Economy, Trade, and Rural Affairs Committee

Symudwn ni ymlaen, felly, i eitem 2, sef papurau i'w nodi. Fe welwch chi gopi o lythyr dwi wedi ei anfon at Weinidog yr Economi ynglŷn â fframwaith taliadau hwyr. Rŷn ni wedi derbyn llythyr gan Weinidog yr Economi ynglŷn â fforwm gweinidogol ar gyfer masnach. Rŷn ni wedi derbyn llythyr gan y Gweinidog Newid Hinsawdd ynglŷn â Rheoliadau Plaladdwyr (Dirymu) (Ymadael â'r UE) 2022. Fe welwch chi gopi o lythyr dwi wedi anfon at y Llywydd ynglŷn â'r adolygiad o amserlen y pwyllgorau a chylchoedd gwaith y pwyllgorau. Dwi wedi derbyn llythyr gan Gadeirydd y Pwyllgor Cydraddoldeb a Chyfiawnder Cymdeithasol ynglŷn ag adroddiad 'Gofalu am y dyfodol: y rhwystr gofal plant sy'n wynebu rhieni sy'n gweithio'. Dwi wedi derbyn llythyr gan y Gweinidog Cyllid a Llywodraeth Leol ynglŷn â'r fframwaith cyffredin amodol terfynol ar gyfer caffael cyhoeddus, a dwi wedi derbyn llythyr gan y Gweinidog Materion Gwledig a Gogledd Cymru, a'r Trefnydd ynglŷn â Rheoliadau Deddf Ifori (Cychwyn Rhif 1) 2021. A oes yna unrhyw faterion yr hoffai Aelodau eu codi o'r papurau yma o gwbl? Nac oes.

Symudwn ni ymlaen at eitem 3 ar ein agenda, sef sesiwn gyda'r Gweinidog Materion Gwledig a Gogledd Cymru, a'r Trefnydd. Dyma'r gyntaf o dair sesiwn heddiw yn craffu ar ddrafft ymgynghori'r cyd-ddatganiad pysgodfeydd sy'n ffurfio rhan o'r fframwaith cyffredin ar gyfer polisi pysgodfeydd yn y dyfodol. Gosododd y Gweinidog y drafft ymgynghori gerbron y Senedd ar 17 Ionawr ynghyd ag asesiad effaith naratif. Gaf i felly eich croesawu chi, Weinidog, a'ch tîm i'r cyfarfod yma? Diolch i chi am eich presenoldeb y bore yma. Cyn ein bod ni'n symud yn syth i gwestiynau, efallai y byddwch chi mor garedig â chyflwyno eich hunan a'r tîm ar gyfer y record, Weinidog.

Bore da, bawb. Good morning, everyone. I'm Lesley Griffiths, I'm the Minister for Rural Affairs and North Wales and Trefnydd. I'm joined by Gareth Bevington, who is the deputy director for marine and fisheries, and Tamsin Brown, who is head of future fisheries.

Thank you very much indeed for those introductions. Perhaps I can just kick off this session with a question. In the previous Senedd, the then Climate Change, Environment and Rural Affairs Committee recommended that the joint fisheries statement should include milestones and ambitious targets. In response, the then Welsh Government said it remained committed to actually setting those milestones and specific ambitious targets, but we don't see that there are any milestones or ambitious targets in this joint fisheries statement. Can you explain to us why?

I don't think it's the case that there's an absence of ambitious targets. The JFS is a strategic policy document and it's been jointly developed with the four UK nations, the four fisheries policy authorities. It sets the framework and direction of travel for delivering world-class sustainable fisheries across the UK, within the context, obviously, of the devolution settlement. It's basically a replacement of the common fisheries policy. Implementation of the JFS policies will be through individual fisheries policy authority policies and delivery strategies, or through some initiatives such as the UK bycatch mitigation initiative, which we're currently working on. What the JFS does do is it commits the four administrations to gathering evidence on blue carbon resources and reducing vessel emissions—obviously, they need to play their part in our climate emergency—policies to support industry to thrive, which includes succession planning, promoting the consumption of locally sourced seafood. It commits us to considering the effects of land and coastal management on our fisheries, and there's a commitment to global leadership on sustainable fisheries management by applying the fisheries objectives to policies relating to our international work. I think, crucially, what the JFS does do is include a timetable for 43 fisheries management plans. I think they're really specific and ambitious in scope. They're a significant undertaking for us. I think what is important is getting the level of detail right, and I think it does really commit us. It's legally binding, and it commits us to some very important issues.

Thank you very much indeed for that. If I can now bring in Hefin David.

Diolch, Gadeirydd. Can I ask the Minister for further information on the co-ordinated programme of data collection, including, particularly, the planned use of vessel monitoring systems and, importantly, remote electronic monitoring?

Again, the JFS does commit us to a wide-ranging and co-ordinated monitoring programme, and the way in which we improve the collection of data, I think, is going to be really crucial to the future management of our fisheries. We are very committed to making the improvements that are necessary. One of the things I can inform committee today—I don't think I've put this information out anywhere else—is that later this month, we're going to be introducing an Order. I'll be bringing forward a statutory instrument that ensures that all under 12m fishing boats operating in the Welsh zone will use a vessel monitoring system, a VMS. We'll be the first country in the UK to do that. We do have the largest fleet of the smaller vessels, so it's not surprising, probably, that we are first; 97 per cent of our fleet is under 12m. But, for me, it's really exciting. I think it's something that's very, very positive, and it's a key development for our fisheries management here in Wales. What VMS will do is transmit the geographical position, the date, the time, the speed and the course of each vessel every 10 minutes to Welsh Ministers—so, I'm going to be very busy—while they're undertaking fishing operations. We just don't have that data—

Are you going to sitting by the computer waiting for it to refresh? [Laughter.]

We don't have that data at the moment. I think what it will do is provide us with a significant amount of really rich data.

I'm open minded on REM; Hefin mentioned REM. And certainly, I think as we go through the lifetime of the JFS, I'm sure we will have REM. But our focus will, in the short term, be on VMS for the reasons that I've just outlined.

Diolch, Gadeirydd. That was such a thorough answer that I've got no more questions.

I'll bring in Sam Kurtz.

Diolch, Gadeirydd. Good morning, Minister. Could I ask how the Welsh Government and yourself plan to further develop and strengthen arrangements for participatory decision making with regard to this?

Yes, certainly. I think we need to get the structure right for our stakeholder engagement. Every Minister and official really needs that input from our stakeholders. I think, if I'm honest, we need to improve the structure that we currently have if we're going to get the co-production and collaboration right. You will have heard me say yesterday in the Chamber about a different part of my portfolio that it's really important that any policies we bring forward work for the people they're meant to work for, and you can only get that, I think, with really good collaboration between our stakeholders.

You may be aware that the Wales marine fisheries advisory group has been the main advisory group to me, and I've concluded after a period of reflection and consideration that we need to move to a different approach. I don't think we can expect one sole group to undertake all that I think we did expect of WMFAG group. So, I have written to members earlier this week. It's taken me a little while longer, I think, to decide what we need to do while we've been bringing forward the JFS. I've written to all members to advise of the next step. I hope many of the members will still continue to advise us.

We brought forward a whelk permit Order in the autumn time of last year, and that was done on co-production. I think that's what showed me that we needed to, perhaps, change the structure a little bit. I think it's an exemplar approach, and I think the stakeholders—. If you are scrutinising stakeholders later this morning, I think they will recognise that that was a really good example of how we should work as a stakeholder group with the Welsh Government. So, I think we're going to replicate some aspects of that model, because we have quite a few other Orders that we need to bring through.

So, as I say, we're very, very committed to strengthening our stakeholder engagement going forward. And also how we communicate with our fishers; I think that's really important, too.

Okay. Thank you. One more question, if I may, Chair. The domestic fishing industry is obviously of a different size now because of Brexit. It's a much smaller domestic industry compared to our European neighbours. Do you feel that this is going to re-establish Wales as a fishing nation and a seafood-embracing nation?

Certainly that's what we've been promised. I have to say, we work as four nations; probably, fisheries is the area where we had the most collaboration between the four nations, because every December we'd go to Brussels to the fisheries December council. So, certainly, that was the impression that our fishers were given. If I'm honest, that is probably the sector that I kind of understood the most why they wanted to leave the European Union, based on what they were being told by the UK Government. I think the fishers would say they haven't done well from being in the European Union. I certainly hope that we will see more opportunities, obviously, with the JFS and the way that we've worked with the Secretary of State at the Department for Environment, Food and Rural Affairs to make sure that we do get those fishing opportunities. Certainly, from my perspective, I think if you look at the vision that I launched at the winter fair around food and drink, there is a focus on fish and seafood there, because I think we do have massive opportunities here.

On this, I think Luke Fletcher would like to come in.

Diolch, Gadeirydd. Just touching on what Sam mentioned there about the domestic fishing industry, and I suppose this touches on Hefin's question as well, and the statutory instruments you mentioned ensuring all vessels had monitoring systems in the Welsh zone, I was wondering what sort of conversations the Welsh Government have had with, in particular, the domestic fishing industry about how they can be supported financially to ensure that they are compliant, because we are talking about a sector here that more often than not is strapped for cash.

I think we've probably had more engagement with them over the course of the COVID pandemic. I met the aquaculture sector specifically just before Christmas to see what more we could do to assist them, because as you know, Luke, there was a real cliff edge with our seafood sector last year around classification of waters, particularly up in north-west Wales. As I say, we do work very closely. I meet with the sector regularly. I think officials probably have spoken to the sector since I have, so I'm going to ask Gareth if he can come in and update, please.

Thanks, Minister. Specifically on the VMS support, we provided the actual units free of charge through European maritime and fisheries funding for all fishers. We're also paying the first—. I'd need to check, but I think it's either a year or two years of the data that's charged as well. So, we've supported the industry in that way to make sure that it's affordable.

Luke, I think you've got another question you'd like to ask as well.

Yes, of course. Moving now to focus on the memorandum of understanding, I was wondering if the panel could walk us through the fisheries framework memorandum of understanding. I'm looking particularly for information on whether previous concerns about the extent of the power for Secretary of State to determine fishing opportunities have been addressed, and perhaps some more detail as well on a strengthened consultation process.

I think I should start by apologising that you haven't got the MOU in front of you. I'm sure you're very frustrated about that. Obviously, it's having to be signed off by all four nations. I am going to reassure you that I've signed my bit off, but unfortunately we haven't been able to expedite the publication of the document. But I do think it would be helpful if you could see the MOU alongside the draft JFS. It does require agreement from all of us. There's little I can say in relation to what's going to be in that, because, as I say, it hasn't been signed off by all four nations.

At the moment, we are hopeful—I'm looking to Gareth to nod if this is the case—that it will be published this month. I know the timetable for scrutiny—. I think we're the first country to scrutinise, but they've got to do it by 24 February [Correction: '25 February']. So, we will make sure that that is published this month, and if you have any further questions, Chair, or if you wish me to come in front of committee again, I'd be happy to do that, or via correspondence. The common frameworks can't be finalised, as I say, until they've been scrutinised by all four legislatures. We do expect they will continue to function at an operational level. But it will be helpful when you get that MOU.

You're right, we did have previous concerns about the extent of power for the Secretary of State to determine our fishing opportunities. It was a key issue during the UK Government's Fisheries Bill progression, and we did have assurances at the time that the MOU would be the vehicle to set out the details on the use of the powers and the principles that we had in the consultation for that Bill. What the MOU will do is set out very high principles by which the fisheries policy authorities will work together. An operational agreement will be developed. Those operational agreements will be business-as-usual documents, which will set out how the fisheries policy authorities will work together on our specific fisheries management issues.

Obviously, officials are working on the drafting of the MOU, and I think they've really pushed for some specific wording on the scope of the operational agreements to make sure that we address those concerns that were around two years ago. My officials have advised that the process for the determination of fishing opportunities undertaken by the Secretary of State—. There has been meaningful consultation, there has been direct engagement. As I say, as soon as the four nations have signed it off, you will be able to see the MOU, but I'm sorry I'm not able to go into details, because obviously the other—. Well, at least one country hasn't signed it off yet.

I now bring in Vikki Howells. Vikki.

Thank you, Chair. Good morning, Minister.

Morning.

My first question is around bycatch, which is always an issue of concern when we're looking to protect our fish stocks. So, can you give us some further information on the development of catching policies to reduce bycatch?

Yes, thank you. As the JFS sets out, there is likely to be a mix of UK-wide and national measures and policies. They will be tailored as appropriate. New policies will be subject to consultation, and that will be in line with normal procedures.

I think the JFS really reaffirms our commitment to working with the fishing industry to try and minimise and, where possible, eliminate the unwanted bycatch and entanglement of sensitive species. We're currently finalising, as I mentioned in an earlier answer, the UK bycatch mitigation initiative. That is a UK-wide initiative, and this approach combines the cetacean and sea bird bycatch plans into one, which I think will be very beneficial. And what it will do is set out a programme of work, whereby we all have to minimise, as I say, or, if at all possible, eliminate the bycatching.

The BMI also aims to improve scientific monitoring and research, and to develop and adopt effective mitigation measures. We really need to support our fishers to implement mitigation measures and, obviously, work globally with our international partners to reduce the bycatch, particularly of sensitive species, globally.

Thank you. Our fish stocks can change over time, can't they, and, therefore, the definition of what a sensitive species is. So, would the policies that are going to be developed be amendable in light of any changes like that?

Yes, absolutely. So, you heard me mention the December council before. So, at every December council, while some things would remain the same, there was always new things coming in because of the sustainability issues. We need to make sure that we have maximum sustainable yield. So, absolutely, that is looked at at least annually. I don't know, Gareth, if you want to say any more. But they do need to be reviewed, because, as you say, they can be changed very quickly.

Yes, sure, just to add to that, it will all be subject to the International Council for the Exploration of the Sea advice on the sustainability of stocks every year.

Great, thank you. And my second question is about reducing marine litter, and, obviously, fishing gear can be a contributor to that. So, what is the Welsh Government doing to encourage the circular design of fishing gear and also to increase the collection and the sustainable management of end-of-line fishing gear as well?

So, again, the JFS sets out our commitment to reducing marine litter. We need to support the industry to reduce its environmental footprint. So, we support the marine litter action plan, and the work of the clean seas partnership. We work collaboratively with marine litter experts and members of the fishing industry. We did launch a pilot end-of-line fishing scheme at a number of our ports and harbours, and what that scheme does is offer an opportunity for the industry to recycle their hard plastics—so, the whelk pots, the buoys, the fish crates,—as well as fishing nets, and the partnership is working to try and increase the capacity of the pilot scheme to include beach litter containing fishing gear, and we're looking at a site both in north and south Wales.

Last year, we also had a small-scale coastal infrastructure scheme. We made that available to our port authorities and local authorities around Wales. They could apply for grants up to £100,000 for capital investment items. There was a pre-determined list that they could pick from. There were four key themes of safety, security, environmental and operational, and the list did include marine litter facilities suitable for marine users to be able to recycle and dispose of marine litter also. So, I think 13 of the 28 applications received requested funding specifically for marine litter facilities, so I think that's really positive.

Thanks very much. Thank you, Chair.

Thank you, Vikki. Before I bring in Sarah Murphy, I think Luke just wants to come in on this particular issue.

Brilliant. Thank you, Chair. Just two questions really from me, and the first one is specifically about the catching policies. I'm just keen to understand a bit better the Government's preference on quotas, whether they're looking at a species-specific quota for catches, or a catch-all quota, because one of the concerns I have is that if we look at, say, a species-specific quota, well, the way trawlers work, of course, is that they don't discriminate—they catch all. And so, one of the risks that we run then, if we have species-specific quotas, is that, because a fishing vessel might have reached the quota for a specific species, they'll still be catching that species and they'll still be discarding that into the sea. So, I was just wondering what the Government's view would be on that.

Thank you. I'm going to bring Gareth in here, because this is something he's been looking at.

Thank you, Minister. Yes, it's a key consideration for us. It's also a key discussion point in coastal state negotiations with the rest of the UK and the EU. Where there are mixed fisheries, quota is always set with that kind of mixed fisheries advice in mind. There's mixed fisheries advice that we use as part of that quota determination, just to ensure that really—to ensure that there are no uses around choke and, therefore, any unintended consequences about bycatch around particular fish in mixed fisheries for us, particularly in the Celtic sea.

Thank you, and to my second question, still on the same point, and it touches, of course, on the fishing side of stuff as well: I'd be interested to know how the Welsh Government will monitor whether or not the sector is keeping to the catching policies and the regulations that are put on them, because, in reality, when you're out in the middle of the sea, it's very difficult to know what's happening. So, I'd just be interested to know what sort of monitoring policies would be in place for the Welsh Government.

