depends.

Thank you. That's helpful.

Suzy Davies, did you want to come in here?

Yes, please. Varinia, all Members on this call, except the Chair, actually, are representing parts of Wales that are also covered by growth deals that are some years into their implementation. There are various views about this, but what have we learned from those and what have we learned about what seems to be the big thick black line that surrounds each of these growth deal areas and seems to limit cross-border working, rather than enhance it? And that's partly because the models are completely different from each other.

I think there's a lot to be said for the growth deals. I don't think that the growth deals are something that should necessarily be seen as a problem, or any issue. But I think what happens—and this is something that we do see in Wales—is that there's a lot of layering. I mean, we see it in France, too, but there's a lot of layering. One thing is there and then something else gets layered and then something else comes on, and that's how you've ended up with this very complex geographic footprint—lots of different sizes of regions. And I think one of the issues that has happened, maybe, with the growth deals and some of the other initiatives for regional development is that there may not have been sufficient discussion as to how all these pieces of the puzzle fit together, and what the role is of the growth deal versus the regional economic frameworks, for example, and whether or not there's opportunity to really create synergies and complementarities, or how to create something that's cohesive and unified. You're on mute, Suzy—sorry.

Suzy's on mute. I think she may have—

I share your observation, is what I was saying.

Okay.

There we are, thank you. Joyce Watson.

So, you got to the heart of the complexities, without a doubt, and the layering and how it all works together, and you started to say that we need to really all be working towards the same end. So, we're looking to you for answers in terms of Government doing just that, and a balance between what we call top-down—and you addressed that in part—and bottom-up approaches.

So, in terms of developing, we've got the policy, let's say, and we're looking at delivery now. So, how do you see us looking positively, as a way forward, in the delivery arm of all of this? Because we won't deliver; Government never delivers in that regard. It is, as you've described, the adviser, the person who comes up with the ideas.

I think, a couple of things. One is that no level of Government can act on its own and I think that that needs to be realised at all levels of Government in Wales. So, the national Government needs the local authorities just as much as the local authorities need the national Government. And fully top-down approaches or fully bottom-up approaches, neither one of them leaves anyone terribly satisfied and neither one is very effective.

I think one of the problems in Wales for this sort of meeting halfway on the top-down, bottom-up for implementation—and this goes into design as much as it goes into doing the day-to-day work of implementing the policy—is that it brings us back to what people talk about a lot, which is this issue of trust and mutual respect, and I think that there is work to be done there. And it's easy for me to say that and it's very hard to do the work, which is why, in the report, we suggest that time be taken to bring the parties together to develop an agreement as to what working together looks like. Because Welsh Government and local authorities use the terms 'co-production', 'co-delivery', 'co-design', 'co-' whatever a lot, but I don't think that they're meaning it in the same way. And coming to an agreement as to what that means, when it happens, how it happens and how it is used may be very helpful. Did that answer it, Joyce?

Yes, that does answer it, because language is important, and the understanding of the language that you're using and the terminology and that everybody understands it—. To do that, of course, you'd have to do some training, which you talked about earlier, and facilitating that training independently of both of those levels of government. But there are three tiers of government, of course, in Wales, and you recognise that the devolution settlement sits even higher than that, so that some level of understanding would have to happen between the UK Government and the Welsh Government and then the Welsh Government and the players—whoever they are—underneath that, without a doubt.

Yes, but I don't think that Welsh Government should wait for the UK Government. I think Welsh Government can take a step forward for itself to start bridging that relationship with the local authorities. Now, I know that it's not as simple as that, because UK Government is also involved in the city deals, et cetera. But I do think that some sort of agreement on language and mutually agreed upon—I mean, it has to be mutually agreed upon. That can at least help Wales.

Okay. And you say in your report that—. Our Minister for Economy, Transport and North Wales did say in November that he'd ask the chief regional officers whether regional economic frameworks are still needed in their current form. Do you have any view on that? Again, it's these tiers and this interconnectivity that I think you talked about just a few seconds ago with Suzy Davies.

I'm going to just highlight something I said in the report. What we say in the report is that the regional economic frameworks are a tool right now based on the policies in place to help support this more place-based approach to economic development. If we take this broader perspective of regional development of a national regional development policy for which we argue in the report, eventually, regionally designed development plans should be considered that link up to that national policy.

