Y Cyfarfod Llawn

Plenary

30/11/2022

In the bilingual version, the left-hand column includes the language used during the meeting. The right-hand column includes a translation of those speeches.

The Senedd met in the Chamber and by video-conference at 13:30 with the Llywydd (Elin Jones) in the Chair.

1. Questions to the Minister for Finance and Local Government

Good afternoon. We are ready to begin. The first item today is questions to the Minister for Finance and Local Government, and the first question is from Altaf Hussain.

Financial Reserves

1. What discussions has the Minister held with colleagues in local government about the use of financial reserves? OQ58771

I have discussed local authority reserves with leaders as part of our ongoing discussions on pressures and funding. All leaders have stressed that they are already using reserves to manage their current pressures and expect to have to continue to do so next year. 

Thank you, Minister. Minister, in March 2020, the Welsh Government reported all local authority reserves to be £1.5 billion, which increased by 42 per cent to £2.13 billion by March 2021. To put this into context, in this current financial year, the revenue support grant allocated by you to local authorities was £3.9 billion. I accept that local authorities need to hold money in reserve and it's not a simple matter as to how those reserves can be used, but, as you discuss the overall financial position with local authorities over the next month, would you assure the Senedd that vast sums of money will not just be left in local authority bank accounts whilst council leaders at the same time complain about the lack of money to provide essential services? Thank you.

I'll just refer the Member to my original answer, which does reassure colleagues in the Senedd that I do discuss local authority reserves with them regularly as part of our general discussions in relation to finance. But I just want to be really clear as well that the position that is reported in the annual reporting mechanism is only the situation on one day of the year—the end of the financial year; it doesn't reflect movements up and down within the year. And, of course, the level of reserves are a matter for the individual local elected members and they will reflect the longer term plans that those authorities have as well as managing the short-term pressures, and there are plenty of those short-term pressures at the moment.

And I think that we need also to see local authority reserves in the wider context in terms of the overall budget of local government. At an all-Wales level, the widest interpretation of usable reserves is 26 per cent of the total annual expenditure. So, that's three months' provision for the costs of all of local government. General or unallocated reserves would cover just 10 days. So, I think that, even though authorities' reserves are higher than they are normally, they still just recognise that there are many, many calls on those reserves. As I say, authorities are already using some of them to manage the extreme pressures of the cost-of-living crisis and the impact of inflation on local authorities, and I expect they would intend to do so next year as well. So, I just reassure colleagues, really, that I do have confidence that local authority colleagues are considering the use of reserves in an appropriate way, and to recognise as well that the level of reserves this year does recognise that, at the end of the financial year, previously, I allocated an additional £50 million to local authorities, bearing in mind that, even before the cost-of-living crisis and the situation in Ukraine, we recognised, because of the three-year spending review, that years 2 and 3 were going to be more difficult. So, I hope that that does put authorities in a better position than they would otherwise have been to manage the pressures next year. But, that said, you'll have seen that local authorities are telling us that they're already expecting to see a gap in funding of hundreds of millions of pounds, which is obviously of concern to them and to us.

Thank you for confirming what I've actually heard in briefings that have been made available to me and to other Senedd Members of other parties about not just the financial budgetary pressures facing local authorities, but also discussing the reserves. And that figure that you've cited, that if it was all thrown at the current pressures, we might have three months before all those reserves are used up, regardless of the fact that most of it is currently allocated for other uses—. So, can I ask, in your meetings with local authority leaders going forward, particularly Andrew Morgan of Rhondda Cynon Taf and Huw David of Bridgend in my areas, could you ask them, if there were any Members of this Senedd—some of whom are former council leaders—who were unable to attend those briefings, and to see the scale of the pressures that are currently facing our local authorities, to invite them again to sit down with officers in that local authority and just see how far the reserves would go?

13:35

Absolutely. I think local authorities have been incredibly transparent in terms of the financial challenges that they're facing, and I'm pleased that they have been able to offer, on a regional basis, opportunities for all Members of the Senedd to better understand those pressures at a very local level. I know they'd be more than happy to engage again with any colleagues who have not managed to attend one of those sessions. I think, in those sessions, you'll have heard that they will have seen pressures right across local government, but particularly in relation to pay inflation, energy costs, schools in particular, social care, the response to Ukraine and wider migration, and also housing and homelessness, and, obviously, all the challenges around the tight capital settlement as well. So, I would absolutely encourage all colleagues to engage with their local authorities to get underneath those challenges.

The UK Government's Autumn Statement

2. What consideration has the Minister given to the impact of the autumn statement on the Welsh Government financial support that will be available for local authorities in South Wales West? OQ58788

Ahead of the autumn statement, I called on the Chancellor to invest in people and public services. While there was some additional funding in the UK Government announcements, it failed to address the significant gaps in funding for public services.

Yes, I'd agree, Minister. Our local authorities are facing huge financial pressures, and I'd like to echo what Huw Irranca-Davies said about the importance of engagement not only in those briefings, but I know, in Neath Port Talbot, the council is going out into all the communities of the local authority area to have public meetings so that people fully understand what's at stake here and to ask for ideas about how things can be managed. There are specific pressures on local authority budgets in terms of the increasing demand on social care in my region. In Neath Port Talbot, for example, there's been a steady increase in referrals to adult social services and children and young people's services over the last two years, and Bridgend council recognises in its own words that gaps exist in social care services. Without additional funding to meet the need for social services for adults and children, it will be impossible, of course, to solve some of the causes of the crisis in the health service—for example, people unable to leave hospitals, and more people going to hospital due to pressure on families that don't have the right support. According to the Wales fiscal analysis team, the Chancellor's recent autumn statement means there'll be an additional £1.2 billion available to the Welsh Government over the next two years as a result of the Barnett consequentials. So, can the Minister provide assurances that the funding included in this £1.2 billion for local government social care services is passported in full during the next two years into local government settlements?

I'm very grateful to the Member for the question, and for reiterating the same message I'm hearing from leaders as well in terms of the specific pressures on social care. They're also very keen to impress upon me the pressures in education as well, and those are two of the main areas of expenditure for local authorities. And I would also welcome and encourage people to engage with the work that local authorities are doing in terms of trying to reach out to the public, so that the public understands the very real pressures that the authority is under locally, but also then that authorities can take decisions having listened to the public on what their priorities are for their particular area. So, I do commend that outreach work that local authorities are doing across Wales.

It is the case that the autumn statement did mean that we would receive in Wales an extra £1.2 billion over the next two years as a result of consequentials through the autumn statement. What I will say is that it means £666 million next year, and that, even still, leaves a gap of around £1 billion in our budget as a result of pressures. So, there will inevitably be difficult decisions for us to take as a Welsh Government, and also difficult decisions for public services more generally. I'll be publishing our budget on 13 December, so I don't want to give too much detail at this point, particularly because we still haven't come to those final decisions, and we're having ongoing discussions with partners—I'm talking to colleagues about the pressures they're seeing in their particular areas. But I've listened very carefully to what the Member has said about that particular area of priority.

I'd also say, in relation to the £1.2 billion, that it is helpful if colleagues understand where the consequentials have come from. Now, I'm very much of the view that consequential funding comes to the Welsh Government and the Welsh Government will take the decisions in relation to where that funding goes; it's not a case of just passporting money on. And it's a case, really, of understanding what the pressures are, because I think we do the Welsh Treasury, the Welsh Government, this Senedd, a disservice if we're just seen as a kind of post box for consequential funding. So, what we will do is undertake serious pieces of work looking at where the pressures are, where our priorities are as a Government, and, particularly also, looking at our programme for government. Obviously, we have shared interests in that area as well.

And just to finally add on that, 44 per cent of that £666 million for next year relates to new schemes in the field of business rates. So, obviously, we're looking very carefully at support for business. So, what I will say is that when the Chancellor gave the impression that it was £1.2 billion for public services, I think that that was slightly misleading and there's a lot more to unpick underneath those figures. 

13:40

Minister, in your prepared answer there, you called on the Chancellor to invest in people and public services. Well, I think we can call on you to do the same. You've had £1.2 billion extra from the UK Government, on top of a record settlement that existed already. So, how much can local government expect? We know that investment in social care leads to better health outcomes, to savings in the NHS. So, perhaps you can enlighten us today on how much local government can expect from this wonderful windfall?

I will enlighten the Member on 13 December, Llywydd, when I publish the draft budget. It's not too long to wait now, but there's a lot of work which needs to be undertaken rapidly between now and then. But, on 13 December, we'll be publishing the Welsh Government draft budget alongside that whole suite of information that we always publish—the chief economist's report, our narrative that goes along with the document, and some of our other analysis as well. We always try to publish as much information in as much detail as we can. 

Questions Without Notice from Party Spokespeople

Questions not from the party spokespeople. The Conservative spokesperson, Peter Fox. 

Thank you, Presiding Officer, and good afternoon, Minister. I've got a feeling I know what the answer to my first question will be. Over the last few weeks, Minister, we've spoken a lot about the challenging fiscal environment, as well as the UK Government's response to this in its autumn statement, which, of course, provided a welcome injection of additional funding to the Welsh Government, as well as protecting the most vulnerable in society. In the local government family, however, there is worrying uncertainty and concern about future funding commitments to local authorities. Councils are calling for their share of additional moneys to help meet future budget shortfalls, much like your political colleagues in Torfaen cabinet, who last week said that they will be, quote, 'lobbying really hard' for the additional monies from UK Government to be passported to local authorities. Minister, I'm sure, within the finance forum, council leaders have shared their concerns robustly. Can I ask, then, whether they can expect additional support, moving forward, and can you provide assurances that any new Government policies or burdens levelled on councils will be fully funded?

I'd just refer to my previous answer to the Member's colleague, but I will say that I do meet very regularly with local government leaders. My officials meet very regularly with officers, including treasurers across local government, to discuss the particular pressures that they are facing. I've got to say that the work that the Welsh Local Government Association presents us with is always very useful in terms of understanding those particular pressures, and understanding the quantum of funding that local government tells us that it would need to continue running the services and to continue delivering for people in their communities. And then, of course, my officials will test those figures with local government to come to a better understanding of them.So, just to reassure, that level of engagement is going on. We are listening very carefully to what local government is telling us that it needs, and also very carefully to what other public services are telling us they need, and, obviously, other parts of Welsh life as well that have an interest. 

But, just to say, really, this budget is probably the hardest one that we've faced, probably since devolution, I think, and there are going to be really difficult decisions made. So, it's not a budget where we're looking to do lots of new things; it's a budget where we're focusing very much in a laser-like fashion on the things that really, really matter and that we need to protect. 

Thank you for that, Minister, and I concur with Huw Irranca-Davies. I chaired, or hosted a meeting for Members to join local authority leaders, and, sadly, I was the only one who turned up, even though we had 10 south-east Wales leaders on the call sharing the scale of their issues. And the scale of the challenge is huge, and the financial outlook is challenging. But some councils are far better equipped to face this than others. Minister, as I've said on a number of occasions, the formula for funding councils is out of date and is unfair. It sees some councils able to stack up colossal useable reserves while others struggle to meet their needs. I understand reserves, I can absorb the stock answers, but I understand the situation, as most local government members here will.

As Altaf Hussain mentioned in his previous question, we saw an increase of over 35 per cent in useable reserves held at March 2021 to £2.1 billion. Now, sad as I am in taking some time to trawl through the draft statement of accounts for March 2022 over the weekend, I've noticed an increase of well over 30 per cent again, some almost 50 per cent, with a circa increase of probably £600 million at March 2022, leaving a collective useable reserve pot of £2.75 billion. However, it's not a fair distribution. Some, at March of this year, held well over £200 million whilst others hold minimal useable reserves.

Minister, do you think that, at a time of such financial pressure for our country, it's right for some councils to hold so much in reserves? I know that a portion will be school balances and some will be capital, but some councils hold significant amounts of useable reserves in dormant, unused, earmarked accounts. So, shouldn't the Government find better and fairer ways to distribute finance? Especially at the moment, so that councils don't have to rely so much on hard-pressed council tax payers who can ill afford—

13:45

Don't go over the page, because you're already on 2 minutes 20 seconds. So, if you can ask the questions.

I understand the question, and to be fair to the Member it is a question that he does raise regularly. I don't share that level of concern at the level of reserves that local authorities have, because I think that, when we're going into what will be the most difficult couple of years for local authorities, for them to be in a better financial position than they would otherwise have been, I think, is a good thing. Part of that is the additional funding that we've provided through the crisis of the pandemic, of course. Also, there will be different things affecting local authorities. The Member will know that there was lots of activity that didn't take place, which had been planned during the pandemic, and that has again led to the rising of some reserves in some authorities. But, he's absolutely correct that levels of reserves are different across different authorities. I don't think that that's a factor of the local government settlement and the formula, however, because the formula looks at a whole range of measures, many of them are related to the nature and the context of the population that is being served and the nature of the geography of the area that is being served, and neither of those things relates to reserves in particular. If local authorities wanted to look at the settlement through the lens of reserves, then, we could ask the distribution sub-group to do some work on that, but it's not something that any authority leader has raised with me at this point.

Thank you, Minister, but the system isn't working, because it's allowing councils to continue to rise council tax whilst at the same time growing reserves in some cases. Your predecessor Leighton Andrews saw this and produced a guide for councils in 2016 to help them understand and better scrutinise reserves and how they may be used. Minister, will you consider reviewing earmarked reserves held by some councils in the same way that councils do with their schools, to understand if earmarked reserves are genuinely being used for their intended purposes, perhaps assessing if they have been drawn down in the past five years or longer and, if not, question why? Some will have held core reserves for many, many years. Earmarked revenue reserves are the same as general reserves, they're just stored in a different place and they are available to be used in any way. So, some may say that they are for a rainy day. Well, Minister, it's pouring down, but some councils have huge umbrellas, others have tiny parasols. So, do you agree that such an analysis of held earmarked reserves should take place as soon as possible to enable you to consider a more sustainable approach to funding valuable public services across the country?