Do you want to take that, Gareth?

Absolutely. So, we've got robust control and enforcement measures and data exchanges with the EU, where fish aren't necessarily landed in Welsh ports, so that they can exchange to make sure that quota is adhered to there. We have robust control and enforcement measures at sea through our fishery vessels, through inspections at port, and we've also got a Welsh fisheries monitoring centre that remotely monitors all of the data that we get. So, I'm confident that our procedures are robust in the way that we manage our fisheries.

So, Luke, just before the pandemic, we spent significant funding—I think it was up to about £8 million—on some new fishing enforcement vessels, because I think it was safe to say that the ones we had weren't really fit for purpose. So, we've got the Rhodri Morgan and the Lady Megan, and I would encourage, Chair, if any Members haven't been, either to the monitoring centre—I think it might be in your constituency, actually—or to see our fishing enforcement vessels, they're well worth seeing.

Thanks for that, Minister. So, just to be clear, we a have a mixture here; not just inspections at port, but we do have, as well, the capability to go out to sea and also monitor—just to be clear.

Yes. In fact, we've recruited, again—Gareth might be able to tell us the numbers—some new staff to be on our vessels. Was it two teams last year we recruited, Gareth?

Predominantly, colleagues at the coast, Minister—marine enforcement officers—have increased and part of their role is to undertake at-sea boardings while on one of our vessels. So, they're colleagues who work at sea and on the land.

Diolch.

I now bring in Sarah Murphy. Sarah.

Thank you, Chair. Thank you, Minister. I wanted to have a look at—. In the JFS, it says that partly it's going to be about ensuring coastal communities are resilient and able to adapt to the current and future needs of the seafood sector. And it mentions that it will be about promoting the increased consumption of UK seafood, which makes a lot of sense, and then mitigating and adapting to climate change. And it also has a line where it just says a

'robust labelling and traceability system'

will be developed to support accreditation, as part of promoting UK seafood. So, could you just give us a bit more insight into what that would look like, how that would be implemented and any foreseeable costs associated with that and who they would fall on?

I'm sorry, I was having a little bit of difficulty hearing Sarah then—there was a bit of feedback. Did you say 'food labelling'?

Yes. It says a robust labelling and traceability system will be developed to support accreditation. So, I wanted to know what that would look like, of any timescales that you might have on that, what the overall objective is and who any costs will fall on for that.

Okay. So, this is very early scoping work that we're doing around this. And we're doing it with agriculture as well, because I think this is a real opportunity to fly the flag for Welsh fish and seafood. This is at very early stages. I'm just going to look and see if either of the officials are able to give any further information. Gareth.

Nothing specifically other than what you said, Minister. It's early stages, but it's something that we would like to incorporate as part of our wider strategy. We could write to Members if you wanted us to.

Okay. Is that all right, Chair?

If you could do that, that would be very useful. Thank you very much.

Thank you. I just wanted to ask, though, a follow-up question, because, of course, as you said, it's in the early stages, but in some of the research that I've been doing, listening to fishers, they say one of the things about the UK is that we have a very narrow palate when it comes to the fish and the seafood that we actually eat, especially compared to the rest of the world. So, I suppose, when I'm looking at that and we're talking about promoting the consumption of UK seafood, of course I think if people were able to trust it better and it was accredited, that would be wonderful, but isn't there a wider issue here that just culturally in this country we don't consume a lot of seafood? We don't consume most of the seafood that we find on our coasts. Also, because of that, and because in other countries they will eat it and they will buy it, is there more to do here in terms of the culture change, but also how are we going to ensure that people are actually getting, then, what it's worth? I mean, this could be something that would actually take generations, couldn't it?

Yes, I think you're right and I had a question in the Chamber yesterday on this, and I said, from a personal point of view, I came to eating fish very late in life. I was probably in my 40s when I started eating fish, and I think you're right—it is a cultural thing. We don't see it on our school meal menus as much as I think we should. If you look at our seafood and fish, we export the majority of it. I forget the percentage. Certainly with seafood, I think it's about 95 per cent. I think fish in general is a little bit lower. So, I do think we've got an opportunity in relation to procurement now. As you know, we're looking at procurement, as we've left the European Union, in a different way and what we can do. I think, with our public services—so, you know, our hospital food and our school food—there is an opportunity there. I mentioned in an earlier answer that I launched the vision for Welsh food and drink back in the winter fair in November. Obviously, fish and seafood play a part there. We had BlasCymru/TasteWales in October, where we brought the world to Wales—virtually mainly, but we brought the world to Wales, where our buyers were there. There was a seafood cluster, which is obviously one of our clusters within our food and drink cluster network. They were there. So, I think we will have seen a significant number of new orders and business from BlasCymru. What we do want to do is really create a very strong and vibrant industry for our fish and seafood. As you say, if people can see where it's from and it's correctly labelled, et cetera, I think that will build confidence, but I think we want to achieve that growth and that productivity for the sector in the way that we have, I think, done for red meat, for instance. So, I think this is an important piece of work and part of the vision. But I do think our public services have an opportunity to support our Welsh fishing industry in the way I've already outlined.

Thank you, Minister. And then you just mentioned creating a vibrant fisheries industry, but that also is about the future, and I think, as we all know, it can be a very precarious industry. It's a very tough industry. I think that there is a lot of worry in the industry. So, how is the Welsh Government going to encourage entry, so that we can continue to have people wanting to go into the industry as well?

This is an area I've taken a specific interest in. So, I think we've made great inroads in agriculture around progression, new entrants, women in agriculture and farm safety, and we just didn't see the same level that I would want to see in our fisheries. So, we've had a big push on that over the last two or three years. Again, we need to work with our stakeholders to make sure we encourage entry to the industry at all stages of career. It is precarious. Unfortunately we lost a fishing boat—I'm trying to think when it was now—about 18 months ago, up in north Wales, and it's just tragic and so we have to do more around the safety aspects and we've done that. We've looked at how we can improve working conditions; we've looked at the standards to how we can develop, to show it's an attractive career path. It's great that we've got a new group now, called Women in Fisheries network. I went to the launch of it, I think it was back in September of last year. It was great to see the enthusiasm of so many women to be involved in the fishing industry. I really want to make sure there are opportunities for that.

We had some funding that—. It was an EMFF window. What we did was announce some funding to make sure we could support fishers and processors who wanted to add value to their product; again, trying to show it's a really attractive career. It's important that we work with the Welsh Fishermen's Association, which Welsh Government funds, and we just recently funded a scoping and feasibility study for a new entrants scheme with them. The funding came from—. I think it was a foundational economy grant; I think it was the backing local firms fund. Yes. And so that's one way, hopefully, we will be able to encourage new entrants too, having that feasibility study coming forward.

Fantastic. Thank you, Minister. Thank you, Chair.

Thank you, Sarah. If I can bring Luke in at this point. Luke.

Diolch, Cadeirydd. I think of course it's important to understand how the sector has an effect on the environment and marine biodiversity, and we know that the sea is going to be incredibly important as we look to tackle climate change and I know the sector is acutely aware of that. I'd be interested if you could provide further detail on plans to conduct research into the impact of fishing activities and aquaculture on blue carbon habitats.

Thank you. I work very closely, obviously, with the Minister for Climate Change in relation to this. We're obviously very committed to protecting our seas, recognise the importance of protecting, restoring, and of course sustainably managing the blue carbon habitat. I was very pleased, when I was Minister with responsibility for the environment, to bring forward our first national marine plan. I think that was a really important step in protecting blue carbon habitats.

We've got—. Under development now, we've got an evidence base on blue carbon and again, the JFS commits us to a fisheries policy that works with the scientific community. There are gaps, I think it's fair to say, in the UK's blue carbon evidence base; we need to address those, and I know the Minister for Climate Change—. At COP26 in Glasgow last November, there was an ocean action day, and she agreed to establish a new cross-administration UK blue carbon evidence partnership, and that will then progress the evidence base on blue carbon habitats in UK waters, and I think the work to establish that partnership is ongoing.

We have our own Net Zero Wales, as you're aware of, Luke, and that commits us to working with Natural Resources Wales and others to develop and deliver a shared blue carbon evidence plan through the Welsh marine evidence strategy, which takes us up to 2025, and that includes the impacts of human activity, and, of course, climate change itself, on blue carbon habitats and emissions. So, I think what we need to do, and we have begun to do this, is build a much clearer picture of our blue carbon in Welsh waters; we need research, we need surveys, and all those are being undertaken. But I think we need to work perhaps a bit closer with the industry as well to understand the impacts and the solutions.

Thank you. I was wondering as well if the Government had a specific strategy to support the reduction of sea bed abrasion, because we know that, of course, damage to the sea bed itself can release carbon.

Yes. So, as I say, we work with our scientists. Certainly, when I was responsible for marine environment, Bangor University, we worked very closely with them to make sure we had the very latest scientific evidence and advice.

So, the work on understanding how we can reduce sea bed abrasion and reduce the impact on blue carbon habitats is still ongoing, in other words?

Yes. Always, yes.

Diolch. Okay. Thank you.

And part of the evidence gathering that we have, in relation to what I've just outlined, will be part of that as well.

Diolch.

Okay. Thank you very much. If I can now bring back Sarah Murphy. Sarah.

Just quite a broad question, really. Do you think that it's a fair representation of the aquaculture sector in the draft JFS?

Do I think there's a fair—?

Do you think it is a fair representation?

Of the aquaculture sector? Yes, absolutely. If you look, it includes aquaculture policies. And the objectives that we've set out, they all apply to the aquaculture sector. There is a section entitled aquaculture for specific policies—that's very difficult to say. Aquaculture is referenced throughout the whole of the JFS document. It's included in our evidence policies, it's included in marine litter, it's included in coastal and freshwater processing, marketing, climate change, so, you know, it's absolutely there throughout the whole of the JFS. But I have to say—and it took me a little while to learn that when I came into this portfolio—aquaculture and fisheries management are very different. There are lots of synergies, but they are very different and you need those specific differences in the policies. They're at very high level, I think, the policies set out in JFS. And, again, if you go back to the national marine plan, which I referred to before, sustainable growth of aquaculture is absolutely a key element of that plan. So, we're very aware of that.

We're speaking with—. We're going to be hearing evidence from the fisheries sector and environmental groups this afternoon. What do you think they're going to tell us about the representation of the aquaculture sector?

Well, I hope they will say that they can see it very clearly in the JFS at a Welsh level. I mentioned that I met with the aquaculture sector just before Christmas, so they're a very, very important part of our fisheries in general. But, as I said, they are different, and it's really important that we hear their views. So, I hope they will tell you that they feel they were represented in the JFS. If you do a word search, you will see it a lot and it's in every aspect of the draft JFS.

Thank you. And just a quick follow-up question. Certainly, I think the media plays a part in this, but then I think we can all play a part in this as well—the way that aquaculture is represented to the public and in the media. You see this in other countries, for example, salmon fishing in France and in Norway is really negatively portrayed. So, I was just wondering what your view is on that, really, and how the media represents the sector? And is there anything that the Welsh Government can do and we can do to help with that?

Well, I think, from a Welsh Government point of view—. I mean, the media are the media and I can't think of anything specific that's ever come across my desk where the sector has felt the media have badly portrayed them, but I think, from a Welsh Government point of view, there's a lot we can and we do do. I mentioned about the seafood clusters. So, we have this cluster network for our food and drink. I forget how many clusters now. The last one was the drinks cluster, I think; we've probably got about 10 now. I'm a really big fan of cluster policy in the way you develop policy. I think cluster networks are really important, where you get all these different companies and stakeholders coming in together in a non-competitive way. I've always been really impressed. I think it started back in Catalonia. Unfortunately, I haven't been able to take it into any other aspect of the portfolio. We have a specific seafood cluster, so I think that is one way Welsh Government makes sure that we fly the flag for that. I mentioned they're part of the vision for the food and drink sector.

As individuals, I think we can all promote it. I remember, probably about three years ago now, on seafood day, we had a fish and chip van, for want of a better word, down in the basin, and all Members—Assembly Members at the time—went out and had fish and chips, and then we had, at the Pierhead, a fantastic display, particularly of seafood, there, and we asked members of the public to come along and view it. So, I think, from a Welsh Government point of view, there's a lot we can and do do. Gulfood is on in Dubai next week. I'm trying to think if one of the companies—. We've only got eight companies going because, clearly, this is our first in-person overseas event since the pandemic, so it's much smaller than it usually is. But I do think, as a Government, we do fly the flag for them. As I say, the media is a different kettle of fish, pardon the pun, and we need to—. Obviously, if there's anything incorrect, we need to address that.

Thank you, Minister. Thank you, Chair.

Thank you, Sarah. If I can now bring in Sam Kurtz—Sam.

Diolch, Cadeirydd. Minister, can I just go back to a point you raised in your previous answer to me with regards to joint working with other UK nations on fishing policy? Do you feel that that's one of the strongest elements where you've seen cross-governmental collaboration with regards to policy in your portfolio?

Yes. Yes, I do. And for the reason that I said. We are used to going to December council in Brussels every year—or, we were until two years ago—and certainly you were literally up all night trying to get the best deal, obviously, from my point of view, for Wales, for the UK. And we worked very, very closely with DEFRA, with Scotland and with Northern Ireland, so I do think, in some ways, my portfolio as a whole—. And fisheries is certainly the strongest place where we work cross-Government. If you look at the common frameworks that are now coming out following leaving the European Union, it was kind of based on the fisheries policy work that we'd done. So, we've had two years, now, of coastal state negotiations and I think we learned a lot by going to December council and I think my predecessors would say the same. So, yes, I do think this—. Other Whitehall departments would do well, I think, to look at how we've worked on fisheries over the years.

Okay, thank you. That's really helpful. I know it's been touched on in this session already, but are the ambitions and priorities of all the Governments with regard to fisheries aligned in what they're trying to achieve with fishery policy?

So, the JFS obviously commits us to very similar policies—the sustainable management of fisheries et cetera. So, there might be slight differences because of devolution, but I would say that this is an area where we are more closely aligned than probably anything else in my portfolio, yes.

Excellent. Thank you very much. Just finally, Chair, what further information is there on how the fisheries management plans will be taken forward? And what consideration is given to the need for a Welsh-specific regional FMP?

I mentioned in my opening remarks around the 43 fisheries management plans that are in the JFS and they really will help design bespoke, flexible, transparent approaches for a number of our key stocks at the most appropriate level for practical management, tailored to species, to locations and to fishing activities. I think the proposed list of FMPs in the JFS reflects what the Welsh Government and the other three nations consider to be the priorities for the next five years. It's quite short term. So, for some stocks, we already have a joined-up approach to management due to the geographical extent of the stocks, so it really makes sense for us to produce joint FMPs, but, for other stocks, where appropriate, we will, or we are certainly proposing to, produce Wales-only plans. So, it's part of the consultation and I really welcome any feedback on the proposed FMPs. So, looking at whelks, looking at cockles and crabs and lobsters, we will have Wales-only plans there. They're going to be really key tools for delivering our sustainable well-managed fisheries that meet not just our national but also our international commitments. So, the FMPs are really important; they're detailed plans, they'll be produced at species level and they will be developed jointly with the other UK administrations where we think—. But I mentioned those four for Wales only.

Diolch.

Thank you, Sam. Minister, you mentioned earlier on that you're hopeful that the memorandum of understanding will be published some time this month. Was it the intention, then, that the memorandum of understanding would have been published at the same time as the joint fisheries statement?

That was certainly what I understood would happen, but, as I say, I've signed my bit off, but not everybody has.

But you are hopeful that it will be published some time this month.

Yes. I don't know if Gareth's got any specific time. I was told February. I'm trying to think now. The end date for scrutiny by the four legislatures is 24 February [Correction: '25 February'], so I'm certainly hopeful that it will be done before that. You've been quite early, as I say, in your scrutiny. I don't know—. Gareth, have you got a date?

Nothing I should commit to here, Minister, because it's outside of entirely our control to give. But, at the moment, there are planned dates for the middle of February. We're hoping that it'll be around then, rather than slipping towards the end of the month.

Okay. Thank you very much.

We are hopeful—. We're certainly hopeful about the time, because we had committed, from the Fisheries Act 2020, to publish the JFS I think by November this year and I know that we're on track for that, so, just to reassure Members.

Okay. Thank you very much indeed for that. Are there any other questions that Members would like to ask? No. Well, we therefore come to the end of our session. Thank you, Minister and thank you to your team as well.

Thank you.

Thank you for being with us this morning. It's been a very useful session. A transcript of this morning's proceedings will be sent to you for accuracy purposes and, if there are any issues, then please let us know. But, once again, thank you very much indeed for being with us this morning.

Thank you.

Thank you. We'll now take a short break to prepare for the next session. Thank you.

