Finance Committee

Mi wnawn ni symud ymlaen at eitem 3, ac eitem 3 y bore yma ydy cymryd tystiolaeth gan y Gweinidog. Croeso cynnes i chi y bore yma. Fyddech chi'n gallu gosod eich enwau a'ch swyddi ar y record, os gwelwch yn dda? Mi wnawn ni gychwyn efo'r Gweinidog.

Bore da. Good morning, Chair and committee. I'm Rebecca Evans, Minister for Finance and Local Government.

Good morning. I'm Sharon Bounds, deputy director for financial controls.

Bore da. Good morning. I'm Emma Watkins, deputy director for budget and Government business in the Welsh Treasury.

Wonderful. Thank you very much. Thank you for attending this morning. It's greatly appreciated. We'll crack on with some questions. I'd like to start by understanding the timing of the announcements of the funding for the cost-of-living crisis, and explore how the UK supplementary estimates will tie in with supplementary budgets and subsequent in-year allocations. The Welsh Government announced a £330 million package of expanded measures to help people with the cost-of-living crisis. How much of this is reflected in the supplementary budget for those measures, and how much will be included in the final budget for 2022-23?

Thank you very much for that question and the chance to reiterate again, really, the support that we've put in place for people in Wales through the £330 million package of support, aimed at helping low-income households address the challenges in respect of the cost-of-living crisis. The support package goes across two financial years, 2021-22 and 2022-23. In this supplementary budget, you'll see £152 million allocated to this, and the large part of that, really, is about providing the £150 cost-of-living payment to all households in council tax bands A to D, and also those households in receipt of council tax reduction scheme support in any band. There is a further £25 million for local authorities to provide discretionary support, recognising that there will be individuals and households who fall out of that eligibility criteria but still very much need support.

So, what are the—? When is it being paid—? When is that going to come out? So, how's that split across the two financial years?

So, the £152 million for the £150 payment for households, which I've just described, and the £25 million are within this financial year. So, you'll see both of those in the supplementary budget. But you'll also see then in the final budget, which was laid yesterday, a further £162.4 million package, and that is a one-year, time-limited package of support, including the £200 payment for winter fuel that will take place next year. We expect the £150 payments in respect of the cost-of-living crisis in the tighter council tax bands and the CTRS to start being paid around April. We're working with local government at the moment to find the best and quickest way to get that money out to people, and April will be a key time because, for many people, that's when they will start seeing their bills rising, and of course it's the start of the new financial year and other bills will be dropping at that point at well. So, it's an important juncture to be able to offer support.

So, people in homes all across Wales will be starting to see that money coming through in April, so we'll be able to see that action happening very, very soon.

Yes, from April, and we expect that there will be around 1 million properties that are eligible for this support. So, clearly, it's a big undertaking, but we're working with local government to make sure that we do it in as effective and speedy a way as possible.

You had the cost-of-living summit on 17 February. What, if any, further allocations will be made as part of that? Did anything come out of that that changed your thinking, or to make other allocations?

Yes, it was a really, really useful summit. There were over 100 different people attending, representing the whole swathe of Welsh life in terms of the organisations that are able to offer support to individuals and to households. Directly following that, we made some further allocations in respect of food poverty, particularly because that was something that really came out very strongly in the cost-of-living summit. So, there's an additional £740,000 agreed for this financial year to support food poverty and food insecurity and to help alleviate the cost-of-living crisis; £490,000 of that goes to FareShare Cymru to undertake urgent food purchases to meet the immediate needs of community food organisations, such as foodbanks, which are running out, and also £250,000 to the Big Bocs Bwyd project, which is starting to be rolled out further across Wales. It started off as a Valleys taskforce initiative, but it's proven really successful and popular, so we're pleased to see that be expanded.

Okay, thank you very much. So, the announcement of the £330 million cost-of-living support was on 14 February, less than a week before a Plenary debate on the draft budget for 2022-23. Could you not have brought it forward so that that came into that, so that we could scrutinise that? Because it was only a week's difference. I'm just wondering about the timing of that.

So, the UK Government only announced its package of support in respect of the council tax rebate scheme on 3 February, so we worked as quickly as we possibly could really to put in place a package of support that would be appropriate for Wales. It was difficult because we don't get any forewarning. People are always amazed. They say, 'You must have known Treasury was going to announce something, why haven't you planned for it?' We had no forewarning at all, so we couldn't start to plan, but we were in a position then to act as quickly as we possibly could to put in place that support and make the announcement.

Thank you. Can you talk us through—? We saw a little bit in the media around the £180 million and the issues around what Westminster were saying and what the First Minister was saying, and there was a little bit of to-ing and fro-ing. Can you talk us through that and what the facts were, as you see them, around that?

