Economy, Trade, and Rural Affairs Committee

Thank you very much. I'm sure the committee will join me in passing our best wishes on to Paul Davies today as well. That is the only apology. I'd like to ask if there are any declarations of interest as well. Jenny.

Yes, I have shares in Siemens and Awel Aman Tawe, and my partner's an advisor to Bute Energy.

Lovely, thank you very much. Any other declarations of interest? No.

We'll move on, then, to papers to note. Any matters arising from these papers? No. If not, I'd like to draw your attention to agenda item 2.4 and propose that Paul, in his capacity as Chair, writes to the red meat levy payers to ask for their views on the performance of Hybu Cig Cymru in light of the concerns raised by Llyr Gruffydd MS in his letter and by Members in the Senedd Chamber last week. If there's nothing else arising from those, we'll move on to the general ministerial scrutiny session.

We welcome the Cabinet Secretary for Economy, Energy and Welsh Language here today—if he would like to introduce the panel this morning.

Yes. I have Helen John, who is deputy director for border controls and the statutory registration and licensing scheme; Neil Surman, who is deputy director for skills; and Aine Gawthorpe, who is deputy director for industrial transformation and foundational economy.

Excellent. Diolch yn fawr, Ysgrifennydd Cabinet. So, in April, you set out your top three priorities for Wales's economic future. Can you outline the specific actions you will take to achieve these and how you will monitor progress towards achieving your priorities?

Certainly. The three priorities are in relation to increasing productivity and economic dynamism; secondly, increasing what we do to support investment in businesses already in Wales, but also to attract investment; and, thirdly, to refresh our approach to employability and skills. I think in terms of monitoring the outcomes of those, those are all things that generally feed into economic output data generally in any case. Part of the challenge around productivity is well established, and I think is clear in the data. The other two fall into similar categories. So, from a monitoring point of view, I think the data will speak to success in that area.

In terms of policy interventions, I'm doing a number of things in the short term by way of engagement with businesses, specifically on their experience about what the Government currently does in relation to at least two of these three areas. Some of those will be around short turnaround reviews in some sectors that are most exposed to some of the challenges in this area. For example, we're doing one on growth opportunities in renewables, but also one on productivity specifically for small and medium-sized enterprises. The intention from those reviews is to determine maybe five to 10 actionable points that only the Government can do or the Government can best do to support businesses in those ways. So, for example, in relation to productivity—you'll also know that I'm undertaking a review of the Welsh Government's business support—one of the things that seems to clear to me on an interim basis is that there is more that we can do, through Business Wales and in other ways, to enhance the support we provide to businesses to increase their productivity, for example in relation to business leadership and management, in relation to employee-level innovation, and these are all things that are capable of being supported through a focus on aspects of our business support. So, there'll be very specific things we do in those areas.

In relation to business investment, one of the key opportunities, I think, if we want to look at it optimistically, from a Government point of view, is to improve the way we can offer to those who are looking to invest in existing businesses, or to attract investment, to be more joined up, both within the Government, but also between the Welsh Government and other layers of Government—so, obviously, the UK Government, but crucially, as well, local government. There is definitely more scope for an aligned approach with other layers of government, so that people thinking of investing have a clear sense of where they go, for what and what they can expect.

Okay, thank you. You mentioned those three priorities—how are they going to contribute to the Welsh Government's economic mission?

Well, the economic mission is a statement of the Government's policy in relation to economic development, isn't it? It's not the entire economic policy, but it is clear in its ambitions for a just transition, for skills and innovation-led opportunities for young people. We're all familiar with the mission. What the priorities do is help us deliver the mission, effectively. It's the bit that links the mission to change and improvement on the ground. So, it's aligned with the objectives of the policy. It's about how we deliver it.

Okay. Luke Fletcher wanted to come in on this point. Luke.

Diolch, Gadeirydd. I'm really interested in the productivity side of this. I know we've had our conversations, both inside and outside the Chamber, on this. And actually, on your recommendation, I went to visit Sony in Pencoed, to see some of the stuff they're doing, and it's really interesting. What I really want to try and get out of you today on productivity, though, is where are we at with some of that work that you've already outlined in actually implementing that work. Because, from that visit to Sony, you can see that the lead time on a lot of the stuff that they're doing is quite significant, so if we really want to catch up on productivity, that work really should be in place now.

Well, there is already work that we do to support productivity, obviously, but what I'm suggesting to you is that we need to make sure that we do as much of that as we possibly can. So, that's why one of those five short turnaround reviews—and this will probably be one that we do after the summer recess—will be on SME productivity. I've met with the Federation of Small Businesses, and they're obviously interested in being engaged in that. I had a very fruitful round-table with some of their members a few weeks ago and heard some very specific and actionable things from them about what more we can do. Some of it is about resources, which, obviously, will be challenging, for reasons that we don't need to repeat again today, but some of it actually isn't about that. Some of it is about how we present the offer, how we respond to what businesses and workforces are telling us about how they can be supported to be more productive. Actually, some of it is around work that we've been doing since the dawn of devolution, if you like, around skills and infrastructure. But there are also things that have maybe a shorter term impact, if you like. You will have talked to them at Sony, presumably, about the employee-led innovation approach that they have there. Toyota have that; other businesses have it as well. And we know that, in doing that, we support workers to be more productive, to feel more engaged, more supported by their business, but, obviously, firm-level productivity can benefit from that as well.

Just out of interest, what were the specifics that were raised with you from that round-table with the FSB?

Well, some of it was about—. There was a range of things, actually, but some of it was about how we can make sure that the experience businesses have of engaging with the Government's business support offer is more easily accessible, to be honest, and is clearer in the path that businesses can go on. There is actually a very good multilevel approach that Business Wales currently takes from a sort of more, if I can use the term, ‘generic’—maybe ‘broad based’, I suppose, is the better way of putting it—level of support that any business can access, through to those businesses that are at an advanced level of growth or growth potential, and have a more bespoke offer. We were hearing there's work that can be done to make that journey clearer, to make it more accessible. So there were those sorts of practical things, actually, and the good thing about those discussions is people generally bring a solution as well as a concern. There were some things we heard about skills—not just about skills in the technical sense, but skills that we might regard as more akin to work aptitudes, broader based skills, what more we could do in that area. And some of this also starts on the recognition that there's more that businesses can do as well in some of these areas. So it's that sort of partnership approach in some aspects.

Great. Diolch.

Lovely. Thank you, Luke. It's no secret that we're in the middle of a general election campaign now, so what would be your priority areas for joint working with the incoming UK Government, and how do you intend that the joint working will contribute towards delivering your economic objectives?

I think there are some aspects of that that are in the ways of working relationship space, and some are in the policy space. In terms of ways of working, I think it's fair to say that what we've seen, in particular latterly under the current UK Government, is lots of pilot schemes, quite a lot of short-term policies, and clearly a high level of turnover in terms of UK Ministers in some portfolios. And none of those things contribute—. Whether you support the policies themselves is a separate question. My position on that is generally clear. But that way of working doesn't really support meeting some of the objectives that we have as a Government. I also want to have a partner, if you like, in Westminster who wants to work with devolved institutions, respects devolution, respects the devolution boundaries, and believes that there's an approach that is based on an open dialogue for addressing some of the challenges that we have, but also, more optimistically, capitalising on some of those opportunities that are pretty immediate. So there's a set of things in the space of ways of working.

Are you disappointed, then, with the announcement by the Labour Party in their manifesto in terms of post-Brexit structural funds, and not aligning with what the Welsh Government has asked for in terms of full responsibility of those funds?