Croeso nôl i gyfarfod y Pwyllgor Economi, Masnach a Materion Gwledig. Symudwn ni nawr ymlaen i eitem 4 ar ein hagenda. Dyma ein hail sesiwn banel i gymryd tystiolaeth ar ddrafft ymgynghori'r cyd-ddatganiad pysgodfeydd. Gaf i groesawu ein tystion i'r cyfarfod yma? Diolch ichi am eich presenoldeb heddiw. A chyn ein bod ni yn symud ymlaen yn syth i gwestiynau, efallai y byddech chi mor garedig â chyflwyno eich hunan i'r record, ac efallai gofynnaf i yn gyntaf i Trevor Jones i wneud hynny.

Good morning. My name's Trevor Jones. Obviously, I'm representing the Menai Strait Fishery Order Management Association this morning, which is a body formed to regulate and control the management of the mussels industry in the Menai strait, but also another hat that I wear quite a lot is as a safety training officer for the Welsh Fishermen's Association. Thank you.

Mr Evans, would you like to introduce yourself just for the record?

Yes. Thank you, Chair. My name is Jim Evans. I represent the Welsh Fishermen's Association, which is the umbrella organisation for the fishing associations throughout Wales.

Well, thank you very much indeed for those introductions. Perhaps I can just kick off this session with a general question first of all: perhaps you can just outline your involvement in the development of the joint fisheries statement, and perhaps if I can start with Trevor Jones.

Would you mind if Jim went first on that one, please?

No, by all means. Mr Evans.

Thanks.

Thank you, Chair. And I understand, for Trevor, it's not been particularly engaging from the aquaculture point of view. But, from the catching perspective, it was fairly clear through the Fisheries Bill process, or the passage of the Fisheries Bill, what the purpose of the JFS was and the various relationships there. So, in terms of how that engagement took place, following the enactment of the Fisheries Bill, the stakeholder process was—. Obviously, the drafting of the JFS is developed jointly by the fisheries policy authorities, and the stakeholder process contributing to the draft was generally led by the Department for Environment, Food and Rural Affairs, through the community of interest group. We took the conscious decision, because that was a very remote process and there was a phenomenal amount of organisations involved in that, that that would—. Given the urgency of the situation at the time, with leaving the EU and COVID and the pandemic, and all the issues that resulted from that, we took the decision that we wouldn't engage through the community of interest process and that we would focus our time and attention and energy on the detail that was developed following the consultation, or the publication of the consultation. And, again, I congratulate the committee for leading on this so quickly, because the consultation was only launched two weeks ago, and I have to admit, for a 12-week consultation, it's still very much at the early stages of examining the detail. But, hopefully, I can answer most of your questions.

Beyond that, in Wales—again, it's been more the fisheries policy authorities that probably have been engaging with the drafting, with the exception of the community interest—so stakeholder engagement has probably been more by way of limited sessions. And, in Wales, there was one in October where marine and fisheries officials presented, basically, the background to the JFS, the timetable, with a general update on the JFS process, including a Q&A. But, I have to say as well that, through our UK colleagues, we've also been actively engaged in industry sessions with DEFRA where we've probably had the same kind of high-level updates on progress. So, that would be about it, from my understanding.

So, were you generally satisfied then, Mr Evans, that you were given an opportunity to actually engage with this process?

I would say, based on what I've just said, I think that I'd be comfortable with that. I think, given the complexity of the JFS—and I would say this, wouldn't I—I would have preferred, maybe, some more direct discussions, certainly around the fisheries management plans, and I know we'll pick that up later on, but, yes, that would have been somewhere I would have welcomed more direct discussion, perhaps at a devolved level.

Okay, thank you very much indeed for that. Trevor Jones.

I think Jim's said enough on my view of that, and I think this is a really great opportunity to engage with what is an overarching piece of work that will be enacted later on in whatever form. My only comment is that it's not so much engagement with the process of the development of the JFS, but the thing that jumps off the page for me throughout the document is the relative silence over the role of the fishing industry in shaping its own destiny in the document. I think we're referred to as 'stakeholders', and that's not really the correct description of the fishing industry in this context. We have had a very good relationship with the administration since the inception of the regulation of fisheries being taken in-house by Welsh Government, and co-management is key to how you make this a success. I can point, through my national and international work with fishing and safety, to the way that the aspirational side of the JFS is enacted through strong fishery-science partnerships and data gathering on a daily basis, say, in Norway, Iceland. The northern hemisphere certainly have got co-management nailed. This is a small nation, with not a million people doing a billion things, and I think it behoves us to try and emulate that level of intervention in terms of collaboration and making sure that we're all singing from the same hymn sheet when it comes to maximum sustainable yield. We don't want to see an unwelcome gap developing between the rule makers, as it were, and people on the ground. I'll stop there.

Okay, thank you very much indeed for that. If I can now bring in Hefin David, Hefin.

I think that largely answers my question, because I was going to ask about the quality of partnership working with the Welsh Government. I wonder if there's anything else to be said there. Does the JFS suggest that that will be enhanced in the future? I think, Jim, you said it was probably too early to say and it needs more detail. Any further comment on that, really?

Well, I could add a little bit to that. Again, when you look at the JFS and how it refers to partnership working, I think that includes a plethora of things that would be—[Interruption.] Apologies. There would be a plethora of things: that would be the national policy authorities; obviously, the devolved administrations; the various agencies; the other coastal states, international partners, but then the question that you're asking is how does that translate into partnership working with Welsh Government. I think, as Trevor said, we've got a very good relationship there. What the JFS does, although it isn't explicit in how it aims to achieve that, is that it does set out how we work together and how we identify that path, so that not just Wales, but the whole of the UK are on the same path. There might be devolved differences in how we manage those responsibilities at a regional level, if you like, but, essentially, we're all on the same path. And I think the important thing about this statement is whereas duties to develop and implement sustainable fisheries management haven't really been adopted through the Marine and Coastal Access Act 2009, they are very clearly a duty under this. So, it is a seismic change, and along with that seismic change there needs to be some careful thought about how that partnership working evolves. There is a stakeholder forum. Having said that, it's been under review for some time; it's referred to as the Welsh marine fisheries advisory group. Interestingly, we had a letter recently from the Minister for Rural Affairs and North Wales, and Trefnydd, that sets out, I think, an initial communication to the members of that group what the future stakeholder engagement structures might look like, and whilst we're yet to see the detail of that, I think that's a very important development that might help to shape that discussion, perhaps, and answer your question more accurately.

Okay. That's really helpful and does flesh out your earlier answer a bit more. Trevor, did you want to add anything to that, or are you happy with what was said?

No, I'd just like to reinforce what Jim said. We had a belated announcement from the Minister yesterday regarding the reinstatement of the Welsh marine fisheries advisory group, which has been a useful tool, and given the requirements of this statement and how we're going to go ahead in the future, I think it needs to have considerable resource thrown at it to make sure it's not just a talking shop, that whatever advice comes from that group is openly and robustly debated and acted upon, if necessary, by the administration. Thank you.

Okay. I think that's fine, Chair.

Thank you, Hefin. If I can now bring in Luke Fletcher. Luke.

Diolch, Gadeirydd. I was just interested, really, in your views on the co-ordinated programme of data collection, including the planned use of vessel monitoring systems and remote electronic monitoring. In our previous session, the Minister mentioned her intention to introduce statutory instruments to require all vessels operating in the Welsh zone to have monitoring systems, so I'm very keen to hear your views on this. I'll start with Jim Evans, and, of course, Trevor, if you have any additional comments, by all means come in.

Thank you for that question. So, to answer the first part of that question, then, on the co-ordinated programme of data collection, obviously the scientific and evidence objective is fairly well set out within the JFS, and as a fundamental part of the fisheries objectives and shaping and forming any future fisheries management plans. But, the co-ordinated programme, from what I can gather from the document—or as much as I've read so far—will be through a specific UK work plan, and that will be in accordance with the fisheries framework. Now, the UK work plan, I can understand why that would make sense to do it at that level, but I haven't seen that, so I don't know what's in it. A number of the fisheries plans that have already been proposed have those statutory data collection requirements already attached to them. They would generally be referred to as quota species. The ones that are less well understood are the non-quota species. So, there's a significant body of work to do there and whilst that is—. So, it's unclear where the focus is. I'm pretty sure, given the provisional or the proposed list of FMPs, that they're thinking in terms of the evidence collection to inform those plans would be consistent with those that have been selected.

The issue I would raise—and, again, it's probably going to be hammered out in the fisheries framework, which I understand is a memorandum of understanding between the devolved administrations—is there will obviously be a cost associated with that evidence collection, and there will be resource issues, because one thing is clear: whereas marine and fisheries in Wales has been constantly challenged with having sufficient resources, I think that, by leaving the EU and the additional legislative components of that, particularly in regard to fisheries, and, obviously, a new Act to prepare for, and who knows, possibly even a Welsh Bill at some point during this Senedd term, these all require a lot of resources, certainly from a policy side, and the science side is key to understanding and supporting the policy directions and so on and the outcomes. So, I would question whether or not—. Because there's no real mention or nothing specific about what the costs of these will be, and I think that's an important thing that needs to be understood. Again, we have no sight of the fisheries framework, so I don't know what's included in that, but I'm guessing there's some correlation between those things that need to be agreed at a high level.

Beyond that, you asked about the VMS and the remote electronic monitoring. I think it's probably easier to understand this at a Welsh level. The majority of the Welsh fleet—90 per cent of the Welsh register—is under 10m, so generally small vessels. So, I think it would be unrealistic to expect there to be cameras on every vessel, because the physical monitoring of that every working day would be unmanageable and impractical. But what perhaps is less understood—. Maybe the Minister's statement earlier in regard to the inshore vessel monitoring system—. That legislation is coming in this month, I think, next week some time. On 15 February I believe. But what that will do is capture all the vessels under 12m on the Welsh register, and it will provide that level of data for all the various activities for that segment of the fleet. It already exists and has been a statutory requirement for many years within the over-15m fleet and, more recently, I think, in 2013 it became a statutory requirement for vessels 12m and over. REM is currently used in that respect, because that will, obviously, monitor a vessel. The purpose of the introduction of VMS into the vessels under 12m is it will have a 10-minute polling frequency, so it will report every 10 minutes where the vessel is 24/7.

Alongside the other REM that has been in place for just over a year now within the under-10m fleet is the catch app, which is a statutory reporting mechanism that reports all the fish caught per trip, by species, by gear type and so on. Given the earlier point about the co-ordinated programme of work, I think these two components with remote electronic monitoring are going to be hugely valuable in helping us to refine and improve our confidence around data and stock information going forward. We are working with Bangor actively at the moment, and have for some time, on developing a camera system that will play an important role within the sentinel fleet that records all the relevant data essential to underpin stock assessments, for example. So, that's another useful and practical use of REM for the under-10m fleet.

But bearing in mind that there's that question about vessels over that and other vessels that are non-Welsh, if you want to call it that, that operate in our waters, REM, to a certain extent, applies to those vessels already. Could that be enhanced or improved? I think there's probably an argument for that, and there have been trials and tests of camera systems throughout the UK and elsewhere in Europe that I think are shaping that discussion. There certainly is a role for that at some point, but I wouldn't have said that was appropriate for the Welsh fleet.

Before I move on to another question, Trevor, did you have anything you wish to add there?

I do, actually. I think data collection is absolutely paramount to all of this. My own industry relies on peer-reviewed science to underpin our activities, and I think the Welsh Fishermen's Association have demonstrated that we are a long way down the path to achieving this with the catch app. I was, until last year, a Marine Management Organisation appointee at the North Western Inshore Fisheries and Conservation Authority, wearing an aquaculture hat up there, and one of the achievements, I think, of the IFCA was to make sure that enforcement vessels were also dual purpose, i.e. they were equipped with very good ground discrimination equipment that was left on permanently, and adequate facilities for scientific work to take place in terms of lowering and retrieving equipment from the sea bed, towing trawls, and all that sort of thing. I think it would be a great asset to the nation if the patrol vessels that we recently acquired, the enforcement vessels, could also be enabled in a similar manner. Because data collection is referred to within the JFS, and I think it absolutely underpins everything that we've got to do. So, the more efficient means we can lay our hands on to achieve that, the better. Thanks.

Of course, you mentioned the memorandum of understanding, and we're still waiting on its publication. I think that will help clear up a lot of things in terms of how this will practically work. In the last session, the Minister mentioned that she's hopeful that it could be this month, but couldn't put a date on it. But moving on specifically to the Welsh Government's engagement on this issue, you mentioned that there were potential resource issues down the line. Would you say that there would be room for improvement in that case, in terms of Welsh Government's engagement on this?

Shall I answer that question?

Yes, that was directed to you, Jim, sorry.

I think more broadly, or to make a broader point, resources have constantly been an issue. I think because fisheries was taken in house, as Trevor referred to earlier, back in sort of 2010, it's been slowly realised how much resource has been required in years post that date, if you like. I think with every change to legislation, with any change to wider objectives, whether that was at an EU, UK or Welsh level, these all require that additional resource, and I'm talking about human resource, essentially. I think we regularly hear that resources are an issue. We're not questioning that, we're trying to apply some logic to that. I think there must be a very clear case now, because we now have statutory objectives, that there may very well be some consequentials that will go along with that, and that may apply to the other devolveds. But if we are struggling with resources and there's no headroom in the budget to accommodate that with what the Welsh Government already receives, then that might be an avenue to help prop that up, because some of the challenges we've got in terms of data collection are fairly significant, and as I said when I referred to the MOU and the UK work plan, until we see the details of that, the scale of that cost or the scale of that task won't be clear. So, that was just a thought that I think is certainly worthy of serious consideration, anyway.

Thank you, Jim. Trevor, any additional comments?

No, not at all. Jim has covered it. Thank you.

Brilliant. Thank you for that. Diolch, Gadeirydd.

Thank you, Luke. If I can now bring in Vikki Howells.

Diolch, Chair. Good morning, Jim, good morning, Trevor. My first question to you is about the proposals on encouraging the circular design of fishing gear. I was just wondering what your views are on those, really.

Thank you. Do you want me to go first?

Yes, that's fine.

Sorry, I don't mean to hog this. Sorry, Trev. Looking at the context of the JFS and how it sets that out, I think the language is very sensible. I think it's important first and foremost to understand that gear loss is not an intentional act. Largely, the one element you can't control is the weather, and that inevitably creates circumstances where certain issues or losses may occur. But, fishermen will always make every effort to retrieve that gear. And I think, given the cost of fishing equipment these days, you would have to, because if you don't have any equipment, you don't have an income.

I think in terms of the way that the JFS sets out that heading under 'marine litter'—and I hope I've understood it right—it seems to be talking about—. In the event of loss, it's perhaps referring to absolute loss, where something perhaps isn't recovered or can't be found. I think it's important for Members to understand that, sometimes, with static gear—and that would capture potting, netting and long-line fishing, that kind of activity—after a weather event, that gear, whilst all of those locations are plotted on electronic charts so that you can identify and find them, and then, if anything moves slightly, they're very easily and successfully recovered, there are occasions in severe weather events where they can move significant distances. And so that's where we think the focus should be.

If a lobster pot, for example, is in the water for any length of time, because you haven't got an effective way of locating that, you may through different states of the tide find the gear at some point in a different place and recover it that way. But to ensure that that equipment is not then creating any environmental issues in relation to, perhaps, ghost fishing, which is the term that's generally used, what the industry has done to a large extent, and more importantly what is going to be rolled out I think through Welsh Government, is voluntarily the industry has put escape gaps into lobster pots, which allow all the juveniles that are captured within that pot to escape at all times. The beauty of that is that the means of fastening those escape gaps to the pot are degradable, so, over time, they would degrade and then that gap would open to leave a large aperture. The intention of that would be that all the juveniles would be able to get out if that gear was on the sea bed for any length of time. And, importantly, if it was not possible to recover it, then the failsafe would be that that hatch would open up completely and let any catch out.

There are also other trials that have taken place and individual initiatives where they use what they call biodegradable shock cord, which is basically an elastic material secured by a biodegradable hook that then keeps the door of the pot closed. Obviously, in the same way that the fasteners securing the hatch would degrade and leave it open, that would degrade and leave the door open. So, those are the kinds of initiatives that are currently happening. There is also a plan for escape gaps and all the relevant biodegradable components to be rolled out to the whole of the Welsh fleet and, to some extent, even including recreational pot fisheries as well.

Great. Thanks very much, Jim—that was really useful. Trevor, is there anything to add from your perspective?

My industry doesn't have waste, I'm sorry. Certainly, Jim's covered it all, I think.

Right. Thanks very much. Thanks, Chair.

Thank you, Vikki. Before I bring in Sarah Murphy, I think Luke Fletcher just wants to come in on this point. Luke.

