Public Accounts and Public Administration Committee

As you might expect, we have a number of questions to cover, and I'd like to ask both Members and witnesses to be as succinct as possible to enable us to cover the wide range of issues this topic has generated. However, before I ask the first question, Permanent Secretary, I wish to express concerns at the delay in the Welsh Government's annual report and accounts 2020-21 being finalised and published. The Welsh Government is of course accountable to the Welsh Parliament and this Public Accounts and Public Administration Committee, which has an important role in scrutinising these documents. I use the word 'important' because it is important, and an important output from our work in this area is to ensure that any findings and recommendations arising from this can inform the following year's accounts. Given we are only two months away from the end of this financial year, we're now past that point this time, and the delay has prevented us from fulfilling that role.

Of course, we understand and respect the audit process that needs to be conducted in finalising the accounts, but we will not allow the delay to compromise or curtail our scrutiny. We will conduct our work thoroughly once the accounts are finalised in due course. This will include seeking clarity on practices for the future preparation and audit of the Welsh Government annual report and accounts. Audit Wales will be briefing the committee in private later on the situation, and Members will then have an opportunity to ask further questions. So, before I move on, I invite Dr Goodall to respond on this matter and also indicate if he is aware and can share with us the revised timetable to finalise the accounts.

Diolch, Cadeirydd. I completely understand the concerns, and you'll be aware that Welsh Government has had a really good record over many years of ensuring that the annual accounts were both prepared, audited and able to be scrutinised, and I completely understand that we need to ensure that the committee is able to discharge its role and responsibilities. Of course, in my previous role, I was responsible for overseeing and ensuring the annual accounts of the NHS were signed off, which is a very material part of that process, and I absolutely understand that, in my new role, which—. You're aware that I wrote to you just at the end of November last year, just to keep the committee updated, and I wanted to ensure that I did so personally, having only just taken up the role. The initial delay, you'll be aware, was a feature and we've been dealing with some unusual arrangements just because of the pandemic response, and needed to make sure that appropriate information was provided, but there was a delay due to the additional work that was undertaken by Audit Wales on support to business grants provided by Welsh Government. It's been a very high-profile area. It's been a really important area of support. And certainly, some of the initial delay was due to that being a material and complex area that needed further review and discussion with Welsh Government. I hope that, with Audit Wales colleagues, we have managed to work our way through that information and to satisfy some of the outstanding concerns, and of course that will be a matter for Audit Wales in respect of the audit process.

I think that the further delay, which just pushed back our normal timetable post November, meant that also we needed to just advise Audit Wales of a potential post-balance sheet event, given that there was already a delay in the existing annual accounts, and to be transparent, to just ensure that that was raised with Audit Wales. Audit Wales, on the exchange of information that's been taking place have decided that that issue needed to have further review, and of course that is a matter and a judgment for Audit Wales themselves. I hope that we have been able to respond to the outstanding queries from Audit Wales. I, certainly, with the Auditor General for Wales, committed to ensuring that there was further information and detail provided by 7 January, and there have been some subsequent discussions with them. So, my hope is that any further queries can be resolved in order, of course, to allow me to discharge my own responsibility to sign off the accounts as well. This was raised in our audit and risk committee earlier on this week, where we were being internally scrutinised—Audit Wales were there as well—and I hope that it's possible that, over the next one to two weeks, we will be in a position to have those accounts signed off, but obviously the audit opinion is out of my hands and I'll just need to make sure that we can still reconcile any outstanding information. But if I could just commit, Chair, to say firstly that if there is any information, I will make sure that that is provided, and secondly, of course, in terms of your own role as a committee, we're very happy to be flexible in terms of any timings for you to be able to discharge that appropriately. I know our original intention was to have started that annual accounts review during the month of January.

Okay. Thank you for your comments, which we'll consider when, as I indicated, we discuss this later.

So, if I can start the formal questioning for this session focusing on the public bodies unit's overall work programme and remit, could you tell us how the PBU has prioritised activity as the pandemic has impacted both staffing resources, and what discretionary activities have been most affected?

Yes, thank you. Diolch. We've had a strong background as wanting to review this area. The 'Delivering Together' report that was originally done back in 2018 gave us a strong basis, not least the requirement to establish the unit in the first place, but I think, like many of the activities of Welsh Government, and public services more broadly, over the last couple of years, clearly, there has been an impact from the way in which we needed to divert resources to the pandemic response. The unit itself has obviously got some core functions that it's had to maintain despite the pandemic context, and I'm very happy to speak to some of those. For example, whilst there have been some reductions, and indeed there was a pause around the public appointments process, there have still been over 100 posts, actually, appointed to during the last year, and that has been despite the pandemic arrangements. But I think it's worth saying that, in terms of teams affected across the organisation, we have had to divert some significant time and attention across many of our services within the civil service. I would judge that probably around a third of our workforce had to be directly involved with the pandemic response at various stages, and, of course, everybody would have been affected. However, for a small team, sometimes the impact is much more significant, and certainly the staffing arrangements for the unit have been affected, because we had made a judgment that, in terms of prioritising activities across Welsh Government, we were able to take some of the experienced members of the team and actually deploy them for some of the pandemic work and some of the extra work that was necessary for us to deal with as well. And I'm very grateful on the one hand that, across the organisation, that was possible; staff wanted to do the right thing. But it did mean that despite having a complement of 23 staff, we have only had 14 members of staff able to kind of carry on with the residual work, if I can put it in that way.

Having said that, I do think the team have done well to maintain areas. We've managed to maintain the public leaders forum approach. In fact, I have to say, that's become a really useful mechanism and a network during the course of the pandemic, because it's been an area where we've been able to use some of those Welsh-based relationships as well. But as with other areas of Welsh Government, yes, the team has been quite significantly affected, and therefore we have had to adapt the work around the team, rather than being able to perhaps have the momentum that I would have wanted and expected to do everything that was in line with the public bodies unit's responsibilities.

Okay. Moving on, what challenges do you believe that the different status of the different arm's-length bodies pose for the Welsh Government when developing guidance and communication relevant to all of them, and what factors do you consider when deciding on the creation of new bodies, what form they take, and what role the PBU will play in that process?

Chair, I may ask Peter and David if they wish to come in and help on this, but certainly, there are challenges. I think defining arm's-length bodies, defining public bodies, you will end up with a different definition, and there are different approaches, and I think one of the things that the public bodies unit has to discharge, of course, is the more direct support for the arm's-length bodies, but I know, even from my previous role, that, of course, it had a very significant role supporting me in my NHS Wales chief executive role around the public appointments process, around supporting mechanisms like honours, for example, within the health system. So, it does have a responsibility to point to a wider variety of organisations, if it doesn't have the oversight responsibility, as well.

We try to get around the different status of organisation by trying to help with, where needed, body-specific guidance. There are, for example, framework documents in place, and there will be more general guidance that we have to provide, using the public bodies unit, such as the pay remit. But, actually, it's important to recognise that, whilst these are a collection of bodies under the arm's-length label, they still have different contexts. So, you have a combination of companies, charitable trusts, royal charter-led institutions, as well as some more traditional public service bodies, and therefore it is important that, whilst trying to create some consistency, you do allow for some of that different context to apply. So, yes, there are some constraints on that, but the original 'Delivering Together' report was trying to bring a more coherent framework together, and I think we've been able to discharge that and still make progress.

Certainly, when we're looking at the establishment of units, they really should be a decision of last resort. We want mostly to try to use the existing mechanisms that are there. But, irrespective of when there are thoughts to establishing a new arm's-length body, it's really important that the officials, in terms of advice that will end up in front of Ministers, have actually understood and worked through the guidance that would apply. We have issued formal guidance in the organisation. There was a bulletin that we issued to make sure that people knew that it's quite a high bar that needs to be set. I think the three main principles that we would expect to be considered when deciding on which public body should be set up are: whether the body is going to need some kind of external expertise to deliver its objectives; whether the body needs to have more of an independent nature, certainly independent of Ministers and perhaps needs to have a particular focus on facts and figures associated with that; and also there are approval processes in place—so, of course, officials aren't just able to decide that it's a good thing of itself and they will need to seek the usual approvals, whether they are, in the first instance, at director general level and, certainly, of course, at ministerial level as well.