13:50

I would say that local authorities are telling us that they are seeing massive pressures and gaps in their budget, both in this financial year and next financial year, and that they are looking to reserves to, in part, meet that challenge. I'm more than happy to ask my officials to have some further discussions with the Treasury on the specific point in terms of understanding reserves and the use of them. I don't think that local authorities have been anything other than straight with us when they tell us about the pressures that they are facing at the moment, and we do enter into lengthy discussions with them about the pressures ahead. But reserves can only be used once. Lots of the pressures that local authorities are facing relate to pay in particular, and, obviously, using reserves to meet pay pressures isn't a sustainable solution to that particular problem. I'm very happy to have further open discussions with local government on this issue.

Diolch, Llywydd. Good afternoon, Minister. There was reference in this Chamber last week to work by the Public Accounts and Public Administration Committee, scrutinising the Welsh Government's accounts for 2020-21, which found that there'd been an underspend of £526 million and, as a result, £155 million of funding allocated to Wales had been returned to the Treasury. I'm sure you'd wish to say something about that. But more recently, my understanding is that, in the last few weeks, the Welsh Treasury estimated that there's about £80 million of unallocated funding in the Welsh budget at the moment. Now, the health Minister, of course, directly contradicted that in her contribution here last week, when she said that there's currently no unallocated spending and no underspend when she was asked about the Welsh Government's budget and the current figure for the Welsh reserve. So, can you set the record straight this afternoon and give us clarity regarding the current estimate of unallocated funding and underspend in the Welsh Government budget, as it stands at the moment?

I'm very happy to set the record straight on both of those issues, and I'm grateful, particularly in relation to the first question, to have the opportunity to do so. On 5 August, I did write to the Finance Committee, and the letter has since been also shared with PAPAC, demonstrating that in the 2020-21 financial year, which was, of course, the extraordinary COVID year, the Welsh Government did operate within the overall departmental expenditure limit budgetary control set by Treasury, but, unfortunately, we weren't offered a level of flexibility to move money from revenue into capital to help us manage that particular issue. And, as a result of that inflexibility, there was funding returned to the UK Government.

But I think the most important point here to note is that the total underspend in 2020-21 by all UK Government departments was £25 billion, and that represents almost 6 per cent of the total provision made available to those departments in that year. All underspends by UK departments were returned to HM Treasury and, actually, the Department of Health and Social Care alone underspent by over 9 per cent, and that department alone returned £18.6 billion to Treasury. A Barnett share of that would have amounted to around £1 billion for Wales, and I think that that partly is behind the reason that the Chief Secretary to the Treasury has been so unwilling to offer us a level of flexibility. That's one of the issues that we have, of course: we need a much more settled way of dealing with these year-end issues, because relying on the flexibility, or otherwise, of whoever happens to be the CST at that point isn't an appropriate way to go forward.

So, just to finish this particular point, the overall underspend for Wales in that extraordinary year was only 1 per cent of the available resources, and I think that demonstrates the effectiveness with which our resources were managed during the extremely challenging circumstances. And it does continue the Welsh Government's record of being amongst the best UK Government departments, as they would see us, in Treasury terms, and devolved Governments in terms of utilising our budgets. So, I'm grateful to have the opportunity to put that on record. I'm happy to share that letter that I sent to the Finance Committee with all colleagues, perhaps, by putting it in the Library, Llywydd. 

On the point of reserves, at the final budget agreed in March 2022, the unallocated DEL stood at £100 million revenue and an overprogrammed capital budget of £76 million. In the first supplementary budget, then, which was quoted in the exchange with the health Minister, the unallocated DEL was £152 million, and that was largely as a result of consequentials from the UK Government's spring statement and main estimates, and the overprogrammed capital position reduced to £68 million following a reduction in spending forecasts, but then that was offset again by the £30 million contribution in relation to Ukraine.

Since then, of course, we've seen the cost-of-living crisis very much take hold, so I don't think it's appropriate to give a running total of where we are in terms of pressures across Government and where we have the ability to respond to that within the reserve, just because that situation literally changes on a day-to-day basis. So, I have monthly monitoring reports from every colleague across Government, setting out where they are overspending and underspending against various items; I then discuss those with officials and we consider what appropriate mechanisms we have to respond to that to mean that we can bring the budget in where it needs to be at the end of the year. That situation does change all of the time, but what I will say is that the funding that we have available at the moment in reserves does not, by any stretch of the imagination, meet the pressures that we see across Government, which I think was what the health Minister was trying to convey in that exchange.

13:55

Okay, thank you for that, but I think we can surmise, therefore, that it isn't true to say that there isn't any at the moment. I respect your wish not to offer a running commentary, but when we have different messages coming from different people, I think we need a degree of transparency around that. I fully concur with the point you made about end-of-year flexibilities, and this, again, reflects on the current settlement and arrangements around funding, which, obviously, are ones that we've highlighted and come at from a very similar standpoint, I'd imagine.

Now, it just underlines, of course, the need to make sure that every pound works as hard as possible, particularly in the current financial climate. I noticed in the Welsh Government's response to the Finance Committee's report on post-EU funding, which I know is the subject of a debate later on this afternoon, but there's one particular point in that response that I just wanted to highlight to you, the Government says in its response that,

'The remaining ERDF and ESF programme spend in Wales is £619 million,'

as of the end of October just gone. Now, the projected spend from that by the end of January is £170 million. So, that leaves £450 million to be spent on activity to be delivered up to the summer and, obviously, claimed for by December next year. Are you confident that that money will be fully utilised? Can you assure us that there won't be any underspend in that respect and that no funds will actually be sent back or lost to Wales? Do you acknowledge that if that does happen, then it will represent a huge failure at a time when, as I say, Wales needs to utilise every single penny that we can?

We absolutely aim to use all of the European funding that has come to Wales, and that is, actually, one of the tools that we have to be able to manage our budget within the financial year—to take decisions as to when, exactly, we draw down that European funding, and help us manage the overall budget position. So, it is a tool that we're able to use and that we consider actively throughout the year. But, absolutely, it's our intention to use all of the funding, of course, that has come to Wales. 

The UK Government's Autumn Statement

3. What assessment has the Minister made of the impact of the UK Government's autumn statement on the management of Welsh Government resources? OQ58770

Despite some additional revenue funding through the autumn statement, this has not gone anywhere close to meeting the gap in the Welsh Government’s budget. This means that Ministers face difficult decisions as we prepare for this year’s draft budget.

Thank you, Minister. I can only imagine how difficult those decisions are going to be, because, as you say, the money that has come from Westminster, while it's an increase, doesn't cover those dreadful inflationary pressures that public services are facing the length and breadth of Wales. Minister, can you give us an indication of the guiding principles that will be followed in determining where and how much Government money is spent? Would you pledge to ensure that when decisions are made, maintaining the best mental health and well-being of the population will be a priority for all Ministers?

I'm very grateful for that question. Just to give an idea of how we're approaching the budget discussions across Government, we are looking, really, very, very much so, at three particular aims. First, obviously, is to table a balanced budget, and, actually, that is much harder than you would imagine, given the fact that there is such a gap in funding, and that's where the difficult decisions will take place, in terms of what we're able to continue funding, where we might have to reprioritise funding away from. But also the second of the key areas that we want to continue to protect is public services. So, the protection of public services is our second pillar. And the third is the continued delivery of our programme for government, because of course that contains so many of our promises to people in Wales, and we're focused on delivering that. It might be that we end up delivering some things over a longer period than we'd initially anticipated. That's something that we need to consider, particularly, I think, on the capital side, where our capital budget falls in every year of this spending review, and there was no additional capital whatsoever in the autumn statement. So, again, that's the kind of difficult decision that colleagues might need to take. But just to reassure the Member that public services, by which we are obviously talking about health there, will remain a priority for the budget process. 

14:00

Will the Minister agree that the UK Government's allocation of £1.2 billion is a reflection of the Conservative Government's plan to level up Wales by investing properly into our country, whilst the Welsh Government spend millions on continuous failed socialist projects, such as the failed state ownership of Cardiff Airport, the failed state ownership of a farm in Powys, and the failed state ownership of train services, while people in north Wales miss out on this funding? Is it not about time the Welsh Labour Government took ownership of the taxpayers' money and spent it properly? And will the Minister outline how she will work with the UK Conservative Government so that my constituents don't miss out?

Your constituents are going to miss out. Every constituent that any of us has is going to miss out, because there's such a gap in public funding, and that's not going to come without without implications for public service delivery and for the services that people receive in their communities. So, I think that we need to just get real about the level of the challenges that we're facing in the budget. So, that's an important point.

So, no, the autumn statement doesn't by any means suggest that the UK Government is serious about levelling up. Quite the contrary—authorities are being denied the opportunity to spend any of the shared prosperity fund funding in this financial year, contrary to the previous commitments from the UK Government. And let's remember that, had we remained in the European Union, the long-term, multi-annual EU programmes would have begun almost two years ago in 2021—£375 million additional funding coming to us here in Wales every year. That's been lost, so what the UK Government is presenting as an offer in exchange for that to level up just doesn't even begin to come close.

Temporary Accommodation Spend

4. What discussions has the Minister had with the Minister for Climate Change regarding the impact of temporary accommodation spend on local authority budgets? OQ58781

Homelessness is a priority across Government, and I have regular conversations with ministerial colleagues about how we can work with local authorities to put cross-cutting solutions in place.

Thank you, and I declare an interest regarding property ownership. Now, the pack prepared for the Conwy county cabinet meeting that was held recently on 22 November states:

'The number of people accessing temporary accommodation is increasing at an alarming rate, which is having a significant impact on the homelessness budget.'

Given that the Welsh Government continue to ignore our warnings, I will now quote from the report that's been prepared for the Conwy County Borough Council Conwy First Welsh Labour and Plaid Cymru coalition cabinet. They say:

'Demand is increasing largely due to private rented sector evictions. The highest recorded s21 notices (no fault evictions) in one week is 30 and is now averaging at around 15 a week. This is a combination of Renting Homes Wales Act implications, Buy to let mortgages and the increase in interest rates.'

So, there's absolutely no doubt that this Welsh Government's legislation on the Renting Homes (Wales) Act 2016 is making people homeless, and is also contributing now to piling pressure on my local authority's taxpayers. Minister, rather than expect the cabinet of Conwy, who are already overstretched and underfunded by your Welsh Labour Government—. Why should they fund the increased costs of temporary accommodation? And I might tell you—

No. No, no, no, no. You'll have a chance again to tell her whatever you want to say. I think you have asked the question, have you? 

14:05

Almost there. Will you now commit to covering this extra expense, and will you also explain to this Senedd what steps you as a Government are actually taking to build the homes these people living in temporary accommodation need? Thank you. 

Obviously, Welsh Government is committed to ending homelessness across Wales, and in support of this we're investing over £197 million in homelessness and housing support services, as well as a record £310 million in social housing this financial year alone. And we have also made available £10 million to local authorities to support the provision of temporary accommodation, as we move towards a rapid rehousing approach. We've also provided additional funding to local authorities to provide interest-free property loans, for example, to landlords and homeowners for home improvements to renovate empty properties to bring them back up to standard for them to be used to increase the supply of housing locally. This also, actually, includes turning commercial properties into houses or flats as well. 

So, there's a huge amount of work going on with local authorities. That scheme alone has been used to bring back over 1,600 homes into use across Wales, and supported improvements to a further 1,300 homes. And in addition to this as well, from a finance perspective, we're responding to the pressures in the system, so we've provided an additional £6 million for a discretionary homelessness prevention fund, and that provides maximum flexibility for local authorities to help people, both people who are receiving housing-related benefits and those who don't, to avoid homelessness. So, we are, as you can see, providing significant amounts of funding through local authorities and our registered social landlord partners to help prevent homelessness, but that doesn't for a second underestimate the scale of the challenge that is still ahead of us. 

Minister, I'm aware that Conwy County Borough Council has a rapid rehousing policy that has gone down well in dire circumstances, and also that councils are advising private tenants to stay in place if they get no-fault eviction notices while they try and help them with that funding you've just mentioned. And I must say, it's really twisted of Welsh Conservatives to blame Welsh Government, who are doing all they can, when this is mainly down to the Tory cuts and financial pressures created at Westminster level. Minister, the local housing allowance being frozen in 2020 at well below market rent is one of the biggest issues we heard at the Local Government and Housing Committee, along with UK Government policies such as the bedroom tax. We heard at committee that, in Swansea, a three-bedroomed private house was £1,000 now, and the LHA only covered £500 of that rent. I understand that the discretionary housing payment fund, which can be used as a top-up, has also been cut by the UK Westminster Government. Is that correct? 

The discretionary housing payment funding, administered by the UK Government's Department for Work and Pensions, is 26 per cent less in 2022-23 than in the previous year. And bearing in mind that we are in the most dreadful time, in terms of the pressures on households, it's absolutely not the time to be cutting that vital support. Actually, that reduction follows an 18 per cent reduction in 2021-22 compared to the year before that. DHP funding in 2022-23 is the lowest amount Wales has received since the commencement of the UK Government's welfare reform policy, and I think that really speaks to how challenging this period is going to be for people across Wales who will rely on this funding.

And that's one of the reasons we've provided that extra £6 million to which I referred, and also why we've tried to make sure there's maximum flexibility for local authorities there. Authorities can offer preventative measures, such as offering a rent guarantee, they can pay for rent arrears as part of a package of action to sustain a tenancy, and they can also top up the discretionary housing payment funding locally, which I know some authorities have decided to do as well. So, we're trying to support authorities as much as possible, but I think that the way in which the UK Government is pulling back from that discretionary housing payment funding is something of deep concern to all of us.