I'd be really glad to have the opportunity to put on record the situation. So, every year, the Welsh Government and all devolved Governments receive an indication from HM Treasury of any changes to the in-year budgetary position that we should expect at the UK supplementary estimates. So, on 26 January, Treasury informed us that we could expect a further £178 million as a result of spending in England, and this then was on top of the £270 million that had been announced on 19 December to respond to the omicron variant.

We were told that this funding wouldn't be able to carried over into the next financial year. That was funding for Wales totalling £448 million, which is a significant amount of money late on in the financial year. And I would add at this point that, in previous years, when we've had very late allocations, we have had the ability to carry over funding. So, I think that this speaks to the difficult parameters within which we have to operate and why it is so important that we keep pressing for further flexibilities.

But, then, as I just mentioned, on 3 February, the UK Government then announced its council tax rebate scheme. At that point, they said it would mean an additional £175 million for Wales. That was subsequently then increased to £180 million. But the latest supplementary estimates position issued to the Welsh Government on 8 February does reveal that increase of £180 million to reflect the council tax rebate scheme, but it's more than offset by a reduction of £189 million in our overall position. So, overall, following that announcement, we were £9 million worse off. And I just want to stress how important it is that we get accurate information from Treasury. Our financial parameters are so tight that we have to land our budget on a postage stamp essentially. So, it's really important that we get accurate information, and timely information, from Treasury.

I did have a meeting with the Chief Secretary to the Treasury asking about year end: can we expect any changes now, or is what we've informed of likely to be the situation? He said there might be a small decrease, but more or less, we were looking at the figures for the end of the year. But, of course, the decision then showed that there would be a big decrease and a big increase as well. So, it just speaks really to the difficulties that we have in getting proper timely information, and the fact that we just don't have the level of flexibility that we need to manage these kinds of situations.

So, bearing in mind now that, obviously, effectively, you're saying you're £9 million down, what impact does that have on—? So, you're calculating for £180 million extra; now you're £9 million down. So, what have been your thoughts, and what's the process been around—? Where have you had to cut or make different allocations?

Well, it just makes it very difficult as you get towards the end of the financial year to know exactly what you should be investing in and what you can invest in. So, we're at the point really where we have to always have things on the stocks that we can deploy very quickly, just in case there's a large amount of consequential funding at the end of the year that we need to deploy otherwise we lose the money. And, clearly, we don't want to be doing that, but, equally, it doesn't really lend itself to more longer term strategic planning for the use of funding. So, that's one of the challenges and it's why we're asking Treasury to allow us a full financial year to use funding from the point at which consequentials come forward. I think that's a sensible thing for Treasury to allow us to do, and it would help us manage our budgets in a better way, I think.

Thank you very much. Could I just ask a couple more questions? The supplementary budget was published before the UK supplementary estimates were laid. Can you summarise the changes to Welsh Government funding for this financial year included in these estimates and the impact on the funding available for the remainder of the year? I think you've touched on quite a bit of that already, but if there's anything further that you could give us on that.

Yes, so, of the additional resources set out in the supplementary budget, £686 million of those arise as a result of Barnett consequentials that were confirmed in the UK Government's supplementary estimates: £629 million were fiscal revenue; £18 million non-fiscal revenue; £57 million general capital, and then there was a reduction of £18 million financial transactions capital. And we do get these reductions at the end of the year, so I've just described one example. Another example would be in a previous financial year where, right at the end—I think it was February—we were notified of £100 million reduction in capital and over £100 million reduction in financial transactions capital. Again, it makes it very, very difficult for us to plan within those parameters.

Sorry to cut across. I think it's £149 million capital adjustment this year.

Yes, I'll perhaps ask Sharon to come in on that particular point.

Yes, of course.

But just to complete the picture as well, I just should put on record that we've also received £77 million of non-Barnett additions, and then a range of things—which I won't go through unless you want me to—for example, £142 million from transfers within other Government departments in the UK, and so on. So, a number of different items, which I can write to you on, rather than go through an entire list.

Yes, if you wouldn't mind. Rather than read them all out, if you could let us have that, that would be great. And the £149 million adjustment to capital funding, can you clarify what that is and explain why this is included in the supplementary budget rather than the previous one in June?

Yes. So, the £149 million is a reflection of capital expenditure that was incurred in the last financial year, but has been reduced now out of the budget this financial year. So, at the time of the supplementary budget in June, we were still working through the outturn position of last year, so that's why it wasn't ready in time for that. The adjustment has now been actioned as part of the UK supplementary estimates, and that's why now you see it in the second supplementary budget for Welsh Government.

Okay, fine. Thank you very much. So, can you tell us what was the balance of the Wales reserve at the end of 2021, and what you expect the balance to be at the end of this financial year?