Thank you, Chair, if I may, I think the creation of the public bodies unit has allowed us to make sure there's a greater consistency of advice from the Welsh Government when there are generic issues, because previously that was all being filtered through each of the individual sponsor teams, so there was a risk of mixed messages. So, where there are generic issues, and some of them are clearly generic, like how do you approach GDPR and stuff, the public bodies unit deals directly with these bodies.

The two things that we've really got to get right in this area are listening to the bodies and communicating with them to make sure that we're not just handing down tablets of stone, that we'll work them, and, as the Permanent Secretary said, making sure that we get our internal communication right. So, with things like the creation of a new body, there are lots of people across the organisation who need to make an input from their own view, and, as the Permanent Secretary said, the basic question is, 'Is there a business case for doing this in the first place?'

Thank you very much. Just for the record, I wondered if, very briefly, as apolitical servants, you could summarise why a government would establish a body as an arm's-length body, rather than as part of a government department.

Chair, we just have a security alarm going off, if could you just bear with me for a minute, with my apologies. My apologies, Chair. There may still just be a follow-through. It's just a security announcement, I'm afraid, so—[Interruption.]

Can I just say, Chair, I've kind of missed this with remote working and not being in the office? It used to be a part of life every week.

David, could you start, perhaps, because you're not affected?

Yes, certainly. The first thing is what jobs need to be done and then it's a pragmatic decision about who is best placed to do that job. So, sometimes, there's an issue about branding—you know, is this something that would be better being perceived as a free-standing organisation. Although, even with that, there's a kind of halfway house, where you can have something within the Welsh Government that has a different brand. Cadw is, to all public purposes, an outward-facing organisation, a separate organisation, but it's not, of course; it's an integral part of the Welsh Government. But there are other organisations where the perception needs to be outside. And then, the other thing is: what is the function? The Welsh Government has a core business, but a lot of our arm's-length bodies do functions that certainly aren't our core business, like Transport for Wales, or Natural Resources Wales. And when you need a considerable amount of expertise that wouldn't normally be part of the Welsh Government, there is often a good case for putting that separately and managing it. And then, another reason is when it's actually better for the function to be slightly more at arm's length from Government, and so the day-to-day running is overseen by an independent board appointed by Welsh Ministers and accountable to Welsh Ministers, but who can bring their kind of expertise and independence to running the function.

Okay. Thank you. If I can move on again, how can we, or even you, be clear about the overall scope of the activities of the public bodies unit, given the differences between the list of bodies in the Welsh Government's evidence paper and those captured in the Welsh Government's register of devolved public bodies and/or regulated by the Commissioner for Public Appointments? And linked to that, why does the register of devolved public bodies appear not to have been updated since 2018, despite the Welsh Government stating that the unit works closely with the corporate governance centre of excellence on its upkeep?

Thank you, Chair. Obviously, I've had the opportunity to prepare for the committee, having moved from my old role. Despite a lot of liaison with the public bodies unit myself, obviously, I've had to become much more familiar on this. I think I'd go back to my opening comments in the first couple of questions about the nature of the public bodies unit remit to extend specifically on the arm's-length bodies, but also to have a role about supporting and providing advice to broader public bodies as well. I mean, if you think about the public leaders forum, that does go beyond just 27 organisations that are technically the arm's-length bodies. I think we do need to allow the unit to have some of those responsibilities where it is part of the liaison, whether it is around the NHS and the appointments process, or allowing mechanisms by which these other organisations can come together to network and talk as well.

Having said that, you're absolutely right, we really need to be clear on those that are the direct oversight areas of arm's-length bodies of Welsh Government. The role of the public bodies unit is alongside, of course, the sponsoring arrangements that are in place with the respective groups, and, of course, the director areas as well. So, it is a tripartite arrangement, I guess. But I had to ask the question myself about information that is in the public domain just as part of my preparation for this process, and I was concerned. I noted that the register had not been updated myself. So, I commit to you, Chair, that that is being updated this week, and that will be done routinely. I apologise that that was the case, but I actually found that out as part of my own preparation. And we will just make sure that that routine process works effectively. Whilst, of course, we've had other areas—and I think probably the staffing arrangements within the team maybe would've affected this, as I outlined in one of my earlier answers—I think, of course, the responsibility to maintain the public domain record is absolutely right, and I will retain my personal interest to make sure that that happens. That should actually be updated this week, Chair.

Thank you. I'll conclude my questions before we move on. I'm just seeking clarity from you over, effectively, Chinese walls between oversight and the independence of the arm's-length bodies. How, therefore, do you ensure that they maintain effective corporate governance, particularly audit trails and human resource systems, which have caused problems in certain bodies in the past, without overtly interfering in their purpose in delivery of services, or otherwise? In terms of your oversight, do you—and if so, how—consider their procurement alongside the goals of the Welsh Government, particularly as the Welsh Government is—we heard again yesterday—developing its procurement policies to incorporate goals around things like fair work and certain social agendas? And, ultimately, who has responsibility for driving improvement and improving standards in how the bodies are run? Is that a matter for them, for you, or how do you ensure that their operational independence is not eroded by your oversight?

Again, referring back to the 'Delivering Together' report, the intention there was to find a different way of ensuring that, on the one hand oversight was clear, but really placed a focus around the responsibilities of the organisations themselves, and to ensure that we were able to develop a series of frameworks that meant that that could happen in practice.

There's actually a useful phrase that is used in the governance section of that report, and I think it probably captures your question appropriately, which is: 'Getting the best from arm's-length bodies means balancing assurance and control with an appropriate degree of independence, consistent with their function. For example, freedom to form impartial judgments and apply technical or operational expertise.' And I think that's quite a nice way of demonstrating the balance that is required to allow organisations to satisfy their own governance and assurance, through board arrangements, through their executive arrangements, and to make sure that the sponsoring arrangements aren't interfering in the day-to-day business.

Of course, we need to make sure that the liaison is effective—it's why we produced the framework documents. We do want to make sure that there is a knowledge base in Welsh Government to actually oversee and discharge our oversight arrangements. But, of course, we are there more on an exceptional basis. We actually have identified some processes around approval and pre-notification, and shifted gear on those, mainly to try to ensure that there was going to be a different outlook and approach. But I would be expecting, predominantly, that it's about the organisations discharging their own responsibilities.

But you're right, there is a proximity with these bodies; where there are principles around what Welsh Government expectations are, we would expect these bodies not just to be compliant, perhaps, with the standards, but they have more of an exemplar responsibility. I mean, I apply that to Welsh Government ourselves in the way that we operate—that we have to recognise that, in setting the standards, we need to be able to follow through as an organisation ourselves. And I would accept that we have a closer relationship to allow those kinds of conversations to take place with these organisations.

The tailored review processes and the contact with the organisations is just one way of testing these out, but there are times when advice will be sought from officials, whether it's from the sponsoring teams, or, indeed, whether that is corporate. We do our best to help out with advice when needed, but, ultimately, the decisions need to be taken by the accounting officers.

Okay. Thank you. If I bring in now Cefin Campbell, who will take up the questioning.

Thank you very much, Chair, and good morning.

I'm going to be asking my questions in Welsh, so you'll need to put your interpretation facility on.

The three questions that I have relate to the calling-in procedures. The first question is: how have the revised approval, pre-notification and notification arrangements for arm's length bodies been operating following what was described as a transitional year in 2019-20? That is, has the process been successful?

Diolch. David, again, given this was such a key recommendation from the 'Delivering Together' report, I just wondered if you could perhaps give a starting view on this, and I may come back in. Thank you.