Diolch, Gadeirydd. I'm conscious of time and I don't want to eat too much into my colleagues' time, so, hopefully, the question will be fairly straightforward to answer. But, in the first instance, just as an observation, I'd be keen to understand in the future whether or not there is any timescale for the roll-out of degradable gear. I think that's going to be quite important, going forward. But I was wondering actually if, Jim, you'd be able to give any sort of figure for how much gear is completely lost or unrecoverable.

That is a very contentious issue. I'm aware of the tonnages that are being promoted in terms of a global estimate; I'm not entirely convinced of that. But I think, at a local level, to answer your question honestly, I will say 'no I don't', but I would add that there needs to be two things really. I'll pick up on your first question in a moment, but we need to understand that Wales, and certainly the west coast of Wales, is almost like a catcher's mitt for the Atlantic, and so a lot of the material that ends up on our beaches, whilst that's an issue recognised and needs to be resolved, in terms of fishing gear or equipment, or plastics, that doesn't necessarily originate here. And this is the whole issue of marine litter. We've got to focus on what we can do, and it goes back to the question that I answered earlier on how you improve that. How do you get to the stage where you make that sort of collection of stuff, the flotsam and jetsam if you like, part of your daily thing? A lot of fishermen do that, and a lot of fishermen will already store any disposables or anything they come across within their gear. When they're hauling pots or nets or what have you, they would normally bag that and dispose of it responsibly.

So, like I say, I think the percentages—and, forgive me, I won't say I'm absolutely confident of this—of plastics in the sea, whilst we're talking about the fishing industry here, or fishing gear, 80 per cent of plastic in the sea, I believe, is generated from land. So, that gives you an indication of what the scale of the problem is that we have to deal with. We have to understand the source and where that plastic comes from before you can find a solution, otherwise fishermen will basically be the bin men of the sea. We need to stop it going into the sea, and, more importantly, we need to do more to stop pollution going to the sea because that is an even bigger concern than plastic because it isn't visible.

So, on your first point about degradable gear, I think, for the commercial sector, that is a challenge because, obviously, that equipment needs to be long lasting and hard wearing, and providing that that equipment is used and fished responsibly, there should be no reason why that can't be disposed of in a responsible way. I accept that the issue around gear loss is a conundrum, but I don't think it's realistic to think that you could make commercial grade pot ropes out of hemp and things like this. That would be both impractical and not cost-effective. So, I think there's a lot of thinking to do on that. I hope that answers your question.

I would tend to agree with a lot of thinking there. I can see Trevor wants to come in, and then I'll hand back to the Chair.

Very briefly, from my own experience of having been a potter, netter, trawler, liner, it was a matter of pride not to leave anything behind that you put in the sea. And I can count on fewer than the fingers of one hand the number of times that I lost equipment, and that was due to the weather, and it was only a few cleats of nets; I never lost any prawn pots, lobster pots, anything of that nature, because, as Jim pointed out, it's in nobody's interest for that to happen. And I think the same is true for other fishermen in Wales, and the amount of gear that they lose is infinitesimally small. Thanks.

I now bring in Sarah Murphy. Sarah.

Thank you, Chair, and thank you, Trevor and Jim, for being here today and answering our questions for us. It's fascinating, and you've been very thorough; it's very much appreciated. I asked the Minister this beforehand as well, because I think we're all aware that the fishery industry is very precarious, is very tough, and that some people are maybe choosing to step out of it now because of some of these things. So, in order for us to ensure we do have a thriving and sustainable fisheries industry, how can we ensure that people want to stay in the industry and also that they want to come into the industry? What are your views on that? Do you think Welsh Government is doing enough? Do you think there is more that they could be doing? I'll come to you first, Jim, if that's okay?

Thank you, Sarah. That's a very, very good question. I must admit there is mention of new entrants within the JFS but there's no detail that sits behind that, and, as Trevor mentioned earlier, there is mention of well-being, health and safety at sea. There's not enough detail in there for me in that regard, and I think there is certainly a risk of there being elements of confusion, because health and safety, certainly safety of fishermen, is not devolved either. So, policies are made at a UK level, and I can understand the sense in that, but it's almost like we're at the very end of someone's reach, and there's always difficulty when policies and ideas are being developed that you perhaps might not feel best reflect your needs or concerns. So, there are always challenges in that area.

But the point that you raised, and they sit alongside each other, is absolutely right—we do have a high average age of fishermen in Wales. Probably, I think, from Seafish economics data, we have the highest average age of fishermen in the UK, which, as you point out, for sustainability and for maintaining these cultures and economic contributors that are so important to coastal communities, is a real challenge. But how do you make something attractive to youngsters these days when there are so many other opportunities out there? That's not to say there aren't youngsters interested; I think we need to do a job of work to define a career path for that. I think this is an area where Welsh Government can have a much stronger role.

Interestingly, we have very recently undertaken a feasibility study on how to create an appropriate new-entrant scheme for the fishing industry in Wales. That was kindly funded by the economics department—forgive me, I don't know the full title—and that is due to be published in the end of March. Now, the intention is that will give us the career path hopefully, because the intention would be, if you have an apprenticeship scheme, you achieve all the milestones through that apprenticeship stage, then you'd have an intervention to help support that intervention scheme through the apprenticeship stage, and then, beyond that, once you've achieved those objectives, perhaps possible funding would be available to help that individual, if they choose, to then move into being a fishing business as well. So, we're taking it from a hard-labour, difficult, challenging job—not that that changes any of that—to make it safer, make us more informed, and we can have a more holistic training approach. But, at the end of the day, you would have transferable skills and qualifications that are certified, and then ultimately you have prospects—you can then not be stuck on the deck for the rest of your days but you have the option of perhaps being a business operator yourself. But you would have all the advantages of that appropriate training, to ensure that everybody understands the objectives that are being set out through the Fisheries Act and what part we all play in achieving that.

Thank you so much, Jim. That's a fantastic answer. Trevor, did you have anything you wanted to add?

Just briefly, it's a symbiotic thing, isn't it—the more successful the industry is, the more people that want to go into it. I think this statement and the requirements of the Act for us to maintain development and make sure we've got MSY, conserve stocks, all those sorts of things, give us a perfect opportunity to increase and nurture the industry and bring people into it. I really look forward to that happening.

Thank you. Yes, Jim.

Sorry, but again I think it's worth explaining that, in addition to what I just said, the study that we're undertaking is in relation to the catching sector, but I think in the context of the JFS, it considers or speaks to the whole of the supply chain and obviously processing, and there'll be other specific training aspects and maybe support and so on that would be required there to possibly give a similar career path. But, I think I'm not qualified to answer what the needs of that sector are and I think it would be probably, with respect, maybe an area that perhaps the committee could explore with exporters, retailers, processors and merchants and so on.

Thank you, Jim. And I think, as a committee, we're going to be very interested in the findings of that feasibility study. I think it's really good that you've participated and that you've been doing that, and, again, just to say that I think both of you have shared today just how enthusiastic you are about getting people to come into the industry as well, and to show and to promote it as a good place to work. So, thank you. Thank you, Chair, thank you very much.

If I can bring Vikki back in. Vikki.

Thank you, Chair. Yes, just a quick question really, because I know we're short on time, about how we can encourage the consumption of more locally sourced fish and seafood.

Thank you. I think, as I was explaining earlier, consumption and marketing—I have to be honest—those are not my area of expertise, and if I knew the answer to that, I would gladly share it. This has been a constant theme and obviously there's a lot of work going on to try and explore that and how to improve that, some of which has been as a result of trade disruptions, and others have been a direct result of the impacts of the pandemic, which has resulted in more direct selling.

There have been, I think, a mixed bag of results there. For some people, that's worked really well; for others, not so well. Is it the answer in its entirety? Probably not. And so, what else would fit into that? And I think, although I'm not entirely clear as to how this would work, given the species that we catch and land in Wales, there may be a place for certainly reducing food miles, which is obviously a big challenge now in terms of climate change and net zero objectives and so on. How do you shorten those supply chains? So, you make sure that, rather than products in Wales being shipped all over the country or even abroad and so on, that maybe to an extent—I'm not saying it would solve it altogether, but to an extent—more direct selling of local products. I think there's a lot going on there that we can learn from. But, equally, public procurement essentially has a part to play in finding, shall we say, avenues for recipes that are perhaps either underutilised or for species that we catch here in Wales that are consumed elsewhere in the UK, and that could be a healthy, nutritious food resource for schools, hospitals, and so on. There's something to think about there possibly.

Thanks, Jim. Trevor, any thoughts on this conundrum?

Yes, certainly. We've got this remarkable resource in Wales called the Seafish Wales Advisory Committee, which a lot of people contribute to. In terms of the advice being acted on, sometimes it's fallen down a little bit, but certainly I was speaking to the new Seafish Wales appointee—'Miss Seafish Wales', as we call her—yesterday, about how we can inculcate cultural change in our perception of what's good to eat or not in Wales, because it's a sad fact of life that what we catch, we export, and what we eat is imported.

Now, in Scotland, under the auspices of the equivalent seafish authority, they spend a lot of money going into schools and turning the children onto fish and fishery products and shellfish—not raw, slimy horrible fish, because that wouldn't do, but it was dressed up in breadcrumbs and batter. It's a very good way of going forward, so we're actively discussing that for the next meeting. Quite how successful it will be or not, I know not, but one thing's for sure: the breakdown in the supply chain that this pandemic has caused has resulted in a much greater consumption of local seafood, and fishermen retailing locally, rather than wholesaling, supplying local restaurants and hotels. And we've seen the rise of a few fish suppliers locally on the back of that, and it's only to be encouraged because, as Jim pointed out, it's much more ecologically sound, et cetera. I'll stop there.

Thanks, both.

Thank you, Vikki. If I can now bring in, finally, Sam Kurtz. Sam.

Thank you, Chair, and good morning, both, Jim and Trevor. Thank you very much so far. This has been incredibly helpful for formulating our thoughts around fisheries and fishery policy, but can I start with a pretty simple question? Would you say the Welsh Government's track record over the last 10 years has been a success or a failure? Jim.

Well, thank you for that hospital pass. I would—. Yes. How to phrase this? I think, clearly, if we all had a crystal ball, would we have done the same things in the same way? I would like to think we wouldn't. Having said that, I don't think that looking back is going to take us forward either. I think we all need to study or examine what's happened in the past and how things could be improved and learn from that, but what I do think, and perhaps why we're maybe a lot more enthusiastic and positive about the JFS is that we now have these joint fisheries statements and fisheries management plans that are statutory duties. If I was being more pointed, the statutory duties didn't include so much developing new, sustainable fisheries management previously, but we are now very clearly on a different pathway, and so, being ever the optimist, I believe that we're on a route away from what perhaps could be described as maybe a fairly circular approach, where we just keep arriving back at the same problems, and that we are now more on a purposeful and directed path, and through that will come the necessary plans to effect those changes.

Trevor, can you hear us?

I can hear you, yes.

Yes, yes. Would you like to respond to that?

Yes. I think to answer the question bluntly, the answer is 'no', but there's no point in looking backwards, as Jim has pointed out. The fisheries have the joint fisheries statement, the fisheries management plans. These are all very important steps towards a more agile and effective fisheries management regime and policy than we've ever been used to under the CSP. I hope that the political tensions that might arise through devolved discussions will be ignored. Look, certainly, the people that Jim represents and the people that I work with, and having been an ex-fisherman myself, it's coming from the ground up. We've asked for environmental protection, we've asked for more legislation, the associations have asked for these things and we really look forward to this new way of working as being a means to engender that. So, let's not dwell on what has not been a very good period for us—a whole decade of it—but look forward to something really useful. Thanks.

Trevor, you mentioned there the political tensions. In the Minister's session previously, she was talking about how she sees the strength of the devolved nations and the UK Government working together around the JFS, and drew real positives from that. Do you feel that Welsh fisheries have an equal playing field when it comes to more wider UK fisheries? Are we in a good place here in Wales with the policy moving forward? Do we put ourselves on an equal playing field with our English fishing colleagues, our Scottish fishing colleagues and our Northern Irish fishing colleagues?

I think in terms of intention and conception of where we need to be, absolutely. Obviously, not in terms of catching capacity, size of fleet, but certainly, when it comes to the aspiration of where we need to be as a nation, yes, we're absolutely there, and I think—. I work quite closely with Welsh, Irish and Northern Irish associations in national fishing industry safety group fora, and they are looking forward to us becoming a bit more—how can I put it—productive in the catching side of things in the future. There's a lot of goodwill, certainly, amongst the colleagues I work with from the other devolveds for us to make a good stab at this chance now. Thank you.

Thank you. Jim.

To be honest with you, I think the JFS or the joint statement wouldn't have got to this stage it has, with the ambition that's in it, if there wasn't broad agreement for all parties to sort of work at least in that direction, accepting there will be slightly different approaches maybe at devolved levels. And I think the list of fisheries management plans that's been produced highlights that, but Trevor's right: are we on an equal footing? Does that mean that we produce as much as other countries? Clearly not. Have we got the same size fleet? No, we haven't. Could we do better? Yes, we could.

But would Wales punch above its weight? I think there have been a lot of instances where we have done that, and I think the good examples of that prior to the—pre-TCA then, if you want to call it that—there were good examples at the December council where certain fisheries were even delegated to Welsh Government officials to lead on, particularly bass, given our specific interest in that area. But in terms of quota resources or quota species, we are and always have been a poor relation, and I think that, again, a bigger challenge for Government—not just within the statement, perhaps within the broader TCA, although certainly a challenging issue—is how do we address the overall resource exploitation of Wales's natural resources, or natural marine resources, because at the moment I think the figure is that 83,000 tonnes of fish and shellfish are harvested from our waters annually. You might be surprised to know that only between 5,000 and 6,000 tonnes of that are landed by Welsh vessels. Ninety per cent of what Welsh vessels land will be non-quota species. And it's difficult to see, given the wider challenges of having resilient communities and so on, how we can, within the agreements reached within the TCA, maybe make a better job of trying to address or create a better balance there, so that Wales benefits economically. To go back to Sarah's point earlier, with opportunity, that generates and stimulates investment, and that would be investment in Wales; the economic benefit from that would largely remain in Wales; it would add to infrastructure potential for development there; and any structural funds would be more targeted and more purposeful and produce better longer term results.

I think there's a lot that we need to do and could do better, but I think, given the narrative within the JFS, we're certainly in a better position, and I firmly believe that the Government will listen and will be willing to play their part in helping us to achieve this. But I do go back to the point I made earlier, given all that I've said, the resource issues, I think, are fundamental, because we can't have the division consumed with annual legislative changes that are a result of having retained legislation in terms of fisheries, and yet the rest of the division are having to focus on all these other areas—well, there's nobody to do that work for you or you can just one bit of it at a time. That legal resource and dedicated resource there is also important. So, there are challenges. We're coming from a low point, so I think the ambition is that we can do a lot better. I think it's being able to articulate that to everybody to understand the challenges to make sure that we provide the best results for Wales.

Excellent. Thank you. Chair.

Thank you, Sam. I'm afraid time has beaten us, so we've come to the end of our session. Can I, on behalf of the committee, thank you, both, for being with us this morning? It's been a very useful session, so thank you very much indeed for your attendance. A transcript of this morning's proceedings will be sent to you for accuracy purposes, so if there are any issues, then please let us know. But, once again, thank you very much indeed for being with us today. Thank you.

Thank you, Chair.

Thank you.

And now we'll take a short break to prepare for the next session. Thank you.

Croeso nôl i gyfarfod y Pwyllgor Economi, Masnach a Materion Gwledig. Fe symudwn ni ymlaen nawr i eitem 5 ar ein hagenda. Dyma ein trydedd sesiwn banel i gymryd tystiolaeth ar ddrafft ymgynghori'r cyd-ddatganiad pysgodfeydd. Gaf i groesawu ein tystion? Diolch yn fawr iawn ichi am eich presenoldeb gyda ni heddiw. Cyn ein bod ni yn symud yn syth ymlaen i gwestiynau, gaf i ofyn ichi gyflwyno eich hunan i'r record, a gaf i ddechrau gydag Emily Williams?

Bore da, pawb. Good morning, everybody. My name is Emily Williams and I'm the senior marine policy officer for the Royal Society for the Protection of Birds Cymru, and I also co-chair the marine working group of Wales Environment Link.

Thank you. And Gareth Cunningham.

Good morning. I am Gareth Cunningham, I am head of fisheries and aquaculture at the Marine Conservation Society and acting head of conservation in Wales.

Thank you very much indeed for those introductions, and perhaps I can just kick off this session with a general question: can you both outline your involvement in the development of the joint fisheries statement? And perhaps I can start with Emily.