Yes, it was the maximum of £350 million at the end of 2021. We've drawn down £175 million in this financial year—that's the maximum that we are able to draw down. But that then creates a maximum headroom for us to be able to put money back into the Wales reserve if we do have underspends. Already, we've seen an increase in the devolved tax forecast of £26 million since they were last assessed by the Office for Budget Responsibility in December. So, obviously, we closely monitor the financial position, and we've tried to make plans to maximise the spend, but, as I say, we do have now the maximum headroom within the Wales reserve to add—

So, are we likely to use all that headroom?

I would hope to be in a position to go into the financial year having put money back into the reserve. At the moment, figures are just moving around constantly. So, I think the best point at which I'd be able to provide that information would be when we get to the outturn, where we can make that a formal report then to committee. But it's a useful, although small, tool in terms of managing.

And what's the risk of breaching that—of breaching the threshold?

Well, by maximising the spending available to us and having plans, as I say, on the stocks that we can utilise late on in the financial year, if we have to, I think that we should be not in a position where we breach that. But, obviously, we wouldn't want to be—

And have you got plans in place if you're looking as though you're getting very, very close to that headroom? What would you do in that instance?

Yes, there are a number of things that you can do very late on in the financial year, but I don't think we'll be in that position. But as I say, it is—. I sometimes think of it as a high-wire act when you start getting towards the end of the financial year, just because the rules are so tight and the flexibilities are so small. I don't know, Sharon—or Emma—if you've got any other reflections on this particular theme.

I suppose the only thing that I would mention in terms of levers, I guess, is that, yes, it is trying to manage things at this stage of the year. We're consistently monitoring the position; it's a weekly if not a daily report almost from the groups across the Welsh Government. One of the levers that we do have is the second supplementary budget has the assumption in there of borrowing of £113 million. So, if we did find that there were underspends emerging, one of the levers that could be pulled would be to reduce that level of borrowing. So, there are a number of levers there and that would be one of them.

But it's part of your contingency planning.

Absolutely, yes.

Okay. Thank you very much. I'll pass on to Mike.

I have a comment and then I'll ask a question. My comment is: I think that our problem is the Treasury treats the Welsh and Scottish Governments as if they're Westminster departments, as opposed to devolved institutions. I think that's where we've got a problem. Because it shouldn't really matter to them if we carry £500 million forward, because they've already allocated to us, so it's already gone as far as they're concerned. My question is, and it's really on something you said earlier, Minister: my understanding is, and tell me if I've got it wrong, that, if something is moved from a non-devolved area, like the Home Office, to a devolved area such as health, we still get the Barnett consequential of it.

So, could you give me an example of—?

Yes: £100 million is taken off the Home Office; £100 million is given to health in England. Now, that is an internal transfer within England, but it's moving from 100 per cent non-devolved area to an area that is devolved. So, shouldn't we be getting the Barnett consequential of those changes?

I don't believe that is the way that the adjustments are applied to the Welsh Government's budget. So, transfers with other Government departments, we don't see Barnett consequentials on those. Because what should actually happen in those—. If that is the case, what should actually happen is that, if the Home Office was transferring on the basis of a devolved—. If it's going from a non-devolved into a devolved position, they should also make that transfer to the devolved administrations or devolved Governments at the same time. So, it wouldn't be a Barnett on that; it should be coming because—. The money would be sitting with the Home Office, as a non-devolved position, and, therefore, if it was transferring out, they should make transfers to England, Wales, Scotland, Northern Ireland at the same time. So, that is how that money should be distributed.

But the Welsh amount should be coming in accordance with Barnett and the Barnett clause, surely.

That may be the way that they've calculated it.

Sorry to push this, Chair, because I think this is really important. Don't we have our own checks on it, or is it just, 'Oh, thank you very much, you've given us £10 million. You might have given England £1 billion, but thank you very much'? Have we got a means of saying, 'This is what you've calculated. We don't agree with your calculation. Can you reconsider?'

Certainly when there are transfers in that way, there are a lot of conversations and discussions that go on to make sure that, the methodology that's been used, we are in agreement with it. As far as any consequentials through, I suppose, the proper Barnett methodology, I think what I would refer to is that there is the block grant transparency report, which is published by the UK Treasury. The last of those was in December 2021. So, it takes up the position right up to the spending review and that details all of the allocations that have been made to UK departments and the consequentials that have been allocated as a result.

I won't push it any further, but I would just say that there was a time when the Treasury wrote off substantial overspends within the health service in England and we should have had a consequential from that. I think—through you, Chair—as a committee, we'd like to see what you get in terms of the transfers and what we're getting as part of it and how it is calculated.

Chair, shall I write to you on the issue of the health overspend that was written off in England? Because I do recall that and it was our understanding that it was written off within the health budget itself, so, just departmentally written off, which meant that we wouldn't have received an additional Barnett consequential because it was a decision just within the health department in England. But I'm happy to write to the committee with that.