The Rising Cost of Living

5. What assessment has the Minister made of the impact of the rising cost of living on local government services? OQ58786

Inflation of over 10 per cent has eroded the value of local government budgets to a worrying degree. In addition to the impact of rising costs for energy, pay, transport and food, councils are also working hard to address the impacts on their communities.

14:10

Can I thank the Minister for that answer? And as you've stated, it's clear that finances are under real pressure. Services will be stretched in every direction possible, but the need to react to growing levels of poverty will be extremely tough. Who would have thought it, just even a year ago—one year ago—that we would be talking about warm banks being delivered by local councils across Wales, in every single one of our communities across Wales and the United Kingdom? Minister, amongst other things, the very existence of pre-pay meters will drive the demand for these warm banks. People are being switched to pre-pay meters and driven further into poverty. Perversely, they ensure that those least able to pay pay more for their energy, and they are only in the interests of the energy company profits and debt collection. Minister, this really is life and death in a cold winter. Do you agree with me that there should be an immediate moratorium on their installation, and that the UK Government should send a strong message to these energy suppliers about the very dangers of people being de facto disconnected every time they run out of credit?

Yes, I absolutely agree: the UK Government does need to be using all of its influence on the energy companies to reduce the impact of the cost-of-living crisis on the most vulnerable people. And just to reassure the Member—and I could hear a lot of support for what he was saying from others in the Chamber—that the Minister for Social Justice has met with energy suppliers earlier this month, and she did press them on this particular issue. And she has also previously sought and been given assurances by energy companies that arrangements were in place to reach out to households that were struggling with energy bills. And they did recognise the need to build in appropriate mechanisms of support, based on people's ability to pay, such as writing off short-term energy debt, agreeing affordable repayment plans, based on the ability to pay, and, where appropriate, referring households to schemes to improve their energy efficiency and reduce bills. So, I think now we need to be pressing energy companies to demonstrate what they've done in response to those discussions.

Could I join Jack Sargeant in recognising some of the really important services that our local authorities provide day in and day out, especially at times of difficulty that many are experiencing at the moment? And as has all ready been highlighted by a number of Members around the Chamber, those local authorities are again experiencing some challenges in terms of their financial situation. One of the key concerns that has been raised with me is the fact that some councils in Wales have indicated to their schools that they should be preparing to reduce their budgets by around 10 per cent in the next financial year. I would have thought that schools and education are probably one of the core services that local authorities provide. So, my question, Minister, is whether you'll be giving instruction or guidance to local authorities, when determining their budgets in the next financial year, and would part of that instruction or guidance be in relation to those vital core services, such as funding for our schools?

Well, I don't want to pre-empt the outcome of the ongoing budget discussions that are taking place across the board at the moment, but I will say the pressures on education, which the Member has described, have been brought home very strongly to Welsh Government by colleagues in local government, and my colleague the Minister for Education and Welsh Language always makes a very robust case for schools and education as well. So, I don't really want to go much further than that at this point. But, when we do come to publishing the budget, obviously I'll try and present colleagues with as much information as I can, and I know local authorities will want to set out their spending plans to colleagues as well.

Could I associate myself with the comments of Jack Sargeant around pre-payment meters? They're wrong, they're immoral, and action needs to be taken on them as soon as possible. But I would be interested to know what conversations have also happened with energy companies around introducing a potential social tariff, similar to what we have with the water companies and broadband providers. I think this will also go a long way in providing energy to people who are struggling to pay.

Absolutely, and that's something that we were pressing the UK Government for ahead of the autumn statement and ahead of the budget before that, in fact. But, in terms of discussions with energy companies, those tend to take place between both the Minister for Social Justice and the Minister for Climate Change; they will be the people who have the direct discussions with those energy companies. I'll perhaps ask those Ministers to provide Members with an update.

14:15
Local Government Reserves

6. What discussions is the Minister having with local authorities about the use of local government reserves? OQ58793

I have discussed local authority reserves with leaders as part of our ongoing discussions on pressures and funding. All leaders have stressed that they are already using reserves to manage their current pressures and expect to continue to have to do so next year. 

This one has been around the Chamber already several times this afternoon, Minister. We've even had Leighton Andrews's name used this afternoon as well—the ghost of Christmas past. But, if we could try and think of the use of these reserves, because, as I understand it and as previous questions have highlighted, there's been a 35 per cent increase in these reserves, and local taxpayers will be aghast at that jump in those reserves to £2.7 billion when they're starting to see their own council tax demands coming in the new year. So, as finance Minister, will you do all you can to make sure that there isn't any squirrelling away in county halls and that ultimately these reserves will be put to best use so that council tax can be kept to a minimum in the new year and it'll pay their contribution with the cost-of-living pressures that people are feeling in their household budgets?

Just to repeat what I said to colleagues earlier in relation to discussions I've been having with local government, they absolutely recognise the need to use those reserves both this year to manage some of the pressures, but also next year as well. I'm frankly relieved that local authorities are in a better financial position to enter the difficult period ahead, particularly when you compare them to their counterparts across the border in England, who have had funding stripped away from them back to the absolute bone over recent years. I'm sure that authorities in England would much prefer to be in a position where they do have at least some reserves to take them into the next year. That said, I absolutely recognise what has been said about the situation not being equal across Wales. It does vary from authority to authority. There are some authorities that do have smaller reserves and will obviously have less ability to call on those reserves in difficult times. 

Public Services Boards

7. What assessment has the Welsh Government made of the impact of the UK Government's autumn statement on the work of public services boards? OQ58773

The autumn statement increases the pressure on public services. The funds provided for public services are being cut in real terms, squeezing their resources even further. This makes the work of public services boards to improve the well-being of their communities challenging, but more important than ever.  

I'm grateful to the Minister for that response. Despite the best efforts of the Conservative Party this afternoon, anyone with any basic understanding or any financial understanding at all will appreciate the cuts that are being made in the Welsh Government's budget, both this year and in future years. However, what we're seeing is public services facing salami cuts year after year after year, and the consequence of that, of course, is reduced services to people that we all represent here. But, we're also seeing, Minister, an increasing complexity of governance in Wales. We're seeing a plethora of boards and commissions. We all know that there are far too many local authorities in the country. But, we're seeing increasing complexity that inhibits the delivery of services, particularly at a time when they are under significant financial pressures. So, will the Government undertake not simply to provide funds for local services in the best way it can, but also to review the complexity of government in Wales, with a view to streamlining the public sector to enable us to focus available funding on the front line and delivering services to the people who need them?

We're absolutely committed to taking forward the recommendations from the review of the strategic partnerships, which was agreed by the partnership council for Wales. We are of the view, though, that any changes should be locally led and locally driven. We've seen a good example of that, I think, through the way in which the public services boards in Gwent have operated in terms of coming together and operating on a single footprint in that space. I'm not sure whether the Member 100 per cent agrees with me, but I'm more than happy to explore it further.

I do think that it is important that where there are opportunities for bodies to work more closely together they should. That's one of the reasons I'm pleased that we're undertaking a piece of work through the co-operation agreement at the moment that looks at strategic partnerships to ensure that they are fit for purpose, to ensure that they are on the right footprint, to ensure that they have the terms of reference that they need, to ensure that they're working across boundaries as best they can, and to identify barriers for better working so that those can be reduced as well. I think that piece of work will be helpful in terms of trying to rationalise partnerships where necessary, but also to make sure that the work is more focused and streamlined. That's a piece of work that is going on at the moment.

The intention is to take a report to the partnership council for Wales early in the new year once we've done interviews, if you like, with each of the strategic partnerships. Cefin Campbell and I have been having some really interesting meetings with the chairs of all of the strategic boards to get their perspectives and their experiences to help inform that piece of work, and we'll come forward with some thoughts on the way forward as a result of that. But, the short answer is that, yes, we're continuing to consider the strategic partnership landscape, although we're probably a little bit further away on the local government issue at this point, I think.

14:20
Income Tax Thresholds

8. What assessment has the Welsh Government made of the impact of the devolution of setting income tax thresholds to Wales? OQ58797

Devolution of the income tax thresholds would introduce opportunities and risks, and we would want to consider this as part of our wider strategy for devolved taxes. We need the UK Government to engage with us to review the process for securing the devolution of further tax powers to Wales.

Thank you for that. Of course, it's devolved to Scotland. That allows them to create thresholds that better reflect the profile of taxpayers in Scotland. And if you look at the taxpayer profile in Wales, of course, the vast majority of them are in the basic rate band, which is different, if you look at the figures, to the rest of the UK, in terms of the ratio of taxpayers, which then means, of course, that being forced to adopt Westminster's thresholds means that it doesn't reflect the needs and the situation here in Wales. It's, therefore, more regressive than it should be and, therefore, I want a clear message that you're keen for it to be devolved so that we can create thresholds that are more progressive and more reflective of the situation of incomes here in Wales. And may I ask whether you as a Government have considered carrying out any research or modelling to see what the possible options would be as part of making the case for the devolution of this area?

I was pleased to see the Member at our tax conference, which took place last week. I hope that he enjoyed it as much as I did. I think one of the really interesting sessions was with representatives from Scotland and Northern Ireland, where they considered the different risks and opportunities of the different fiscal frameworks that we have.

The devolution of the thresholds would allow us to have more policy flexibility, and it would enable us to determine our own approach to Welsh rates of income tax in a different way, recognising income distribution in Wales and the importance of a more progressive system, where those who are able to afford it pay more tax. However, it would be difficult to devolve the thresholds without devolving the whole of the tax base. I think that that would then, potentially, increase greatly our exposure to risk via revenues and the associated block grant adjustment. I think that we need to be very careful that we have the capacity and the flexibility to manage those kinds of risks. We only have to look at the experience in Scotland to see that the exposure to the whole of the tax base can really lead to some budgetary issues. Remember that black hole that we talked about a few years ago when the reconciliation was taking place in terms of the projected tax take and what actually was received? So, there are potential risks.

It is true though to say that our tax base does differ from England's. We do have that higher proportion of basic rate taxpayers. Pay is also lower here in Wales. For full-time employees, the median weekly pay in April 2022 was 94 per cent of the UK average. I think that we'd need to consider all of those factors in relation to the suggestion to devolve the thresholds, because there would be considerable risks that come alongside that. Also, as I said at the tax conference, devolution of Welsh rates of income tax itself is a fairly new thing. We've only been collecting it for a couple of years. I think that letting it bed in whilst also exploring what the future looks like would be the sensible way forward, and there's a role for the commission to look at that.

14:25

I'm grateful to you, Presiding Officer, for accepting this. The Minister, in providing a very good and full answer to my earlier question, referred to another Member, Cefin Campbell, in terms of delivering an executive role within the Government. We all understand the co-operation agreement, and as Members will know, I fully support the co-operation agreement. However, Members in this Chamber have no opportunity to scrutinise the Members of Plaid Cymru who form a part of this, and no opportunity to understand the role that is played. Our opportunity to provide the scrutiny of the agreement and the policies derived from that agreement is therefore limited. I'd like to ask you, Presiding Officer, whether you can take a review of this situation, because we're going to be marking a year of the co-operation agreement this week, to ensure that Members on all sides of this Chamber are able to scrutinise all aspects of the Government's work.

I'll consider the point that's been raised by the Member. The Minister, of course, is here to be scrutinised on all matters within her portfolio, which includes the operation of the co-operation agreement, but I'll give some further consideration to the points that the Member has made in light of the fact that it is a year of operation of the co-operation agreement. We do know, of course, that it is the subject of scrutiny as well in the First Minister's scrutiny committee next week. So, it's an opportune time to be reflecting on these matters. Thank you to the Minister for her scrutiny this afternoon.

2. Questions to the Minister for Rural Affairs and North Wales, and Trefnydd

The next item is questions to the Minister for rural affairs and north Wales. The first question is from Peredur Owen Griffiths.

A Viable Future For Farming

1. How is the Government securing a viable future for farming? OQ58785

Member
Lesley Griffiths MS 14:27:15
Minister for Rural Affairs and North Wales, and Trefnydd

The Agriculture (Wales) Bill establishes four sustainable land management objectives as the legislative framework for future agricultural policy. The proposed sustainable farming scheme includes actions that will help farmers make best use of their resources and improve the resilience of their farms and businesses.

Thank you for that answer.

I support efforts to establish a set of actions for all farmers in Wales in return for annual universal baseline payments that will promote biodiversity and boost the environment in our country. I do, however, share the concerns of farming unions that tenant farmers or those with common land rights, similar to one I visited within my region, will find it difficult to meet the scheme's requirements. How will you ensure that your universal principles for the sustainable farming scheme will include and protect the kinds of farmers I have referenced? They are part of a long tradition in rural Wales and in the Valleys, which I represent, and their future must not be threatened by unintended consequences of the scheme.

Thank you. It's really important that the sustainable farming scheme works for every farmer on every type of farm in every part of Wales. So, what we've established is half a dozen working groups to look at specific areas. Tenant farmers is one area, and common land farmers is another. Both are very important parts of the agricultural sector here in Wales. We know that common land is important for environmental benefits, for instance, such as biodiversity and water management, and for the large number of farmers that rely on it for forage too. You'll be aware that we've just come to the end of the co-design of the sustainable farming scheme. We'll now look at the responses that we've had and the discussions we've had before we go out to the final consultation. But obviously the outputs from the working groups that I've just mentioned will be mixed in with all the responses that we've had to the co-design output, along with ongoing policy development.

Minister, ensuring our farmers have a viable future is very important, but one sector in particular that is facing huge pressure is our poultry industry, as they are managing avian influenza and a massive rise in energy costs. Can you please outline what steps the Welsh Government is taking to support our poultry farmers to make sure that they have a sustainable, viable future in the poultry industry here in Wales?