Yes. We, as RSPB and as a coalition with the future fisheries alliance, have been involved, to a certain extent, as part of a community of interest. So, we have received various e-mails with certain draft elements of the JFS over the last few years, and asked for some input. We also have developed our own position statements about what should be in the JFS as well. And, of course, we were involved in the scrutiny of the Fisheries Bill before it became the Fisheries Act 2020. So, we've had quite a lot of input into discussing what should go into the JFS, through part of the legislative scrutiny of the Act when it was a Bill.

So, we have had some involvement, although I would say it has been fairly limited—not as much as we might have expected—and I think that's been particularly down to the fact that the fisheries group in Wales, the Welsh Government's fisheries group, which is called the WMFAG, has been under review for the last year or so. So, there hasn't been a formal stakeholder group through which to discuss fisheries matters at all, really. We have had a few meetings with the Government, particularly when we've requested to have them, so that we could get more updates and be more involved. But I would say our involvement has been much more limited than we might have expected it to be in normal circumstances.

Thank you. And Gareth Cunningham.

Thank you. As with Emily, we work in the same partnerships. We've had quite a lot of engagement with, say, DEFRA—almost regular six-weekly meetings. Obviously there have been some constraints and calendar issues with that at times, but fairly regular conversations around what we would like to see, what is developing within the JFS draft documents, and similar conversations with Marine Scotland as well. As Emily's pointed to, less so with Welsh Government. We also, as a partnership of RSPB, WWF and the Marine Conservation Society, produced a report last year to inform what we thought should be taken forwards to deliver the climate change objective within the Act.

Okay. Thank you very much indeed for that. If I can now bring in Hefin David. Hefin.

Can I just ask more broadly about partnership working and how successful it's been? Perhaps you'd like to elaborate on that, on what you said. Perhaps Emily or Gareth, I don't mind.

Shall I begin, or do you want to? I think it's been fairly effective. And, going back to the report I mentioned, actually, that's expanded into a much bigger partnership now. So, within the 'Shifting Gears: Achieving Climate-Smart Fisheries' report we produced, we made a recommendation to look at the opportunities for dual fuel within the inshore fleet and electrifying the fleet, where possible, with the University of Hull and the National Federation of Fishermen's Organisations, which is the large offshore partnership for fishermen in England, and also some of the Scottish fishermen. We had a successful bid put forward through the fisheries and seafood scheme funding, which is a central funding pot, UK, to look at that. So, that's been successful; it's actually delivering-on-the-ground developments. I think in terms of lobbying and impacting what may come out of the other side of this consultation, perhaps less so. We've obviously had conversations, but I haven't seen that track across the JFS as much as we would have hoped.

Okay. Emily.

Yes. I think Gareth refers to the partnership working between the environmental non-governmental organisations and with other stakeholders, including the fishing industry, which I think has been very positive. In terms of our partnership working with the Government itself, as I mentioned, the WMFAG, the Welsh Government's fisheries stakeholder group, has been under review, so there hasn't been a formal mechanism for stakeholders to come together to discuss fisheries matters, which has been a major gap.

We have just this week received some correspondence from the Minister about the plans going forward. That doesn't set out the whole structure for engagement, but it does allude to the fact that they're considering having more than just one fisheries group, which I think is absolutely the right way to go. Fisheries and aquaculture cover so many different topics that we need to have more task-focused, task-and-finish-style groups to look at specific management issues, rather than just expect one group to look at that. So, I think it's really positive that the Government have come out and said that that is the way forward.

I am hoping that this will mean a change from the previous situation where we spent years fighting to get more than one environmental representative into the fisheries group. I'm hoping that with more groups and more topics under fisheries that they might enable us to have more than just one representative as part of those discussions, and that's something we'd like to discuss with them, having just received this letter about the steps forward.

So, you feel optimistic about the JFS. What I'm reflecting, both from the fisheries sector and from what you've said, is that it's been a mixed bag in the past, but the JFS suggests there are opportunities for developing partnership working.

I think the JFS doesn't say a huge amount about how partnership working or collaboration are going to be taken forward, but I think certainly what we've heard from the Minister about the fact that the review of WMFAG has now happened and that they're looking to set up an engagement structure is definitely positive, so I'm hopeful about that.

Okay, I think that's it, Chair, unless you've got anything else.

Thank you, Hefin. If I can now bring in Sarah Murphy, Sarah.

Thank you very much, Chair, and thank you for coming to give evidence today. So, I wanted to ask you questions, to comment on the absence, if you could, of the milestones and specific, ambitious targets in the JFS, despite previous commitments to include them. We have been told, of course, that there's not as much detail in this as of yet, but how significant do you think that this is and what would you have liked to have seen? If I can go to Emily first, yes, of course.

Thank you. I was keen to jump in on that, because I think this is a major issue. The previous Senedd was involved in scrutinising two draft Fisheries Bills, one of which was dropped when Parliament was prorogued, so the Senedd's put a huge amount of work into scrutinising those Bills, and one of the major issues that came out during the scrutiny of the Fisheries Bill was the lack of detail and the lack of duties, the lack of milestones, the lack of deadlines. When looking at the common fisheries policy, which this was replacing, things, for example, like the deadline to set fishing limits at sustainable levels, that deadline was taken out and instead replaced with a very high-level objective. The Senedd was reassured consistently that this high-level lack of detail would be addressed through the joint fisheries statement, which we're now looking at, and it was on the basis of those reassurances that the Senedd gave legislative consent, and now we're looking at the joint fisheries statement and, again, this is very high level.

It reminds me of the White Paper that came before the Fisheries Bill. So, we had a high-level policy White Paper; we had the two draft versions of the Bills; we had the 'Brexit and our Seas' Welsh fisheries policy consultation, which nothing ever came of; we had the marine plan; the UK marine strategy, and all have fisheries policy aspirations in them and, again, we're being presented with another high-level policy document that says a lot about what they want to do, but not about how they're going to do it. This, for me, is one of the key issues: we need to start moving towards a place of action plans with deadlines and actually start delivering things on the ground, and unfortunately, the JFS just doesn't do that.

Thank you very much, Emily. Gareth, can you also give your views on this? Could you just give us an idea as well of, without this action plan, without these targets, without these deadlines, what's actually happening to the environment in the interim? What's the impact of this not being done?

I agree with everything Emily has just said. Perhaps another angle to answer your question is that with the absence of detail within here, it's very difficult for—. You've just had the evidence session with the industry talking about sustainable growth within the industry. From a business point of view, if you don't know what the future for your industry is going to be in terms of Government policy, it must be very difficult to find investment within that. So, we've got to consider that as well. If we want a growth of sustainable and responsible industry, you need to set out what that's going to look like. Obviously, COP26 gave us oceans within the language. So, now, that's a clear recommendation, that we need to think about how the environment of the seas actually helps us fight against climate change. We've got COP15 this year, which will look at how that interplays with the recovery of biodiversity.

Answering your question around where are we in terms of impacts on the sea, across the UK—and this isn't just Wales—around a third of the stocks are fished sustainably, a third are, perhaps, unsustainably, and a third we don't actually know. This is the crux of the problem within the JFS: it puts a lot of the emphasis for milestones and deliverables down to the fisheries management plans, but, of course, there's no detail of those yet. They haven't been published. It's going to be extremely difficult to scrutinise something that doesn't actually exist at the moment. The fisheries management plans only exist for certain species; they don't cover every species. And, of course, we've got an ecological objective within the Act talking about fishing within sustainable limits. The monitoring and data requirements are all in those fisheries management plans.

So, it does beg the question: if we're only going to monitor and collect evidence against those fisheries that are either commercially exploited through the current data collection framework or through fisheries management plans, how will we know how other species are faring, both in terms of the industry's interests and also in terms of how they fit across, as Emily said, to other policy requirements—from the statutory framework directive or statutory regulations in the UK? There's an objective there to deliver good environmental status, but how do we know if we're achieving that if we're not actually collecting the data to say yes or no? And that, in turn, means it's very difficult to inform management measures because we don't know what the baseline is, we don't know what the pressures are directly in all cases. So, it's a little tricky.

You did ask a question in the previous session around data collection, and there was a framework put out in January. I'm sure there'll be questions about monitoring in a moment, but it just takes forward what we had previously. So, we're now an independent coastal state and we can do monitoring to our own level of requirements, but, unfortunately, it just takes forward and extends the multi-annual plans for data collection that we had under EU law. The retained law remains the same, and that will continue to December 2024. So, it doesn't appear to have any ambition to change the status quo within the JFS. It's a continuation of where we are. Sorry, that's a very long answer.

No, that's a really good answer. Emily, do you want to come back in as well?

Thank you, yes. I just wanted to share some of the reassurances that I've received when I've asked about this lack of milestones and specific detail in the JFS. The reasons that I've been given have been that it's been quite difficult to secure agreement on specifics across the four countries for a UK-wide policy statement. But the UK marine strategy does include various different sections for different countries. So, for example, in the UK marine strategy, the Welsh Government will set out what it's going to do, the Scottish Government will set out what it will do, and whilst there are issues with that as well, it does enable them to include some specifics. So, I question why they haven't been able to do that so much in the joint fisheries statement. I also just wanted to mention that the Scottish Government have in the meantime already got a fisheries strategy, which they have published. They haven't waited for the joint fisheries statement in order to do that. They've been setting out clearly to stakeholders and the industry what their specific policies are, and we don't have that in Wales yet. So, I'm not reassured by this excuse that doing a UK-wide policy statement means that they can't bring forward more specific detail, and hopefully we will see that in the near future.

Thank you so much for your answers. This is a crucial element of this, so your answers are not too long at all—this is very, very helpful. Thank you, both, very much, and thank you very much, Chair.

If I can now bring in Luke Fletcher.

Diolch, Gadeirydd. You touched there on the data collection element. I suppose I would just like to see if there are any additional comments you have, really, on that co-ordinated programme of data collection, and, of course, this is including the planned use of vessel monitoring systems and remote electronic monitoring as well. We know, of course, in the previous session, that the Minister revealed her intentions to introduce a statutory instrument to ensure that all vessels operating in the Welsh zone have them. I just wanted to know if you had any additional comments on that. I'll start with Gareth, if that's okay, and then I'll come on to Emily.

Thanks. One of the things, as NGOs, we've been asking for is fully documented fisheries, using electronic opportunities. Just going back to what's within the data collection framework, it has breakdowns across how sea fishing will be monitored. It has a plan for Scotland, it has a plan for Northern Ireland, and a joint plan for England and Wales. Within there it talks about at-sea observer levels, and there's a grand total of 525 staff days for England and Wales, which, as a rough calculation, is two or three staff for the entirety of the fishing fleet in Wales and England, which doesn't sound a great deal. It does actually say that the constraint there is down to financial and staff resource. So, there is an acknowledgement that there is not sufficient capacity to monitor the at-sea activities.

Then it talks about issues around health and safety, it makes exemptions for certain sized vessels and certain types of vessels as well—so, things like potting vessels, oyster vessels, cockles and any vessel under 7m or where it will be a risk to the health and safety of the staff or the observer. The question then is—. They're all absolutely fine, you've got to think about the safety of the staff and the observers, but how do we collect data in the absence of that? If that's the mechanism they're recommending, then we need to think about what are the modern techniques we can use.

We've had a conversation recently with DEFRA around when they intend to bring forward remote electronic monitoring, and the answer is 'soon', but, unfortunately, that has also been the answer for the last two years. Obviously, we've had a pandemic, and that's slowed things down, but we would like to see some trials across fleet sections—it doesn't have to be every single vessel all at once.

The final thing I would say as well is that the data collection framework only applies to the UK. As we know, the Welsh offshore area is exploited by European-flagged vessels, and there is a question about how do you manage your stock sustainably if you don't know the full extent of the exploitation by external fleets. It's very difficult to set a level of sustainability if you don't actually know what's being targeted by those fleets. So, any data collection needs to cover all fishing activity—it doesn't just need to focus on UK-flagged vessels.

Thank you for that, Gareth. Those are really interesting points there. Emily, I can see you want to come in.

Thank you. If you'll indulge me just for a moment, I wanted to share with you a couple of sentences from Natural Resources Wales's recent 'State of Natural Resources Report'. In that they said that, for the most part, we don't have a good enough understanding of stock status and the dynamics of fishing effort, its distribution, and resulting catches to be able to determine the extent to which extraction of fisheries resources within Welsh inshore waters is being carried out sustainably. So, in summary, NRW can't determine the sustainability of fisheries at present because of the lack of evidence. I think that's just a really great way of explaining why things like IVMS and remote electronic monitoring are so important to help us to address that, not just for the environment, but also for the industry, to make sure that the industry has a sustainable future.

The JFS includes some vague commitments about exploring IVMS and REM. It kicks the can down the road in terms of saying there might be future policy documents about that as well. Happily, the Minister today did set out that they were going to bring in VMS, which is really positive. It is overdue, but it will make a significant difference. However, there are differences between VMS and REM. For example, REM can show you what you're actually catching. It can also tell you when fishing is taking place and when it's not taking place. So, in terms of making sure that we have a really good understanding of how much fish is being caught, but also how much bycatch of sensitive species is happening, REM is really key. There are also certain fisheries, for example herring fisheries, where it might be harder for onboard observers to detect bycatch. For example, they might pump their catch directly into tanks below board, so cameras can really help with that sort of thing as well. As Gareth said, we're looking to start a conversation about REM. It doesn't have to be all vessels all at once. There are offshore, larger, non-Welsh vessels, for example, which would be a really good place to start given the size of those vessels and the type of fishing that they're undertaking. So, we'd really like to see a more detailed conversation taking place around that.

I just wanted to quickly comment on VMS. I have heard various different people say that the VMS being brought in for the smaller fishing vessels will have a reporting frequency of four or 10 minutes, but the frequency of reporting for the VMS that's already on the larger offshore vessels is far less frequent. I think that really needs to be looked at as part of this VMS being introduced for the smaller vessels. We need to make sure that all vessels in Wales have the same requirements on them for reporting, and ideally that the reporting is frequent enough that you know where the vessel has really been. We can't have huge gaps between these pinging frequencies for the larger vessels and not for the smaller inshore vessels.

Thank you for that, Emily. That was a point that I was about to come on to, actually; a witness in the previous session mentioned exactly that issue with smaller vessels. I was just wondering, before I move on to a question on the JFS specifically, if you wanted to add anything there, Gareth.

No, not really. I entirely agree with Emily there; it's parity across. Why are we asking smaller vessels where they are and what they're doing at a much higher frequency? With some of these larger vessels, an hour's ping is quite a long time when fishing. So, you can measure the speed of the vessel and you can make calculations on whether it was going slow enough to be towing its gear, but that's not always accurate, which of course makes it very difficult, unless you have an onboard observer, to ground-truth that data. As I've said, with two or three staff doing that, it's going to make it very difficult to actually ground-truth what is happening. So, yes, we need parity.

Brilliant. Thank you. On the JFS specifically now, I'd be interested to know, in your opinion, to what extent the JFS is taking an ecosystem-based approach. We know that sea bed abrasion, for example, can release carbon in itself. We know the important role that blue carbon habitats have as well in tackling climate change. Again, I'll start with Gareth and move to Emily.

Me and Emily have discussed this and I think my broad assessment is 'not really'. The ecosystem-based approach objective within the Bill talks about the impacts on the wider environment, and there are a lot of very nice commitments, but with no clear deliverables, objectives or timescales on when things will happen. I've asked DEFRA directly where will this appear, and there isn't one home. So, it makes it difficult for you to look at—. If this is not going to sit within the JFS, where will it sit? Where can you scrutinise what is happening?

Just touching on the blue carbon, England has proposed now plans or a contract to monitor the level of stored blue carbon within the sea bed. Wales has obviously done some work on this already, but it would be nice to see some parity there as well, because that will inform management. The ecosystem objective isn't just around how does the fishing industry become sustainable as well, it's that broader point—and this was the big change, really, with the Fisheries Act—about how these fisheries interact with the wider environment. What we haven't seen yet is any commitment within there to move us towards that goal, really. It looks at how we fish currently and we'll continue that until some later date when we decide a different answer. Unfortunately, there's no clear date for when that answer will happen or what that difference will look like.

Thank you. I tend to agree with the point that you made there, in terms of how does the fishing sector interact with the environment. I think it's something that we really need to look into in more detail, especially given the fact that we know there's a significant amount of stress already put on fishing stocks and the wider marine environment. Emily, would you like to come in and add any additional comments?

Thank you, yes. I completely agree with what Gareth has said. There are nods towards language around an ecosystem-based approach in the JFS that are positive, but the lack of policy detail doesn't really set out an ecosystem-based approach in my mind. I think one of the areas of concern, as I talked about earlier, is that the common fisheries policy had that target to set sustainable limits for fisheries catch; the wording in the JFS is we

'will aim to fish within sustainable limits'.