Yes, of course. Thank you. We consider that the arrangement has been successful. It was a change that the predecessor committee here was concerned about and asked a number of questions about, but we felt this wasn't actually working very well as a way of keeping in touch with an arm's-length body. The main evidence of the success is what hasn't happened, because I think there was concern in some quarters that it would be a bit like the wild west suddenly, and that all sorts of strange decisions might get taken, and there's been no evidence of that. Neither the accounting officers whom we appoint nor their audit committees nor their external auditors or their internal auditors are reporting any more issues of things that have come as their concern. So, there hasn't been the outcome, I think, that some people feared.

What has happened has been a better quality of dialogue between our sponsored bodies and ourselves about issues that are coming up. As the Permanent Secretary was saying earlier, one of the things that we did through these changes was to raise the level of engagement of sponsored departments, so we made heads of division personally responsible for having that kind of dialogue. Because one of the things that came out of the report was chairs and chief executives saying that they felt they were being required to come into the organisation at actually not a terribly senior level and that they would value a more strategic discussion. So, the level of discussion has raised, and what's happened in practice is that chairs and chief executives are coming to us for advice, saying, 'What is your advice on doing this? We don't have to come in with this to you formally, but have you seen it before? What would you do?'

Chair, if I could just add, we've got a very clear framework in place around how these arrangements will work, firstly, in transition, but we've actually maintained those, because they have had a good impact. As an example, although this is a more limited list, the approvals that would absolutely need to come into the Welsh Government, for example, would be about the appointment of the chief executive to the arm's-length body, and that will be a matter for the additional accounting officer, but also for the Minister. The signing off of a term-of-Government business plan would be a mechanism that would need the approval of the Minister. But that is a much shorter list than traditionally, where sponsoring teams arguably would have been getting overinvolved in some of the operational issues within the organisation.

Just to call out a couple of examples on the pre-notification arrangements, which is where I the bulk of the contact is happening, the kind of areas that need to be shared in advance would be if the organisation itself has decided that there are any novel or contentious issues that seem to be an issue associated with 'Managing Welsh Public Money' principles, either that they've highlighted themselves or are picked up as part of the contact point, or, potentially, areas around staff remuneration and terms and conditions where there may be a different course of action that is potentially being explored as well. So, again, without distorting the governance and assurance mechanisms that are in place and that responsibility of organisations and their own accounting officer arrangements, we've got a pretty clear list of the areas we would expect to be part of a conversation, even if they still land as a local decision.

Thank you very much. The second question is: has the Welsh Government made any changes to the framework of decisions covered by these different arrangements, considering lessons learnt?

In overall terms, as I said openly at the outset, some of the natural momentum that we would have wanted, if it had been a normal context—. I think we may have seen some movement and some changes happen, just as we continue to learn. I think the pandemic would have affected some more material changes, necessarily, following through. But, as David was articulating himself, actually, we think what were initially intended to be transitional arrangements for assurance have actually turned out to be much more positive in terms of their impact. There seems to be good feedback on that being the right kind of balance of choices between ourselves, our sponsoring individuals and the organisations themselves. This isn't to say that we're not open to changes if they're needed, but, at the moment, we think the framework is working pretty well, so there are no areas, certainly materially, where we feel there is a need to change at the moment. If there were something that we spotted, not least, I would suggest, in the course of the tailored reviews, then we'd be very happy to bring that in and alter the framework. And, of course, if there were any things that we thought were materially different and/or significant, we would bring that to the attention of the Public Accounts and Public Administration Committee.

Thank you very much. And the final question is: have there been any examples of public bodies that have not acted in accordance with the expectations of these new arrangements, and, if so, how has the Welsh Government responded to that?

So, again, as I was saying, I had to come in and start from scratch on my understanding of the public bodies unit and ensure that I'd been able to both look backwards and also at our future intentions on this. But in terms of trying to work out the problems that exist within the system, I've not really been able to pick up any examples of public bodies that haven't acted in accordance with these new arrangements. I mean, obviously, despite the categories that we've set, there is inherent flexibility, and then I think if there was any confusion about an issue, then I would hope, as a minimum, that there would be a conversation with the sponsor arrangements just to sort of check in, so to be more cautious in approach.

I think probably what has helped, maybe, to steer—. As I say, I'm not aware of any examples unless they're highlighted to us, but there was a very full consultation and discussion with the arm's-length bodies themselves when we created the framework, and I felt that we developed it with support and that there was a consensus that this was really about delivering clarity and accountability, and I guess the offer from Welsh Government that there would be less a Welsh Government just constantly looking over their shoulder and checking on their work, so just wanting to make sure that that accountability works properly. But I think the fact that we removed many of the calling-in procedures mainly meant that we've actually got a list where there would be few occasions where it was necessary for them to come in, and probably for that reason, we're not seeing necessarily that there's a problem. But, again, we may be surprised as we go through some of the tailored reviews. There may be an open discussion that leads to some problems, and, again, if I'm aware of any issues, we're very happy that that is something that we would communicate in the future, but I've not been able to find anything myself as part of the preparation.

Thank you very much.

Diolch, Cefin. Mike Hedges, would you like to take up the questions?

Both I and the host have been unmuting me a few times then, so I think I am unmuted now. I've got a general question before I move on to tailored reviews. A large number of these bodies are part of the Welsh Government's consolidated accounts, and in business terms, they would count as wholly-owned subsidiaries of the Welsh Government.

Yes. David, do you want to clarify? When David was part of the original 'Delivering Together' report, even at the time that he was calling out for a definition of public bodies, I think there were more than 80 that were part of our arrangements in Wales. But you are right, rather than many of these being completely independent, they do have to be drawn into the Welsh Government's accounts process, and we do need to account them in that way. But, yes, there are company arrangements as well. But, David, you might want to just give a bit of detail about the different sorts of organisations that are covered. Thank you.

Yes, thank you. We have, from memory, about 12 companies, and they are companies that are wholly-owned by Welsh Ministers, so they have articles and memorandums but it's clear that the sole shareholder is the Welsh Ministers themselves, and they're all consolidated. I think the definition of what we put into our consolidation accounts, apart from the companies themselves, is governed by the accountancy rule rather than the legal definitions. So, there are other bodies that aren't companies, like the health bodies themselves, that come into our accounts as well. But that's the accounting convention.

And at the other end of the scale, we have a number of our bodies that are on the register and indeed they're public bodies, but they have no budget and they have no staff, and effectively they're advisory committees that deal with specialist subjects, often in the health field, and they meet regularly. Apart from teas and coffees, they don't actually cost us anything separately.

Just to complete the strange landscape, some of our bodies are charities as well, and others aren't. So, they're governed by the Charity Commission, as our companies are governed by company law, and some of them have a royal charter, which also impinges on their business.

I'd like to go into this in greater detail, but you as Chair, Mark, won't let me do that, but I think we perhaps can talk about it in greater detail, even if only in writing in the future.

I've got three questions regarding tailored reviews. What criteria underpin the risk-based assurance approach that the Welsh Government has said will guide its tailored review programme? How far do you go into the organisation? Because most public bodies I know, they're strategic and tactical decision making are very good—it's at the operational level that things fall down. If you listen to me asking questions in First Minister's questions yesterday, it was about the failure operationally of Natural Resources Wales. I've got no problem with them tactically, I've got no problem with them strategically, it's when it gets down to people not doing anything about the River Tawe.

Indeed. I, obviously, come from a background, over the last seven and a half years, of course, of needing to reach into the NHS, from the strategic, tactical and into the operational as well. But that needs a different relationship from the arm's-length-body arrangements that are in place. The criteria, just going to the first part of your question about the risk-assurance area—what we're trying to do is to use the available intelligence information around us to go down a risk route that allows us to identify each body in Wales and put them into a category of high, medium or low. We're trying to test from paper exercises in the first instance before we have the contact about whether we have a confidence that the organisation is able to deal with its residual risk and their core objectives. But we are also trying to allow for the organisations to take responsibility for themselves. So, it's probably a pretty traditional risk mechanism. We, obviously, have to work through a series of these tailored reviews, and I still think that, irrespective of having instigated it with the National Library of Wales, we're still going to allow ourselves to adapt that process as we go through it in that way. But I would like to use information from the organisation, use information from the sponsors, but also use information more available from other public organisations, not least Audit Wales.