No, I think it does align perfectly with that, actually. What it talks about is restoring the powers to the Welsh Government that we previously had. But as you will know, as part of the European Union we had an EU-wide framework for how those funds are employed. That—necessarily, outside the European Union, unfortunately—operates at a UK level only. But there were powers within that framework that the Welsh Government have previously exercised, which have been taken away from the Welsh Government by the Conservative Government, and will be restored by an incoming Labour Government, and I think that's the right approach.

In terms of the foundational economy, how will you support it over the coming years and what progress is being made to develop plans for the energy, housing and transport sectors announced by your predecessor?

We will continue to support it. I've been championing the foundational economy, together with other members of this committee, actually, since we were elected many years ago. So our commitment remains absolute. What we are doing at the moment is working across portfolios to see what contribution each portfolio can make to the foundational economy, because obviously some of those areas that you just touched on—transport, housing, energy, which is in my portfolio, food, for example—are areas of substantive policy in other parts of the Government. So, at the moment we are undertaking an exercise that should be, I think, complete next month, probably, to understand the baseline against which we can measure progress and success, and that will then obviously inform our policy.

Specifically, in the three areas that you've mentioned—housing, transport and energy—we've been analysing the optimised retrofit programme and working with landlords to understand the opportunities that they have for foundational economy players to help us achieve our policy, but also capitalise on that economic opportunity. We've been working with Transport for Wales and with the Welsh Automotive Forum to look at opportunities there, including, importantly, given the bus legislation we're bringing forward, around the decarbonisation of public transport in particular. We've got another meeting coming up next week, I think, with Transport for Wales and the Welsh Automotive Forum to look at some of those particular opportunities.

In the floating offshore wind space, the energy policy space, we are undertaking a mapping exercise of the supply chain so that we can identify, obviously, where our existing strengths are, but where there are opportunities for foundational economy businesses to participate in what could be quite a significant opportunity there.

And although this isn't one of the three that you referred to, I feel very strongly around the capacity of the food sector to support the foundational economy, and we've been doing some good work there on shortening supply chains. Working with Castell Howell, for example, we've identified eight new growers in Wales to work with them on some particular products. We've identified a gap in the carrot market; lots of carrots are being imported from China, so we've been working with some particular growers on that opportunity. So, there are some quite specific things that have been going on.

Jenny Rathbone wants to come in on this point.

I'll probably contain my enthusiasm for this particular field of discussion, and just go back to how you're approaching the offshore wind market, in particular the negotiations or discussions you may have had with the Crown Estate. Because initially we were all very disappointed that, in the last round of licence offers, there was nothing in it about local suppliers being used. And I just wondered if the Government had any opportunity to clarify that and get something a bit more concrete about how we are going to use Welsh skills.

I was at the RenewableUK Global Offshore Wind conference last week, and had a good opportunity on an informal basis, if you like, to have a discussion with the Crown Estate there, and registered our enthusiasm for making sure that we are able in Wales to make sure this is an economic opportunity as well as energy opportunity, in the way that you're describing. But I have a formal meeting coming up with them, I think within the next week, actually, and I plan to use that opportunity formally to press for that. I think it's pushing at an open door, in one sense—that's my impression—but it's certainly really important for us that this is a just transition, and actually that is about a jobs-led transition, and in order to deliver that we need to make sure that we have the economic opportunity in Wales, as well as the clean energy opportunity in just the way you're describing.

Okay. Can I just go back to carrots?

Yes, certainly. I'm just conscious of time already, but—

Yes, very briefly. I'm less concerned about carrots and more concerned about products that we import from southern Europe, where, because of the drought and the climate emergency, it's likely that we're not going to be able to source those sorts of seasonal vegetables from there. I just wondered what action your department is taking to substitute and improve our food security around what are often very basic products, particularly during the winter.

I don't myself have information beyond that. Aine, do you have anything we can share today?

I don't have anything specific in relation to southern Europe.

Okay, we'll come back to that.

If possibly, Cabinet Secretary, could you circulate a letter to the Chair?

If there is anything more we can tell you, we'll drop you a note on that.

Thank you very much. I'll bring in Hefin David.

Diolch, Gadeirydd dros dro. I hope you don't mind if I just continue this line of questioning very briefly. In your letter, Cabinet Secretary, of 30 April, you wrote to the committee about the apprenticeship levy. No doubt, in the discussions you've had with business, it would have come up; it's certainly come up in the discussions I've had. One of the most startling things about your letter was that the Welsh Government, you said, knew the actual amounts transferred over the first three years of the levy’s introduction, which was before 2021. Now, we have no knowledge of what these amounts are. Likewise, we are not able to find out what individual employers pay in the levy. However, at the time when the levy started the estimated cost to the public sector was around £30 million. So, the apprenticeship levy is having a huge impact on your ability to deliver your third priority with regard to skills. Anything you want to do is at least partially overshadowed by that. How are you going to address that and what kind of conversations would you have with an incoming Government to change it? And are you optimistic that you could?

Thank you for what you said about the letter; I thought it was important to be pretty categorical about our view about how the levy works. Those of us who were around when the levy was introduced were making these points at the time, and you were one of them. The challenge, actually, is this, it seems to me: we've broken the link from a Welsh point of view between the payments that are being made and the funds that are available. In England, because there isn't, obviously, a Barnett mechanism in England, clearly, that link remains direct. We are not able to identify how much funding is generated by it, we are not able to identify how much funding we receive as a consequence of it, because it's now filtered through Barnett. So, that link is broken.

We have a different way of funding apprenticeships in Wales anyway, which obviously provides a significantly higher proportion of Government funding, and that's where the mismatch arises, because the scheme was designed in a way that doesn't reflect the higher level of investment that we make as a Government. Obviously, an incoming Labour Government has already committed to looking at reform of the levy, so I'll be making the case for the sorts of reforms that you're alluding to in your question.

One of the things that businesses say, of course, is, 'Well, we're already paying a levy; why should we engage any further than we have to now?' If you took the levy out, I think it would give you a greater opportunity.

The levy is an employment tax that's levied by the UK Government, in all practical effect, isn't it? That's really how it operates, actually, both in England and Wales. The principal challenge that we have, and the reason I think you asked the question in the way that you have, is that the operation of the levy creates a revenue stream, as it were, for the UK Government. But actually, the way that we have funded apprenticeships in Wales has been predicated on a source of funding that is no longer available to us—that's the challenge that we face, and we still want to have an ambitious policy in the space of apprenticeships. The limitations that we have in that space aren't limitations of ambition; they're limitations of funding. So, I will hope that an incoming Labour Government, certainly over time, will be receptive to that argument.

Thank you very much. Anything we can do to help, we'd be glad to do so. With regard to the Holyhead border control post, you've announced it won't be ready till spring 2025, so what does that mean for phase 3 of the border target operating model?

I'd probably describe Spring 2025 as very ambitious indeed at this point. My own view is that it's unlikely that that date will be met, and that we will be doing well to have got there by the autumn, say. But we aren't in a position to review that at the moment, because, obviously, we've got a UK general election and there'll be a Government being formed in short order, so we'll have to have discussions with incoming Ministers about that time frame. But I am confident that, in light of the ongoing delays, which are very regrettable in relation to checks and to clarity around the checks, the construction of the border control posts that we expect to have in Holyhead and in Fishguard and in Pembroke Dock will have been completed before they're needed, if you like. I think the checks will come in after they're completed. So, that's where we are on the sequencing.

And there are no estimated completion dates now for Holyhead, Pembroke Dock and Fishguard BCPs.

I think construction of those is still on track, actually, for spring of next year, but the checks themselves, I think, aren't likely to be coming in then, in my view.

We took evidence from Baroness Neville-Rolfe earlier this year, and she said that the UK Government didn't have any regional breakdowns to calculate the costs that might fall to Welsh traders as a result of the border control changes. Have you done any work to find out the costs in Wales specifically?