It's not particularly ambitious. There's no deadline set to that. They talk about trying to achieve maximum sustainable yield, but, if that's not possible, using alternatives. There's no particular drive, I feel, in there towards achieving that. So, that's one component that I think is of concern. Obviously, bycatch, we would have liked to have seen more on that. It does kick the can down the road on that as well. There are a few nods towards things like measures to protect spawning and nursery areas of key stocks, which would be a really positive step towards an ecosystem-based approach, and there is a policy in the Welsh national marine plan about that as well. So, I'd like to see that further developed. There are also some nods towards species of particular ecological importance—for example, sand eels, which are important prey species for a lot of sea birds in Wales. There are a few nods towards that but, again, not any specifics. So, I would have liked to have seen more detail around things like the forage fish side of things. And, as Gareth said, the climatic impact on food webs more broadly, I think, is something that could be expanded more as they look to finalise this.

Thank you for that, Emily. As the species champion for the basking shark, I'd also like to know how it will affect them in the future as well. But, no further questions, Chair. Thank you.

Thank you, Luke. I now bring in Vikki Howells to ask a few questions. Vikki.

Thank you very much, Chair, and thank you, Gareth and Emily, for joining us today. I'd just like to ask your views on the commitments to reduce bycatch and the use of the proposed appropriate discard exemptions. I don't know who wants to start with that.

If I cover the discards and Emily covers the bycatch, that might work. The discards is an interesting one, and the wording within the JFS I don't necessarily disagree with. It talks about the impacts, and that it shouldn't be financially too extravagant—it obviously uses different words—and there has been that challenge around some of the smaller vessels, particularly in Wales. Under the landing obligation for non-target species, they're required to take them to a certain place, and that can be an excessive cost. But what it doesn't do is clarify what is an appropriate approach, and that needs to be thought about quite carefully. If we put a general 2 per cent or 1 per cent for an under-10m vessel, that's probably appropriate, because their landings are much smaller, but when we start looking at the larger offshore fleets, 1 per cent of their catch would mean a much more significant amount of discards. And this is one of those things where we need to have some clarity on how this all interacts, both across the UK and within country. We shouldn't forget that there are nomadic fleets that come down from Scotland into the Welsh offshore area, and if we're not monitoring those, we don't know the levels. A lot of the mixed fisheries—cod, haddock and those sorts of things—have an impact on non-target stocks. So, if you're catching cod, you're also impacting haddock and vice versa. So, it would be very good to get some clarity on that, rather than just assuming that, yes, we don't want to impact on people's pockets. There is an element of that, but we also need to think about how this comes back to the ecosystem as well. Emily, do you want to cover the bycatch?

Thanks, yes. In relation to bycatch, the JFS largely says that that will be looked at through something called the bycatch mitigation initiative. We have seen drafts of the BMI—I love an acronym—and that's very high level as well. What we really need are some smart targets and goals. As we've been saying for the JFS, that's also what we need in the bycatch mitigation initiative. At the moment, we're not convinced that that is going to deliver. So, certainly we think that much more needs to be done to deliver an action plan on bycatch for fisheries across the UK. Coming to back to what we were talking about with regard to monitoring, REM would play a key role in that. One of the big issues in Wales is that we have such limited coverage of bycatch monitoring that we don't know if there is an issue, where the issue might be, and we really need to start getting that evidence base developed. One of the suggestions has been that we could look at the catch recording app and see whether we can add functionality to that, so that if sensitive species like sea birds are caught, that can be incorporated into the catch app. But we also need to have independent monitoring as well, and, again, that's where we come back to the REM that we've been talking about.

I briefly just wanted to comment in relation to discards. During the UK Fisheries Bill scrutiny, one of the points that lots of stakeholders, including the industry, raised in relation to discards was that if you have different policies being developed for discarding in different countries around the UK, that could create an unlevel playing field, and it could attract fishing in some places and not others. So, the JFS talks about different administrations developing different discarding policies, and I just think that needs to have a bit of care to make sure that there is a level playing field with regard to that.

That's really useful. Thank you, both. My final question is just to gauge your views on the proposals to encourage the circular design of fishing gear, and also how collection and sustainable management of end-of-line fishing gear can be increased. So, again, up to you who wants to take a lead on that.

Shall I start, Emily, and then you can correct anything that I miss? Obviously, the Marine Conservation Society do quite a lot of work around marine litter, and I think you probably heard this from the previous session—there is the challenge of putting all the responsibility onto the industry and, actually, I don't agree. I think, in reality, it should be on the producers. If you take it back to litter in the sea, one of the things is, obviously, you cannot recycle it. It's mixed plastics. Obviously, it gets degraded by ultraviolet action, so it can be of varying quality. You don't actually get very high volumes. I think Jim mentioned the actual sorts of water plastic litter comes from land, and, from our data, we'd absolutely agree that the majority of plastic litter in the sea begins on land—around 80 per cent. And, actually, of the different types of plastic they use within the fishing industry, it's only really gill nets where you get big commercial interest in recycling. So, really, I think this needs to be a wider conversation about what plastics are being produced by producers, and actually going through the extended producer responsibility.

There's also the challenge, of course—I think Jim put it as being the dust man of the sea—of it taking up space on a vessel. They're out there to fish. If they're pulling up their haul with litter, there should at least be compensation or probably some incentive to doing that. Otherwise, they're not actually going to be commercially viable, and that's going to impact the business. Across the UK, there have been a few incentives for landing waste, but often it's the costs of this, because if there's no end user, it's very difficult for councils to offset that cost—by having someone buy the litter to recycle and turn it into a marketable product. So, it puts the emphasis back on the fishing industry to pay for this port-side infrastructure to be put in place.

So, my view is this needs to be part of a wider conversation about a circular economy—what plastics do we have, how do they actually get produced, and enabling them? Scotland itself did a mapping of economic, behavioural and social factors in the plastic chain, and it made quite a good set of recommendations. I would recommend looking at that to inform what is done in Wales.

Thanks, Gareth. Emily.

Thank you. Nothing to add.

Great. Thanks, both. Thank you, Chair.

Thank you, Vikki. I now bring in Sam Kurtz. Sam.

Thank you, Chair. Thanks, both, for your contributions so far—very informative—but can I ask for your views on the criteria used and the stocks covered by the fisheries management plans? Emily.

Thank you. Yes, if I just focus on the stocks covered to start, as to the fisheries management plans, some of which are being taken forward with multiple countries involved and some of which are being led just by one country, the ones that are being led specifically by the Welsh Government are three FMPs for cockles, crabs and whelks. The crabs one also includes lobsters. I think these are definitely stocks that need management plans, and so I completely support those being taken forward. I would say, however, that they are the same stocks that we've had on action plans to develop management plans for for five, 10 plus years. So, there's nothing particularly new here. So, I'm sort of in two minds about it. On the one side, I think they are definitely the right stocks to start with, but, at the same time, I'm not really getting inspired by this level of ambition. It's sort of repackaging things in a different presentation, I suppose. We've always known that we needed management plans for these specific stocks, and I think it's going to be really interesting to see how those other additional stocks that Welsh Government are working on with other countries are taken forward.

But, yes, I think they're probably the right ones, but they're not as extensive as I would have liked to have seen. I also just wanted to say that the timetable that has been given for these stocks is perhaps more generous than other Governments'. I think the Scottish Government, for example, have listed a longer list of stocks that they're looking to deliver FMPs for within the next year or so, whereas with the Welsh Government, for some of these FMPs the publishing date is up to 2025, which isn't really compatible with the new deadline they've set for achieving good environmental status of 2024. So, those timetables, again, I think could be a bit more ambitious. And we also don't have a timetable for stock recovery. So, for example, other Governments, in America, would have deadlines by which management plans need to achieve recovery of those stocks. We don't have that for the FMPs; we just have when those plans are going to be published. I think that's a particular area that needs addressing.

Thank you. Gareth, anything to add?

Yes, broadly speaking, as a first list, it's pretty good. It covers, and this is across the UK, a lot of the mixed fisheries, a lot of the non-quota species as well, which is great because they have, technically and historically, been the data deficient stocks. But a lot of this comes back to that data collection. So, there are two things with this. The fisheries management plan will set out what data collection will happen, which is good, but, of course, some of these have been developed by, say, DAERA for the mixed fisheries in the pelagic area, so the Welsh offshore. So, there is a question: if they make recommendations for monitoring the activity in the Welsh offshore, will Wales inherit the bill to deliver that? So, it would be good to understand how these are being developed. There are some very good things in there. I'm pleased to see a scallop FMP put forward for England and Wales. Previously, there was a fisheries improvement plan being developed for scallops at a UK-wide level, but it was quite slanted towards Scotland, with Wales and England perhaps not being represented as well. So, it's good to see that that's being put forward.

But there are also some weird things in there. Cockles is a good example. England has a fisheries management plan for cockle dredging for its own waters only. Wales has a cockle fisheries management plan for hand gathering for its own waters only. But if we just look at the Dee, NRW is responsible for licensing hand gathering and dredging activities, so it seems odd that the two nations have not decided to work together on both these fisheries management plans and, given it's a fishery that is dealt with across border, actually agreeing how that's be going to be delivered in practice. You could actually, under the current proposals, have a situation where a vessel that has a dredging license for England and Wales only has to apply the fisheries management plan when it's in English waters. So, there are oddities like that.

And the final thing I would say, going back to data is, it recommends data collection for the fisheries management plans, and it does say, for other species that don't have a fisheries management plan, they will propose them where evidence shows they are required. My question, of course, is: if we have no requirements that gather that data to inform that evidence of whether a fisheries management plan is required, how will we ever know until the point the stock crashes, which is not good for the environment and certainly not good for the industry either? So, I think there needs to be some tightening up there as well.

Excellent. Thank you. Diolch, Cadeirydd.

Thanks, Sam. I think Luke Fletcher would just like to come on this. Luke.

Diolch, Gadeirydd. Just one question from me, and apologies if it's a bit of a low-ball question, but it strikes me, from my own interest in marine conservation and my own interest as well in the sector, that sometimes there are different visions for what a sustainable fishing industry is. So, I just think, for the benefit of clarity, for not just members of this committee, but for people outside of this place as well, I'd be interested to know what your definition of sustainable fishing would be. I'll start with Gareth, and then go to Emily.

It may surprise you, I think, and this is talking for the Marine Conservation Society, rather than for all the NGOs, our vision probably isn't too far away from the industry's. I've certainly spoken to Jim last week about this, and this is the crux of the approach that the US, New Zealand, Australia take. They have harvest management rules. So, they work out what the stock can cope with in terms of effort, and then assign that to the industry. The Isle of Man as well is taking this approach. They're saying, 'Actually, if we recover a stock to a certain level, we can allow this level of effort' and that level of effort means the fishery itself is sustainable in the long term, but also the vessels that have the permits to access there are able to catch to have a viable industry. So, it's sustainable economically and sustainable environmentally.

Of course, we need to look at the way that we fish, and make sure that it's compatible with the recovery of the marine environment. In some places, that may mean fishing activities need to change; in some others it may not. But I think we can all agree that responsible fishing and aquaculture, which is something that's very important and actually quite often missed through this fisheries Act, have a role to play in sustainable food production. But we do need to modernise what we do, and we do need to look at how we produce that food so it's in line with all the objectives within the Act, and, of course, make sure that we deliver other policies that we have in place, like the statutory regulations, the habitats directives, and the aspiration under future generations and well-being Act as well.

Thank you, Gareth. Emily.

Thank you. I agree with what Gareth has said, and I think, as a sector, we have far more that we agree on with the industry than we disagree on. In fact, during stakeholder fisheries meetings with the Welsh Government, it's usually—. Everybody around the room is singing from the same hymn sheet in terms of wanting sustainable fisheries, wanting action to develop management for specific stocks, wanting various issues addressed. I think the challenge has been really getting that delivery from the Government, to be honest. I think the fishing sector and the NGOs have all been saying very similar things for a long time. We might have slightly different priorities. For example, I do a lot of work on stocks which aren't of commercial interest for Welsh fishing vessels, so things like sand eel, for example. There isn't a commercial fishery in Wales, so that might not be a priority for the industry to do fish research on sand eel species, but it would be from an environmental perspective. But that's just a differing order of priorities, rather than disagreements, I suppose. I think the fishing industry have been the ones pushing for a sustainable management of these stocks and to see action for a long time, so I think that's really positive.

Thank you, both. Very useful.

Yn ôl i chi, Cadeirydd.

Diolch yn fawr iawn. Are there any other questions Members would like to ask at all? No. Therefore, we've reached the end of our session. Can I take this opportunity on behalf of the committee to thank you both for your time today? It's been a very useful session. We will be sending you a transcript of today's proceedings, so, if there are any issues, then please let us know. But, once again, thank you very much indeed for being with us today. And we'll now take a break to prepare for the next session. Thank you.

Diolch.

Croeso nôl i gyfarfod y Pwyllgor Economi, Masnach a Materion Gwledig, a symudwn ymlaen nawr i eitem 6. Dyma sesiwn blynyddol y pwyllgor gyda Banc Datblygu Cymru a byddwn ni'n craffu ar ei adroddiad blynyddol ar gyfer 2020-21. A gaf i groesawu ein tystion i'r cyfarfod yma? Diolch i chi am eich presenoldeb y prynhawn yma. Cyn i ni symud ymlaen yn syth i gwestiynau, a fyddwch chi mor garedig â chyflwyno eich hunain ar gyfer y Record?

Hello, I'm David Staziker. I'm the chief financial officer of the bank.

I'm Gareth Bullock. I'm the chair of the bank.

Prynhawn da—Giles Thorley, the chief executive.

I'm Mike Owen, group investment director.

Thank you for those introductions, and I understand that you've got a very brief opening statement you would like to make before we actually move into questions. So, over to you.

Yes, certainly. Chair, thank you very much. It is very brief, but I just thought it important just to set some context before we start on questions. So, the first point is to say, look, we were set up in 2017, so that means we're now in our fifth year of operations, and, during that time, we've gone from 140 employees to what I would describe as a fully fledged professional financial services company of some 260 staff who work for us, spread over five offices, the two largest of which are Cardiff and our headquarters in Wrexham.

The second point is that our purpose remains constant—that is to support the Welsh micro-to-medium enterprise sector through the provision of loans and equity that they cannot obtain from the private sector. So, our mission is to be a gap funder. And in the last five years, we have, with the private sector in our deals lent or invested over £800 million and we have, at the current time, over £700 million that we are able to invest in the coming years. And alongside that, our other main activity is to administer the very important Help to Buy—Wales programme.

The third point. I think, in the 2021 year, there are two quite important events and messages. The first: we were able to deploy the Welsh Government's £100 million COVID-19 Wales business loan scheme programme, the business support loans, very quickly and efficiently. In so doing, we doubled the number of customers that we manage. So, that was a major shift in our size and operating model. And also, alongside that, we lent or invested over £100 million to Welsh entrepreneurs and businesses. So, in a time of economic dislocation and uncertainty, we saw entrepreneurs in Wales still active and eager to invest.

And my final point would be that, actually, in the 10 months of this year that we have completed, we're still within a period of economic uncertainty, and we're seeing a similar run-rate of investment demand from Welsh businesses. So, there are some very positive signs at this economically stressed time. That's what I just wanted to say by way of opening context, Chair.

Thank you very much indeed for that opening statement, and perhaps I can just kick off this session with just a few questions. I know you've touched on some of your achievements there, but can you tell us whether you've achieved your headline targets set by the Welsh Government for the first five years?

Yes. Thank you, Chairman. I believe that we have. In fact, we've exceeded the targets in most cases. In 2020-21, we did £105.6 million-worth of investment in Wales. That was spread: £25 million in north Wales; £31 million in mid and west Wales; and almost £50 million in south-east Wales. That exceeded the performance in 2019-20 by just over £2 million. Cumulatively, our cumulative performance in the five years is we supported—. Our committed target for jobs was just over 13,200 against a target of 14,000, but our overall investment return is well in excess of—the cumulative investment is well in excess of—the number that we were targeted. In fact, as the chairman says, we were targeted with achieving £80 million-worth of investment a year by year 5 and we achieved that in year 2. We now have 16 live funds, including the £500 million Wales flexible investment fund, and private sector investment in 2020-21 hit £60 million. We'll talk about that maybe a bit more later, but that has been affected by the impact of all of the loan schemes put in place during the COVID crisis.

Thank you for that. Now, I notice that one of the aims of the bank was having a £1 billion overall impact on the Welsh economy by 2022. In your opinion, has that £1 billion overall impact been achieved, and, if not, will it be achieved in the very near future, and how are you actually calculating that impact, and are there going to be similar targets set for the future?