There are some things that worked well in the library review, for example, and I was really impressed in looking at some of the detail, actually, about how much detail was a part of that process. We had an independent panel that was established who were able to feed in, and they weren't part of the sponsoring arrangements directly. We also instigated a challenge session that was led by one of our non-executive directors in Welsh Government as well. But I think there were processes that we learned from that, but, actually, it was possible to reach into some of the operational issues. So, for example, in the library, really understanding its physical estate and where there's a scope to do things more effectively, looking at the implications for digital and technology, not just as a strategic issue, but actually some of the practical things that were in place within the National Library of Wales. So, I wouldn't want to hold back from those. They are a limited contact, they don't happen on an annual basis. We would expect to get through all organisations over a five-year tenure. But, actually, they did get into some of those operational areas that you highlighted, and they were challenged through the process as well.

Thank you for that. Talking about an area that the Public Accounts Committee have talked to you about fairly regularly in the past in your previous job—feeding patients. The auditor general's produced lots of reports. The view of each hospital board—it's their policy and it's the policy of Welsh Government that patients should be helped to eat. But I'll take you to wards in Swansea now where no visitors are allowed in during meal times. So, you've got these policies. It must have had you quite annoyed at times as well over this, but I won't ask you whether it did or not. It's the Government's policy, it's the health board's policy, but when it gets down to the operational manager, who is the ward manager, then that policy is overridden by the person who's making the decisions on the ground. How do you ensure that doesn't happen?

Well, as a general point, I do think that operational matters are matters for the organisations themselves, but you have to have ways of checking in, having feedback, working through other bodies. So, in the NHS context, that's why you do expect to have feedback from Healthcare Inspectorate Wales or Audit Wales on their investigations, the use of the community health councils, and tracking through complaints as ways of highlighting some concerns as well. But you obviously want to follow through on a culture, and that's a generic comment. If I apply that to the arm's-length-body process, I expect that to be an effective relationship to be in place between the sponsor arrangements and actually the organisation themselves. That should be a pretty open conversation. We have an ability to know about concerns. Ministers can receive information in their own postbags that we need to respond to and we can trigger expectations in organisations. But, actually, the tailored reviews, as I said, do go to quite a good level of detail in asking for evidence and assurance about progress that's been made in the organisation. I guess we have to use the information that's available around us and have to make sure that there is at least an open way in which we can articulate that to the organisations.

And finally from me: we've gone into the National Library of Wales and I think you've talked to us about that in one of the answers to a previous question. Are there any other organisations that you have concerns about that you would have them on the first of the ones you'd do during this five-year cycle?

Well, we try to keep our fingers on the pulse of the bodies. Again, speaking openly, the diversion of attention and resources as part of the pandemic response just means that we haven't geared this up in the way that we would have wanted and expected, and certainly you would expect there to be areas. I think there's a combination of areas where we will follow concerns, and areas where I think organisations are naturally quite keen to be part of the tailored review process itself. I was pretty pleased that the National Library of Wales had actually offered to be a pilot, in the first instance, anyway. National museums have already highlighted that they wish to be part of that—in fact, we've already been able to do some of the desktop process. In fact, one of the interesting issues just highlighted from that process has been some of the issues that can tie into guidance that comes in from Welsh Government, and actually some of the broader status, like royal charter status. I think the size of the organisations and their budget is probably a factor, but we just need to finish off the risk exercise. But certainly, where there are organisations of concern, we would expect them to be in a higher risk category, and they would certainly be earlier in our process of pushing through the tailored reviews as well. And hopefully by doing those we will be able to work our way through the five-year tenure and make sure that even the lower risk organisations have an opportunity to be part of a formal tailored review as well. Thank you.

I don't think it's a declarable interest, but I will say that something like 15, 20 years ago I was a member of the land drainage board dealing with west Wales. That's me finished, Chair.

Thank you. After your revelation, I'll never see you quite the same. [Laughter.] Thank you very much indeed. Natasha Asghar, can I bring you in, please?

Thank you, Chair. I thought Rhianon was prior to me—I don't want to jump in.

I'm very sorry. Yes, you are quite right, because there are no notes next to it on my guide. So, Rhianon Passmore—apologies for that.

Thank you, Chair, and Natasha. Can I just ask before my line of questioning around the sponsorship role of individual departments, and I don't know whether I missed it before Mike Hedges, in terms of the tailored reviews? In regard to the actual new term of Government approach in regard to the public bodies unit, when will there be an evaluation of the actual PBU itself in terms of its new way of working, and we've highlighted the loss of the call-in; have we got any timelines around that? Obviously, I understand fully, Chair, that the unit is at half capacity in regard to COVID.

Yes, I've also been open about not just being at half—we've diverted attention as well, so even the instigation of the review with a smaller number of colleagues in place would be an issue. I've got two areas of interest. To some extent, even as part of the preparation for this hearing today, there's been a review process in place, I guess, for me to just be able to fully understand in more detail the way in which the unit is working and the things that we need to do, the impact of the vacancies, and just establishing it. My sense is, without putting an undue burden on things, I would like during this next financial year to just be able to stand back and think about some of the things that we've done well, and things that need to be altered. But actually I'm really interested in seeing how we can more ensure that the unit is commissioned as intended post the pandemic.

What I'd also want to say is that there's a danger of asking for a review specifically of the public bodies unit when actually what I'm interested in, more from my own research, if you like, is to make sure that the overall process works effectively around arm's-length bodies and some of the appointments mechanisms in place. Whilst we have 14 members of staff currently in post for the public bodies unit, we probably still have around 80 members of staff who are involved in the various sponsoring activities that happen, and that includes the tribunals within Welsh Government. So, there are actually more staff involved in the oversight of these arrangements than there are in the public bodies unit itself. So, perhaps, with your agreement, Chair, if I could just have a way in which I look and evaluate the overall process, and then I can translate that into some of the implications for the public bodies unit—that would be my preference. But there's definitely something about making the unit effective, I agree.

Okay. That was a poorly put question then, perhaps. My question, really, was in terms of the public bodies unit and the processes, the new term of Government approach. It is the processes within the public bodies unit's way of working that I'm thinking of—when can that be evaluated? So, I would actually tend to agree with you if you're talking about the processes, but it would be definitively something of very great importance, I would have thought, in terms of moving this new way of working forward.

Right, I'm going to go on to my line of questioning. Do you feel that the Welsh Government is satisfied that the respective roles and responsibilities of the partnership teams and the public bodies unit are clear and well understood by our own officials and arm's-length bodies? And before you answer that, Permanent Secretary, could you just give an overview of the sponsors, the sponsorship, the partnership team for any one of our avid listeners to this committee?

Yes, and again there's a danger that all roads lead to the public bodies unit if we're not careful, and the unit itself doesn't have the oversight responsibility. We do need to make sure that the sponsor arrangements are there in place. But, yes, we have teams who are embedded in our groups that are led by directors general, and we ensure that we have a deputy director minimum responsibility to ensure that they are able to liaise with our public bodies and the arm's-length bodies specifically at a level of seniority in the organisation. That means that there is regular contact and understanding of the commission for the organisations, that they will oversee the budget remits, the expectations of Ministers that are translated into that Government term aspiration as well. And they will act, as I said, on a day-to-day basis, but routinely as necessary with the sponsoring arrangements across Wales.