I think I'm right in saying that the impact of the border target operating model is—. It's a regime for import, isn't it, so the cost for Welsh producers and Welsh exporters won't be governed so much by that; it'll be governed by the EU's regime for UK goods, if you like. I think, actually, that is why the commitment in the Labour manifesto for a new veterinary agreement is really important, because I think that could have the effect of reducing those costs for Welsh businesses, which is obviously what we want to see. But the operating model itself, I don't think, is creating particularly material costs for Welsh businesses. But I'll ask Helen for her contribution.

Thanks. The Cabinet Secretary is right, in that the border target operating model is about the stuff you bring into the country. Obviously, there are Welsh producers who are using imported goods to produce their products. We import some milk and eggs and things from Ireland. But, yes, those costs are primarily about the EU's arrangements, and so, if there was a reciprocal agreement to reduce controls, then that might reduce those costs.

In terms of the border target operation model and costs for Welsh consumers and things, actually, an awful lot of products on Welsh shelves are not imported through Welsh ports. Most of our products, actually, are coming through England rather than coming from Ireland, so we don't think there's a particularly different cost in Wales than in Great Britain as a whole. So, we haven't done any additional analysis on costs in Wales.

Thank you. Thank you, Hefin. I'll now bring in Jenny Rathbone.

Thank you. I wanted to move on to EU and non-EU trade. You say that negotiations are currently on pause with Canada and Mexico. Is there are particular reason for that? I know they're all on pause at the moment because of the general election—

That's why, yes, absolutely.

But, with the long list of other things that are in play, you've rather separated out Canada and Mexico, and I just wondered why they're on hold, regardless of the general election.

Helen, are you able to help with that?

I'm not, I'm afraid.

Okay, we'll follow up with that.

Don't worry. I think a lot of these trade agreements have been made in quite a hurry post Brexit to enable the UK Government to show that something was happening, and some of them caused a huge amount of disquiet in this country, particularly the ones with Australia and New Zealand around cheap lamb suddenly turning up in our abattoirs. So, I just wondered what leeway you have with, for example, this upcoming one with the trans-Pacific partnership, which is a huge trading area, to ensure that it actually does meet the UK’s interest, rather than just being something signed in a hurry.

I think we're about to publish an approach-to-trade policy paper, which will come out after the general election, which will flesh out some our broader objectives in relation to how we seek to influence UK Government policy in this area. Our principal focus to date has been on making sure that, when these agreements are negotiated—. I would say that, in general terms, there has been a reasonable working relationship with trade negotiators on most of the international trade agreements. It's different when we come to the European Union, it must be said, but, on non-EU trade discussions, actually, there's been a pretty collaborative and open way of working in general. The focus that we've had to date is making sure that those agreements don’t remove our capacity to regulate in our own country and our devolved competencies, that we shouldn't place domestic sectors at risk of unfair international competition in the way that you're, I think, alluding to in your question. And, specifically, we seek, in every instance, the highest possible commitments to sanitary and phytosanitary measures, to animal welfare standards, to antimicrobial resistance—all the things that we know are so important from a biosecurity point of view—but also to those standards questions that you're talking about in your question to me. So, those remain our key priorities in some of those agreements that you're talking about. At the end of the day, I think about almost 59 per cent or so of our export trade in particular is with the European Union still, so that remains, by a very large margin, the most significant trading agreement that we have, which is why so much of our focus is on what we can do to improve that, frankly, over time.

Okay. So, your trade policy advisory group, we note, has been looking to draft a paper on its approach-to-trade policy, going forward. Is it possible for us to see that in due course, because, obviously, we want to be able to scrutinise it in relation to the Well-being of Future Generations (Wales) Act 2015 and, indeed, in relation to the foundational economy?

That's the paper I've just referred to, which we'll publish after the election, so we'll be—

Okay, fine.

—able to answer questions on that in due course.

Okay. So, in terms of the incoming Government and the review of the UK-EU trade and co-operation agreement, which you've mentioned in your written evidence, and particularly you mentioned the need for a veterinary agreement with the EU—

Yes.

—what are the other key issues for improving the flow of Wales-EU trade?

Well, we've got the review coming up, which is, effectively, an implementation review of how the agreement currently operates, if you like. So, there will be an opportunity in that context to, we hope, make some adjustments. Some of that is around the governance structures of how we raise issues within it, to make sure they're being properly engaged with. But, in a sense, that's an implementation review. We've started having discussions with the current UK Government. Obviously, those will continue with the new Government. We're having a set of internal discussions within the Government as well to make sure that, with all the policy areas that are impacted by the operation of the TCA, we are developing that kind of cross-Government set of potential issues for review.

As I said earlier, whilst there has been good engagement, I think, on non-EU agreements generally, the level of engagement on the TCA itself with the current UK Government has, unfortunately, not been particularly strong, which, given it is the most significant agreement for us, is particularly disappointing. So, there is an inter-ministerial group on UK-EU relations, but it doesn't really allow the kind of detailed engagement that we would both hope to see, really. So, one of the opportunities, I hope, with the new Government is to be able to deepen that engagement, and, alongside focusing on what we can do to improve implementation, what are the opportunities for changing the deal itself, and the veterinary agreement, I think, would probably be the most significant of those changes.

Okay. Many people say that not being in the EU has cost us £1 billion a year, but, looking at the bald statistics prepared by our research staff, actually, the export values to EU countries last year was broadly the same as the previous year, whilst, actually, there was over £1 billion reduction in non-EU country exports. Are there particular reasons for that? Presumably, the cost of living, the general sort of crisis in—

I think there's probably a number of reasons for that, but I think it is absolutely the case that there are businesses in Wales who would previously have exported to the European Union who, whilst they're still doing that, are finding it a lot more challenging, for reasons that we don't need to re-rehearse today. And I know as well that there are businesses who are finding that more expensive to do and are not able to pass on those increased costs to their own customers. So, the value of the trade may be remaining constant for them, but what that means for their bottom line can be very different from what it was, and that affects all sorts of other things—what you can pay your staff, what you can invest in the business. So, I think it's absolutely clear that there are significant costs that have been incurred as a consequence of leaving.

Indeed. So, what are the implications for Welsh exports of the EU's carbon border adjustment mechanism?

So, there may be some further changes in this. Because it's in a transitional period, that doesn't come in to full operation just yet, so it's not possible to identify exactly yet, but I think it is an important thing. And I think it's good as well that the UK Government is looking at a similar mechanism, and I think it would be good for those to be aligned—for the UK and the EU mechanism to be aligned. I think, given what we've just been talking about—the level of trade—that would be the most advantageous for Wales, in principle.

Well, it's an absolutely key issue in terms of us not simply exporting our carbon emissions.

Yes, absolutely. Absolutely.

And there is a very specific issue around the UK-India trade negotiations, where India is seeking exemption from the UK's carbon border tax, going forward to 2027. Could you just describe what this potentially could mean for the steel industry, because obviously we're all aware of Tata's plan to continue using imported steel from India and the Netherlands whilst they, apparently, are going to build an electric arc furnace at Port Talbot?

Well, I'm not able to comment specifically on that because those negotiations are active at the moment, so I don't think that that would be right for me to do. But, I have asked the UK Government for their officials to engage closely with Welsh Government officials on this for the reason that you've given and for others as well.

Okay. Thank you.

Lovely. Thank you. Just before I bring in Luke Fletcher, I am conscious of time so, Cabinet Secretary, if you could keep your answers as succinct as possible, and the questioning as well. Luke Fletcher.

Diolch, Gadeirydd. Sticking with steel, then, you've been clear in terms of your calls on Tata about them not making any irreversible decisions before the general election. How receptive have they been to that?

Could you repeat the question please?

So, you've been clear about Tata not making irreversible decisions before the general election. How receptive have they been to that?