In order to not add additional layers of planning, because there are already a lot of plans, consideration would then need to be given to seeing how something like the regional economic frameworks fold into that, just as how other plans, be it for education or transport or whatever, and well-being plans fold into that as well. The well-being plans may be a bit more difficult because of the legislative dimension.

But it's how to start unifying some of all that planning, and I think the regional economic frameworks are tools for economic development and a place-based approach to economic development in Wales in specific regions. But that can eventually take a broader perspective, because, again, there needs to be some rationalisation of the plans and of the footprints.

Thank you.

Suzy Davies.

Thank you. Just quite a brief section, Varinia, on this, to do with mid and south Wales west, or south-west Wales, sorry, I should say. I think we picked up some of the reasons why you think these should be separate regions and I can say just from the one county of Powys that culture change is within a very short distance within Wales and Powys itself is kind of a crazy concept and that's just one county.

But I'm wondering if you could tell us what evidence you think would be needed to show that a four-regional approach had worked? 

Okay, so, let me just take a step back. When we worked on the case study, the reason why we suggested doing a pilot or an experiment was because if we looked at the advantages and disadvantages to three versus four regions, it was really rather inconclusive. It wasn't, 'Oh, three regions have infinitely more advantages than four' or 'Oh, four regions have infinitely more advantages than three.' There were strong advantages and disadvantages to both. So, one way to manage that is through a pilot. 

Now, to answer your question specifically, when you're piloting something like that and you're considering the evidence, before you consider what evidence, you also need to consider the design of how it's going to be evaluated. And so, in terms of the evaluation, we feel it's really important to have a good time period—so, at least three to five years—because then you can start collecting interesting data. And it's also important in the design of the evaluation that it be evaluated by independent experts: so, either academics, researchers or other independent experts that have experience in impact evaluation. And it's working with them that you can identify better what those indicators are. So, some variables or indicators could be issues like demographic trends in your population base or your levels of deprivation or internet activity. But it really depends on what it is that that region should be achieving or accomplishing as its own region. And commenting on those variables right now may not be very helpful.

Now, if you look at a quantitative analysis, you could do a 'before and after' comparison, but, if you just do that, it's not entirely reliable because you can't control for factors that affect some of those outcomes, but it can be very descriptive. But if you talk about a study that shows, for example, a comparison group or a comparison region to mid Wales, which is what an independent expert or an academic evaluator can help identify, then you may be able to better see what the impact was. So, I can't tell you right now, 'This is what you need to measure', because it really depends on where you want mid Wales to go. So, the answer that an evaluation to this type of experiment—. The question that you're trying to answer is, 'What would have happened in mid Wales if this experiment had not been carried out?' And then you use that to compare with the mid Wales that has been developed. And since mid Wales is quite unique as a region, then what you need to do is maybe find almost like a proxy—find a comparative region or a comparison region using statistical methods—which may not be a Welsh region; it could be another region in the UK or somewhere else. That again depends on your—

Okay. Sorry to interrupt. That's what I was going to ask you, really, about whether that comparator should be a UK comparator or whether it could be anywhere. And the reason I ask it is that I think Wales is quire unusual, and certainly mid Wales and most of rural Wales is not like France—it doesn't have any big centres of population. We've got our three or four big towns and two cities, three cities, but they're small by international standards as well. So, is there an equivalent of Wales anywhere that we could compare with? We can't say Cumbria or Cornwall—they're not the same.

No, and I really think that that needs to be discussed with an expert evaluator.

Yes. Really, thank you—that's very helpful.

You're welcome.

Are there any other Members who've got any questions at all before we finish? Or, if not, are there any final points, Varinia, you think that you should make that perhaps haven't been drawn out in the questions that you think are important for us as those who are scrutinising the Government here in the Welsh Parliament?

I'm sorry, was that for me? Because if it was, I didn't—

Yes. Sorry, sorry. I was just saying that we've just come to an end, but I was just saying, if Members haven't got any additional questions, is there anything that you feel that's relevant for us as those whose job is to scrutinise the Government here in Wales?