Obviously, we've seen an unprecedented series of outbreaks of avian influenza. We've had no respite at all over the summer, when we usually do see no outbreaks at all. We've just had it constantly over the last three years. We start counting the new outbreaks from 1 October of each year, and since 1 October 2022, we've already had three outbreaks here in Wales, so, it's a really difficult time for our poultry producers at the moment, particularly, because we know that many farmers have diversified into poultry farming. It's really important that we look at this across the UK. Next Monday, I'll be having my regular inter-ministerial group meeting with my counterparts from across the UK. I've asked for this to be an agenda item, because, clearly, we need to work as four nations to support our poultry farmers.

14:30

Can I draw your attention to the register of interests and the multiple organisations that I belong to that have an interest within this area, including the British Veterinary Association, Ramblers Cymru and others? But could I just commend the Minister on how she is trying to bring forward a future for sustainable farming within Wales that balances what sometimes appear to be competing interests, but actually are not competing interests?

Could she tell me how, within the agriculture Bill—and Llyr and I welcomed the opportunity to be in part of that Bill the other day, taking evidence from the Minister—but also in the future sustainable farming proposals as well, how she will make sure that we have that livelihood for farmers and landowners going forward, particularly because of the impact on Welsh language and culture, but small and medium-scale farms? But also, how do we actually expand and augment those wider public benefits that she's talked about, like flood alleviation, like carbon sequestration, but also, Minister, access to the land, biodiversity—how do we square those all off? This is complicated, but it has to be done because I think this is a one-off opportunity to get it right.

Yes, thank you. I do think it is a one-off opportunity and it's the first time, obviously, that we've been able to have this Wales-specific policy, and it's really important that it works for our farmers here in Wales and for ensuring that we keep farmers on the land and that we protect the fantastic landscapes that we have here in Wales.

You'll be aware that the agriculture Wales Bill has those four objectives, and you mentioned a couple of the objectives, particularly around culture, environmental, social and economic outcomes. I said in my earlier answer that it's really important that that scheme is accessible to everybody. Now, I believe that, at the current time, there are lots of those environmental outcomes being produced by our farmers that they're not being rewarded for. So, I think it's really important that we try and incentivise our farmers to be part of the scheme. I certainly would like to see more farmers participating in the scheme than who currently participate in the basic payments scheme, for instance. So, we've got parallel working now with the agriculture Wales Bill and the sustainable farming scheme. But that quality water and soil, and the protection of our habitats that farmers currently undertake but don't get rewarded for will certainly be part of that sustainable farming scheme.

Good afternoon, Minister. I wanted to follow up on Peredur's question, particularly around farmers who farm on common land. On Monday, we were at the winter fair—many of us were there—and we met farmers, Gary Williams from Carmarthenshire, and Guto Davies from Clwyd, both of whom farm on common land. It was really interesting to hear some of the challenges that they face, which you'll, no doubt, be aware of, particularly the concerns that Peredur has mentioned: the ability of farmers on common land to access the sustainable farming scheme and deliver against some of the elements of the scheme that may not even be possible for some of those. We know that it's critical for farmers with common land rights, for whom the basic payment scheme and Glastir is central to farm incomes—that they are able to access and participate in the SFS. We know that some 65 per cent of common land is within Glastir and more than 3,000 farm businesses declared common land for the purpose of claiming BPS in 2021. Could I just ask you to expand a little bit more on your commitment to ensure that the scheme is sensitive to the needs of farmers on common land? Diolch yn fawr iawn.

Thank you, and as I said in my earlier answer, we are setting up a common land working group and what I want that working group to do is explore what specific support and advice may be needed, as well as what flexibility we may need to offer to account for the complexities that are posed by common land. 

As you'll be aware, within the sustainable farming scheme outline proposals, we have three tiers: we have the universal, the optional and the collaborative tiers. And, certainly, in my discussions that I've had with common land farmers, I think it's fair to say that the universal and the optional actions, as are currently described in the outline document, don't apply to common land in the same way that they do to other farms. So it could be that we'll need to have a focus on the collaborative level for our common land farmers. You know, common land is very unique, and therefore I think it needs a much more tailored approach.

14:35
Animal Welfare Plan

2. Will the Minister provide an update on the implementation of the animal welfare plan for Wales? OQ58798

Thank you. Progress has been made across all four of our animal welfare commitments, and ongoing work is on schedule. Wider work has progressed on animal welfare policy, and the local authority enforcement project is driving significant change, and the 12-week consultation on closed-circuit television in slaughterhouses was launched on 14 November.

Thank you, Minister. A year into the five-year process, as you say, there has been good progress, most notably the consultation on mandatory CCTV in abattoirs. But in terms of priorities, can I ask where the use of breeding cages for game birds sits? I know the plan includes a commitment to examine the evidence around their use, but with the new shooting season under way, the use of breeding cages and how that sits with our commitment to animal welfare is quite rightly in focus. So, can you provide any update on that particular issue?

Thank you. As you referred to, we have our priorities for animal welfare in the plan. It is a five-year programme, and we are just having the one-year look back at what we've been able to achieve in that first year. It's not possible to provide you with a timeline for the consultation on any changes to the welfare legislation, or the code of practice, in relation to the welfare of game birds. And, certainly, you'll appreciate that, within the office of the chief veterinary officer, a significant number of officials are having to deal with the avian influenza outbreak, and it has taken a bit of a priority, as you can imagine. But certainly, we will now, as we go into the second year of the plan, look at what we can do, and I know that this is an area of great importance—I can tell by my postbag how significant this is.

One of the legacies we know about COVID is that, obviously, a lot of people during the COVID pandemic took on a pet, and the responsibility of a pet. The welfare implications, as we've come out of COVID, have indicated that many pets have been left abandoned, and the charitable sector that tends to pick them up and look after them and try and rehome them has come under huge amounts of pressure. Has the Government done any analysis of the extra work that charities working in Wales have had to face because of this legacy, and, if the Government have done an analysis, are you minded to work financially and other co-operatively with them, to support this extra burden that they face, so that these animals can be rehomed in a sensible way, rather than, ultimately and tragically, end up being put down?

You're quite right—we certainly did see a significant increase in the number of households that obtained a pet during the COVID-19 pandemic. And as we came out of the pandemic, and perhaps people returned to work who were previously working at home when they got their pet, we did see a number of animals looking to be rehoused. I think the cost-of-living crisis now is also, unfortunately, increasing the number of pets that are looking to be rehoused. I'm not aware of any significant analysis. I know that the office of the chief veterinary officer has worked with third sector organisations, to see what we can do to assist them. I have to be perfectly honest—I don't think my budget would allow any further funding to be able to be given to the third sector, but, obviously, if that could be considered in the future, I'd be very happy to do that.

Questions Without Notice from Party Spokespeople

Questions now from the party spokespeople. The Conservative spokesperson, Samuel Kurtz.

Diolch, Llywydd. Minister, three weeks ago, you and I debated the value of a Wales-wide bird flu housing Order. In your response to my appeal for the pre-emptive policy, you stated that the evidence that all CVOs in the UK had to hand did not warrant such a response here in Wales. Fast-forward to last week, and, following pressure from both the industry, myself, and with new evidence, you reviewed Welsh Government regulations, and, from Friday, Wales will have its housing Order. As I'm sure that you know, however, this isn't the only challenge facing our poultry industry. The rise in overhead costs, and the supermarkets' unwillingness to pay producers a fair price for their eggs, has left the industry unable to keep pace with production costs, prompting some producers to either quit the industry or cut their flocks.

When the dairy industry faced similar problems with their milk contracts, the Welsh Government worked to consult and introduce fairer dairy contracts. So, given this—and previously, you mentioned that you have an inter-governmental meeting on Monday—can I ask that the Welsh Government commits to a poultry contract feasibility investigation to find out why our farmers are getting a raw deal for their produce?

14:40

Well, I can assure the Member that it wasn't because of pressure from him that I made the decision for mandatory housing last Friday; it was purely on the scientific evidence and the advice I sought from the chief veterinary officer. Obviously, all four chief veterinary officers received the same advice. How it's interpreted, then, by Ministers is obviously a matter for each Minister. Three weeks is a long time in an outbreak like this, and it became clear to me, probably in the middle of last week—probably about a week ago— that the advice was changing. And that's why we brought in the mandatory housing of birds—. Well, it will be coming in this Friday, but I announced it last Friday, along with stringent biosecurity requirements, because biosecurity is incredibly important, as we try and do all that we can in the face of this very unprecendented avian influenza outbreak. 

I quite agree with what you're saying in relation to it not being the only thing that is concerning the poultry sector. The price that they're getting—. And, certainly, I had some very interesting discussions with farmers at the winter fair on Monday, and I mentioned in an earlier answer that we have seen a lot of farmers diversify into poultry over the last few years. Certainly, it is a discussion, as I've said, that is on the agenda for the inter-ministerial group on Monday. Unfortunately, I understand that the Secretary of State won't be at the meeting, which I think is unfortunate, but, certainly, I will raise what we can do across the UK at that meeting. And, if it looks as if we have to do something on our own, we can certainly look at what we can do. And I appreciate what you were saying about dairy, and it could be that we will need to see what, if anything, we can do to help our poultry producers. 

Thank you, Minister. I appreciate the response, and given your meeting on Monday, it would be welcome to hear from you whether declaring an exceptional market condition is something that is discussed at that meeting on Monday. Because, anecdotally, at the Hybu Cig Cymru breakfast on Monday at the winter fair, there weren't any eggs at the breakfast, showing just how much difficulty the industry is facing in these unprecedented times. 

Moving on to a different topic, I was recently given sight of a Welsh Government freedom of information response to a request that sought information on the amount of carbon sequestered through agricultural land use in Wales. The Welsh Government's response: well, you don't hold this data, and this is concerning. Most of Wales's agricultural land is grassland—land use that, studies have shown can sequester carbon as equally as trees, or even better in some certain climates. The farming industry knows the role that it must play in protecting and improving our environment and biodiversity, but for the Welsh Government to introduce such sweeping policy changes without the knowledge of the good that the industry is already doing is somewhat of a kick in the teeth to Wales's hard-working farmers. 

So, what data are you using to underpin the agricultural Bill and the sustainable farming scheme, if you don't know what carbon is currently being sequestered in Welsh agricultural land?

Before I answer your second question, I'll just go back to the first question about the inter-ministerial group. I always publish a written statement following the IMG, so the Member will be updated in relation to that. 

You will have heard me say in an earlier answer that we know that farmers are already providing so many environmental outcomes—and, of course, that includes carbon storage on their farms—and not being rewarded for it. And the sustainable farming scheme is a way of ensuring that they are rewarded for it in the way that the basic payment scheme doesn't. I think it's fair to say that, in general, most farmers would say that the common agricultural policy hasn't rewarded them in the way that it could have done, but it is really important that we get this scheme right now, so that things like carbon storage are rewarded in a way that we believe it should be, to help us. And you're absolutely right—the agricultural sector, of course, recognises the significant role that it has to play in us reaching net zero. And, in fact, the National Farmers Union Cymru, for instance, have got very ambitious targets to enable them to help us with that. So, we don't keep data on absolutely everything, but of course we know that if you look at peatland or, as you say, farms in general across the country, the amount of carbon storage is significant. I remember—it was probably before you came to the Senedd, and I'm trying to think which consultation it was I launched—a farmer was very proud to tell me at the farm where we did the launch just how much carbon was being stored per acre in his farm.

14:45

Thank you, Minister. It is a bit concerning that, if you don't have that baseline information available, how do we know that these projects that the sustainable farming scheme is going to introduce are actually benefiting carbon sequestration, because we don't have the baseline figure to work from? So, while there are carbon calculators out there that every farm can do, you and I both know that there are varying carbon calculators out there that offer very different calculations. So, I'd be really keen to stress that there needs to be a baseline figure here, where we know that a sustainable farming scheme introduced is delivering the benefits that we're looking to achieve within the agricultural sector. 

But, sticking with the agriculture Bill and the sustainable farming scheme, I want to draw your attention, as Peredur did earlier, to tenant and common land farmers. Having recently met with the representatives and attended NFU Cymru's policy launch for common land at the winter fair, coupled with the strong evidence from both tenant farmers and common land farmers presented at my committee, I'm left with some serious concerns about the lack of consideration given to these farm types by Welsh Government policy. A tenancy working group was formed, although its first meeting was only a couple of weeks ago, and last month I asked you for a specific group for common land farmers, but I've heard no progress on this—two examples of how both are seen as somewhat of an afterthought by the Welsh Government. Minister, both tenant and common land farmers make up a big proportion of active farmers here in Wales. If the agriculture Bill and the sustainable farming scheme fail to work for them, it will have huge consequences on the viability of Welsh family farms across our country. So, what guarantees can you give that neither tenant farmers nor common land farmers will be negatively impacted by the introduction of the agriculture Bill and specifically the sustainable farming scheme? Diolch.

Thank you. Again, just to go back to your second question, I think the number of carbon calculators that are available is an issue for us as we try and ascertain just how much carbon is being stored. One of the things I've asked officials to look at is if we can just use one, so everybody knows what they're looking at and how to use it. Certainly, I think we can get it down to single figures, and very early single figures—three, maybe, at the absolute maximum. Certainly, that is something that farmers are asking me to do, because I think it will help them. 

In relation to your final question, I'm not sure if you heard me say we are having a common land working group. That is currently being established. It will be meeting before Christmas, and you're quite right that the tenant working group has already met. I think it's really important now we let these working groups do their work now we've come to the end of the second stage of the co-design, ahead of that final consultation at the end of next year. Both parts of the agricultural sector you refer to—tenants and common land—are very important to the agricultural sector here in Wales. The Bill contains modifications to the Agricultural Tenancies Act 1995, for instance, so it is really important that we hear from both of those parts of the sector, and both of those working groups will be meeting regularly and reporting back to me.