In terms of the view of the approach that's taken in the organisation—and I've just emphasised, of course, that we have more colleagues associated with the oversight mechanisms that are outside of the public bodies unit, because they have to maintain those more personal and knowledgeable relationships—I do think that the relationships are probably still settling in. We've managed to introduce hub arrangements in one of our groups that means that there is a single director who is overseeing all of the arm's-length body arrangements that are in that one group, and there are deputy directors who are therefore acting in support of that. I think that does allow there to be some consistency. But I feel that there probably is a need to continue to emphasise what the public bodies unit is, but also what it isn't. And what the public bodies unit isn't there for is to step into those individual relationships in that way. They are there to provide consistent guidance, to advise on public appointments processes and to make sure that the equality and diversity expectations, for example, are worked through.

I would similarly say that I would be worried that, as we have diverted resources more generally, clearly there may be some impact there even on the sponsoring arrangements, but I think in overall terms, actually, the sponsor teams have maintained a really good and effective relationship. But we have, actually, as part of our own assurance process, issued an internal control questionnaire, which will allow our directors to just assess how well and effectively they think the sponsorship responsibilities have been made and whether they are satisfied that they've got everything available to them to deliver it as well. But, even going back to the original 'Delivering Together' report, which is the governance and assurance review that took place, it did feel that there was some further work required there on that clarity of role, and I still think that, while it has improved a lot, I just see, still, some issues within the organisation to make sure that people don't overuse the public bodies unit for the wrong purposes.

Okay. You've touched upon a theme throughout this session, the impact of COVID and the capacity within the unit. Could you give us any assurance about the principle that the lead sponsor would ordinarily be at deputy director band or above, because obviously that was part of the recommendation? And, if you are very brief, could you give an example of the sponsorship arrangement? And I think it would be useful for the committee if we had some sort of diagram to be able to look at it, perhaps, in a visual form as well. Thank you.

Well, perhaps if I could ask David or Peter to come in and talk you through one of the examples—very happy to follow through with a diagram, whether it's in overall terms or simply just one area, to show you how those sponsor teams would work. That might help to bring it to life a little bit. But, yes, just to confirm, because this was one of the clear recommendations, that all of our partnership teams are led as a minimum at the deputy director or head of unit level, and they will act as the main contact for the arm's-length body contact points and the officials there as well. But, David or Peter, you might just want to talk through one of the examples. Thank you.

Thank you. Perhaps we could use our culture division as an example, where the deputy director there has oversight of several bodies, including the national museum and the national library, and they will also have the main policy responsibility for advising Ministers, not just on the activities of those bodies, but of the whole subject area generally. They will have a number of staff under them who will then be particularly dedicated to liaising with that particular body on a day-to-day basis, often alongside other responsibilities, but they will feed directly. So, they will have a dialogue with the body about the issues that are emerging, particularly about how and what the bodies are doing to fit in with the programme for government. But they would and do keep in close touch with the public bodies unit, so that, internally, there's a flow of information to make sure that the sponsor team know what the public bodies unit might be dealing with in regard to the organisation, and the other way around so that we join up. And as much as I'd love to assure the committee that all works perfectly all of the time, you know, it works reasonably well most of the time. [Laughter.]

Thank you. Finally, then, if I may, could you just touch upon the training and development pathways for those sponsorship role individuals and how that's assessed? I would have thought that that's pretty easy to answer. And how the Welsh Government is addressing the risks around succession planning, particularly in very small teams, and obviously particularly in the context of where we are now with COVID.

Yes. So, on the one hand, responsibility for training and ensuring that we have individuals who understand how to discharge their roles is delegated to directors, and they need to follow through on that. But, having said that, we obviously have significant experience across the organisation of individuals and teams who are working in these arm's-length contact arrangements. So, we're pleased that we've been able to put in network arrangements. That helps to give a more informal approach in support of the on-the-job learning, but, actually, in our training and development sections, we often use individuals who are discharging the responsibilities themselves to describe how they are delivering the role and responsibility themselves. We, clearly, look at the consistency as well.

There's a little bit of adaptation, based on the nature of some of the bodies as well. So, as I was saying earlier, there's a little bit about just understanding that there are some different environments, maybe, for the organisations to deliver. But, whatever the formal training that we're able to discharge and that going there, I'm quite interested in how we just have an ongoing approach to sharing what feels like good practice as people are implementing, and we create an internal community of practice on the sponsorship skills.

On the succession planning side, I think probably rather than just think about this as about how we would discharge this for the sponsorship roles, it would be to recognise that, even with 5,000 staff, we are a small organisation, on the one hand, in civil service terms, but it's really important that we actually have a succession planning approach for the organisation as a whole, and that will clearly draw in some of the concerns about these interface areas within the organisation. So, we do have a succession planning process in place in the organisation. That does go through the levels in the organisation. It does mean that we have to look at director level, deputy director level and below, and it's part of ensuring that we have a pipeline of colleagues who would want to make a choice of staying in Welsh Government for their next roles in the organisation. They obviously have the flexibility to go wherever they wish, including to other external bodies, but we'd like them to feel that we are a good employer and we can offer them good development opportunities, and they can learn very effectively, not least in these sponsorship roles as well.

Okay, and finally, if I may, because I'm not quite clear I had an answer, in regard to the evaluation of both the process in terms of the Government's approach, and the public bodies unit itself as that grouping, at what point do you think the committee will get an evaluation of that work, so that we can assess its quality?

We, obviously, submitted our current status in the papers that I gave in advance. Subject to seeing where we are heading in the pandemic response—and I'm hoping that, perhaps, we're starting to point to a different phase—I would hope that we can do that during the next financial year and report it in. I would like to pause with the team on the back of just my preparation for this committee, and I think there are some genuine opportunities—as I said, almost this acting as an intermediate review for myself personally—but I would just really like to see that, for the organisation, we are emerging from the pandemic response. I was really concerned that, with omicron variant, we were almost having to revert back into a full-blown emergency public health emergency response, including for the civil service itself. I'm pleased to say that our data and numbers seem to be heading now in a much better place and more rapidly than we would have expected as well. But if I could commit that I would like to be trying to do that during this next financial year, and then be able to feed back formally to the committee.

Thank you.

Thank you. Thank you, Rhianon. Well, now it is Natasha Asghar. I invite Natasha to now develop the questioning on the theme of public appointments. Over to you.

Thank you very much, Chair. Just to give you a heads up, I am going to be batching a few of the questions together, so I'll be covering diversity and inclusion, compliance development, as well as senior management pay. So, if I do come through with an influx of questions—. Just so you're aware.

So, I was really happy to see that you have five goals in place in relation to the diversity and inclusion strategy, which is like music to my ears. And I completely take into account COVID, but equally I have seen that there's been a huge influx of people changing and moving jobs. So, I'd be really interested to know your perspective and if you can perhaps provide myself and everybody here on the committee with an update as to the progress you've made in this department from 2020 to 26 January 2022, please, if that's possible.

Yes, indeed. Yes, you're right to refer to, I think, clarity on the five goals. I think looking forward at least and having clear intentions from Welsh Government, I think that is all captured within the diversity and inclusion strategy for public appointments. But the test isn't just the commitment, the test is actually how that converts into something different. So, looking at the data, our last set of data, just in the public domain at the moment, is actually from the last office, from the public services commissioner office. Whilst the numbers on the one hand show improvement over years, they weren't necessarily showing a significant change, if I look at the impact of these types of areas. So, in terms of our baseline, looking at those who were appointed from an ethnic minority background, for appointments and reappointments, around 8 per cent were from an ethnic minority background—as I said, increasing over previous years, but not necessarily different from the year before. Having said that, reappointments were higher, at around 18 per cent, and certainly we have seen some evidence of disabled people within the process actually coming through as well.

I will commit to give the committee the more recent figures. That will be going through the conversations with the public appointments commissioner, just to be clear about that, but what I'd like to focus on maybe is what have we tried to do differently to try and allow ourselves a different approach that is going to bring some of that diverse experience to bear.