And it would be very interesting, as Mike says, to see the workings out, for us to have a better understanding of how it works so that we can better scrutinise how it works then.

I just want to say, as well, that I completely agree with Mike on the point about treating Welsh Government as a department. We get that feeling very, very strongly.

I'd better stop there before the Chair gets annoyed with me, or more annoyed than he is.

Turning to the health budget, you've allocated in the supplementary budget £411 million to health and social services for the cost of dealing with the pandemic. What do you expect to achieve with that?

So, this particular funding was for NHS stabilisation. It also included funding for contact tracing, for vaccination programmes and for personal protective equipment and other COVID response. So, it was very much about continuing the response to the pandemic. And also bearing in mind always the fact that other variants might be coming down the line, as we saw later on, then, after the allocation was made, in respect of the omicron variant.

Well, we've got to the fifteenth letter of the Greek alphabet. I assume there are more viruses coming along; we're probably at pi now. Anyway, just moving on, local health board recovery plans, I think, are really important, and I think one thing that many of us believe is that there's an under capacity in critical care, where they deal with people post operation, and also in operating theatres, in that area, which means that you've got very skilled surgeons sitting around, because they can't actually operate because none of the things they need to operate are available. Is some of that capital money going to increase capacity?

Yes. So, some of the capital money is going towards orthopaedic theatre at Neath Port Talbot and also additional ophthalmology provision in a new, I believe, ophthalmology day centre in Singleton. So, some of that capital is going to that physical capacity. And then health boards also were looking to have additional internal capacity, so health board staff, for example, working beyond their contracted hours, so that kind of approach. And then insourcing capacity, so external additional resources, equipment and staff being brought in. And then also the external capacity, using additional capacity off the estate. So, a number of approaches.

From my experience, which might be different to others', the big capacity problem is the lack of critical care beds, the lack of operating theatre capacity, so that even if you've got the people you've got nowhere for them to work. The point I was trying to make—obviously not as well as I thought I was—is: is this going to start increasing? You've said about ophthalmology—I wish I could say that—and you also mentioned orthopaedics, which I can say, for which there's always been a queue in the whole history of the Welsh Government. That's going to make some progress, but do we need more?

So, we've seen, through some of the modelling that we've done and looking at the estimates of waiting lists, that what we're doing already is having an impact, so our waiting lists aren't as long as we would have expected them to be, thanks to the investment that we are making. But continued investment, as published in the final budget yesterday, is there for the NHS in terms of responding now to the long waiting lists and so on. That's obviously a priority for the NHS in the budget for next year.

You've given £50 million to local authorities to cover overspends and winter pressure. Has that gone out via formula, or has it gone out via what local authorities are asking for?

That went out via the formula so as not to perversely, if you like, respond to local changes that were made on the ground.

Yes, because, if it went out any other way, it would be in the best interests of the local authority to allocate £20 million less than they needed for social services, because the Welsh Government would be coming over the hill providing extra money. So, I'm glad it's gone out via formula. I think it is important to get that across to others.

The next question on this is on the £42.7 million funding for social care to address the social care system. The social care system has got very serious problems. It's got a serious recruitment problem. It's got a lot of very small private providers, some of whom have handed lots of contracts back, and in some of the rural areas it's become very serious. In our area, it's just serious. Is this £42.7 million actually going to deal with some of the problems? Because we've given additional money, which I'm very pleased about, to social care staff, but why would somebody be a member of social care staff when they could work in Tesco for more money and with less pressure? That's really the question that's coming out. I should be asking this to Eluned as well—I'll ask her in a roundabout sort of way. Should you be providing more money into social care in order for local authorities to bring the contracts back in house and carry them out with their own staff, based on local government terms and conditions?

So, referring first to the £42.7 million in the supplementary budget for this year, that was to create a package of support based on what we were told by the care action committee was required for this year; £20 million of that was to support social services for children. There was £9.8 million for the regional partnership boards work, £5.5 million to support unpaid carers, £3.8 million to support early intervention and prevention, and then there's another range of smaller items, including funding for the third sector, unaccompanied asylum seekers, and the work that we're doing to advertise social care as an attractive profession to people. So, there was funding in this financial year for that, but you'll see in the final budget published yesterday a real focus on social care, so additional funding to go through to local government for social care alongside the specific social care reform fund, which will be £45 million next year, increasing to £60 million in 2024-25. So, we are really putting serious additional money into social care and, hopefully, it will give local authorities the chance to step back and consider what their options are.

If I may, on that, you're putting the money into social care; what consideration have you given to things like hospices who are voluntary, and in that sector, that might have to match that salary or whatever for that nurse or whoever that might be? Is there a separate allocation for that, or whatever? I think Emma might want to answer that one.