Diolch yn fawr iawn, Llywydd. It was good to see you in the winter fair on Monday, and it was a great opportunity to catch up with some of the farmers and listen to their concerns. You'll know as well as others that one of the most important things that did come up was the avian flu. That's a huge concern, and we clearly welcome the mandatory housing measures that you've brought in, or will be brought in this Friday. Having said that, businesses will still face crippling disruption to their activities, namely those dealing with eggs and poultry meats, and there are concerns from the sector, and poultry farmers in my own constituency, that the problem of severe market disruption caused by the flu in poultry meat and egg sectors is being compounded by the massive inflation in feed and energy costs. Now, in your answer earlier, you said that you will be raising with UK Government this issue and asking what they can do and you will be exploring things that you could do alone as a Welsh Government. But, of course, the Welsh Government could use the powers available under Schedule 5, Part 2 of the Agriculture Act 2020 to declare exceptional market conditions, which would enable the provision of support to egg and poultry producers. So, does the Minister agree that the Welsh Government should use these powers, and, if so, will you use them?

14:50

Well, again, it is something that we could do. We don't know how long this is going to last for. It could be that we will need to do it sooner rather than later, for instance, but I would prefer to have that discussion, because we haven't really had that ministerial discussion across the UK, because obviously it's very integrated across the UK. So, I would rather hear from the UK Government first to see if they are offering any support. As you know, we've been asking them to bring forward some further funding because of the significant input costs that the agricultural sector has and continues to suffer from. You will have heard that at the winter fair—I heard that there's 36 per cent inflation now on our farms. Across the board, it's 11 per cent, but on-farm inflation is significantly higher. So, I would prefer to have that discussion at a ministerial level on Monday.

My officials have been attending weekly meetings, as I say, at an official level, but my food division officials have also been having daily contact in relation to the costs. We've seen some supermarkets start to limit the number of eggs that consumers can buy. We are concerned because, as we know, if something gets in the media around that, it's very difficult then to stop that panic buying. So, I'm really pleased to see that hasn't happened. Interestingly, the same as Sam Kurtz, I did wonder at the Hybu Cig Cymru breakfast, when we didn't have eggs, if that was indeed the case. It's very obvious at the winter fair that we don't have birds there, but I thought that was a really in-your-face example of what we're suffering at the moment. So, I'd be very happy to update Members following the IMG next Monday. 

Thank you for that response. 

Thanks for that. Okay. Moving on to fisheries, if I may, the 2012 fisheries concordat sets out how the UK's quota allocation is divided between the four administrations, and provides overarching principles on effort control and licensing. One key element covered by the concordat is the set of conditions associated with the economic link. The economic link is a fisheries licence condition. It currently applies to all UK-registered vessels over 10m in length that land more than 2 tonnes of UK quota per annum, including supertrawlers. In short, it requires them to demonstrate a real link to the economy of the UK by meeting one of the criteria set out in their vessel's economic link licence condition. These criteria can be summarised as landing at least 50 per cent of the vessel's quota into the UK, employing a crew of whom at least 50 per cent reside in the UK, or making at least 50 per cent of normal operating expenditure into UK coastal areas. As the Minister will know, the economic link is a devolved issue. Economic link licence conditions are present in current Welsh Government fishing licence documents for commercial fishing vessels. However, as the majority of the Welsh fleet is made up of small vessels under 10m, it's hard to know how many, if any, vessels in the Welsh fishing fleet are subject to an economic link licence condition. So, given the presence of environmentally damaging supertrawlers in Welsh waters, as well as other boats larger than 10m, can I ask the Minister to what extent the economic link conditions apply to boats that fish in Welsh waters? In other words, how many vessels are subject to the economic link conditions and what economic benefits does Wales get from this arrangement?

Thank you. That took me back to December council fishing negotiations in a previous life. Certainly, I haven't got those figures to hand, but I'd be very happy to write to the Member in relation to that. I know officials are having discussions at the moment around the number of licences that have been allocated since we left the European Union, going forward, but I'd be very happy to write to the Member about the economic link. 

The Mersey Dee Alliance

3. What consideration has the Cabinet standing committee for north Wales given to cross-border collaboration through the Mersey Dee Alliance? OQ58772

Thank you. The Cabinet sub-committee for north Wales has discussed broad policy areas that impact on the Mersey Dee Alliance area, including transport, skills and COVID recovery. The Welsh Government is a founder member, and we value the partnership of organisations working to support the cross-border economy.

Minister, that's great to hear because, of course, public transport is a key issue—probably the most important issue—to consider on a cross-border basis in the Mersey Dee area. Last weekend, Carolyn Thomas and I went to Chester. We met with key figures from across the border in England, including metro mayors Steve Rotherham and Andy Burnham, as well as Samantha Dixon, and we of course spoke about the need to improve public transport, particularly bus services on a cross-border basis. As north Wales Minister, would you agree to convene a north Wales and north-west of England summit to focus on transport and the potential economic benefits of working together across the border in this area, which has such a strong contribution to make to the Welsh and UK economy? And would you agree that it’s absolutely vital that we consider important transport infrastructure improvements, including that of the Wrexham-Bidston main railway line? 

14:55

Thank you. I would certainly agree with you on that final point and I know it’s really important that we have partners working together in relation to the Wrexham-Bidston line, and that includes, obviously, Transport for Wales, Merseyrail, and the Welsh Government itself.

In relation to a summit, probably at the current time, while the north Wales transport commission is having a look at what it needs to do following the publication of its progress report—. I met with the chair of the commission, and currently he is looking to talk to stakeholders around cross-border transport, because it is, as you say, so important for north Wales, and I would encourage stakeholders from the cross-border region to certainly engage with the commission.

You will know very well, as you, obviously, chaired the sub-committee previously, that it’s really important that, at that committee, we invite people to come in from outside to give presentations, so I have asked officials to ask both Steve Rotherham and Andy Burnham to come along to the committee. I think it’s very important that ministerial colleagues hear about the links we have with the north-west of England and how important they are for north Wales, and particularly north-east Wales, and, obviously, the local authority leaders also attend that committee. So, I’m hoping, either at the next committee meeting or the one after that, that both the mayors will be able to come along to that.

Can I join Ken Skates in calling for and highlighting the opportunities there are in terms of that cross-border collaboration in north-east Wales and north-west England, especially on transport there, where we see around 200,000 people cross that border on a daily basis? But, indeed, there are other opportunities, which I think the Mersey Dee Alliance, as a great example, is looking to exploit, which is the opportunity of working across UK Government, Welsh Government and local authorities across the border, and one of those is—. I had the privilege of attending a meeting with HyNet on Monday of this week, who were sharing with me again their intended project not just to make sure hydrogen is available in the region, but also in removing carbon from many of the industries in the region as well, and the investment of billions of pounds in the area. So, I wonder, Minister, what assessment you’ve made of the role the standing committee can play in working with the Mersey Dee Alliance to ensure that projects like HyNet and other positive environmentally friendly projects like that will make a difference in the region.

As I say, it’s really important that all partners work together and I think you’re right about the HyNet project. Again, I’ve met with both Steve Rotherham and Andy Burnham to discuss the role that HyNet and the hydrogen project can play across border, and they’re both very keen to get involved. So, the committee can bring all these partners together, and you heard me say in my earlier answer to Ken Skates that it’s really important that we get people from outside to be able to help us with our deliberations, particularly as the local authority leaders from right across north Wales—north-west and north-east—are at that meeting, to hear about how closely we can work together, because, as you said, a significant number of people cross that border every day.

Community Engagement with Farming

4. Will the Minister outline the Welsh Government's policies to encourage community engagement with farming? OQ58787

Thank you. The Welsh Government is committed to improving understanding of how food is produced, in addition to providing social benefits through community-supported growing. Support is available for community-supported agriculture through the Welsh Government rural communities rural development programme, under the co-operation and supply chain development scheme and LEADER.

Thanks for that, Minister. It is, I think, obviously important that the wider community understands and feels connected with farming if we're going to have the sort of popular support for our policies and the farming sector that we would like to see. It's about better understanding how our farms work, what happens on the land and how our food is produced. I think Ramblers Cymru are doing a good job, Minister, to connect some communities with landowners/farmers through their initiative Paths to Wellbeing, which, working in partnership with landowners, designs paths and then provides the community with training and tools to improve nature and improve access to that land. I know that Maindee in my constituency of Newport East is one area that's involved in this project, Minister, and I wonder if you would see the sustainable farming scheme as a way to continue and strengthen this work, which I believe is very important, so that as well as, perhaps, connecting the educational sector to farms and farming, we do it on that wider community basis that Ramblers Cymru are taking forward.

15:00

Thank you. I think you raise a really important point, and I absolutely see the sustainable farming scheme in the future being incorporated into this area. As I mentioned in my tabled answer to you, we've got many schemes that we support, and it's really good to hear about the project in your own constituency.

I've been really pleased to see how many farmers want to engage with schools, and I've been on many farm visits where there are schoolchildren present, learning about how food is produced, and just what the agricultural sector does, because, of course, particularly if you're from an urban area, perhaps you don't have that knowledge, and it's great to see the engagement from our farmers. When I was at the winter fair on Monday—and I think this is really important, going back to what I was saying about schoolchildren—I was really pleased to be able to support, both with funding and other resources, a booklet that can go out to children about farm safety, because I think, again, farms can be very dangerous places, and it's really important that our children, ahead of going on a farm, understand the dangers that are there.

We've also got the community food strategy, which is another way, I think, we can engage with the community, and I'm currently having discussions with Cefin Campbell, as the designated Member as part of the co-operation agreement, in relation to the community food strategy. Food is the common factor, but there are so many societal benefits that can come out of this type of work as well.

Minister, the global beef industry has enjoyed a series of anti-meat campaigns recently from various sources, making serious claims about environmental damage, animal welfare problems and health issues. Beef farming in Wales has suffered as a result. I appreciate my colleague's question to you earlier, but one of the ways to counter this misinformation would be to, obviously, as you mentioned and he mentioned, encourage school pupils to visit farms. I would like to focus a bit more on children from special needs schools, as well as those people from more of a vulnerable background, to be able to go and see where their food comes from, and they can learn about sustainability and the importance of farming to the environment. So, I'd like to know, Minister, what discussions have you had with farming organisations, the Minister for education and other potential Ministers in the Welsh Parliament, to encourage more young people, people from disabled backgrounds, ethnic minorities, as well as those from, perhaps, disadvantaged backgrounds to be able to go and see where their food actually comes from. Thank you.

Thank you. I've had quite a few discussions, certainly during the summer shows. Cows on Tour had a fantastic corner in the Pembrokeshire show, where they had a constant stream of schoolchildren attending, and it was the story of the potato, how the potato started, going right through the life of a potato and how it ended up on our plates in the various forms it can be. Those sorts of things are really important. I wouldn't say it was about specific groups of children; it was about children and young people in general, but I was very happy to support that. I've had discussions with the Minister for education in relation to that, and, as I say, with farmers themselves, because it's really interesting to see so many farmers encouraging visits from their local schools. I think it's something I would be very happy to continue to support in any way I can.

Animal Welfare (Kept Animals) Bill

5. What progress has the Minister made regarding collaboration with the UK Government on the Animal Welfare (Kept Animals) Bill? OQ58791

Thank you. Welsh Government is continuing to work with the UK Government on the animal welfare Bill, which makes provisions to deliver important reforms for the welfare of kept animals. Legislative consent memoranda for all the clauses contained in the Bill have been laid in the Senedd.

15:05

Diolch am yr ymateb, Gweinidog. I'm sure the Minister is expecting a question around greyhounds here, but not on this occasion. I would like to highlight and express that I share the concerns of RSPCA Cymru who have called on the UK Government to prioritise the completion of the Bill, so that the cruel practices it aims to address become a thing of the past. However, there are worries that the UK Government's commitment to the Bill is on the verge of collapse.

Now, back in November 2020, the Welsh Government published their response to an expert task and finish group by the Wales animal health and welfare framework group. The review had made 55 recommendations, covering issues such as improved training for local authorities, but most of these have not yet been taken on by Welsh Government. So, in the absence of any visible progress on the part of the UK Government, are there any intentions from the Welsh Government to improve Wales's regulations, to strengthen legislation around unlicensed breeding and puppy farming, as well as the import and export of pets from Wales?

I'll refer to the two things separately. So, from a Welsh Government point of view, obviously, our priority is for animal welfare, as set out in the animal welfare plan for Wales. And there are things we can do on our own, but also, within that plan, it includes collaboration with the UK Government and other devolved Governments where there are clear benefits to us doing that.

In relation to the Animal Welfare (Kept Animals) Bill, I share your concern about the lack of progress that we've seen. The disruption we've seen and the complete chaos in the UK Government hasn't helped, but we are hopeful. I'm going to try and get some more definitive information from this at the IMG. But, certainly, officials who've met with their DEFRA counterparts are told that, hopefully, there will be a Report Stage date announced soon, because we have seen the Bill stall time and time again. But we are keeping a very close eye on it and, again, I'll be happy to update Members when we have further information, because, clearly, it's a UK Government Bill and they set out the parliamentary timeline.

Minister, this Bill has been supported by the RSPCA, Dogs Trust and the British Veterinary Association, all recognising that the legislation will improve the standards of welfare, not least by becoming the first country in Europe to ban the live export of animals for slaughtering and fattening. Does the Minister accept that this achievement, along with those measures to crack down on the import of puppies, is a huge step in delivering those high standards we all want to see?

It's a very important piece of legislation on several levels. You referred to two of them, but the dog attacks on livestock part of the legislation, for me, is very important. The current legislation is absolutely not fit for purpose. I'm just looking in my briefing to see what year—1953 is the legislation that we're currently working to. Well, that's before I was born, so it's a long time ago and clearly needs updating to make sure it's fit for purpose. Some of the conversations I've had with the wildlife and rural crime commissioner is that we really need to make sure our legislation is fit for purpose and, clearly, a lot of that is down to the responsibility of the UK Government. So, I'm very happy to keep working with the UK Government. You mentioned prohibiting the export of live cattle, which, again, I think, from an animal welfare point of view, is really important.