I'm really pleased that we seem to have done something different in Wales, at least, in our appointments of senior independent panel members. They are required for all of the committee and panel judgments to be made. They have a role in assuring the public appointments commissioner as well. We have been able to appoint 13, who are just now available, to underpin all of our arrangements, which has changed from the previous arrangements, where we would have just drawn in people with significant experience relating to the role. But it has actually allowed us to bring both lived experience and diversity to the fore. There's been really good feedback about that process that we've put in place, and I do feel that, in living up to the expectations of the diversity and inclusion strategy, that has allowed us to show that something different is happening.

But it's really going to be about the data and the outcomes, and one of my worries is that, whilst we may be improving our processes, I think really to address diversity and inclusion we need to make sure that there is a pipeline available so that we're able to attract people in to public service posts, and that we can bust some of the myths around them. There may be some preconceived expectations about what they represent, and I've actually seen that in play not just around the arm's-length body roles but actually around the NHS itself. I've needed to be involved in my old role to actually see about how we could have some different arrangements in place. But I do think that recruitment panel approach has been really important.

Fantastic, thank you so much. There is obviously an issue of pay disparity particularly being a barrier for those people from protected groups to getting into these sorts of roles and positions. So, what's being done to deal with that issue as well?

So, we are trying to ensure that we can deliver some changes in this, but the pay disparity concern is probably broader if we're looking to find ways in which we can have other broader representation from our communities as well. Again, if I look at this through an NHS lens, we felt that one of the constraints that was in place about where we would have people who would have jobs that may conflict potentially, but if they were supported in different ways, not least through the benefit system, it would just almost be impossible to find a way of dealing with the pay offer and, actually, not affecting their personal set of circumstances. So, as you start to follow through a principle of trying to get it right, you find there's a real complexity. Many of the mechanisms, not least around welfare of course, are outside the gift and the powers of Welsh Government. And I do think it raises a particular question about ensuring that we don't have underrepresentation of key groups as well. But there is a process in place. We are aware that the fees for public appointees have remained static for a number of years, and in respect of some of the worries about how we can bring forward colleagues from our communities, we are looking to provide some revised advice and to do a review. But it's Cardiff University who have been doing some work actually on implementing the diversity strategy and underrepresentation. But we do need to go through a process for reviewing the fees for the public appointments as well and make sure that they are fit for purpose and will attract colleagues and people in. But it's not just about the fee; it's actually about the knock-on effects of the fees in terms of what people are doing in their existing personal lives.

Thank you so much for answering that question. I think you might actually be best suited to answer the next question that I'm going to ask, which is whether the PBU will be involved with the task and finish group that the Minister for Health and Social Services has established to consider succession planning arrangements for the NHS public appointments.

Yes, well, it's a slight area of expert knowledge, I guess. Given that I was part of the instigation of it, yes I can absolutely confirm the public bodies unit is part of that process. It is a significant area for us to get into. We've not reviewed these arrangements since back in 2015. We think it is a factor in leading to people being attracted to come into the role, but it is a task and finish role. It's chaired by one of our chairs in Wales, and I would expect that to be reporting within a six-month period of time. Obviously, that will come through the health route, and through the NHS Wales chief executive director general, and the health Minister of course.

Okay. I'll be very honest with you, up until perhaps this session, I was very unclear as to what the role of the PBU was. So, thankfully, thanks to you and thanks to my committee researchers and team members, I've been a lot more educated as to the role of the PBU. But, for me, personally, coming from the outside into the Senedd now, it genuinely feels like the PBU is almost like a glorified recruitment consultant. That's just my perception of it, but you can correct me if I'm wrong. Based on the fact that appointments are made without competition, it almost feels like there's a pool of candidates and these candidates are there in various positions already, and they're sort of cherry picked and put into other different roles and positions in other organisations, which is fine.

I know you mentioned it initially, I believe it was to our Chair, when you responded about the list being updated, which I really appreciate, but there have been some areas, particularly with regard to the PBU, where serious breaches of the Government's code weren't actually met. So, my question is: because the list hasn't been updated, what checks and balances are in place now to ensure that the candidates that are already there, or the candidates that you're already going to be adding to that list, have actually had, potentially, county court judgment checks, and perhaps that criminal record checks have been made, because not being updated for quite some time does leave a lot of room for manoeuvre for a person to do something? Not that I'm saying anyone has a criminal record, but you can understand where I'm coming from. As Members, we have to fill out a record of interest and we have to declare any criminal issues that we've had in the past. So, do you have something in place for your current, existing people on the list, and those who'll be joining it, and, if not, are you planning to introduce something like that in future?

Peter, you might also want to come in on this, on some of the more HR aspects of this. But, certainly, within the process that we have, where candidates apply, and whether they are successful in their recruitment or not, of course a series of checks need to be made around that process. Whilst a candidate may apply for a role and be unsuccessful, we keep an ongoing interest in them, but it doesn't mean that we're necessarily looking to deploy individuals in different ways; they would still have to go through the requisite appointment process.

When people are appointed, it's the responsibility of them, within the organisation that they've been appointed to, to declare any changes in their circumstances, and I would expect that to almost be part of the HR process. We don't have a direct arrangement in place with these individuals; we oversee the process by which they're appointed.

And on your former comments, the public appointments process is a key part of what the unit does but it's not the only thing. As I set out in the submission, there is a series of areas that go through. If you think about the honours process, there's the public appointments mechanism, there is the application of the guidance, and there is making sure that the pay, terms of reference and the remits are actually overseen in that way. So, there is a series of areas, although I do agree with you that the profile is often very much on the public appointments process, and, given that we are processing at least 100 of those a year, then, inevitably, it's quite a visible process that we actually go through. But, Peter, I just wonder if you wanted to comment on some of the HR checks that are there, because, broadly, in future, they are the responsibility of the organisations, but we obviously check through the public appointments process.

We do, Andrew. Certainly, in terms of conflict of interest, and certainly the role of public appointments commissioners, regulated appointments, the conflicts element forms a key part of the assessment of candidates that go through quite formally, and there are then the very minimum basic checks, to check for criminal background, et cetera. And that does happen in all competed exercises, but also where individuals have been directly appointed—the checks are put in place to ensure, as far as we're able to, that they are individuals who are fit to hold public office, if I can put it that way.

Certainly, if and when breaches occur—and obviously as we liaise with the public appointments commissioner, we have an opportunity to pick up on concerns, talk those through. There is an annual process in place—obviously, we will pick up on any breaches that do occur, make sure that we make changes to our approaches. And I would generally say our relationship with the commissioner for public appointments is pretty good—it's very open. And alongside other UK departments, he has commented himself, not least on his last report, that he felt that things were improving. But, certainly, a breach is a serious issue, and we always need to make sure that we have changed the routines that are in place.

The following question I have comes from that I read a little bit about the leaders of the future programme, which I believe has been introduced. And I'd love to know a bit—. Obviously, the programme was mentioned, but there wasn't much detail as to who this is applicable to. Is it applicable to completely novice people who just want to find out more, or is it to those professionals? There is a question on my list on development and training for those already in position. So, is this for those who are already in the role, or those who wish to aspire to get into one of these potential roles that may come about later on?

So, I think we're trying to focus more on the pipeline at the moment, whilst we, obviously, have a responsibility for those who are sitting in post, but those in post can take advantage of the mechanisms that we already have in place—via organisations, some of the national programmes they have in place, some of the work that Academi Wales do. We used to run, for the NHS, around public appointments a corporate induction programme—I used to speak at it myself personally, alongside the Minister. But I think our attention needs to be more about drawing in interest to ensure that we will have diversity represented in those applying for our posts across Wales. As I said, I don't want to drop the immediate responsibility, but organisations can generally look after those who've been appointed; I think we just need to be looking, as you said, at those who are going to be prepared to be part of our oversight of public services in Wales, for many years to come.

I understand, but does the PBU at all look at the performance of an individual that they've perhaps assisted in placing in a particular role?