Just in respect of your question, Chair, we are working very closely with colleagues on the health and social care side in terms of what support we do need to give beyond the local authority and the hospital-led provision, including for hospices, and I know that the Ministers in that side as well are very interested in terms of what support can be given to carers in that sector as well. So, we're having quite active conversations, and particularly in relation to what we do in terms of the allocations the Minister just mentioned for future budgets as well. So, we're happy to follow up with committee on that with a bit more detail, if helpful, in relation to hospices in particular.

And also the unpaid carers—

Yes.

—what's your thinking around—? Making allocation for social care is extremely important, but also we've got an army of unpaid carers out there, and what support can we give them?

The supplementary budget includes £0.27 million for the third sector carers hardship fund, so that is a pot of money that carers can go to to access funding specifically put there for carers, and anything we can do, really, to promote that to carers is really important.

And on the hospices side, we did, in the worst part of the pandemic, particularly around the lockdown period, provide additional funding for hospices, recognising that so much of their funding is received through fundraising activities and so on, but obviously those couldn't take place at that point, so we did provide additional funding for hospices in recognition of that.

And with those hardship funds, and I think you alluded to it, but promoting that so that the unpaid carers that are feeling the real hardship—. What encouragement can you give, or what mechanisms can you put in place, to make sure that they're aware that they're able to pull on that? Because it's great making the money available but, if people don't know about it, well, what's the point? And that's a real issue, that people don't know that they're able to access this, and it's something that's come up in committee before: how do we make it simple for people to access it?

Carers' organisations worked with us in respect of this fund, and I know they've been promoting it really heavily to carers within communities who they are aware of and so on. But, obviously, yes, we would want to do more. And that's part of the cost-of-living crisis as well, isn't it? It's about making sure that people are aware of everything that they're entitled to. In the cost-of-living summit, this came up time and time again, that we need to work closely with organisations on the ground to ensure that people (a) are aware that funding is there and (b) are content to come forward, because there are still lots of people who either feel that, 'Oh, well, there's never any help for me, so I won't even look, because everybody else gets help; I don't.' But the help might be there for those people, but also people who are facing hardship for the first time, who might feel embarrassed to reach out for help. So, we need to just break down those kinds of barriers and make sure that people who are eligible for that funding come forward for it.

Sorry, cutting across Mike there.

One of the big problems is the forms themselves. They tend to be lengthy, they tend to be complicated and they tend to not be aimed at people who are not highly educated. So, the people—and, as we know, wealth is proportional to educational qualification in the main—who are most likely to need it are the ones who have got the lowest educational attainment and are the ones least likely to be able to successfully complete those forms.

I think the discretionary assistance fund is quite a good example of a relatively light-touch approach. So, I, in a previous portfolio, went up to spend some time with Northgate and just listen in on the calls to hear people who were approaching the DAF for support. And hearing those phone calls and the way in which the people on the line got the information out of the person in respect of the need that they had to make that payment was good because it was a friendly kind of approach and it was quite light touch.

I'd like to just bring Jack in on this. Jack.

Thank you, Chair. I think it's worth noting as well—and it's an important point from Mike—80,000 personal independence payments in a recent report were, once reassessed, actually paid out. So, I think it's worth noting that this is a problem from the welfare state at UK Government level, and anything the Welsh Government do to make that kinder approach to filling in the forms or the Northgate experience the Minister said should be very welcome. We should certainly push for that, and I'd encourage the Minister to do more of that.

Through our single advice fund, I know that we're making progress in terms of providing funding to organisations on the ground that are there to seek to help people maximise their income, supporting them to fill in those unnecessarily often complicated forms, and also to use the kind of language, really, that people assessing those forms are going to be looking for. That's, unfortunately, part of the picture when people are filling out PIP forms.

And finally from me, I think the £1,498, approximately £1,000 after tax and national insurance, is very welcome. Why didn't you put it into the base salary or base pay? Rather than just a one-off, why didn't you just do an uplift?

So, the Minister made the announcement for the final budget for next year in respect of the overall uplift, which takes the payment for social care workers up to the real living wage. So, that was the overall uplift, but then I know the Minister also wanted to make an additional payment—a kind of bridging payment, if you like—to that point, which reflects the additional £1,000 payment. They're also two separate financial years. So, the payment of £1,000 is this financial year, but then that will take you through to the next financial year when we'll start to be in a position then to pay the real living wage.

But I think one of the things that many of us are very keen on is things to be embedded into a budget, rather than just be dealt with as one-offs, because you get the one-off and then it disappears. So, I'll just ask you, perhaps, if you could look at that when you're putting money in. If it is sustainable, should we be sustaining it?

This was funding found within the health and social services main expenditure group for this financial year, so, obviously, I guess, it would be a decision for—. I'm going to put this firmly back in Eluned's court for any future payments.

That's me.

Thank you, Mike. Peter, I think we need to keep a little bit tighter, but I won't curtail you here.