Yes. I believe we have met that impact, both in terms of actual value, but also we've asked Cardiff Business School to do a piece of research for us on the impact on the Welsh economy. Their research, which was published by Economic Intelligence Wales, stated that, for every £1 million invested by the development bank, there was a £4.7 million benefit. So, on the basis of the investment we've made, we've well exceeded the £1 billion target. I would say that you probably need to ask the team at Cardiff Business School about the calculation, but it follows pretty consistent systems that they've used in the past to look at performance. And there are some other—. Within that, there are also some other highlights. We're now one of the top five equity investors in the UK by number of transactions, and we've actually, over the last year, been promoting an equity education programme to increase the level of equity investments of Welsh small and medium-sized businesses, and to attract equity to Welsh entrepreneurs.

[Inaudible.]—business as usual. Private sector investment achieved alongside the development bank's investments in 2020-21 was 21 per cent lower than the previous year. The number of jobs created was 18 per cent lower, and the number of investments made was 12 per cent lower, so is the position in 2021-22 returning to pre-pandemic levels, in your view, or is this becoming an area of concern as far as the bank is concerned?

It's not an area of concern. I think there are a couple of points to make there; it's a very important point that you've identified, but it reflects a change in the operation of what we've been—where our focus has become.

Firstly, it's worth noting that, in the course of the five years up to the pandemic, the level of private sector bank lending in Wales dropped by almost 3 per cent compound every year. During the pandemic, that changed completely with the intervention through the Coronavirus business interruption loan scheme, through the bounce-back loan scheme, and the schemes that we introduced, the COVID Wales business loan scheme that we introduced.

But, over the course of the five years, one of probably the most significant differences, and why the numbers have changed in terms of the private-sector leverage and also the jobs, is that we have become a very active lender to the housebuilding sector in Wales. In 2019-20, that accounted for 33 per cent of our investments; last year, that moved to 46 per cent. The reason why that's relevant to the numbers you asked about is that there is significantly less co-investment in the housing sector transactions. I should note that we're not allowed, in the calculation of co-investment, to include the property developer's own value that he has ascribed, that he has put into the project, so, in that sense, I think we probably undercall the benefit that we're providing.

And also, of course, the jobs created or jobs safeguarded is not the same in housebuilding projects. However, the good news is that there have been a lot of things where we have significantly exceeded and grown our activity. So, start-up lending by value increased by 32 per cent and actually by volume by almost 70 per cent in that time. And we are—. And as the chairman said in his opening remarks, part of the reason why the number of businesses we've supported is in business-as-usual terms is because we've supported over 1,300 businesses through the COVID Wales business loan scheme.

Okay, thank you very much for—

Just to reply—sorry, Chair, this was one of your final points—this year, we're at around 93 per cent of our target for private sector leverage, and we're slightly ahead on the jobs number, so, to your point about is it returning, it looks like it certainly is.

Okay, thank you very much indeed for that. Now, your annual report notes that:

'It has been widely reported that business support measures in response to the Covid-19 pandemic have led to an increase in fraudulent activity.'

Has any assessment been made of the level of fraudulent activity present in the COVID-19 Wales business loan scheme, and, if so, what were the key findings?

Mike, do you want to take that?

Yes. Thank you. Thank you, Chair. So, casting our minds back to when we created the COVID-19 fund, in the very early days of the pandemic, we very quick out the blocks; the priority for us was speedy delivery. However, having said that, we also, with our colleagues in the Welsh Government, put a keen focus on ensuring that the scheme would not be open to fraud and significant losses. So, with that in mind, there were three particular controls that we put in place to safeguard against that: so, eligibility for the fund meant that only businesses trading longer than two years would be eligible; secondly, our identification and verification procedures were not compromised at all and overseen by our internal risks department, very experienced individuals; and, thirdly, modest personal guarantees were requested from directors to the sum of 20 per cent of the investment.

Added to that, once the investments were made, we've got a robust monitoring process and team that used an online tool that reports any changes in the risk rating of these businesses, and also alerts us to anything we should need to keep an eye on. All of that combined has meant the performance of that fund is much better than we expected—in fact, we have a default rate currently less than 1 per cent, and all of these loans have started a repayment process—and to date, we're not aware that there's been any fraudulent activity on that fund.

Okay. That's great. Thank you very much indeed for that. If I can now bring in Hefin David to ask a few questions. Hefin.

As we move into the year ahead, we start to think about pandemic recovery rather than support through restrictions. With that in mind, can I ask what—? Can you give us an insight into the kind of discussions you've had with the Minister for Economy on how you can support economic recovery from the pandemic?

Thank you very much. I'll take that. So, we've been in discussion throughout the COVID crisis with the Welsh Government about the services that we can provide, and, in fact, we wrote to the Minister—[Inaudible.] In the most recent remit letter, it was clearly set out that there were expectations on our role for the recovery. And so, we've worked with Welsh Government across all the departments and portfolios to look at the impact and to tackle the changes. There are a number of things that we focused on. Through those discussions we want to ensure that we're there with recovery support and that we support businesses through repayment holidays, and we reiterated that in a letter to the Minister in December. In terms of this year alone, the financial year to the end of December, 13 per cent, 402 facilities were given flexible repayment terms to reflect challenges that those businesses have had.

And then, another interesting piece of work we did: as our chairman said, we have some very, very experienced financial professionals in the team, and we offered the Welsh Government the opportunity for us to create a team of those professionals in what we've called the recovery support group. Fifteen members of the team offered their services to support the Welsh Government and Welsh businesses where they have got into financial difficulties and need possibly a workout or there are needs to be negotiated between parties. The key thing about the recovery support group is it's not necessarily situations where we are a lender, but merely that we could facilitate other creditors and other interested parties to come to a solution that supports the business and ensures it carries on. And we've been involved in two projects and two specific company projects with the recovery support group already.

Is that the intention to meet the expectation, the remit letter, for you to help businesses spread the cost of borrowing and manage costs through economic recovery? Is that how you're tackling that, or are there other ways that you're achieving that?

As I said, in simple terms, at the very, very earliest point, if it's necessary, we're able to be flexible on the repayment terms. If there are other things that we can do that also support the green recovery, then we're in a position to do that as well.

And with regard to the Wales flexible investment fund, the Minister wanted it to operate on what we understand to be a year-round what they call a 'fully evergreen basis'. Is the operation of the fund likely, therefore, to change as a result of that?

David, do you want to take that?

Yes, sure. Initially, this fund was created as a response to the Brexit vote to offer more flexible parameters than historic EU-backed funds. So, £500 million of the flexible fund, or WFIF as we call it, is now the largest fund in the history of the development bank. So, for it to operate on a fully evergreen basis, there are two things we need to consider, Hefin, and first of all is how WFIF is funded, and then how to improve the investment return.

So, for the £500 million, a £100 million of that funding has come from recycled EU funding, so money we've got back from previous investments, and the majority of the remaining £400 million is in the form of loans from Welsh Government. So, to operate as fully evergreen, these loans would need to be converted into permanent capital in the first place, okay? So, the money stays in the fund; it doesn't go back to repay Welsh Government. And then, secondly, how to improve investment return. The intention here is not to increase the prices, the interest rates we charge to customers or, indeed, to reduce the risks that we're taking. The area where we can have most material impact to improve investment return is to improve our equity returns, and the way we're looking at doing that is by focusing on doing more less risky growth equity investments in deals that we've nurtured in our higher risk earlier stage funds. Now, this isn't easy; stimulating demand for equity has been difficult, and we're spending time now on a marketing campaign. We've invested heavily in an educational equity campaign to develop the market and encourage business owners to consider the full range of financing and to think wider than just debt. To be honest, it's all a matter of balance. As we monitor the performance of this fund, if the default performance is ahead of evergreen requirement, then we could do more risky deals, and if it's behind, then we'd probably have to take less risk. And we're in discussions with officials at the moment to try and work out the route that we'll follow for that.

And are the Welsh Government agreeing, or is the Minister agreeing, to offer the—[Inaudible.]—support that you require in order to do that?

Hefin, sorry, we didn't get that question. Could you repeat, please?

Yes, sorry. My internet connection might be a bit unstable here. Has the Welsh Government given you the guarantees that you need in order to achieve that, particularly when you said that you need to keep capital in the system? Is that likely to happen? Is the Welsh Government agreeing to that?

That's a difficult question for me to answer. [Laughter.]

[Inaudible.]—I think.

But, certainly part of that is within there, yes.

Okay. But you must have discussions with Welsh Government about the ability to achieve what they've asked—

We are having discussions with them, yes.

Okay. And what we're trying to get to is: are those discussions fruitful?

Yes. I think the Welsh Government has been—

Positive.

—incredibly supportive over the course of the last few years, and they see the development bank as a key component of their economic support activity, and I think that, if and when they're able to do so, I'm sure that they will take the opportunity to convert the capital, but of course, this is at a time when there are other significant challenges that they have to factor in as well.

Okay. And finally, the economic environment with regard to inflation and interest rates, is this changing your forecast for the future? Is that having an impact on what you're able to achieve in this regard?

No. That's a good question. We monitor the circumstances quite carefully, but our historical experience—and maybe Mike will want to talk about after the financial crisis and the changes there—is that the demand for our services will almost certainly continue to remain if not increase and we want to be in a position to continue to provide that support.

Yes, for sure. Just to add a little bit to that, in the crisis of 2009-10, we expected there to be serious attrition to our revenue in terms of investments, and, in fact, the opposite was true. It's counter-cyclical, you know, as the private sector reins in risk appetite, that is our remit to step in with our risk appetite and fill that gap. So, we saw that then and we are seeing that now.

The only difference now is that this economic crisis is inflationary whereas the last one wasn't.

Yes. Although, interest rates, base rates are at 0.5 per cent, so they rose today. So, we're in a stage when we have to factor in inflation, we have to look at underlying interest rates and monitor that, but I think we're in a position, we have the scope and we have the space within our facilities to address those issues.

Okay. I think we'd probably be speculating, then, if we went any further, so I'll hand you back to the Chair.

Thank you, Hefin. If I can now bring in Sam Kurtz, Sam.

Diolch, Cadeirydd. Good afternoon, gentlemen. Could you please outline what progress has been made in monitoring and reporting on the quality of jobs created by the development bank, and, if so, what metrics are used?

Yes. In fact—thank you very much for that question—we have done quite a lot of work on this. Just to set the history, because we've obviously been in front of this committee for a number years, we began an impact investor programme or monitoring in 2018 and reported on that in 2020, as requested by the committee in the former Senedd. And we developed four impact themes aligned with the Well-being of Future Generations (Wales) Act 2015, but also the UN's sustainable development goals, and these are: prosperity and global opportunity; health and social inclusion; innovation and digital inclusion; and decarbonisation in the environment. And the data we gathered last year shows that 60 per cent of the jobs supported by investment are in the medium-to-higher pay brackets, as defined by the Office for National Statistics. And, in relation to businesses that are supported by equity, this goes up to 86 per cent.

The other measure that we identify is productivity and, interestingly, in the case of productivity, which is a real focus for the UK economy overall, productivity increased by 9 per cent when we made debt investment, and 28 per cent on businesses backed by equity. So, we have more to do, but I think we're seeing some very significant progress. And the impact work we're currently reviewing, to consider parts of the move to develop an ESG investment and portfolio management strategy, that includes work streams on brand development and corporate communications, on incorporating ESG into our investment appraisals, reporting and monitoring ESG risk and impact, and decarbonising our operations, which we can talk about later, if you wish. And through this, we've been in contact with the Fair Work Wales team to consider any further indications recommended as a result of that commission's work.

Thank you. So, the annual report shows that 3 per cent of owner-director shareholders in the businesses the development bank has supported in 2020-21 were from ethnic minority communities. So, has the development bank undertaken any work to understand and reduce the barriers to finance faced by these individuals?

'Yes' is the short answer, and that work is ongoing. So, there have been a number of studies in this area, most recently the British Business Bank's 'Alone, together: Entrepreneurship and diversity in the UK' report in 2020, which identified that under-represented groups are quite often disproportionately affected in terms of financial crises. So, internally ourselves, we're doing some work, going forward, with Economic Intelligence Wales, to understand the long-term impact and to assess the effectiveness of our business finance provision.

As you mentioned, currently in the annual report, our baseline for this measure is 3 per cent. Pleasingly, even though we've just started the work, this year we're running currently at 7 per cent. So, we've seen a real improvement this year, which is great to see. Having said that, obviously we're not going to rest on our laurels; we're conducting focus groups with these under-represented communities to understand the barriers they face, both to starting a business and access to finance.

So, we're also working in partnership with advocacy groups and other partners to understand the barriers for different groups, particularly hard-to-reach communities. This is based on success we've seen historically when we've tried to increase the number of investments we're making into female-led businesses, female entrepreneurs. And we saw that improve last year to 32 per cent, which was up from 29 per cent the year before. The strategy and our process there for improving that performance is based on promoting case studies, through social media and through our marketing communications team, and role models in the female entrepreneur community. We signed up to things such as the Womenspire awards, and we're also active members of the women's entrepreneurship advisory board. And we've recently signed up to HM Treasury's Investing in Women Code, and we'll be looking to replicate those types of activities and that strategy with ethnic minority communities.

Thanks, Sam. If I can now bring in Luke Fletcher. Luke.

Diolch, Cadeirydd, and I'll go straight in and ask how big a challenge does the loss of EU funding present to the development bank.

Thank you for that question. Yes, well, I think we've discussed this at previous meetings. We got on the front foot very, very quickly in relation to the EU funding. In fact, the chairman and I had a meeting with the then economy Minister the week after the Brexit vote in 2016, and—. So, there was a significant piece of work done and significant changes in the structure of the capital of the organisation in that time to reduce our exposure to EU development funding. So, just by way of example, in 2016, there was £330 million-worth of funds of which 54 per cent was EU funded. Today, there's £1.1 billion-worth of funds, of which only 16 per cent is EU funding. So, a significant move has taken place. However, there's still more to do and there's still progress and there are obviously a number of discussions and challenges being placed on the distribution of regional support from the UK Government. Our strategy director sits on the strategic forum on regional investment in Wales, which is a group formed by Ministers to bring people, key stakeholders, together to seek the best outcomes of that future funding and the change in the distribution model that's being proposed by the UK Government.

Great, thank you for that. Looking at the remit letter, the Minister for Economy stated that he wants the development bank

'to continue to work with, and support the Welsh Government as it seeks to shape policy related to the replacement for European Regional Development Fund funding'.

Could you tell me what does this mean in practice?

Yes. So, the—. Some of this has already been mentioned by David in the comments on the Wales flexible investment fund. So, as I said, we got on the front foot very early on, and, since that time in December 2016, we have seen a very significant increase in the funding to over £1 billion. The new source of capital is predominantly through what's called financial transaction capital, so that is loans from the Welsh Government that are backed by loans from the UK Treasury, and that now makes up 80 per cent of our funding, so there is a challenge in that, which we mentioned earlier in the conversation and questioning to David. So, there are repayment criteria on us for that, but it does mean that we have good visibility of funding for at least the next five to seven years, and, as the chairman mentioned in his opening address, we have over £700 million to spend on the Welsh economy in that time.

Thank you. Also, in the remit letter, the Minister invites the development bank, and I quote here,

'to actively work to identify solutions which create the potential to increase the flow of funds into Wales'.

How will the development bank be taking this forward?

Mike, do you want to—?

Yes, thank you. So, as Giles has said, we're well capitalised currently, so we have plenty of cash to invest over the next few years. However, having said that, we understand that we can't rely solely on the Welsh Government, so, internally, we have a fundraising team, if you like, that analyses our track record, and we think we've got a pretty good story to tell. We've been an impact investor for 20 years now, as the development bank and as our predecessor, and we've also got great governance and a track record of delivery.

So, building on that, there are two real strands to the fundraising. So, the first one is bidding for tenders and external fundraising contracts, like we had to do prior to being funded by the Welsh Government predominantly, and, currently, there a number of near-term opportunities I guess is the best description.

The first one is city region deals, and the capital city region have an investment fund out right now for tender, and then, a little bit further down the track, we're not quite sure when, but certainly within the next couple of years, we expect the British Business Bank to be making investment funds available open to tender, maybe in the next couple of years, and we will be in position, we hope, to bid into those funds.

Then the second strand is really about fund creation, and for us that is about looking for complementary gaps, if you like, in the provision within the Welsh financial sector, so, where can we add value. It's no good us raising funds to deploy in areas that are already well served. A good example of that is when we raised management succession funds, which we couldn't do previously, and we won private sector investment from the Clwyd pension fund in 2019, and that was built on our track record of market-acceptable returns, but with a focus and the impact of investing in Wales. And, as I said earlier, I think we've got a great story to tell there, and we hope to build on that to leverage, maybe, investment from other pension funds and, potentially, large corporate investors.