So, we obviously look at the calibre of the candidates as they are working their way through the process. We will not, really, get directly involved—perhaps very, very exceptionally in issues that are around the individuals themselves. Once a non-executive director, an independent member, has been appointed around an arm's-length body, really, the oversight becomes the responsibility of the organisation and ties into the chair arrangements that are in place, for example. And we would expect the majority of those issues, really, to be dealt with and handled within the organisations themselves. But, actually, there may be, on occasion, times where advice is needed or there is an exceptional arrangement, but I would not expect the public bodies unit to be directly involved in the oversight of individuals. If there were concerns that affected individuals, and they were applying for other roles, then I guess there would be some communication if there was something really significant, whether that's a disciplinary process of some kind, or just where relationships had broken down. But the public bodies unit would tend to be less involved in those types of issues; they're for the organisation.

Okay. Thank you very much for answering that. I want to talk a little bit about pay—let's talk about the money side of things. So, when it came to the pay angle, I felt it was a little bit of a contradiction. The reason why I say that is because it says, when it comes to the PBU—and I'm quoting from the documentation:

'PBU oversees the remuneration arrangements for public appointees, and provides oversight and assurance on Arms-length Body pay and pension matters.

'It offers guidance...decisions...lie with the...Ministers and the Partnership Teams.'

But I wanted to know whether the insight and assurances that are provided by the PBU are in line with the UK regulation or UK guideline used in order to decide what it should be?

Pete, do you want to just have a start at replying to that? I may come in. Thank you.

Yes, Andrew. Well, in short, the answer is 'yes'. Many areas of employment—most areas of employment—aren't delegated to devolved administrations, so we have more than an eye on the UK regulations and approach in this space, and, as far as possible, unless there's a good reason to deviate, then, we would align ourselves. So, the short answer is that there is a very close connection between the public bodies unit and the position across the rest of the UK. We're very close on many respects to Scotland, and try, as far as possible, to align ourselves, and certainly where there are any differences that are required.

I appreciate that you're trying to be in line with Scotland—that's absolutely fine. But ultimately, from the information I received, the ultimate decision as to what the pay is going to be is in the hands of the Welsh Government. So, in that instance, their decision supersedes the advice of the PBU. Is that correct, just for my knowledge?

Yes. I'm trying to give you an example. I'm sorry, it goes back quite a while actually, about the reform to the health service. Andrew could probably remember better than I the when of that, but it does go back a while. There was a lot of evidence presented ultimately to the health Minister on the remuneration arrangements that we put in place for appointees into those board positions, and that has been updated since, if memory serves correctly. But ultimately it's for Ministers to determine whether there's remuneration at all, on the one hand, and, if there is remuneration, what level that should be at. But we do try to provide some evidence and guidance to drive consistency where we're able to do that.

Okay. So, it's actually, from what you've just said, quite rare for them to disagree with the advice you've given in relation to pay.

I'd say quite rare, but we do give a range and options, rather than say, 'It should be this outcome'. But there's a rationale behind those options as well, although it's not something that we review frequently. I can't genuinely remember the time that it was last reviewed on any large scale. It's been fairly static for quite a period of time.

Okay. And are there any particular consequences? I know you gave us the example previously in the healthcare sector, but are there any particular consequences, if, for example, there was a disagreement on pay disparity between the PBU and the Welsh Government?

I can't think of an example when there has been, nor can I think of a reason why there would be. However, never say never, I suppose. [Laughter.]

I think it's more likely to be an area that could be highlighted as a concern, because of a worry about an ability to recruit that comes from an arm's-length body. It's probably less likely that the public bodies unit is in disagreement with the Welsh Government, because, of course, it is in Welsh Government and it's discharging a role on behalf of Welsh Government. So, I think it's more likely that it would be an area that would be highlighted from one of the individual bodies.

Okay. I promise I don't have very many questions left, so I will get through. The Welsh Government is indicating that it plans to update its senior management pay reporting for public bodies on only a two to three-year period. Sorry, a three to four-year period—my apologies there. So, my question is why three to four years. As MSs, our pay gets disclosed to the whole wide world, and obviously our pay gets exposed every single year and if there's even an increment, but I don't recall there ever being one. Why is it three to four years in this case?

Well, I think, the reality is that the pay reporting mechanisms are pretty clearly set out within individual organisations' own annual accounts process. It was certainly true of the NHS—it was very clear and transparent and it was reported through. That would be true of the arm's-length bodies as well. So, actually, they are reported, but they are reported by organisations through their own responsibility, and with a clear template for how that should happen. Some go beyond that; some actually will make sure that they're complying with the expected standard as well. I think our issue about the reporting every three or four years, when we bring it together, is that, in reality, at a national level, as we bring the aggregate together, there is very limited movement in senior pay levels. So, we see it almost like a milestone report, to do a check and balance on it every three or four years, put it into the public domain, allowing us to give some perspectives on it as well. So, the real issue is the time associated with doing it and producing it, when it's already in the public domain anyway, and really wanting to use it for the proper processes of, 'Do we need to change our approach? Do we need to change our policy?' And we'd really only do that on a three-or-four-year basis anyway. So, it's a bit of pragmatism, but the information is in the public domain, as I said, through the organisations themselves.

Okay. Thank you very much. That's it from me, Chair.

Thank you very much indeed, Natasha. Before I bring Mike in, can I just ask a quick supplementary? In terms of senior management pay, as you'll know, pay in general in workplaces, or effective workplaces, is based upon job evaluation processes that aren't looking at the person, they're looking at the factors and responsibility levels within the job. But, at senior management level, you're also competing in a marketplace for people. How do you reconcile ensuring that pay is compatible with the factors and responsibility levels identified in a job evaluation with the fact that you're competing for people in a big marketplace?

Well, making a more personal comment, I would have come through an NHS perspective on this. There were mechanisms in place, job evaluation processes, that we're able to reconcile, and there would be some examples of problem posts that were difficult to recruit to, potentially, across Wales. There are mechanisms in place across all of the arm's-length bodies as well. But, Pete, I just wondered whether you wanted to pick up some of the detail of that, because we do some of that from a Welsh Government perspective, but bodies have their own job evaluation mechanisms in place too.

They do, Andrew, thank you, and I think the problem that organisations often come up against—and I'll say the civil service, from my perspective, has a bit of this problem as well—is that they hard-wire job evaluation outcomes to pay scales, with limited flexibility in some respects to actually go beyond that. And I'm sorry to use the same example, but the first time we tried to break that scenario was around the creation of the local health boards many years ago, where there wasn't actually an effective as the health service were looking for evaluation system. So, they elected to use the civil service job evaluation senior posts arrangement, but specifically without making that direct linkage to hard-wired pay arrangements, rather, looking at what market the organisation would be operating in and doing what it could to actually link that into the 'Agenda for Change' mechanism.

So, I think we do have examples where we've managed to do that. I won't say it's clear-cut everywhere; we've still got work to do. Markets for senior posts change over time, and it's a challenge sometimes to keep up with that, but I do think it's important that we operate within the right level of governance around some of this. What we don't want to see is a continued escalation of salaries in an unchecked and uncontrolled way. And, Chair, you're absolutely right: what's important is that it's underpinned by an effective job evaluation methodology.

You've seen that function, Chair, in the submission about our intentions around pay terms and the conditions and the remit. I think, again, given the way in which we've had to point the public bodies unit staff and team in a different way over the pandemic response, I think probably that's an area that we've been less able to develop. As, again, we come out of the pandemic and can reorganise ourselves in the civil service and the public bodies unit, I would expect us to perhaps be more able to look at that. What I would say, however, is we've not dropped the ball on some of the areas of pay remit or terms and conditions that have been necessary over the course of the last two years. But I think at least we can bring some of the more coherent thinking and consistency together.

Okay, thank you. Mike Hedges, could I bring you back in now to consider back-office functions?