The LEADER Scheme

6. Will the Minister make a statement on the Government's long-term plans to follow the LEADER scheme? OQ58794

Thank you. As a result of the UK Government not honouring its commitment to replace EU funding in full, Wales is around £1.1 billion worse off. However, it is my intention to continue to support community-led local development thorough our framework for regional investment in Wales.

Thank you for that response. I too share your frustration that the UK Government has gone back on its word in terms of expenditure post Brexit. The Minister will be aware of the excellent work that's been done under the LEADER programme. I'm particularly grateful to Menter Môn in my constituency for the innovative work that they've led in drawing down funds and starting projects through LEADER. They've written to the Minister—and the Minister will be aware of that—on behalf of the local action groups, raising concerns about the fact that we have no assurance as to what will happen after 2023. Plans are being developed by DEFRA for England, for some sort of rural levelling-up programme in England. There's a suggestion that the shared prosperity fund could be used, but that offers no sort of consistency of expenditure nor an ability to be strategic in the longer term. So, does the Minister agree with me that we need assurances now that these plans, and the structures that have enabled the LEADER programme to develop, will not come to an end quickly after 2023?

15:10

You're quite right, I have had a letter and I have responded to Menter Môn in relation to their concerns around a replacement for LEADER in Wales. Obviously, I'm unable to make any commitments ahead of the draft budget, but my officials do continue to work with stakeholders to see how we can continue to support rural communities in the future. There's been excellent work delivered through the LEADER programme over a long period of time. I've seen for myself many examples of the innovative projects that have been delivered in many rural communities, and, as I say, it is our intention to continue to explicitly support that community-led local development.

Avian Flu

7. What assessment has the Welsh Government made of the impact of the current avian flu outbreak on egg producers in Wales? OQ58789

Thank you. Since 1 October 2022, there have been three confirmed outbreaks of avian influenza in Wales. The epidemiological start of the current outbreak was in October 2021, and we saw cases continue to be confirmed throughout the summer for the first time. We continue to monitor the disease situation on a daily basis. 

Thank you, Minister, for that response. The poultry sector in Wales and beyond is currently experiencing a range of challenges, with the effects of the avian flu outbreak combining with increases in input costs to create a difficult outlook for producers. Constrained supply, partly as a result of avian flu measures and higher demand at this time of year, has meant that egg availability is lower than normal. This has resulted in a number of supermarkets limiting the sale of eggs to consumers. Farming unions have also raised concerns that some retailers have taken the disappointing decision to import barn eggs, which are not produced to the same high standards as they are here in Wales.

Minister, I know you'll agree with me that these are worrying times for poultry producers, who are doing their very best to maintain wider confidence in the sector. So, how is the Government working with producers to help maintain supply as much as possible, as well as working with retailers to ensure that producers get a fair price for their eggs? How would you respond to calls from the farming unions for you to consider using powers under the UK Agriculture Act 2020 to investigate whether a declaration of exceptional market conditions should be made, so that the Government can support producers to cope with any financial losses as a consequence of the measures in place to deal with avian flu?

Thank you. You will have heard me say in an earlier answer that, obviously, that is something that we can consider. I would prefer to wait until I've had my ministerial meeting on Monday to see what other views are across the UK and whether there's anything that we can do collectively together. I think you're right; these are challenging times for everybody, and I absolutely accept that there are a range of other pressures on our egg producers at the current time. 

Certainly, the information I'm getting—again, I mentioned earlier that we're in daily contact in relation to this issue—is that supply is tight but it is holding up as well, and I know that some supermarkets have introduced low-key limits on how many eggs a customer can buy, for instance. But, we do feel that the biggest risk to supply is the media driving panic buying, so we're really keen to avoid that.

Food Processing Capacity

8. Minister, could you give us an update on the ability to increase processing capacity here in Wales? OQ58792

Thank you. The Welsh Government is building on its strong track record of investment in the food industry, as described in my strategic vision published last year. This month, I launched £40 million of investment through the new food business accelerator scheme to support capital investment in processing equipment and infrastructure.

Thank you, Minister. One thing that has always perplexed me is driving along the M4 and seeing tanker after tanker exporting milk out of the west Wales milk field. I appreciate it's not the Government's decision that that happens—it has been a commercial decision that dairies over many decades have taken—but, surely, through any processing capacity that the Welsh Government is looking at, it should be a priority to try to get more processing capacity into that substantial—it is substantial—milk field, one of the biggest in western Europe, so that value can be added to the product and, yes, then transported out of Wales to achieve the full value on the shelves of the UK and beyond. So, with the strategies that you've put in place, how confident are you that by the end of this Senedd term in 2026 we might see an increase in processing capacity in the west Wales milk field to add that value and keep that money here in Wales and at the farm gate?

15:15

I think you raise a really important point, and we saw what happened in north-east Wales when we lost a milk processor—the difficulties that that caused. So, I'm really keen to see more milk processing taking place here in Wales and we're not seeing those tankers, as you say, cross the border. It is a commercial decision, but what I think Government's role is is to make sure that we have schemes that are easily accessible for people who are looking to either expand their premises or look for funding for further capital investment. I mentioned the food business accelerator scheme—it only opened I think it was 17 November—we've put £40 million there. It will stay open as long as it needs to for that £40 million to be used up, so I do hope it will be fully utilised in the way you suggest.

3. Topical Questions
4. 90-second Statements

Item 4 is next, therefore, the 90-second statements, and the first statement is from Jenny Rathbone.

The Clink restaurant in Cardiff has operated for over 10 years from a building attached to Cardiff prison. It's one of four restaurants operated by The Clink Charity—the others are in Brixton, High Down and Styal prisons. The Cardiff teaching kitchen and restaurant is situated outside the prison walls, so it can only recruit category C prisoners who are not deemed at risk of absconding. There are no category C prisoners in Cardiff prison, so all the learners are recruited from Prescoed prison in Usk.

It's put hope on the menu for nearly 3,000 learners, who've graduated with City and Guilds qualifications in food service, food safety, food preparation and cookery. Most Clink graduates go on to full-time employment, and, unsurprisingly, they are two thirds less likely to reoffend and end up back in prison than other prisoners. It really is a rehabilitation programme that works. 

Pre COVID, Cardiff Clink achieved the very highest accolade for its food, alongside famous foodie destinations like Le Manoir aux Quat'Saisons. What's not to like about this success story? Last week, I, sadly, attended a farewell dinner at The Clink. It was both a celebration and a wake. I met graduates, trainers and employers who'd provided training places and employment. HMP Cardiff needs to explain why they decided not to renew the lease of this very successful charity. The Clink will close on 16 December.

On 25 November, The Mousetrap celebrated the seventieth anniversary of its opening in the Ambassador Theatre. For many years, Agatha Christie's theatrical masterpiece has held the record of the longest-running stage play in the world. It has been performed just under 29,000 times on the London stage and seen by over 10 million people. It led the West End out of lockdown; the first show to reopen now in its current home of St Martin's Theatre.

Royalties from the play were given by the queen of crime to her grandson, Mathew Pritchard. In 1995, Mathew set up the Colwinston charitable trust to support arts groups largely funded by those royalties. Each year, the trust distributes hundreds of thousands of pounds, with arts organisations in Wales receiving around 80 per cent of all grants. The trust has supported the National Museum of Wales, the National Eisteddfod, the Welsh National Opera, the Royal College of Music and Drama, and Welsh universities. It has also supported more local organisations and projects, particularly those benefitting children and young people or linked to improving access to the arts, like Valleys Kids. Seventieth birthday celebrations for The Mousetrap will include its Broadway debut and a tour around the UK, including performances in Cardiff and Swansea, and also a legacy of continuing to support the arts in Wales. Just remember to keep the secret locked. 

With players, staff and supporters of the Cymru men's football team preparing to leave Qatar to return home, I wanted to take the opportunity today to convey our thanks to all of them, together with the Red Wall who supported them here in Wales. Although our journey has come to an end and there is a natural sense of disappointment, there is also so much to celebrate, and that's what I'd like to reflect on today.

Reaching the world cup for the first time since 1958 was a tremendous achievement, and a source of pride for the entire nation. This is the first time ever for a great many of us to see our national team in the tournament, and the team has managed to motivate fans of all ages and show the world that this small country that we love is 'still here'— ‘yma o hyd’.

At such a difficult time for so many people following COVID and now the cost-of-living crisis, hasn't it been great to have the chance to celebrate our nation and to see a sea of red and bucket hats across the nation and on our tv screens? I'm sure that I wasn't the only one to have tears in my eyes while watching our first game against the USA on tv and hearing our anthem echoing through the stadium and realising that it was the first time for it ever to have been heard by so many people.

And a special tribute must be paid to the way in which the Football Association of Wales, led by Noel Mooney and also Ian Gwyn Hughes, have ensured that Wales, not just the association, has benefited from this incredible opportunity, building on the great work that the association has been doing for years, seeking to modernise and collaborate with the Red Wall, and ensuring that football belongs to everyone in Wales, and that the word ‘Cymru’ also belongs to everyone, whether you speak Welsh or not.

The pinnacle of this work was seeing our history, our language and our values at the heart of the whole world cup campaign. I will never forget being in Cardiff City stadium when we secured our place in the world cup and seeing the whole team, with Dafydd Iwan in their midst, singing 'Yma o Hyd', and even a few members of the Tory party singing 'Er gwaetha’r hen Fagi a’i chriw'—don't worry, I won’t name you today. As Dafydd Iwan said when he was interviewed in Qatar, regardless of the result in the tournament, without a doubt, Wales has won. And as Gareth Bale said when he was interviewed last night, looking ahead to the Euros:

'We go again in March.'

They can be sure, as can the women's team, that, whatever the results are in the future, the Red Wall will be there to celebrate and support as it has throughout this journey. Together stronger. Thank you, team Cymru. [Applause.]

15:20

And in the spirit of 90-minute football matches never being within the 90 minutes these days, I allowed that 90-second statement to go beyond the 90 seconds. [Laughter.] But that's not to be repeated. 

I thank Heledd for reflecting all of our feelings as we consider our football team and supporters and everyone who's represented Wales so superbly. 

5. Debate on the Finance Committee Report—'Post-EU funding arrangements'

Item 5 is a debate on the Finance Committee report, 'Post-EU funding arrangements', and I call on the Chair of the committee to move the motion—Peredur Owen Griffiths.

Motion NDM8149 Peredur Owen Griffiths

To propose that the Senedd:

Notes the report of the Finance Committee: Post-EU funding arrangements which was laid in the Table Office on 10 October 2022.

Motion moved.

Thank you very much, Llywydd, and I am delighted to move the motion and to open this debate on the Finance Committee’s report on post-EU funding arrangements. The issue of EU replacement funding has a particular salience in Wales, given that it was the largest recipient of EU funding relative to its population of the UK nations. As a committee, we considered this as a priority, and our inquiry took a deep-dive into replacement EU funding, with the aim of clarifying the level of funding received here in Wales.

As part of this, we considered the UK Government’s funding schemes, namely the community renewal fund, the levelling-up fund and the shared prosperity fund. Given the cross-cutting nature of our inquiry, we were pleased to hear from the Welsh and UK Governments, and I would like to place on record my thanks to the Ministers who appeared before the committee.

The new funding arrangements established since the UK left the EU represent a seismic shift in the way that money is allocated to Wales and the role of the Welsh and UK Governments in that process. Our overriding finding was that the successful implementation of these new funds in Wales is endangered by the lack of engagement between the Welsh and UK Governments. The delivery of funding under these arrangements should not just be about sharing money across the UK; it also needs to be about the sharing of ideas and responsibilities if it is to be a truly partnership approach.

We made 20 recommendations in our report, which includes recommendations aimed at the Welsh Government and the UK Government. I am thankful to the Secretary of State for Wales and the Secretary of State for Levelling Up, Housing and Communities for providing a written response to our recommendations. We appreciate the UK Government is not accountable to the Senedd. However, the successful delivery of EU replacement funding will require co-operation from both Governments, and therefore we are grateful the UK Government has been part of the scrutiny process. I would also like to thank the Minister for Finance and Local Government and the Minister for Economy for their joint response to our report and for accepting all the recommendations that apply to the Welsh Government.

Given the time today, I will cover our main concerns and findings. I'll start with the level of funding for Wales. When we embarked on this inquiry, a key consideration for us was how the new funding proposed for Wales compared to the funding received while the UK was a member of the EU. The Welsh Government states there is a £1.1 billion loss of replacement EU funding in Wales. The UK Government told us the shared prosperity fund will ramp up as remaining EU funds tail off. It says providing both wasn’t something that was ever promised. Substantiating these competing claims has not been possible, because it was clear the Welsh and UK Governments were not considering how the new funding proposed for Wales compares to the funding received while in the EU in the same way. Therefore, we were unable to take a view on whether Wales is due to receive more, less or the same level.

The UK Government's autumn statement adds to uncertainties regarding the future of these funds and their value. Whilst we understand it is necessary to explore the different perspectives around replacement funding during our inquiry, we spent so much time unpicking the basic principles of each Government’s argument in relation to the level of EU funding. We received evidence suggesting that funding announced to date by the UK Government is short of what Wales would have received if we had remained in the EU, albeit any future EU funding is an estimate, and therefore there is a level of uncertainty about that value.

Over the course of the inquiry, we have seen more detailed information published by both Governments, but it is unhelpful for Governments to disagree as they have, and to not promptly and fully publish the detail of their perspective. It is disappointing that the level of disagreement between the two Governments continues. The Welsh Government claims the UK autumn statement means the overall value of the SPF for the UK has been reduced by £400 million to £2.2 billion by the end of 2024-25. However, only yesterday, we received correspondence from the UK Minister for levelling up stating that this is incorrect. This is exactly the type of dispute that we believe needs to be avoided if these funds are to succeed. My predecessor has previously written to the two Governments, highlighting the importance of transparency in funding calculations. It makes our job of effective scrutiny even harder when there are disagreements like this over levels of funding.