I'll be quite concise. Morning, Minister. I just have a couple of questions around some of the allocations to local government and education. And whilst it is welcome to see £50 million additional put into the hardship fund, I note that you're making available another £50 million through general revenue to local authorities to help them with some of those additional pressures. Why did you decide to take that path instead of moving that through the hardship fund as well?

So, the general revenue was to support local authorities' social services functions in particular, because local government leaders had talked to me about the pressures that they were facing, both in terms of social services and the winter pressures, which weren't specific to the COVID crisis. So, the hardship fund was very much about providing funding to local authorities to support them with the specific issues that COVID had made. And also, it's on a claims basis, whereas this funding was on a different basis, so it was more about responding to the general pressures, rather than COVID itself.

Right. So, that £50 million going into revenue, that's allocated again on the formula, whereas moneys into the hardship is still paid out on a claims basis.

Yes, it was by a formula.

Fine. Thanks for that. On to capital, I note that there is some additional £70 million-worth of capital that you've allocated out of reserves to local government. Obviously, that's quite a specific figure. What are your expectations for the use of that, and if it is quite specific, have you made sure that there's enough time for local authorities to prepare to use that wisely?

Yes, so this funding, which I was really pleased to be able to provide for local government is, as you say, £70 million and it does recognise that Welsh Government and subsequently local government have had a very difficult capital settlement, in the sense that our capital funding for the next three years falls in comparison to this financial year. So, I was able to provide money in this financial year to support local authorities, which they can use in this financial year, they can use it for displacement, or they can put it into reserves and planning for future years, potentially looking at those more difficult years 2 and 3 within the budget.

Okay. So, there's no specific expectation around it; it's at their discretion as any other capital allocation would be.

It is fully at their discretion, although in my letter to local government, I did mention highways, because that was the context in which some of our discussions about capital were raised. Obviously, with the change in approach to highways funding for future, I thought that this might be a way to smooth some of that out for them.

Yes. Thanks for that. That's clear. Another one I want to look at is that there's a good allocation of £19 million that has been put forward to deal with some of the flooding from 2020 and that leaves minimal moneys left in reserves for that. How are you planning to fund those more recent issues of adverse weather, which, you know, local authorities are going to be coming to you looking for support for?

In respect of the more recent flooding events, any requests for assistance for damage would be through the emergency financial assistance fund. We haven't yet, to my knowledge, received any requests from local government for support for that. We understand that there's no damage to assets as a result of the recent flooding that would require allocations through that particular fund, but it's always there if it's needed.

Okay. Fingers crossed, because we're not quite out of the winter yet. But that's reassuring to know that they can call on you out of that emergency fund if needs be.

Just looking at education, I wonder if you could just give us a bit of an insight into what is the total fund provided for the Recruit, Recover and Raise Standards programme for 2021-22, and how are you planning to evaluate its impact?

That's a total of £68.9 million that has been distributed to schools in Wales via local authorities in this financial year, and that's supporting all schools in their response to the pandemic and supporting the Recruit, Recover and Raise Standards programme. It also means that we can retain the additional 1,800 practitioners within schools who were recruited through the programme during the pandemic, so I think that's been a really, really positive outcome as well.

In terms of the evaluation, it does have two elements. The first being Miller Research, which was appointed in the autumn to undertake the formal evaluation of the scheme. That will look at the impact on the learning and well-being of children and young people, and it will also look at those interventions that have proved to be the most successful so that we know for sure what works for the future. And it will also look at how the funding was used by schools, looking at best practice and so on. So, that's one part of the evaluation, the other is much more informal, but it is much more real time, if you like, with constant updates from monitoring data directly from schools to give us that more up-to-date snapshot, really, of what's happening on the ground.

Great. Thanks for that. Just the last one from me: I wonder if you could just summarise the funding for the new curriculum and what are the specific objectives for it. How do you know you are targeting the most appropriate areas to maximise value for money in light of our experiences through the pandemic?

So, in 2021-22, we invested an extra £8.3 million as part of our continued investment in implementation of the new curriculum, and that's over and above our existing investment in professional learning. And additional renew and reform funding of £6 million was provided in this financial year for learning progression, which is important in extending that to schools and learners.

I might again write to committee, because I've got a long, long list of things that the curriculum funding is doing. Perhaps I don't want to just talk you through all of that, but some highlights, I suppose, would be direct support to schools for the curriculum, support for funded non-maintained nursery settings, curriculum implementation, to ensure that children get that support at the very earliest point. And then, of course, new curriculum-related resources for schools as well. But, as I say, there's so much in that package that perhaps it's best dropping you a note on that.

I suppose hand in hand with the new curriculum, we're going to be seeing the roll-out of free school meals, and I think it's a point that Mike raised a while back, and we've asked questions in the past, around that capital spend on the actual schools themselves, to make sure that they're able to deliver those. Are specific allocations for this in your budgets?