Well, Tata's position has been publicly stated and is clear. We met with them on 10 June, including shadow Ministers from the Labour Party as well, to make the case for not making those irreversible decisions until after the election, but you will have seen what their position is, which they've publicly stated.

So, do you think that could be down to not really being sure what is on offer if, say, a Labour Government came into power? We know that there's a carrot there, but the carrot is still very much in the ground, isn't it? We know there's a £3 billion plan put forward by the Labour Party, but we haven't seen any detail on that. So, is there any detail to give, because, as far as I'm aware, the only time I've heard anything specifically about Port Talbot was in a meeting of the Industrial Communities Alliance, where a Labour representative said that it might be around £1 billion. Well, obviously, we have to deal in absolutes here, don't we?

Well, the specific answer to your question is: no, I don't think it's about that. And I think a commitment of £3 billion is a very significant commitment. How that is deployed is a matter for a Government that's been elected to discuss and engage with the steel sector itself, which is why our position as a Government has been so clear that decisions shouldn't be taken until that new Government is in place and able to have those discussions in its capacity as a Government with those businesses.

To be fair to Tata, though, they have to deal in absolutes here, don't they?

Well, there's an absolute commitment by a Government, which is significantly greater than that of the current Government.

With respect, there's a commitment of £3 billion but no specific detail around the site in Port Talbot.

I think Tata recognise that an incoming Labour Government will be able to operate as a Government and have a different kind of conversation with steel producers than it's able to have as an opposition. I think that's a perfectly reasonable position, and I think both parties understand that. The argument that we have made is that, because that is the case, decisions shouldn't be made that are irreversible before that election.

So, what happens if those conversations take place and Tata still don't change their position? Would you support a move by the UK Government to nationalise the site?

Well, look, we've had this discussion many times in the Chamber and I don't think I've got anything to add to the points I've made to you in the Chamber. I have no objection as a principle to Governments taking a stake in businesses where that is the right thing to do, but the situation that we're facing here is very specific. Tata itself is talking about many hundreds of millions of pounds of investment into the works. Obviously, that's not for a plan that we think is the best plan, but that is still a commitment to invest. So, the context in which you've made that point to me previously and, I think, again today is very different from—. I think you were pointing me to the banking crisis previously. I think it's a very different scenario, and I think it is really important that we engage with the scenario that's in front of us here. There is a £3 billion plan that an incoming Labour Government has committed to. That is a significant sum of money, and even a proportion of that is capable of making quite a significant difference in the context of steel making in south Wales and across Wales. Just to repeat the point, that's why we think it's so important that those discussions are able to be had by an incoming Government with Tata.

I'm finding it difficult to understand why there's a reluctance to have on the table nationalisation as a clear option, and I say that because, in negotiations, you need a carrot and you need a stick. The carrot in this scenario would be that £3 billion plan on the table, but you also need a stick then to back up what happens if negotiations go sour, don't you?

And how would that stick work?

Nationalisation?

Yes.

Well, we've talked about nationalisation as being an opportunity to buy time for a just transition, because what we have right now is not a just transition, is it?

Okay. Well, I don't think there's any practical—. No-one has articulated, I think, a persuasive way in which that could work in the context of the current situation. And I think it's really important that we work with Tata, work with the steel unions and make a commitment to additional funding, which is what an incoming Labour Government has made. And I think there is a very changed landscape in the context of a Government that is committed to an industrial strategy, committed to steel making specifically, and committed to a renewable sector in an order of magnitude greater than the current Government, which will increase the demand for steel, will change the landscape and does make the economics different. That's why we think it's important for those decisions not to be irreversible.

So, what is the backstop is what I'm trying to get at here, then? If those negotiations don't go well for the potential incoming Labour Government, what is the backstop?

Well, we will wait to see how those discussions unfold with an incoming Labour Government.

Well, I'd worry it'd be a bit too late then. The reason I'm asking these questions as well is because we've seen Tata show its true colours, if we're going to be totally honest, over the last couple of months. We've had them threaten to reduce redundancy packages—less favourable redundancy packages—they've threatened to accelerate the timetable, because workers have gone on strike and they've decided to stand up for themselves. We've also then had from you right then the news that Tata were inviting workers into what they were calling 'a briefing' on the current situation and then trying to stop workers from leaving the room unless they told them whether they were going on strike or not. I mean, that's not really a company that acts responsibly, is it?

No. We want all companies to respect the rights of workers and that includes the right to take action—workers don't take that decision lightly, as we all know. We've all seen the announcement last week, at the end of last week, by Unite. I have a discussion lined up with Tata later on this week to understand their response to that.

Okay. Thinking about the transition board—because I know we're tight on time, Chair—both you and I were on the same transition board where we agreed the priorities for going forward. How do you see the Welsh Government getting involved in those priorities, funding those priorities and how do you also see, then, some of the Welsh Government's current projects actually feeding into achieving some of those priorities?

Well, how we got involved in identifying the priorities is by participating fully in the board's discussion and decision making around that, which—. You will recall that discussion. I think the transition board needs to work more effectively than it's been able to work so far. I think most participants would share that view. I think we need to make sure that the funding, which has been, frankly, a press release on the part of the current UK Government, is able to be deployed specifically and purposefully.

There are a range of ways in which that needs to be done—some of it is around skills and employability; some of it is about business growth and so on. So, we know what the areas are. So, I think getting a mechanism where those sums can be invested rapidly to support the workforce is the critical thing. There are already funds that the Welsh Government is deploying through our existing programme, so, if you look at our employability programmes, they're probably worth—not specific to Tata, but on a Wales-wide basis—about £25 million.

The personal learning accounts programme has been increased, specifically to recognise the increased demand that will probably come from Tata employees and that's, I think, probably worth about £20 million across Wales. And we've removed some of the qualification criteria within the PLA so that the Tata workforce—which, because of the wage levels, very often would not qualify otherwise—will be able to qualify. And those funds are being spent already, so, people are taking up those opportunities for support so that they can develop other skills or upgrade their skills in particular areas, which is the purpose of those programmes. So, those are already operating.

The critical thing, it seems to me, is to make sure that all these things happen in an aligned way and, critically, that the way that we communicate that to workers, both at Tata, but also, in a way that is more complex actually, workers in the supply chains who are affected by their proposals, because they're harder to identify given the range of workplaces, for obvious practical reasons—that the way of communicating that is very straightforward.

When we come to the general election result, will one of the first calls you'll be making be to get that transition board back up and running?

Absolutely.

Because one of the concerns that I have now is that we've fallen behind because of this general election. Of course, that was after we had the commitment that the transition board wouldn't be affected by the general election—

Indeed.

—so, I'm very conscious now of time moving on very quickly.

I am very clear that an incoming Labour Government will want to move that forward very quickly.

Thank you. I'm very conscious of time, so I'm going to have to move on to Vikki Howells, with the last set of questioning. Vikki.

Thank you, Chair, and welcome, Cabinet Secretary. I will be very quick with my questions and, hopefully, we can get the answer to both of them. Firstly, I know that the committee's been in correspondence with you about the target now, the target number, for all-age apprenticeships, so can you clarify: is that 100,000 all-age apprenticeship starts this Senedd term, as indicated to us in the Welsh Government’s response to the committee’s budget report?

Yes, it is.

Wonderful, okay. And my final question, then: so far this Senedd term, there have been 50,930 all-age apprenticeship starts. What actions will the Welsh Government take to reach its target by 2026?

Well, we've continued with a significant level of funding, and, as you know, the planned reduction that we feared we would have to make in the budget this year, we were able to reverse that reduction, so, in the 2024-25 financial year, we're investing over £143 million, for example, in that, and a policy statement that we issued earlier this year guides our approach to apprenticeships, and, from this year onwards, we have a new approach to prioritising those apprenticeships, which we will review to make sure the frameworks are up to date, and that will enable the system to be more responsive still.