15:25

Will you take an intervention? Can I say what you've heard me say a number of times? It would help if both the Welsh Government and the Westminster Government showed their workings rather than just giving us a number at the end.

Thank you, Mike. We recommend that an independent body should assess both the Welsh and UK Governments' claims around the levels of future funding and how this compares to previous EU funding. We are pleased that the Welsh Government has agreed to this recommendation, but, unfortunately, we did not receive the same commitment from the UK Government. We therefore urge the Minister to pursue the issue at the Finance: Interministerial Standing Committee when it next meets.

Let's move on to the UK Government acting in devolved areas. A major concern for us is the UK Government using these funds as vehicles to act in devolved areas, namely through the financial assistance powers in the United Kingdom Internal Market Act 2021 and the Multiply programme. We also have sympathy with the Welsh Government that it is being bypassed in the decision-making process. The Finance Committee of the fifth Senedd has previously explored issues relating to the UK Government funding devolved areas via the internal market Act, so I will not reiterate those arguments today. However, the Multiply programme is further encroachment on an area that, as the Minister for Economy said, is 'plainly devolved'. We are disappointed with the method of allocating funds through the Multiply programme, and, given that education is devolved, we recommended that the UK Government provides flexibility to spend funds from the programme in other areas. We also acknowledge the Welsh Government’s position that the programme is too narrow in focus and led to the duplication of provision. The UK Government says that

'Multiply is intended to complement existing Welsh Government provision'

and that

'There remains the flexibility for places to adapt the delivery of Multiply in response to their local needs.'

However, we feel that this should have gone further, to allow the Welsh Government greater flexibility to spend this funding in other areas. Worryingly, we also believe this Senedd is in danger of being sidelined, and that further consideration is required, to ensure that effective parliamentary scrutiny of these and future replacement funds takes place in Wales.

Whilst the committee appreciates the attendance of the then Secretary of State and the then Under-Secretary of State for Wales, the UK Minister with responsibility for the funds refused to attend. As a committee, we have also faced similar issues in the past trying to engage with HM Treasury and their refusal to attend committee to discuss fiscal matters that have the potential to significantly impact Wales. If the UK Government insists on acting in devolved areas, scrutiny should not be done at Westminster only. These are new, significant funding arrangements that require resilient, transparent and accountable structures that reflect the constitutional realities of the UK, and this Senedd needs to consider its role in scrutinising these funds.

I’ll move on to the three specific funds that I mentioned at the start—the community renewal, levelling-up, and shared prosperity funds. We are very concerned with the lack of engagement on all three funds between the two Governments. These are new and crucial funding streams for Wales, and a lack of dialogue risks misaligning objectives between local government and the Welsh and UK Governments. In order to ensure value for money of project delivery, we believe we work best for the people of Wales when all tiers of government work together. In relation to the community renewal and levelling-up funds, we heard from local government that the timescales for submitting bids had been challenging, and the administrative pressures may have been a deciding factor in the types of bids that were submitted. The UK Government has acknowledged this position. Furthermore, the process was described as inherently wasteful. We are therefore pleased that the shared prosperity fund has moved away from the competitive process of those funds, and we have made a number of recommendations in this area.

The Welsh Government has spoken positively about joint work with the UK Government on the free-ports programme in Wales. Equally, the UK Government said it is eager to strengthen its working relationship with the Welsh Government by building on its effective collaboration on the programme. In addition, the UK Government says it remains open to conversations with the Welsh Government on their role in any UK-wide ministerial forum, and, more broadly, on the opportunities for them to engage with SPF and other levelling-up funding opportunities. We hope the Welsh Government takes up this offer to engage, and hope the approach taken on free ports can be replicated in the delivery of SPF and future funds, in order to maximise the investment in Wales.

Finally, I’d like to look ahead at plans for future funding. The EU funding programmes were delivered over a 10-year period, with the flexibility and longer spend profiles being described as hugely important. The shared prosperity fund only has a three-year funding cycle and has restrictions on moving funds between projects and financial years. Furthermore, returning underspends from the SPF could lead to projects being proposed in order to ensure money is spent, rather than ensuring priorities are dealt with. For these reasons, we recommend the UK Government increases flexibility to move the SPF funding between financial years and between projects, as well as increasing flexibility on how underspends will be treated. We note the UK Government’s response that, and I quote:

'The UKSPF is providing local leaders with the opportunity to spend funding as they see fit and to enable places across Wales to unleash their unique potential.'

However, this response reiterates our view that the Welsh Government is being bypassed in the decision-making process. We also sought clarity on the UK Government’s long-term plans for replacement EU funding and the status of the shared prosperity fund beyond 2025. The UK Government has said that any continuation of existing or successor funds will be informed by a combination of engagement with relevant partners and evaluation of evidence, and that it would be inappropriate to pre-empt the structure and focus of future funds at this point in time. In this current economic climate, this offers little reassurance, and the committee believes that more needs to be done until we see funding arrangements that meet Wales’s needs. Diolch yn fawr.

15:30

Can I welcome the opportunity to take part in the debate today as a member of the Finance Committee, and can I thank the Chairman for capturing so eloquently the position we found? Of course, leaving the EU was always going to present challenges, particularly when such funding had become entrenched within communities over a period of time, but I also believe that it presented us with an opportunity to design new funding schemes so that we could support people, businesses and communities as effectively and as efficiently as possible. 

There are some differences with the new funds that were broadly welcomed by most stakeholders. For example, in evidence, the WLGA welcomed the decision of the UK Government to allocate these funds directly to councils as the democratically elected bodies closest to the people they serve, but I understand that Welsh Ministers have not been as positive about this, feeling like they have been somewhat sidelined. The committee report rightly recommends that the UK Government provides further information on how the UK-wide ministerial forums will support the design and delivery of the funds.

From a personal viewpoint, and I reiterate personal, there is scope to support a more localised administration of this replacement funding. As a former local authority leader, I am a firm believer and advocate for the principles of subsidiarity. As we heard from stakeholders, and as I know myself, councils are often best placed to manage funding initiatives. They already work within local and regional structures, are familiar with partners and stakeholders, and understand what it is in their area that is needed.

This takes me on to a more fundamental point. As the Chairman has said, the committee heard in evidence that a lack of engagement and collaboration between UK and Welsh Government is holding back the potential of new post-EU funding schemes to deliver what they are intended to achieve. This is also preventing us from properly learning about what is currently going right and what needs to change to ensure that the funding streams work together in a coherent way.

There were always going to be some teething problems when setting up funds, and these have been explored by the Finance Committee, such as challenging timescales and whether the process is as streamlined as it could be. Hopefully, the UK Government listens to these and identifies ways of moulding the schemes so that they work more efficiently. But, I feel that both Governments have become drawn into an increasingly complex argument about the quantum of funding compared to previous EU funding, which has unnecessarily soured relationships and hindered progress.

As the report notes, the committee is of the view that both the Welsh and UK Government estimate the overall annual level of funding through ESF and ERDF at broadly the same level. The difference is how this relates to the tail-off of remaining EU funding and the reliance of the Welsh Government on projected EU funding, which brings with it a level of uncertainty as to exactly how much we would have received. 

As the Chairman has already referenced, we received a letter only yesterday from the Minister of levelling up regarding the Welsh Government's claim that the value of the SPF has been reduced by £400 million. The letter states that this statement is factually incorrect, and the Government confirmed that there has been no change to the total quantum of UK SPF funding. So, I hope that the Minister will address this in their response, because too often the discussion has been muddied by politics, and it shows why there needs to be more openness and clarity from both sides so we know exactly what is going on and how any issues will be rectified so that the Welsh and UK Governments can finally move on from this debate.

The Deputy Presiding Officer (David Rees) took the Chair.

15:35

You spent finance questions emphasising the importance of the quantum of cash available to local government. I've got no argument with that. You now seem to be proposing an argument where the quantum of cash is less important than other matters. Who is the real Peter Fox?

All I'm saying is that there are two parties here who believe that the quantum is different, yet we haven't had the evidence to demonstrate one way or another. I'm reciprocating what the Chairman has said. The real Peter Fox is stood behind you, and he'll tell you as he sees it.

Instead, let's focus on what really matters the most, and what the committee report is actually about, and that is providing communities with the funding that they need, getting projects off the ground, and delivering a better future for our communities. Thank you, Dirprwy Lywydd.

Can I recommend Members read the full report? Because there are some very interesting things in there, not just the recommendations and the committee views and conclusions, which normally most of us read in reports of committees we're not on.

On 1 January 2021, the trade and co-operation agreement took effect and established the UK's future relationship with the EU. The UK's access to future rounds of European Union structural funding programmes was not agreed. That meant that we no longer got the money. The UK Government has developed their new funding schemes: the UK community renewal fund, the levelling-up fund, and the UK shared prosperity fund. The Welsh Government has said that there's a reduction in the money coming to Wales. The Westminster Government has said that there is not. Both statements were said confidently and forcefully, as if there could be no argument with them. Neither has shown their workings, although Simon Hart did promise to show the Westminster calculations, but he was not Secretary of State for long enough after the meeting to fulfil that promise. Our request to the Welsh Government is that when they make financial statements, to publish their calculations. Eventually, we discovered that some, or almost all, of the difference was that Westminster included continued European funding that was tailing off, and the Welsh Government did not. If the Welsh Government knew that, why didn't they tell us that in the first place? It would have made life a lot easier for the committee, and saved us a substantial amount of time.

The competitive processes around the UK's community renewal fund and levelling-up fund were also criticised by local authorities. Pembrokeshire County Council, which is certainly not a Labour area, referred to the competitive process around the community renewal fund as 'inherently wasteful'. The WLGA explained that when you add competition for the funding, all local authorities put in a lot of resources and spend a lot of time, and other organisations put in a lot of resources, and they had to put time and effort into bidding with no guarantee of success. Then, of course, all those applications had to be assessed. You're spending a lot of time, a lot of money, and with a lot of people ending up very upset at the end of it.

The shared prosperity fund was launched on 13 April and will cover 2022-23 to 2024-25. It's valued at £2.6 billion across the UK. The Finance Committee of the fifth Senedd expressed disappointment regarding the lack of available information on the shared prosperity fund in its report on preparation for replacing EU funding in Wales in 2018. This followed the Welsh Affairs Committee concluding in 2020 that up to that point in time there had been a failure to properly engage with stakeholders or Parliament.

Local allocations of the shared prosperity fund in Wales are distributed on a basis of population 40 per cent, community renewal fund index 30 per cent, Welsh index of multiple deprivation 30 per cent. In terms of how the distribution differs to EU funding, as has been noted, it is not possible to compare allocations at local authority level with previous EU funding due to most EU project allocations spanning more than one area. There is an apparent shift away from the west Wales and the Valleys region towards east Wales. I would put it much more simply: from the poorer parts of Wales to the more affluent parts of Wales. I welcome the shared prosperity fund moving away from the competitive funding process of the community renewal and levelling-up funds.

Can I come on to what I think is the most important thing? I believe universities are the key to improve the gross value added and income of Wales. If we look at successful cities, regions and nations, the role of universities is crucial to economic success. Successful areas also have highly educated and skilled people living there. Why are Palo Alto and Cambridge more successful than anywhere in Wales by two or three times? Why is Mannheim the same? They've got those things. These are incredibly important. If we're going to become wealthy, we need more universities, more money spent on universities, and more research being carried out. The UK's ongoing uncertain future relationship with Horizon Europe is adding to the pressure facing Welsh universities. Universities Wales have welcomed the recent confirmation from the Westminster Government that associating with Horizon Europe remains the ambition of the UK Government. I welcome that, in the interim, there was an announcement of a funding package to invest in the UK research and development sector. It will be beneficial if the UK remains closely associated with Horizon Europe in the future, if only to allow people with great skills to come into this country and to work with other people in Europe with those great skills in order to improve our wealth. 

The announced investment from the UK Government includes an uplift of £100 million in quality-related funding for English universities, and we get a Barnett consequential. Quality-related funding is essential in enabling our Welsh universities to compete and attract additional investment to Wales, bringing benefits to communities across the country. Providing this funding to Welsh universities will help mitigate the impact of the uncertainty over the future association with Horizon Europe and a loss of European structural and investment funds, but, fundamentally, if you want to be a wealthy nation, you have a highly skilled, highly educated workforce, and outstanding universities. 

15:40

I thank the committee Chair and members for their work in this important area. For me, the starting point is to remind ourselves of some of the pledges made by the UK Government as we left the European Union, and just to evaluate to what extent those pledges have been delivered six years down the line. We were told, as we've just heard, that we wouldn't be a penny worse off here in Wales. We were also told that we would benefit from removing the regulatory burden and the red tape, and that that would allow targeted investment and more efficient investment too. We were told that it would be a means to take back control, if you recall, and to empower devolution to make decisions. Now, I don't see that yet, I have to say, although we are six years down the line, as has been noted.

The funding allocated to Wales under the shared prosperity fund up to 2025 falls short of the levels that we would have received during the same period were we still part of the European Union. The implications of the autumn statement by the Westminster Government, of course, tell us that there will be £400 million less, although I do note what the Chair said on correspondence that countered that argument, but if you only look at the economy and the performance of the economy more broadly, particularly in comparison to the rest of the G7, then the suggestion that we are, somehow, better off being where we are today, to me, is just an empty promise. And we also know that the Welsh Government wasn't consulted with at any stage on the development and planning of how this budget would be used, although, of course, they do cut across devolved areas and, for me, that sends a message that the Westminster Government is treating this place with disdain.

And let's contrast what we have and what we have, is what I'm trying to say, because the shared prosperity fund is an unashamed political construct, hastily cobbled together to fill a vacuum left behind after Brexit, forcing, effectively, the recreation of a wheel that was already in place. The Welsh Government had a framework, co-developed over a number of years with the Organisation for Economic Co-operation and Development, with Welsh local authorities, with higher education, further education, the business sector and the third sector—all subject to public consultation as well. But no, we need to build something else.