Yes. Within the final budget, which was laid yesterday, within the allocations that we've made for free school meals, there is provision to improve the capital within the schools to bring many school buildings up to standard, to allow them to have the facilities. So, that is definitely there. I can't think of the number off the top of my head, but I can certainly get that back to you. There's also provision as well for Welsh language services, which I know is something that your party have been keen on as part of the co-operation agreement.

But you've got two things, haven't you? You've got kitchen capacity and you've got the seating capacity for children to be fed. Now, does anybody know what needs to be done to increase both of those, before getting into the people capacity—getting more cooks et cetera—but what we actually need to do? I mean, is somebody actually looking school by school? If they have to feed, in a primary school, all the children there, have they got capacity in the kitchen? Have they got capacity to feed them over a 1.5-hour period? And if they haven't got that, what is needed to bring either or both up to standard?

The education Minister and his officials, working with local authorities, are continually working working on this, because that's a very real issue you've highlighted there. So, yes.

It's a really interesting one, because we're assuming everybody will stop having sandwiches and they'll all having school meals, and we certainly need to gear up. And I expect a lot of people will do that. I think that assessment of what take-up would be needs to happen, won't it, before we spend huge amounts of money really gearing up every school and finding, actually, there's only another 10 per cent of children who need—?

It's probably for the education Minister, but the capital would need to come through, and the funding would need to come through, you. So, it's worth keeping it on the radar, so any updates around that would be excellent to receive. Even if it's a letter to keep us informed, then that would be great. Sorry, Jack, you've waited patiently. I'll bring you in now. Thank you.

Diolch yn fawr, Cadeirydd. Minister, if I can focus on some other allocations of the second supplementary budget, starting with the £125 million for businesses with regard to COVID-19 support, and it's worth putting on the record the thanks from businesses across Wales for all the support during the pandemic. This is a further allocation again, as I said, of £125 million. Can you just tell the committee the key lessons that you've learnt from the previous schemes, those welcome schemes that we all have been aware of, and how have those lessons—? What have you implemented differently to this scheme to make sure you achieve the objectives that you wish to achieve?

Well, Chair, before joining Welsh Treasury, Emma was working in the Welsh Government, so perhaps I'll ask her to provide an update.

Yes, certainly. And throughout the development of the economic resilience fund, and the other mechanisms that were put in place, we as Welsh Government, with the then economy Minister, Ken Skates, engaged very closely with businesses, with business organisations, with specific sectors and with local authorities as well to ensure the support we provided was exactly what they wanted. We evolved that support throughout the period, so we moved from different mechanisms, whether it was grants or mechanisms to look at business development, for example, very much listening to what businesses told us. We've looked at the use of artificial intelligence, we've used data through our Business Wales services to look at what it is that businesses need and what we want to give them. We've continually evolved the advice that we give to businesses, the appraisal of the application forms to ensure they're what they need, and worked very closely with local authorities in terms of the due diligence and audit to ensure the money was reaching those businesses that needed it the most.

An example would be, at the very start of the pandemic, the Welsh Government took a decision to fill the gaps that were left by provision of UK services. So, obviously, we had the job retention scheme; the Welsh Government worked to meet that gap. By the time we came to our later schemes, the job retention scheme was no longer in place, so we had to listen to businesses to find out what they actually wanted. So, I think there's been a very clear evolution in terms of the support that has been given.

I think it's also worth noting as well that the economic resilience fund and the £125 million further allocation is demand led, so it's very much what businesses want, and the amount that we gave out was reflective of that as well.

Do you want to add something about the formal evaluation that we've commissioned as well?

Yes, that's right, actually. Throughout the process, we were obviously evaluating as officials. Economic Intelligence Wales conducted an evaluation, that's a partnership with the Development Bank of Wales, Welsh Government and the Office for National Statistics, and we have conducted and contracted formal evaluations of the schemes as well. I'm sure the economy Minister and his officials would be happy to provide further information on that for Members.

Well, I'm grateful for that answer, and particularly the prompt from the Minister on evaluation. So, the key, interesting point that you've said there, Emma, was the use of AI. Would that evaluation include an evaluation of the use of artificial intelligence in this process?

So, I think it would probably consider that, yes, and we certainly used artificial intelligence to ensure we weren't duplicating applications and to really ensure that they weren't ghost businesses or made-up businesses, if you like, as well. So, yes, that will definitely be part of the process, particularly since many of the applications were managed through the Business Wales database and the technology that we have there. A lot of it was done through that.

Thank you for that. Moving on, if I can move on to the allocation of a further £53.1 million for rail in light of the passenger numbers continuing to decrease and reduce, can you tell the committee how that £53.1 million has been calculated and will that support stop come 31 March 2022, as has happened with other support areas for the pandemic?