Thank you, Cabinet Secretary. Thank you, Chair.

Thank you, Vikki, and thank you, Cabinet Minister and officials. We've come to the end of the first scrutiny session with yourself. A copy of the transcript will be forwarded once it's available, but we'll now take a short break and prepare for the next session.

Welcome back, ladies and gentlemen, to the second panel of the Economy, Trade and Rural Affairs Committee this morning, a second session with the Cabinet Secretary for Economy, Energy and Welsh Language. It was remiss of me not to say in the previous session that we missed a series of question on free ports, so the committee Chair, Paul Davies, will write to you, Cabinet Secretary, with a series of questions for you to answer on free ports, if that's okay.

Certainly.

But we'll move on straight to ask if you could introduce your panel, knowing that there has been a change since the previous session.

I have Aine Gawthorpe, who is the deputy director for industrial transformation and foundational economy; Neil Surman, who is the deputy director for skills; and Ed Sherriff, who is the deputy director for energy.

Thank you very much, and this is the ninth and final oral evidence session for our inquiry on the green economy. The renewable energy sector has said that Wales is being left behind compared to other parts of the UK, and has called for the Welsh Government leadership to demonstrate the attractiveness of Wales as a location for investment. How would you respond to their concerns and what are your immediate priorities in this area in the coming months?

Well, I actually had a good round-table at the conference I was at in Manchester last week with people from the sector in many, many different ways, and there was a strong recognition, I think, that Wales has a very good offer indeed in relation to renewable energy potential. I think one of the key ways in which we can support the sector is by being clear and ambitious in our targets, as I think that we are. We've also brought in, as you will be aware, changes to the planning process, which will be implemented from next year onwards, which I think will be a significant contribution to streamlining the process for planning decisions to be taken.

I think there has been a concern for Wales, which developers, I think, would say to you, around a lack of certainty around financial support. Some of that is around how the contract for difference mechanism works. This has, I think, led to quite a lot of delays. I think there are real opportunities for us as a country, given our natural assets, our natural landscape: we're a coastal nation, we're a nation of hills and lots of wind and rain—and some sun as well for the solar sector—so I think we have natural assets that we can draw on.

One of the key things for us, I think, is to make sure that we continue to be engaged in those international discussions to make sure that we are looking for those collaborations with other partners, and we are keen to be, and are working hard to be, represented in the kinds of fora where these decisions are discussed and where opportunities are discussed. That's why, last week, I was at the conference in Manchester, together with Ed and others.

And how will the Welsh Government work in partnership with industry, unions and other levels of government to drive forward investment in the green economy sector, and what are your key asks of an incoming UK Government?

We're already very engaged, as I've just said. So, we have the offshore energy alliance in the north, the Celtic sea cluster, the Celtic sea alliance, in the south-west, we've got the Marine Energy Wales activity right across Wales. We had a deep-dive recently, which we published the results of for the Senedd, and that has now concluded. That's identified some barriers that partners have asked us to work on, which we are doing. I think there's more of a role that the Advanced Manufacturing Research Centre Cymru could play in some of the renewables and other green economy opportunities. It's a huge asset for Wales, I think, in terms of its capacity to help with innovation in some of our manufacturing sectors. In the broader green economy, if you like, I think there are really good examples already of progress in relation to the circular economy, so building on our very successful track record in recycling, really good work, both with businesses, with trade unions and others, on how we can expand that sector, and I think that is genuinely—you know, we are genuinely world leading in that part of the economy.

Thank you. On 17 April, you announced your intention to work with the renewable energy industry on a sector deal. Can you outline what you think this would look like and what discussions you've had with the industry on this, so far?

Yes. There are ongoing discussions, which Ed and others are leading on, with the sector. The purpose of this is to respond, if you like, to the points that came through from the deep-dive. But we've been advocating for this for some time. I think the Scottish Government now have one, as well. It's about identifying what the obstacles are and what commitments both the Government will make on the one hand and developers on the other to addressing some of those.

So, from our point of view, I anticipate that we will be looking at things around planning capacity; about aligning planning policy and biodiversity policies in other parts of the Government; finding ways to ensure that the resources that are in the sector, in the hands of developers, can be used to increase our capacity as a Government and consenting bodies, to respond to what is a huge opportunity and, therefore, a huge level of demand. So, it's about a very practical set of things that we will agree to do as a Government. I think that we'll be able to get on with some of those in very short order, so I would like to be in a position to have that sector deal more or less in place by the end of this year, or very early next year, if we can—and obviously, it's an agreement, so one can't be specific about that, but that would be my hope—and in the same sort of time frame, that we would have been able to make some progress on some of those consenting capacity questions as well.

Okay, thank you. And clean growth hubs, how do you intend for these to invest to support their development and where do you anticipate these being located?

Well, I was at the launch of the first one in Barry last week—I'm not sure if that's gone public yet, but in anticipation of that. There's one in Barry, one in Llantrisant, Milford Haven, Deeside, Wrexham and Newport; they're the current areas in scope. We've worked with Net Zero Industry Wales for some time on this. Obviously, we've got two key industrial clusters—one in south Wales and one in the north-east—and they've been working very hard in relation to these. So, an example for you is the one in Barry: obviously, significant port infrastructure, established chemical sector and a renewable energy offer on site, so that can be used to attract high-investment, low-carbon businesses, some in hydrogen, some in carbon capture and storage and other renewable and green energy sectors, clustering together. And we obviously understand that that has a beneficial effect in terms of driving up business opportunity, growth, skills levels and other things that we would all want to see.

Okay, thank you. Jenny Rathbone.

Thank you. RenewableUK Cymru, in their written evidence, are asking for the Welsh Government to

'Provide leadership and convening power to demonstrate a strong signal that Wales is the place to come to invest in the green economy.'

And, surprisingly, they argue that Wales is being left behind compared to other parts of the UK. Given that there's been an absolute ban on inshore energy wind development, I find that quite surprising. So, would you accept that that's the case? And if not, how are you going to provide that leadership and convening power, so that everybody's moving forward in the right place?

I think it's probably fair to say that RenewableUK would make the demand of all parts of the UK to be doing more, wouldn't they, I would have thought. Certainly, I would be making that case if I was them. And there's much more opportunity for all parts of the UK than is currently being taken advantage of. So, I think that's the space that we are in.

And just as I was answering the question earlier, I think it's about—. I think it's an important point about convening power, by the way. I had a very, very interesting and very productive round-table meeting, which we as a Government convened in Manchester last week, for the players who were there, parts of the UK, but also internationally, and it was a really granular, practical discussion about who can do what to move the agenda forward. The deep-dive that we've undertaken is part of that role about leadership. One of the short turnaround reviews that we are doing, in fact two of them, are relevant to the renewables sector, one is specifically on accelerating growth opportunities in floating offshore wind and one is about how we can connect policy to change on the ground in terms of future skills. So, I don't think there's any shortage of leadership on this.

There are some practical challenges. I was at the British-Irish Council at the end of last week and the theme of that council was about the renewable energy sector. Governments everywhere were talking about the imperative to make sure consenting is as rapid as possible, consistent with the other policy objectives that Governments have, obviously, but also around supply-chain mapping and skills enhancement. These are common challenges, I think it's fair to say, for Governments everywhere, and I think the leadership that people look to us to provide is on having a plan for addressing those, which were some of the things I was pointing out to the Chair earlier.

Okay. RenewableUK Cymru are talking about a lack of a consistent pipeline of onshore and offshore wind projects, which obviously does, if true, disrupt things for all parties. How do you think the Infrastructure (Wales) Act 2024 will enable us to have a smoother analysis and approval, where appropriate, of the proposals?