Yes. I think that Welsh Government is very aware of what its challenges are, and I think that there is an enormous amount—. From our perspective and the people we've spoken to, there is a lot of goodwill within Welsh Government to address those challenges, and—

Is that at ministerial or official level? I'm just curious on that. Is that the Government, in terms of the politicians, or officials in Government?

I think officials. I was speaking more about officials in Government, because, while we spoke to Ministers, most of our time was spent with officials in Government.

Okay. Yes.

This is not to say anything negative about the Ministers—it's just our exposure was more to officials. And I think there's a lot of pride in Wales about Wales, and that's really nice to see. Just from my own—. And this is speaking from my own personal experience—this is one of the most engaged nations we've worked with. It's been very engaged in this process, and that's been a real joy to work with. 

Do you have any understanding of why that might be, out of interest?

I think because there were some very clear objectives and matters that Welsh Government wanted to explore through this report, and the desire to then see what could be done. It comes from that commitment to taking this place-based approach, to doing more, to helping generate greater growth, to supporting Wales. I think that—. I don't know. It's a good question. I haven't reflected so much on it, but it made it a true pleasure to work on this project.

I suppose finally from me, in terms of an example, is there anywhere else within the OECD area that is very close to Wales in terms of its geography and size, which you can point to as a similar example? I'm just thinking of regions of Germany, for example, which you pointed out in your report, but I've not got any comprehension if they're the same size or the same structure of Government that we have here in Wales.

Well, I think Wales is—. In Germany, the—. How do I answer this? Let's say that, from certain respects, no, Wales is really quite unique, but the challenges aren't, necessarily. Lots of places have problems with fragmentation, lots of places have problems with the degree of devolution and gaps in terms of spending and revenue requirements, lots of places have issues with resource constraints for investment. The differences can be—. For example, in Germany, it's a federal country, so each Land has greater movement, freedom of movement, it's not—. But, in France, it's a unitary country, so that's different. The challenges can sometimes be very similar, and the mechanisms need to be appropriate to the economic, political, social and capacity level of the place being looked at. So, Wales is not alone, but it is unique. Does that give some additional insight?

I was just curious, I suppose, because I can see your example of Saxony-Anhalt, just to understand—in one sense, in some countries that are of a similar size to the UK, you might have regional Governments or nation Governments within that Government, and in some countries there might be entire areas that are the economic region that we're talking about in terms of place-based, I suppose. I'm just trying to get my head around those issues.

Well, yes, and that's where this—. We can look at place-based at many levels; we can look at place-based from the UK level, and then what does UK Government do to take a place-based approach throughout the UK. And then you can look at a place-based approach from a regional level, and so that can be in Germany, in one of the Länder, or it can be in Wales, or it could be in Scotland, or it could be in a province in Argentina. And then you can go even further down and say, 'What's a place-based approach in mid Wales?'—or in Cardiff, which has lots of different communities.

You can keep going then, can't you?

Yes, yes, you can keep going. Maybe you end in an apartment building—I don't know.

Where do you stop and draw the line? But that's not a question, that's just an observation. Lovely. Well, thanks, Varinia, for this fascinating session this morning. We really appreciate your time with us, and thank you very much. It's all very timely, of course, for our work as a committee, but we've got an election next year, so I'm sure political parties will want to look at your OECD report in terms of developing their manifestos ahead of the next Welsh Parliament elections as well, I'm sure. So, it's timely for both our committee and for political groupings within the Welsh Parliament, so thank you very much for your time with us this morning. We're very, very grateful. Diolch yn fawr.

Thank you for inviting me.

Thank you. You're welcome to stay, we're still in public session, but you may leave if you want.

Unfortunately, I have to go, but thanks again. It was good to see some of you, meet some of you, and have this opportunity.

Thank you very much.

Okay. Take care. Bye bye.

There we are. Goodbye, Paris. There we are. Thank you.

So, we move to item 3, and this is a consideration of a legislative consent memorandum on the UK Financial Services Bill 2019-21. I just invite Members to raise any comments. We have got a draft report to look at in our private session later on in the meeting, so we can do that, but, if Members have got any comments they want to raise now, put on the record, then do so.

No, in that case, I move to item 4, and, under Standing 17.42, I would resolve to exclude the public from the remainder of the meeting, if all are content. Yes, they are. So, that brings our public session to an end this morning.