We heard from Mike Hedges that bids have been resource intensive for local authorities, very much driven by time pressure rather than a more strategic take when it comes to influencing which projects are being put forward. No necessity of reference to other investment, particularly Welsh Government investment, so you end up with non-complementary projects, a risk of duplication, and certainly a risk of poor value for money as well. And Multiply, of course, is referenced in the work. Education and skills are devolved, but the Welsh Government was given no role in developing those proposals. There should be huge alarm bells ringing there about the Westminster Government meddling in devolved areas, and again, running the risk of serious duplication around some these.

We're now moving from EU funding cycles of 10 years, with two-year overlap as well, which gave stability and continuity, and allowed for a long-term strategic outlook, to a shared prosperity fund three-year funding cycle. We're at the end or very nearly at the end of the first year now, and local authorities are still waiting for confirmation on the SPF investment plans. It isn't conducive to the best use of resources.

The UK Government as well have created, as they confirm in their response to the report, a dedicated Wales-area team to now run the bureaucratic side of these post-EU funding streams, and that includes work around reporting, monitoring, assurance, evaluation. All very important—granted—but of course, all of these already exist in Wales and all of this is now replication, it's duplication, it's additional complication, and cost to the Welsh taxpayer. So, my conclusion is that it's very much, so far, so bad, and there's a long, long way to go to make sure that those promises that were made six years ago are anywhere near being delivered.

15:50

As a member, also, of the Finance Committee, I was very keen that the committee undertake this hugely important piece of work for Wales as a matter of priority, both for fairness and honesty and fair funding as principle, and for the fulfillment of political promise and trust and so that Wales is also not treated with disdain. This is because Wales was the largest recipient of EU funding relative to its population of the UK nations. It is vital that we hold the UK Government to its promise and to account, in that Wales is, in their own words, not a penny poorer off now that the United Kingdom has left the European Union. I note the Welsh Government's response to our report, where they state that not a penny of replacement EU funding has reached Wales. 

I am heartened that the Welsh Government has remained totally committed to further dialogue with the UK Government, which includes a discussion on the shared prosperity fund, funding levels and allocations, together with the establishment of a genuine co-decision making function for Ministers, in order to improve that impact and value for money of the fund in Wales. The Welsh people deserve nothing less than for both the Welsh and UK Governments to devote themselves and work constructively to ensure that Wales does not lose out financially. Today, it is beholden on Rishi Sunak, the third Tory Prime Minister of the year, to now honour the previous promise to Wales, in that the Welsh people would not be, again, a penny worse off when we left the EU.

Deputy Llywydd, as the Tory cost-of-living crisis deepens, and after the shambolic 'blink and you miss it' premiership of Liz Truss and her mini-budget, the people of Wales deserve and demand that the Tory UK Government do the right thing by them and honour their pledge to Wales.

Yes, thank you so much to the Finance Committee for bringing forward this report. It's very detailed and it's very clear.

Thank you very much to Peredur and the other Members too.

My party's opposition to Brexit is well known. Brexit has had an impact on our standing in the world, on our ability to travel freely, and, importantly, on our economy. It is this economic argument that I suspect we might actually be winning, because in the light of the cost-of-living crisis, as everyone can see, we are likely worse off than had we actually remained members of the European Union. We, the Welsh Liberal Democrats, are calling on the UK Government to rejoin the single market and the customs union, so that we can end the unnecessary bureaucracy that is affecting our ability to trade with our closest neighbours.

Focusing in on the report's findings, it's clear that the structural funds that were available to Wales pre Brexit are not going to be replaced in their entirety by the UK Government, and Wales will definitely be worse off by this metric. This is in spite of the Conservatives' manifesto promise in their 2017 and their 2019 manifestos, that the shared prosperity fund would directly replace EU structural funds. It's even a further concern as well that not a single penny of the shared prosperity fund moneys has been spent in Wales to date, and that Wales will definitely be receiving less than it would have done had we remained members of the European Union.

I just want to focus on one small area, just to finish off, and that's with regard to the report's conclusions on funding for the sciences. The UK Government needs to urgently address the shortfall that Welsh science will experience via the UK shared prosperity fund—the £772 million lost to Wales returned across the next three years. Just think about that number: £772 million that we should be getting for our sciences. But we know that science, particularly in the area of physics, is a boon to our Welsh economy, and we've heard from Mike Hedges around how skills and universities and learning are so important to our country. The Institute of Physics estimates that physics itself is worth around £7.3 billion to the Welsh economy. It's clear that there is some work to be done by Welsh Government in embedding science as part of its forthcoming innovation strategy, but also in attempting to convince the current UK Government of the importance of this sector in terms of investment. Thank you. Diolch yn fawr iawn. 

15:55

I'd like to start by very much agreeing with the Welsh Liberal Democrats on rejoining the single market and the customs union. I think the damage done by Brexit is going to be a disaster not just for our generation but for future generations, and I hope that all political parties will recognise that. I don't expect the Minister to reply to me on this point, but I hope that she and her enigmatic smile this afternoon—perhaps I shouldn't read too much into it, but I hope it means that she doesn't at least violently disagree with me. 

In terms of where we are on EU funding, I'm very grateful to the Finance Committee for this report. I think it's a very important report, and it's one that I very much welcome. I think we need to have a realistic debate on where we are on EU funding. I'm afraid that there has been a lot of—how shall I put it; I'm trying to find a different word in my mind from the word 'nonsense' that's written down in front of me—there is a lot of talk about EU funding that I think has been largely misplaced. I well remember a former First Minister, actually, describing it as a once-in-a-lifetime opportunity for fundamental change. But, it was never that, and you can't undo a century of economic decline with a five-year funding stream. You need a funding stream over a number of years. And of course the old Objective 1 status was designed in order to deliver that. It was never going to be a one-off funding experiment, if you like, it was always going to be a part of a wider opportunity to underpin economic development over a number of years. And European Union funding, of course, was always based on the principle of additionality. It was never assumed that it would replace spending from national Governments. And it was always that partnership that was crucial to it. So, we were always wrong to assume that EU funding was a panacea for all our economic difficulties. And EU funding was a part of that jigsaw that enabled us to do far more than we could do ourselves. The additionality meant that we had streams for investment in people, infrastructure and places. And I've seen that in my own constituency.

The UK Government has broken its word, and it is in danger of breaking the union. The External Affairs and Additional Legislation Committee in the last Senedd reported on this subject, and the Deputy Presiding Officer, of course, chaired the committee at that time, and he will remember, as I remember, the then Secretary of State giving an absolute undertaking that every penny of EU funding would be replaced under the new system. And that's something that clearly, whatever the complications we now see, hasn't been delivered. And I think we can be very clear about that. The United Kingdom Internal Market Act 2020 is a destructive piece of legislation that doesn't simply attack this place, but it undermines the UK constitution and the agreed will of the people of Wales. I have to say to Peter Fox that this is also a democratically elected institution, and this place has a mandate, and it has a mandate and powers given not simply by the whim of a Secretary of State but delivered by the people through a referendum, and they have the right for a Government to respect that. Yes?

Will you take an intervention? I accept the outcomes of referendums; it's a great shame that you did not accept the outcome of the referendum to leave the European Union. In your own constituency, 62 per cent of people voted to leave. How have you represented them over the past few years?

I've always stood up—and you, of course, as a Conservative, will be familiar with the work of Edmund Burke, the father of modern Conservatism. And what he said very clearly in his speech to the electors of Bristol is that an elected Member owes his allegiance to the people represented by him, not just by his labour but also by articulating what he believes. And that is what I've done, and I will continue to do it. And I will argue for a democratic mandate to overturn the referendum in 2016. I wouldn't do it through the back door or by legislating to do it without consulting the people. 

So, what we've seen over the last few years is a lack of transparency, no understanding of the purpose or objectives of the new programmes, no co-ordination, the exclusion of the Welsh Government, which is an affront to Welsh democracy, and we've seen a system in its place that is chaotic and a shambles—and that is quoting a Conservative MP. So, let us be absolutely clear for what we need. Where does it leave us? We have a broken system and it's one that needs to be repaired. And the EU model is actually instructive in doing so. I believe that we do require—and a Welsh Government I think has argued for this before—a council of Ministers reaching agreement by consensus rather than receiving diktats being imposed by press release. We need the transparency to be able to argue and articulate our views, and, for the Conservative point of view, we need to understand what are the purposes and objectives of funding streams before they're introduced and not simply reported upon after they've been introduced. And we need to go back to the co-ordination that Huw Irranca-Davies led as Chair of the EU funding committee at the time, to ensure that you bring people together, you don't exclude people and you ensure that Wales is served by all the people it represents. At the moment, what we have is a broken system and we're in danger of having a broken union.

16:00

Alun, thank you for taking my name in vain, but in a praiseworthy way there for a moment. But I would say that report is still there and it's still valid, I have to say, and it was put together—. I'll turn to this report in a moment, but that report on the future funding, regional funding, within Wales, I have to say set the benchmark for what we should be doing throughout the UK, and it was OECD reformed, as Llyr actually said. It was supported not only by industry, trade unions, third sector, civil society, post-16 education and so on, and it's there on the shelf, and, to be honest, it did actually have as one of its key elements how we could work cross border with the UK Government, and on a trans-European basis as well. So, I would say to the UK Government still, as well as to Members who may not have seen it: have a look at that report, dust it off. There is no better model for regional funding, not just here in Wales, but across the EU, currently, and the UK Government could take that and turn it into a partnership with the Welsh Government and the way forward.

But let me turn to this report. I think it's brilliant. I've really enjoyed reading it, which might surprise the committee chairman and its members, but the reason I've enjoyed it is because it's very well informed and it also reflects what I and others must have been hearing from businesses and others within their own constituencies. But also, that group that I mentioned that put that piece of work together, many of them are now part of the strategic forum for regional investment in Wales, which is trying to work through some of the difficulties highlighted in this report.

Let me just pick up some of the areas that they've picked up on which are reflected in this report. In the preparation of these bids by a local authority, the immense time burden that it put on—so, it didn't suddenly simplify and reduce burdens, it put the burden firmly and squarely on local authorities to produce bids in a competitive process. Not only that, it put time pressures on them, and those time pressures meant that sometimes they didn't pick the best, they didn't look around and liaise with others—they did their best to do it, but they had to actually say, 'What have we got on the shelf that’s ready? We've got a better project down the line, if we only had a little bit of time to work this up, and we could do it with the neighbouring two or three authorities, but it's not ready, so we're going to have to pick that one, and pick that one and throw it forward.'

And then you've got the fact that it's not that it's just this place that has been bypassed, or that Welsh Government has been bypassed, and—[Inaudible.]—but the idea that, in parts of these funding streams in the early days, you've actually got MPs who were being asked to put forward schemes that had their names on it—not MSs, not local authorities, but MPs. Now, this is quite interesting, because this is good, old-fashioned American-style pork-barrel politics: ‘Here’s my pet project. Minister, I’ll support you. Give me this project here. It may not be the best one for my constituents, but it's the one I want on it.’ Now this is wrong. All I say to colleagues here to my left on the Conservative benches is: you should not do this. One of the lessons from previous ranges of European funding was the criticisms of complexity and the time it took and so on. But the one thing you could say: they were accountable and they were driven on good analysis of need, and it was also informed by bottom-up approaches by communities who said, 'This is what we want.' Now there could be a different model. [Interruption.] I will indeed give way.

I'm grateful to you for that. You'll be aware that the Penprysg railway bridge is something that benefits from the UK Government's levelling-up fund, and your MP colleague Chris Elmore has put his name to that. Are you saying that's the wrong decision?

No, not at all. In fact, I would support that, but my point is this: should it be that one MP, one elected representative, ignorant of the policy framework in Wales, ignorant of the wider needs of the rail network within that area as well, such as the Maesteg and Tondu crossing, which has been waiting for 20 years for the investment from UK Network Rail—that doesn't get a mention—one MP gets to say it, whether it's Chris Elmore or Jamie Wallis or anybody else? It should not be pork-barrel-style politics, and that's my point. There is a better way to do it. I'm running out of time here. Let me just go on to some of the other things—

16:05

I have given you some extra time. You have another intervention, if you wish to take it.

Would you take another intervention, from me? I understand that a levelling-up funding bid for railway infrastructure was declined by the UK Government and the authority has to put it back in again. But do you agree with me that local authority officers have said it's like going back 10 years now to move forward with this, so it's not really achieving very much, is it?

I entirely agree. We need to move away from this, and it needs to be based on good analysis, needs analysis, and where the money should be properly going. And to pick up on Alun's quite right point, this is not just to do with the current quantum of funding that may be lost, it's to do with long-term sustainable funding that goes to those areas and communities that most need it. We do not have that model. So, let me quickly, with those couple of interventions, just—

—Dirprwy Lywydd. No clarity at the moment from UK Government on future, medium, long-term post-EU funding. No agreement or clarity on the amount lost to Wales or otherwise. Ongoing uncertainty over Erasmus+, Horizon Europe, other European co-operation agreements. Poor or absent—absent—engagement between UK and Welsh Governments. Now, I would simply say to my Conservative colleagues that this has been put upon Wales, not done in partnership, so it's for the UK Government to reach out and say, 'Let's do this together.' That lack of engagement does not fall at the Welsh Government's feet; it falls at the UK Government's.

And finally, that lack of formal role for not just Welsh Government but for this Senedd, for individual Senedd Members sitting all around this Chamber who represent their constituencies—that complete absence. We cannot go forward like this, so I think the recommendations and the conclusions are sound, and I really hope that UK Government and the committees in the UK—both Parliaments—see this and listen to it, as do Ministers. I also hope that this might be part of the discussion when the Welsh Affairs Select Committee visit here this week. Cracking report—well done.

Member
Rebecca Evans MS 16:07:22
Minister for Finance and Local Government