Well, I think there are two points. The pipeline point is actually a very good point. I was saying earlier, in a sense, the challenge isn't a lack of resource in the sector. I think there is an eagerness to invest, which I think is a good thing, because that's often the challenge we have, isn't it, a pressure on resources? But in order for developers and others to commit what are many, many tens of millions of pounds on spec, if you like, you need two things. One is a sense that you've got a planning and consenting regime that is, as I say, consistent with other policy objectives, as supportive and as predictable, I suppose, as it can be. But, secondly, that you have visibility of a pipeline of projects over many years. That is the reason, in the offshore space, why we've been pressing the Crown Estate to be clear not just about its current leasing round, but the future leasing round for the other, I think, 12 GW capacity. People want to know that they can invest, that they have projects that go beyond the next three or four years, if they're going to be putting in many tens of millions of pounds upfront. That's why that conversation is so important.

Okay. So, when you told the Global Offshore Wind conference last week that Wales is starting the charge towards a green energy future, what specific actions are you intending to take to do this, given how crucially important it is, and how can we learn from good practice elsewhere?

On the second point, there are definitely things we can learn from elsewhere, but there are things that elsewhere can learn from us as well. It's important to recognise that, I think. Some of the discussions I was having at the British-Irish Council at the end of last week were very much in that space. What approaches are other jurisdictions taking to net-zero skills, for example? What approaches have we been able to take in Wales to reconcile some biodiversity priorities with consenting priorities? I think there is quite a supportive discussion to be had with other Governments on some of this. To some extent, it's a competitive environment, obviously, but I think there's more that we can do.

In terms of what we are doing, it's partly about changes to planning and consenting, so the infrastructure legislation will change things. The commitment of additional resources to Natural Resources Wales, so that they have more capacity. There is a good discussion happening with the sector based on a pilot, effectively, or at least a project, in south-west Wales, where developers have provided funding to Net Zero Industry Wales in order for consenting bodies to draw on that funding when they need more capacity.

So, the critical thing here is, if we're asking developers to contribute in that way, clearly there can't be a nexus between that and the decision that ends up being taken, for reasons that are obvious and correct. So, we are working productively on a mechanism where we can ask developers to contribute resource that consenting bodies can draw on when they need more capacity, at peak times or when there are particular pinch points, but doing that in a way where there's an intermediary, so there's no link between the two. If we can do that, that will enable us to increase planning and consenting capacity and make those decisions faster, and be better able to respond to the level of demand, if you like. So, I think those things are all in quite an innovative space.

Okay. I mean, that is the purpose of the infrastructure Act, is it not? It's to try and ensure that we've got the right expertise in place to respond within some set timescales.

So, I'm making two points. One is about having the legislation that puts in place the faster system, and the separate point is about making sure we've got the capacity in the system to address the level of demand that we know is there.

Okay.

Thank you very much, Jenny. Hefin David.

One of the consequences of those planning changes and some of the issues that you've raised in answer to Jenny Rathbone is that we seem to be, particularly with regard to onshore, heavily reliant on companies outside of Wales that are very much profit focused, capital oriented. You could give Bute Energy as an example of that. I'm not making an objective judgment, I'm just suggesting as a socialist that I'd be more comfortable with community-based, home-grown companies. How specifically are you going to encourage those home-grown organisations to develop onshore wind?

Well, we have actually been doing very well against our target for energy production from community ownership, and we've actually extended our target now in order to make it more stretching. So, our new target is 1 GW [Correction: '1.5 GW'] of capacity by 2035, and that is really important, I think, because we want to see more community ownership of renewable energy generally, for some of the reasons you ask in your question. The Senedd is looking at a legislative proposal later on today about mandating that. My own view is that that runs the risk of limiting the investment that we need into the sector, but I do absolutely think that we need to make sure that we are maximising the opportunity for communities to benefit from developments in their locality.

Part of the rationale behind Trydan Gwyrdd Cymru, for example, is to be able to capture some of the income that is available from onshore wind, and then to be able to reinvest that in local communities. So, that is a fantastic opportunity for us. The work that we're doing with Ynni Cymru was about developing local smart energy projects at scale, and that will help increase that sense of direct community benefit from renewables. I think there is more of a role probably that, for example, the Development Bank of Wales could play in this space over time, to provide financing, to make that larger scale community involvement and investment in renewable energy more feasible. So, there are some very practical things that we are doing: targets, setting up our own operations, but also providing, I hope, over time, that more supportive funding environment as well.

Apologies, Hefin, Jenny Rathbone just wants to come in at this point.

I just wanted to pick up on the community benefit pots of money that are already growing as a result of the existing onshore wind operations. At the moment, it seems to be spent on worthy, but really quite minor things like improving playgrounds, rather than decarbonising all the homes in the communities that are supposed to be benefiting from these schemes. And I just wondered what action the Welsh Government's taking to ensure that communities are supported to put in bids for much more ambitious projects around decarbonising homes and improving communication links, and things like that.

Well, that, really, is some of the work that Ynni Cymru will be doing. That's specifically about making sure that we can support communities to have a more strategic view of how that funding can be deployed. So, that, really, is part of what that is there to do. I do recognise there's a tension, isn't there, between what are sometimes quite significant sums being deployed in a way that meets an immediate need, but perhaps doesn't create that direct link between energy costs locally, for example, through energy efficiency on the one hand, and the fact that you've got a windfarm over the brow of the next hill. So, I think there is more to be done, and that's the point of Ynni Cymru. But I think as well that Trydan Gwyrdd Cymru will be doing some of that as well.

Just to be clear, we have really good examples in Wales already of this work, and Ynni Ogwen's a good example, where the funding is being used to drive low-carbon transport locally. So, there are actually really good examples on the ground already. What Ynni Cymru and Trydan Gwyrdd enable us to do is to scale that up, really.

Have any targets been set for this, similar to the 1 GW by 2035 ?

We have got targets for Trydan Gwyrdd Cymru. I don't have them in front of me, but Ed probably—

Okay. Perhaps you could write to us with them.

Yes. So, the ambition to have 1 GW by 2040, is the target, developed. The key constraint there is around good connections, which is obviously a key barrier across Wales. We can develop the projects, but we need to get them connected and energised to the grid, so that's the key constraint. So, 1 GW by 2040 is the aim.

Hefin David.

Jenny Rathbone mentioned community benefit, and I’ve got that concern that it's a nice-to-have for most of the companies that come in, rather than a fundamental objective of those organisations. Does the Cabinet Secretary share, perhaps, a fear that I've got, that the model for onshore wind and renewables will follow the same approach that has been taken across the UK with housing, where we rely on the big companies like Barratt and the likes to build, with the community benefit from housing associations added as an aside, and therefore we're going to end up with a green economy that's hugely reliant on outside capitalist organisations? I think there's a real concern here, and I'd just like to hear more about how local government, local community working can achieve a better offer than simply going for the albeit cheaper one of relying on big corporates.

I don't think it's about the cheaper one. The point I make about mandating local ownership is that that requires local ownership, and there may not always be that demand in a particular profile. I think the better way of approaching it is to make sure that we have stringent targets. We have pressed our targets even further recently, and I would be very content to press them further, frankly. The whole point of those is to be keeping people's feet to the fire, in a sense, and doing more and more in this space. But I think there also needs to be a recognition that, in order to provide that community ownership, there needs to be a funding model, which may not be physically present in lots of communities. On the work that I alluded to earlier—is there more the development bank could do in this space—I'm sure that over time there is. You could imagine that providing a level of funding into projects, which enables this to be taken forward much more rapidly and at scale. So I think that's the approach that I'd advocate.

This is the last question from me. Do you see any benefit from the promise of a UK Labour Government establishing Great British Energy? Does that have any consequential effects for the way we run our transition and our renewables here in Wales?