Thank you. And just a final question on capital specifically, and I'll have a few other questions on employee-owned businesses to follow after this. We know that the UK Government provided £130 million to the British Business Bank to establish a fund in Wales. I was wondering how the development bank would be looking to work with the British Business Bank to avoid any competition or overlap between the two organisations going forward.

Thank you. I'll take that. The development bank has a strong, long-term working relationship with the British Business Bank. Our regulated subsidiary, FW Capital, has successfully delivered Northern Powerhouse investment funds on behalf the British Business Bank in the north of England. That involves quarterly operating meetings to share market intelligence. So, we have a strong operating relationship and we also regularly meet with senior management of the British Business Bank to compare notes on what the challenges are in the UK economy.

So, recently, in Wales, we partnered with the British Business Bank and Business Wales in a conference on equity investing, which was attended by over 200 entrepreneurs and we co-hosted a recent round-table sharing intelligence on equity markets in Wales. So, we'll be waiting for more information and details on the fund, objectives and delivery, and then considering how best we can ensure good alignment. But there already is a clear dialogue to ensure that there isn't direct competition for this funding.

Thank you. If I could move on to employee-owned businesses now. Of course, the development bank manages the Wales management succession fund, which is worth roughly £25 million. I'd be interested to know how many employee buy-outs have been supported in recent years by the Wales management succession fund.

Mike, do you want to take that?

Yes, thank you. A little bit of a more complicated picture than that, I guess. Because of the range of funds we have, we do various types of buy-outs from different funds. So, if I start at the high level, since 2017, so, over the last five years, we've supported 57 succession transactions—buy-outs, if you like—and £21 million in terms of value. So, those businesses were funded from a range of funds, but, as you say, we have a dedicated Wales management succession fund, which is really aimed at buy-outs, small buy-outs up to £2 million, and that fund has done 12 transactions. It is not a high-volume fund; we only expect to do around 20 transactions in the full term of the fund. So, we've done 12 transactions to the value of £10.4 million, but we've also done further transactions out of the business fund and the Wales flexible investment fund.

So, in terms of employee-specific, so employee ownership trusts, in the last few years we've done two transactions, and a good example is a company called Cwmni Da, which is a leading Welsh-language TV production company based in Caernarfon, where the staff took ownership of that business following a £0.75 million investment from us. But, because that was in the form of debt, that wouldn't have come out of the specific management succession fund. So, I guess the story is we do these transactions, but we know that we need to do more and we're currently working with the Wales Co-operative Centre and Social Business Wales to support a campaign to promote employee buy-outs as viable options, but we currently have, I guess, sufficient scope in our funds outside of the management succession fund to be able to fund these transactions.

Thank you. Just to be clear, sorry, the 57 buy-outs figure, is that the total across the board, so including the 12 buy-outs from the succession fund? Just to be clear.

Yes, it is, and the two employee ownership trusts as well are in that figure.

Great. Great, thank you. You mentioned, of course, that there are multiple avenues of support for buy-outs in answer to the first question, but I was wondering if there would be any further measures, really, that the development bank could take to support the Welsh Government's commitment to provide greater support for worker buy-outs and the ambition to double the number of employee-owned businesses in Wales.

I guess, to repeat part of the answer from the previous question, this is an area we're very interested in because, absolutely, it's great for Wales. We need to retain these businesses in Wales. Somebody external, outside of Wales, coming in and buying these businesses and relocating them is not good for Wales plc.

They're also interesting transactions for the team to work on, and generally very low investments. So, absolutely, we are focused on it, and we will continue to do the work that I mentioned earlier with the experts, really, in employee-ownership trusts in Wales, which are the Wales Co-operative Centre and Social Business Wales and, of course, Business Wales. So, nothing specific beyond that, but this is an area where we will be providing specific focus.

Okay. I suppose a follow-on from that then would be whether or not the development bank expects to receive any additional funding from Welsh Government to support the delivery of this commitment, and, if it were to receive that additional funding, if it would be looking to go beyond what it's offering at the moment.

Look, I would say I think that, as the chair and the chief exec have already stated this morning, we are in a very fortunate position that we're well capitalised. The flexible fund that David referred to earlier pretty much does what it says on the tin; there's not much it can't fund. The reason we had to raise money for a management succession fund specifically is because those deals are very difficult to do with public sector funding, particularly European funding. So, we needed it. We had that gap. I think, with employee ownership trusts, which are predominantly backed in the form of debt by ourselves, we have adequate resources available at the moment to do those transactions.

Thank you. Just one final question, really, to sort of sum up, I think, the entire line of questioning around the employee-owned business section. Are you confident that the Welsh Government can meet its target of doubling employee-owned businesses in Wales?

I'm getting that one, am I? Do you know, genuinely, it's not for me to comment on whether or not I think it's achievable. Historically, my view would be that the Wales co-op lead on this, because they've got specialists, and it is a specialist area. It is relatively uncommon as a transaction. Predominantly, owners look to sell for best value, so they will be selling trade; trade sales is particularly where businesses get sold, and then management succession funds. So, I'm fudging the answer a bit, I guess, but what I would say is there's been a significant increase in the number of these types of transactions, employee buy-outs. I've been here a long time, and we used to see maybe one or two a year. There's definitely—there's definitely—momentum towards more deals. Whether the target is achievable or not, I don't know. You'll have to forgive me for being a bit vague, but actually I think we've got a new member of the team joining us shortly with some heritage in this space, so we will definitely be able to pick that individual's brains and make more of an impact to help the Welsh Government with that ambition. Chairman.

Just to add very briefly to that, I think that the part answer to your question is that the more of these things that are done, the more they get noticed, and they build momentum. Part of that—the reason that momentum builds—is that there is a recognition that there is money available to support those things. Now, we have that money, and, as Mike has said, our flexible fund, WFIF, is able to do those. So, once that's more widely recognised, I suspect demand, which is always very, very difficult to predict, will probably increase. But by how much and where and in what timescale, I think that's almost impossible to determine.

I'd just add that I think it's becoming much higher profile. Certainly, the other tax benefits available to owners to sell businesses efficiently have gone or have been reduced, so I think it's becoming a more attractive proposition for the seller. There have been two high-profile businesses that have gone through the process recently—one positive, one negative. So, Go Ape, which is a leisure business with operations in Wales, has been sold into an employee ownership trust, whereas Blackwell's, the educational bookseller, just announced—I think it was as recently as yesterday—that they had proposed an EOT but had not been able to receive help. That's an English business, so we can't help them there, unfortunately. They've not been able to get the funding for the EOT and have now opted, as Mike said, for a trade sale, which is a shame.

Diolch yn fawr. Nôl atat ti, Gadeirydd.

If I could now bring back in Sam Kurtz. Sam.

Diolch, Cadeirydd. Moving on to decarbonisation and the environment, could you outline the work that is under way to measure the impact of the development bank in relation to decarbonisation and the environment, and any details on a plan to achieve net zero?

Yes, thank you; I'll take that. So, we decided several years ago, actually, probably delayed slightly by COVID, to address this head on. The way that we look at new ideas within the organisation is to create a team of people from across the organisation into what we call a teulu, a family, where they're grouped together to actually come up with solutions for that product, and we actually created a teulu specifically for looking at our decarbonisation strategy. Also, we had a separate teulu to look at the decarbonisation agenda for our customers. So, we're committed significant resources by looking at investment decision making, products and services, reporting and monitoring, and our communications. We completed a piece of work to measure our scope 1 and 2 emissions, and that amounted to 184 tonnes of carbon dioxide, and immediately we did an offsetting exercise of that amount with support—. It was actually, I think, tree planting for schoolchildren in Wales and northern England, where we operate.

Now, that's not enough. We're not here to say that simply offsetting was the process. So, we have been looking at priority actions for reducing our impact on the environment, and that includes reducing our office space in Cardiff by 25 per cent, green travel and behaviour changes. And the board also requested that new risk and environmental, social and governance issues be added to the green risk principles. Finally, this year we've actually appointed a specialist consultant to repeat the measurements of our scope 1 and 2 measures and assessments, but also to look at assessments of scope 3, extending the work undertaken. And finally, there are two pieces of additional work we're doing—we're in the process of finalising an electric vehicle scheme for our colleagues to complement our cycle-to-work scheme, and we're exploring business standards such as Planet Mark, the Responsible Business Tracker and B Corp, to provide a framework for our business ethics going forward.

The remit letter sets out that the development bank is expected to play its full role in tackling the climate emergency by requiring changes to business behaviours and practices to move our economy purposefully towards net zero. So, in terms of a business coming to you with an investment, at what stage does the application need to be, and what support do you offer in that guise? Are you able to offer assistance in how that move towards net zero would look, or are you basically at the very end of a business application with regard to offering that finance support?

A bit of both, but for sure we can impact that business in this space. So, recently we held our board strategy day, and this is an important area and was one of the focal points of the discussion, to get the board's input on it, because it's never quite as straightforward as you would like. But off the back of that, we've completed a piece of research with our customers and stakeholders, so, looking at SME business knowledge and attitudes towards decarbonisation. Interestingly, 13 per cent have or were working towards some sort of recognised standard, such as ISO 14001. Sixty-four per cent are taking informal action, and have some procedures. Twenty-two per cent said they didn't think they needed to bother at all, which is a bit worrying. But the interesting thing for us was finance wasn't the top issue, which is of course our stock in trade.

And in terms of what we would do with clients, we work, normally, with Business Wales to raise awareness in this space, we use our promotional materials, make sure that they know there's funding available for decarbonisation initiatives, and we regularly refer our portfolio businesses to Business Wales for their resource efficiency advisers. Actually, this year, we are taking a step forward again, following a session at our board strategy day. We will be updating the way in which we appraise our investments. So, we're bringing the environment and the decarbonisation issue earlier in the process, to come to your point. So, the way we appraise investment proposals will change in that we have sourced an external tool that will give us in-depth environmental analysis on the businesses that we're investing in. So, it will help us provide a solution through highlighting the trends in those industries, what the regulatory issues are, what the commercial considerations are for those businesses, which will inform our diligence process to hopefully enable us to make better decisions on these types of opportunities.

[Inaudible.]—my ignorance on this, but with regard to decarbonisation, are you seeing established businesses coming to you asking for financial support to decarbonise, or are these new businesses looking to enter a specific field in a net-zero manner? Is there a distinguishable difference, or do you see the weight of balance tilted towards established businesses over new businesses? What do you see from the market in that?

Okay. What we're seeing is a mix of both. So, as we've mentioned a few times today, we are well capitalised. So, our existing funding can be used to support businesses that are involved and operating in the environmental sectors. We've seen, definitely, a growth in the number of start-ups, businesses coming to our tech seed, our equity portion of the book, with solutions for other businesses. And a good example of that is Vortex IoT. We invested £250,000 in that in seed equity back in 2019, and we followed that up with a further investment through expansion. And, based in Neath, this company is a supplier of environmental sensors—so, networks and data. And a good example of one of their projects is that they provide air quality sensors to a council to allow that council to take decisions on traffic management, to improve the quality of the air. So, that is a typical start-up, high-growth business that is coming into this space, because a problem quite often creates opportunities for entrepreneurs. So, we can fund those, but we can also fund, because of the broad nature of our funding, businesses that wish to implement energy-saving initiatives under capital expenditure. We do have one specific fund where the focus is on renewable energy—small, local renewable energy initiatives. And that fund has done £9 million of investment, I think, over the last few years. And that funds local communities on single sites, on a small scale, clean energy production. So, that would be wind turbines. We had the investment committee last week for a recent investment, which was a small solar park being sited next to an existing single turbine in mid Wales. So, that is small scale, but that is the only fund that we have currently that focuses exclusively in this area. But what we are doing—and again this was a product of the board strategy day—is that we have created six potential opportunities for us to deploy funds into this space. We have shared that with our colleagues in Welsh Government, and we are working with them to see which of those initiatives, if any, we will take forward.

Now, we've referred to your remit letter a few times here today, and the letter confirms you're required to develop a corporate strategy for the period 2022-27 that addresses the Welsh Government's strategic policy objectives. But it's not clear to me how much wriggle room you have to be more creative. So, are you allowed to widen the scope of your remit letter to meet other economic challenges, or are you just restricted to what the Welsh Government tell you to do? I suppose what I'm asking you is how much flexibility you have as a bank.

I think we've had a very good relationship with the Welsh Government, and on a number of occasions we've proactively identified areas of the economy that need support, and they have been willing to endorse that. Probably, the most significant has been the support that we've provided for residential and commercial property builders. That's a sector where the mainstream lenders have just simply exited the market, particularly for the smaller developers, and we've come in to take that stand. And as Mike just mentioned, the six proposals that we've made in relation to decarbonisation, providing finance to support the decarbonisation agenda, are completely new, developed in-house by the development bank and made as a proposal to the Welsh Government. So, although the remit letter sets support of the decarbonisation agenda as a core component of the remit letter for the next five years, the actual execution of that and how that can be executed has really been down to us, and we've developed those ideas in-house.

I should add that we did a bit of research looking around the world for places where there has been effective financial support for decarbonisation, and, actually, the number of examples—. It's still a very nascent piece of work, and there are very, very limited examples. So, we're really starting with quite innovative ideas that we want to promote in Wales.

Thank you very much indeed for that, and, unfortunately, we've come to the end of our session. So, on behalf of the committee, thank you very much indeed for your time this afternoon. We've had a very, very useful session. A transcript of today's proceedings will be sent to you for accuracy purposes, so if there are any issues with that, then please let us know. But, once again, thank you very much indeed for giving up your time this afternoon.

Thank you, Chair, very much indeed, and to the committee.

Symudwn ni ymlaen felly i eitem 7 ar ein hagenda, sef trafod y memorandwm cydsyniad deddfwriaethol atodol (rhif 2) ar gyfer y Bil Cymwysterau Proffesiynol. Gan mai 10 Chwefror yw'r dyddiad cau ar gyfer cyflwyno adroddiad, mae'r pwyllgor yn bwriadu trafod adroddiad drafft ar y memorandwm cydsyniad deddfwriaethol atodol hwn yn breifat yn ddiweddarach heddiw. Ond, oes unrhyw sylwadau hoffai Aelodau eu gwneud ar gyfer y cofnod cyhoeddus? Nac oes.

Fe symudwn ni ymlaen felly i eitem 8 ar ein hagenda, sef trafod y memorandwm cydsyniad deddfwriaethol ar gyfer y Bil Rhentu Masnachol (Coronafeirws). Gan mai 10 Chwefror yw'r dyddiad cau ar gyfer cyflwyno adroddiad, mae'r pwyllgor yn bwriadu trafod adroddiad drafft ar y memorandwm cydsyniad deddfwriaethol hwn yn breifat yn ddiweddarach heddiw. Ond, oes yna unrhyw sylwadau hoffai Aelodau eu gwneud ar gyfer y cofnod cyhoeddus yn sgil y memorandwm cydsyniad deddfwriaethol yma? Na.

Symudwn ni ymlaen felly i eitem 9 ar ein hagenda, sef trafod y memorandwm cydsyniad deddfwriaethol atodol ar gyfer y Bil Lles Anifeiliaid (Anifeiliaid a Gedwir). Y dyddiad cau ar gyfer cyflwyno adroddiad yw 3 Mawrth, sef dyddiad cyfarfod nesaf y pwyllgor, felly dwi'n awgrymu ein bod ni'n cytuno ar adroddiad drafft mewn gohebiaeth. Oes yna unrhyw sylwadau hoffai Aelodau eu gwneud ar gyfer y cofnod cyhoeddus? Nac oes.

Symudwn ni ymlaen felly i eitem 10 ar ein hagenda, sef trafod y memorandwm cydsyniad deddfwriaethol atodol ar gyfer y Bil Rheoli Cymorthdaliadau. Y dyddiad cau ar gyfer cyflwyno adroddiad fan hyn yw 3 Mawrth, sef dyddiad cyfarfod nesaf y pwyllgor, felly dwi'n awgrymu hefyd ein bod ni'n cytuno ar unrhyw lythyr neu adroddiad mewn gohebiaeth. Felly, oes yna unrhyw sylwadau hoffai Aelodau eu gwneud ar gyfer y cofnod cyhoeddus? Nac oes.

Felly, symudwn ni ymlaen i eitem 11 ar ein hagenda, ac, yn unol â Rheol Sefydlog 17.42, dwi'n cynnig bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod hwn. A yw Aelodau'n fodlon? Ydyn, dwi'n gweld bod Aelodau'n fodlon. Felly, derbyniwyd y cynnig a symudwn ni felly ymlaen i'n sesiwn breifat ni. Diolch yn fawr iawn.