So, the £53.1 million was allocated to support rail in light of the reduced passenger numbers. During the most difficult point of the pandemic, during lockdown, we were looking at a 95 per cent fall in patronage. It started to get up to about 60 per cent of the demand prior to COVID, and it's still, I think, improving now. Obviously, the omicron variant did make things more difficult, but the funding was calculated by considering the previous subsidy required to cover the fare box lost. So, we've got quite a lot of experience now, over the last couple of years, to understand the impact on the fare box, with the assumption of continued increasing passenger figures for 2022-23. Obviously, we'll be keeping this figure under review and adjusting it accordingly. Looking towards the next financial year, 2022-23, £54.7 million has been allocated, predominantly for additional rail support, again to cover the ongoing impacts of the pandemic on rail services and particularly, again, on the fare box.

Okay. One final question from me—

Sorry, Jack—

—Minister, I move—. Sorry, Chair.

Could Mike just come in with a supplementary, before you move to your final question?

One is a statement and one is a question. The statement is: aren't we keen on reducing the amount of travel, environmentally, and, people working from home in larger numbers, isn't that a good thing, rather than cramming everybody onto trains? But my question is: you've given that money to rail. Most people who travel on public transport use buses. Have buses been treated the same way?

Yes, buses have also received significant financial support from Welsh Government throughout the pandemic, again to reflect the lack of the fare box there.

Is any of it in the supplementary budget?

I think there's about £22 million in the supplementary budget, in the most recent one, for bus support.

Thank you.

Thank you. Jack, sorry about that. There we are, carry on.

Dim problem. Thank you. Moving to complete the other end of the second supplementary budget and to just ask a question about Welsh Government staff costs, they've increased by almost £20 million for the year 2021-22. Why is that, and are they recurring costs? Is that going to be the same for 2022-23 and so on?

I can take this one. The Member is right to say that the Welsh Government delegated running cost—that's the DRC—has increased by £19.7 million in the supplementary budget. So, of that, £3.1 million has gone to a pay award for 2021-22; £12 million has gone for 2020-21 for central funded pressures, which includes a pay award, it includes recruitment of additional senior civil servants—around 20 of those—as well as annual salary incremental increases; and then there's about £4.6 million that relates to intra-ministerial expenditure group arrangements, so that's things like dealing with the Transfer of Undertakings (Protection of Employment) Regulations 1981, for example, in relation to our ICT contract and social partnership as well. So, this will then be reviewed, in terms of permanent baselining of budgets for 2022-23 going forward. And they are recurrent costs—the Minister is right on that one—because they relate to agreed pay awards and annual increments as well.

Over the last couple of years, the Welsh Government, obviously, has had to support a range of staffing pressures in relation to both COVID, but also the UK's departure from the EU as well, which has put additional pressures on that as well, and that's meant some short-term increases to staff numbers. But we have a new Permanent Secretary in place. He's looking at our operating model, he's looking at efficiency, effectiveness, across the Welsh Government and, I'm sure, in time, will be able to say more about that as well.

I'll leave it there. I was going to delve in deeper, actually, Emma, but I think you've covered it off. Maybe it's a question for the Permanent Secretary, and maybe that's what the committee might want to ask, about the operating model and whether there has been any consideration of restructuring of the civil service in the Welsh Government to reflect where we are now as a Government. The priorities of the Government have clearly changed over time in devolution. I notice the time as well, Chair, but it might for the committee to consider at a later stage.

Thanks, Jack. Just to emphasise the point then—that £20 million, in its entirety, will be a recurring cost next year?

Yes. And I should say also that we, as Welsh Government, as indeed across the public services, will have to deal with the impacts of inflation as well in terms of the public sector pay bill as well, so these are things that we'll have to consider.

With that in mind, what sort of contingency planning are you doing, currently, to model that and see what pay awards are going to be looking like?

So, we've been doing quite a lot of work across Welsh Government with different sectors, for example education, local government, health, to model what it could look like. The Minister has made some provision for pay within the final budget. At the moment, these have to be met within settlements, but we're keeping it continuously under review because of the inflationary impacts, and we'll be happy to provide you with some more information on that as a follow-up as that evolves.

Thank you. Thank you very much. Unless anybody else has got any further questions or any supplementaries, thank you very much.

Diolch yn fawr iawn ichi am ddod y bore yma ac rwy'n falch iawn o'ch gweld chi, a diolch yn fawr ichi am fod yn ffraeth efo'ch atebion.

Felly, o dan—lle ydym ni? O dan Reol Sefydlog 17.42, dwi'n cynnig bod y pwyllgor, felly, yn gwahardd y cyhoedd o weddill y cyfarfod hwn a'r cyfarfod ar 11 Mawrth eleni. Ydy pawb yn fodlon? Dyna ni, felly, awn ni'n breifat. Diolch yn fawr.