There's an opportunity for us through that. That is certainly not an intervention that exists outside Wales only. There'll be opportunities for investment that come from that, which I think are very exciting and will enable us to meet some of the policy objectives that I know that you and I share.

Diolch, Gadeirydd dros dro.

Thank you, Hefin. Now we'll move on to Vikki Howells.

Thank you, Chair. Cabinet Secretary, going on to skills, your paper to us says the recent consultation on net zero sector skills will help to inform the sector skills road map, and we've heard from a large number of stakeholders about the need for a road map so that the education and skills sector can plan strategically ahead. So, how are you working with stakeholders, including industry, employers and skills providers, to ensure that these road maps are co-created and provide the certainty that they're really looking for?

I think this is a really fair point. I think one of the challenges that sometimes we have, for reasons which I think are probably unsurprising, is that busy employers often find it a challenge to articulate exactly what the skills mix is that they need today, to be fair, let alone in five years’ time, perhaps. And this isn't unique to Wales. I think it's a feature that is very common. That's why that co-design is really important. We've had a lot of information through the consultation. Obviously, that closed at the end of last year. We've produced as a consequence of that the first draft of those road maps, and Neil and the team will be working, and Ed and the team will be working, with some of our key partners and with industry more broadly to expand those. There's a series of workshops happening over the summer months.

I think the key thing is that those road maps need to be iterative and able to be adjusted to reflect the pace of change in the sector, as much as anything else, and so that we can be alive to the response from investors, from industry, from trade unions or the workforce about what more support, what more guidance they need. So, there will be a road map for each of the eight emissions sectors that we've talked about in the plan, and that will provide what I hope is an accessible visual representation of how businesses need to respond. I'll also be having a set of bilateral discussions with Cabinet colleagues who've got a particular interest, so that we make sure that there's a cross-Government level of working. And I'm planning at this point to publish the first iterations of the plans when we're back in the autumn.

Thank you. We've recently undertaken some case studies on Anglesey and in Pembrokeshire, where employers told us they were struggling to recruit workers or were reluctant to take on apprentices because they felt they weren't able to guarantee work. How are you working with employers and skills providers to address this challenge, which really could result in employers moving out of Wales and people seeking jobs elsewhere?

You identified Anglesey and Pembrokeshire. I would say that there are very good examples both in north Wales and in west Wales of developers working with local further education colleges, having made a commitment to do everything they can to recruit from the local labour market, which obviously is important, and we would strongly support and welcome that. They've then said, 'These are the job roles that we need, these are the specific skill levels that we need over this period of time', and I think that's created quite a productive working relationship between those FE colleges and developers and investors in north Wales and west Wales. I think, in a way, the task is to make sure that we can systematise some of that good practice across the system. So, in north Wales, and I think in west Wales, it's RWE working with Coleg Llandrillo and Coleg Sir Benfro.

But I think there is a challenge about that long-term visibility. We need to make sure that people know that there are job opportunities that are going to be there for the next 10 or 20 years, don't we? Some of that is about the point I was making to Jenny Rathbone earlier about visibility of Crown Estate leasing, for example. But, on the other side, I was in Coleg Llandrillo a few months ago talking to some of the apprentices there on the RWE offshore apprenticeship training scheme, and they come from all over the UK, by the way, not just from parts of Wales. And the strong sense that you get there is that these are people embarking on a career in a sector that's going to carry on growing throughout their working life. That's not true of every sector, is it? So, I think that's quite encouraging.

But there is more that we can do, I think, working with employment bureaus and FE colleges, making sure we take full advantage of things like National Apprenticeship Week to focus that on some of our renewables and net-zero sectors. And there's the point I was making to Jenny earlier about pressing for that long-term visibility.

Thank you. Building on that, we've heard of particular challenges around encouraging young people into so-called 'green jobs', and whether we should be looking to rephrase that terminology because they're seen as not yet being tangible or available. So, what kind of conversations are you having with the Cabinet Secretary for Education regarding consistency of access to schools for colleges and employers to speak with learners about these kinds of future careers?

Some of it is about modelling what these roles look like, isn't it? So, Careers Wales have been working on a series of case studies showing young people progressing into green jobs, and some of those, at least, are up on the website already. They're developing a 'future jobs Wales' page, which will provide more granular detail alongside some of that, and they'll then be using those resources when they go into schools and when the careers advisers are giving that specific advice.

The regional skills partnerships have been working on some school-level engagement for employers, which I think is very important. Obviously, the curriculum changes that we've introduced provide much more scope, I think, for engagement with employers. There are some very good examples already of this happening. In Denbighshire schools, in particular, there have been some good ways of integrating renewable careers into curriculum opportunities, and I know in other parts of the UK you've had primary school children learning to build models of floating offshore wind platforms and taking them down to the beach and floating them into the sea, which is an obvious curriculum opportunity, but also brings the thing alive to people. So, I think there's a lot of creativity.

Atc FE level, there's some good work, I know, been going on in Cardiff and Vale, where there have been engineering and construction firms coming in and talking about what net zero means in those sectors, so that they can bring alive some of the opportunities for students at FE level as well.

Thank you very much, Cabinet Secretary. Thank you, Chair.

Thank you, Vikki. Just on Vikki's final question there, Cabinet Secretary, I've raised with you in the Chamber before about future skills and making sure we have an audit of what skills are going to be required for green opportunities going forward. But the more I've thought about this, a welder who is going to be fabricating for a floating offshore wind rig would still have the skillset that could be transferable into other current industrial opportunities. So, are we phrasing this wrong when we're looking at this? In terms of focusing our development on these skills and training of young people, are we focusing incorrectly in the areas, segregating two industries and not understanding the transferability of these skills?

I don't think we are segregating them, in reality. What we're basically saying to people is—. In a sense, the point we're making is that a lot of the skills that we need for the future are ones that we are currently training people to do, but applying them in different sectors or in different ways. There will be any number of renewable sectors—I don't just mean energy sectors, but renewable sectors more broadly, the green sectors, if you like—who will say that to you. We had a debate in the Chamber about nuclear skills, didn't we, and 80 per cent of those skills are common to other sectors. So, part of this, and the net-zero skills plan is designed to do this, is to help businesses to understand how they can go on the journey from the skill set that they have today to the one that they're going to need in a few years' time. Some of them need them already, obviously. And actually, some of it is about applying skills and qualifications that already exist, but in, sometimes, a different setting.

Thank you. Luke Fletcher.

Diolch, Cadeirydd. I think, actually, the example of the need for more welders is quite important, especially in the context now of where we look at the Celtic sea, where offshore wind is going to be pushed out from Port Talbot, and in the context of what's happening in Tata. The reason I reference Tata again is because we've been talking about the need for a just transition for, let's say, a decade or more, as if it's something that's coming down the line. Well, it's here now, isn't it? The need for policies to be in place is here now. Tata crystallises that, I think, for us very clearly. So, I suppose my question to you, Cabinet Secretary, is what policies are currently in place now that would ensure a just transition and what more do you think Government needs to do to guarantee a just transition.

From a workers point of view, I think a lot of it is about making sure the skills that people have are ones that enable them to flourish in that changing economy. The personal learning accounts that we fund to enable people who are in work to reskill or to change their skills profile, and the employability and skills plan more broadly, are intended to do that, making sure that we can raise skills levels, raise qualification levels, apply those skills, which are the same skills as the Chair was saying, that are needed in some of the newer sectors, and that people understand that. The work that Working Wales does does that as well. The skills focus that we have has been given a real boost, I think, by the net-zero skills action plan, because that connects provision to demand, doesn't it? That's the critical thing, so we can help people on that journey in a smooth way to make that transition fair, but also manageable and smooth in the way that we obviously all want to see.

In terms of what more can we do, we had, I think, very useful responses from the consultation on the just transition framework, and I think there was a strong sense in that about engaging stakeholders more broadly, making sure communities understand what just transition is about and what the impacts might mean for them. Obviously, there are some issues that I've just talked about in relation to skills provision. I think there was a good level of engagement with that, and I think there will be some things in there that are very useful for us to take forward. One of the things that we are working on as a consequence of that is some specific guidance, a toolkit of practical things that employers and organisations can look to as they transition to the more sustainable economy that we obviously need.

I think the focus on skills is the right focus, clearly, and I've been very supportive of the idea around that sort of skills audit—the skills that we're going to need in the economy, but also what our current FE institutions are also offering in terms of trying to get to that point. And I think that's quite an important piece of work to do because there seems to be, to me, a slight disconnect between what the Government is saying that it's already got in place and what the FE sector are saying that they understand as being sort of a pathway forward. And I say that because, in the conversations that we have consistently with the FE sector, what comes through is the ansicrwydd—

Uncertainty.

Uncertainty—the uncertainty around, well, where do they take new projects, and where do they go in this whole green skills agenda and not being clear on what that means. So, how do we get to that point where they understand exactly what's expected from them from the Government, in a way, then, that actually benefits everybody?

Okay. So, there are two things. I think I do recognise some of what you're saying, because I do have some of those conversations myself, but I think it's quite a complex set of things that are going on behind that. So, I think part of it is about where you get the data from about what provision should be available, and so the net zero skills plan is designed to create that understanding amongst employers of what is required. But, as I was saying, there are some colleges who will have very good relationships with particular developers, for example, in the context of renewable energy, and they've been able to say, 'Look, these are exactly the things that we need', and the colleges are basically providing those. So, that is a well-functioning relationship, it seems to me.

The point I was making earlier about systematising that is sort of the answer to your question, but there's another dimension to this, which is that we've got the regional skills partnerships that plan for the longer term needs of the regional economies, and that's very, very important work, and that feeds into policy and provision. But I think we also need a national picture on that as well, because Wales is not a very big country, is it—so, having that national picture. That's some of the work that we're putting under way at the moment.

Yes, and the size of Wales actually gives us a good advantage in being able to link up a lot of these thing very easily.

Yes.

One thing that we have discussed as a committee is what's happening in Scotland at the moment with their just transition commission. Is that something the Welsh Government has considered as a way of sort of monitoring—having that independent voice that monitors Government policy, as well as implementation?

Well, we've got a prior approach, haven't we, which is the well-being of future generations Act, which, in a sense, has just transition at its heart, I would argue. That's about living in a sustainable, just country. So, in a sense, we've got our own solution to that, which is the commission and the legislation.

I would say, though, that one of the things we heard in the response to the just transition framework was the need for a sophisticated understanding of what just transition means to be integrated into the work of the various fora that we have doing various things across Wales, in a way that, perhaps, isn't yet there. So, I think my own view is doing that is the critical thing, so that public services boards, and all our partnership fora, really, really have a clear and good understanding of what this means, because, in a sense, it's an organising principle for the whole of society, really, isn't it.

If we're going to rely on the future generations Act, then, it's fair to say that it needs to be toughened up a bit and given some teeth, because I think we can all point to examples in our own areas where local authorities have said stuff like, 'The LDP takes precedent over the future generations Act'. I can point to two in my region. So, there's a need to toughen up that Act, isn't there.

I think it's about culture change at the end of the day. I think that's what will enable us to get to the right end result. And that's why the legislation has developed in the way that it has, really. I had, in my previous role, plenty of scrutiny from the former commissioner in relation to some of the things I've been doing, and it's been very clear and very specific in terms of what we should be doing in response, and we are then able to engage with that, and you can scrutinise whether we're doing it well or not. I think that's a good way of achieving culture change, which is the critical thing.

I have two other questions, Chair, but I'll hand back to you because I'm conscious of time.

Thank you very much. I've just got one question, then, in terms of nuclear, which you mentioned earlier. Would you see nuclear as part of Wales's green energy future?

Yes, as part of that broader mix involving nuclear and renewables, it's important to make sure that we're doing everything to decarbonise energy generation in Wales. We obviously have a history of nuclear in Wylfa and in Trawsfynydd, and I think we've seen from the current UK Government an indication of a future path for Wylfa. I think one of the challenges in this area has always been being able to provide certainty and visibility so that we can make the choices, make the investment, make the skills investment so that communities can see the opportunities as well. But, as part of that broader mix involving renewables but also nuclear, I think it has an important part to play.

Okay. Thank you. Jenny Rathbone wanted to come back on a point.

Yes, I just want to come back to the challenge for producing green steel, the transition from carbon-intensive steel production to green steel production. I don't want to go back into Tata at all, but the letter from the Celsa chief executive that we noted earlier has some very specific asks, which is that it wants a low-carbon steel innovation fund to accelerate the technology, as well as having more competitive electricity prices that aren't pegged to gas when we need to be getting away from gas, as a way of also incentivising more renewable energy. So, I just wondered if, in the final moments, you could say a little bit more about this, because we certainly can't build these arrays without steel.

I think the point about innovation is important. I would say that there are a number of ways in which we support innovation in steel production already. Even last week, or the week before last, a new, I think, £1 million fund was committed by Innovate UK to support Swansea University, Tata and others to capitalise on the floating offshore wind opportunities. And there is already investment in innovation in a number of ways in steel, but I do recognise that that is an important thing to do. I think that the work that we've seen, which the UK Government have introduced, around the supercharger, which addresses some of the particular pressures of high, intensive energy-using sectors is welcome, but it absolutely has not addressed all the pressures by any means on the sector. So, I absolutely recognise that there is much more that needs to happen to provide that level playing field that we see that other European countries have put in place for many, many years and has enabled them to make different choices.

Thank you. The final question, Cabinet Secretary, before we do run out of time: do you think the Welsh Government is agile and flexible enough to capitalise on the opportunities of emerging technologies in the green sector?

I think we are, yes. I think there are challenges that all Governments face in terms of the scale of the demand and the opportunity. It's a positive thing, really, to respond nimbly to that, and everyone is looking to improve their agility to be able to respond more rapidly, and the Welsh Government is one of many Governments in that position. What I'm absolutely clear about is that we have a particular opportunity in Wales because of the features I was talking about earlier. We're a small country, we've invested in changing our planning system and we're looking at innovative ways to connect the resources in the sector with the consenting capacity that's needed to be able to make rapid progress. I think that shows a Government that's really committed to the sector, and the message I had to investors, if you like, in Manchester last week was that we are a Government who wants to work with them as a partner nimbly, responsibly, responsively. We have demands of them, they have demands of us. The sector deal is meant to enable us to negotiate a good outcome for that to give people certainty and to draw that investment. It's a fantastic clean energy opportunity, but I'm really clear that it's a fantastic economic opportunity for us as well.

So, you would disagree with the categorisation that some industry bodies bring forward that the cogs of Government turn a lot slower than the cogs of the private sector, who are looking to invest and get these projects up and running.

I think that's a slightly different question, Chair, and I think Governments everywhere probably are in that position, because there are other things that Governments have to address. The point I'm making to you is that we are looking to put in place the most responsive system we can possibly have and to work with developers to provide that outcome. I think that sector deal approach is our signal to the sector that we want to work with them as nimbly and as rapidly and in as agile a way as possible.

Thank you, Cabinet Secretary, and thank you, officials. Time has beaten us, unfortunately. A copy of today's transcript will be forwarded when available. Thank you very much for joining us.

I now propose, in accordance with Standing Order 17.42, that the committee resolves to exclude the public from the remainder of today's meeting. Are all Members content? Content. Thank you very much.