Can I ask a question on pay first? The Public Accounts Committee previously reported on chief executives of local authorities's, amongst others, pay, and what we saw was what, once again, we knew: there was a ratcheting up or a moving upward mean and median, which was occurring as everybody went through the same procedure, and they continually moved upwards. How are you going to stop that happening within sponsored public bodies?

Pete, do you want to talk about the engagement and the way this works for some of those senior appointments? I'm happy to pick up the local authorities issue and the responsibility for that in a moment. Pete.

Yes. So, we have influence over the appointment of, certainly chief executive level and, in some bodies, the executive teams more generally. And it's trying to balance the responsibility of the organisation to justify its own position, but also to drive consistency as far as possible, but also to recognise market difference. So, there's challenge every time that comes through on ensuring that there's a justification, a reasonable justification, behind setting a salary level at X, rather than an automatic ratcheting up, and certainly, a squeeze in recent years to remove the expectation of performance-related bonuses, for example, in senior executive appointments across public bodies in Wales.

As an example in terms of the process, the appointment of the chief executive of an arm's-length body would be something that would come through the accounting officer, would go to the relevant Minister if that is a requirement. On the local authority side, Members may recall the work of the manpower commission, Gill Lewis's work, trying to work through support, and gave some recommendations into Welsh Government. Of course, from a local authority perspective, the responsibilities for pay will be part of their local democratic arrangements as well, of course, but we did try through that governance review and the advice of Gill and her team to make sure that at least there was an understanding of the position across Wales and some of the choices.

I was just using local government as an exemplar; I often do that because I know a bit about local government—probably more than I know about other areas—but the exemplar was that what you had was a ratcheting up and moving mean, and I think you've given assurance that's not going to happen.

The question I'm down for, as it were, is on back-office functions and the sharing of back-office functions. As you know, I think it's in France that all teachers are paid from one central payment run. Lots of other organisations share back-office functions. Payroll is a classic example; lots of IT, as well, where you've got the major expense and you can then have shared resources. Do you give advice or do you suggest that organisations look to sharing resources, especially some of those smaller organisations, where their IT costs can get incredibly expensive? Sorry, another local government example: Hatfield council at one time spent 40 per cent of its budget, when it was a district council, on its IT system, and that's because it can get incredibly expensive when things go wrong. So, are you advising, suggesting, or bringing people together so they can actually look to share certain resources, which will work very well? I'm not talking about merging organisations, because I'm concerned about mergers and their costs, but actually the sharing of back-office functions.

Well, I'm an advocate of using and having that sharing approach in place. We've had NHS shared services in place for many years, discharging a range of areas, including the payroll mechanisms and recruitment processes that one would expect, and I was overseeing the establishment of Digital Health and Care Wales as a new organisation in Wales, and it won't surprise you that the payroll functions and a range of areas were drawn into part of that corporate approach that we'd established in NHS Wales.

I do think there are more opportunities. I think that there is a danger of organisations looking to establish themselves as a full complement of areas, and I think the balance of spend of public money, and also the opportunity to not duplicate, means that we should be steering a bit more in this area. There are some examples of where we've even offered support or intervened to suggest some alternatives—I think, probably, some really good examples around internal audit, even where Welsh Government is providing some approaches. The citizen voice body that is being established to provide support to the NHS generally, again, we've directed there for shared services to explore the feasibility of the services being offered to that organisation, even if it's not a traditional NHS body, if I could describe it in that way; that's one of our arm's-length body arrangements.

But my personal view is that there is much more to go at here. I probably would draw in an expectation that the First Minister has set for me coming into the role about how we can look at some 'one Welsh public service' principles in overall terms. I've been part of those discussions over the years. Shared services is obviously one of the most obvious areas that we could make more progress in as well. So, I'm very committed to it, but probably can't give you full assurance at the moment, because I think it's going to be an ongoing conversation that I'll be directing with public services in Wales.

That's the answer I wanted, that you are looking at it and you're trying to take it forward. There are things like shared space as well. There is a terrible tendency amongst organisations to want to be everything themselves, and there's a cost to the public purse of that. If I look out my window, I can see two doctors' surgeries, one fire station, one police station, one school and one library, all separately run and all separate, and there could have been huge economies of scale of actually putting a lot of those together, certainly the library and the police, which are virtually next door to each other. I think some of this use of shared space can be run and can be run quite effectively, and what I'm asking you is that you will set this as something people will look at and discuss, because there's huge savings for the public purse when this is done.

I'm sure there are going to be a lot more conversations to take place on the shared space issue, and I think some of that might reflect the way in which there may be different working arrangements that have been embedded and will emerge from the pandemic response itself. That in itself may generate a different conversation. We really endorse some of the approaches that were taken by our emergency service colleagues in Wales, because, obviously, the way in which they brought forward some of their facilities and some of their headquarters approaches as well is kind of in recognition of what you were saying there. So, yes, more to do, but I think the pandemic response may trigger some of those conversations in a different way.

Okay. Thank you very much.

Thank you. Before we conclude this part of the meeting, do any Members have any further questions they'd like to raise while we have our witnesses with us? No, I'm seeing heads shaking. No.

If I conclude with a final brief question, then, to both the Permanent Secretary and his colleagues, what do you see as the biggest challenges and opportunities for public services administration in Wales during the remainder of the sixth Senedd in the context of themes that have been emerging from our committee's recent consultation and the broader issues we've been discussing today?

First of all, to say I've also read those consultation responses myself with interest, and I think some of the areas that have been highlighted there that you will look to work your way through are very useful. There's definitely something for me about equality and diversity, and then, clearly, a need to maintain that focus on openness and transparency. I think this possibly could be my sixtieth public accounts committee attendance, and I've always tried to speak in a very direct way in terms of providing evidence and responses along that way. I think there's probably something for me about ensuring that there remains a focus on public service delivery in overall terms. Some of the consultation responses I noted myself can revert to the machinery of government, and, for me, there's probably something about the machinery of public services and public service delivery that is something to work through. But I think the committee serves a really significant and important role to hold public services to account, something that I'm very used to myself, as I said, from my regular attendance over the years, and the focus on good administration is definitely a switch to ensure that we can have proper time and attention on that.

If I finish, however, on the biggest challenge for public services and their administration across Wales, clearly, I just can't avoid saying that the disruption caused by the pandemic, the way in which we all need to find a way forward to respond not just to the immediacy of the issues that we've been faced with, but actually the consequences, feels really important. There are, however, a range of things that we've put in place during the pandemic response that I think are actually to be embedded. My worry for some of our sectors—and this would have been true of everything I challenged with the NHS—was, if you're not careful, the system snaps back to the way it was operating beforehand. So, I think a kind of relentless focus on looking forward, about how responsive and flexible public services could be, and the responsibility to make sure that it's not just about embedding, but how are we going to deal with the recovery and how are we going to broaden out our look about broader harms and how are we going to keep an eye, I think, on the resilience of our population more generally, are going to be really important.

But I think one area that public services—and I include the civil service in this—are really going to have to understand is the resilience of our workforce. I think the remarkable thing about the experience we've been through is that it's affected everybody in their professional lives, but it's also affected everybody in their personal lives, and I do think that there are still quite a lot of people needing to understand the impact that the last two years will have had on them and whether there is a different outlook for colleagues who are working in the NHS, in care, in local government, in respect of what it may mean for the civil service as well. But I can't remove myself at this stage, Chair, I'm afraid, from dealing with the pandemic aftermath and the response. I think that's a really significant ask for us in Wales, but also internationally.

Thank you. I don't know whether Peter or David want to add to that, or whether you've summarised it for everybody.

Can I just say, Chair, that I think the challenge that the pandemic has left us with, we do need to embrace as an opportunity moving forward? We've got a real opportunity to redesign the world of work, not just for those in work at the moment, but for those generations that will come after us. That's not lost on us, and I think the challenge from Mike Hedges's question earlier and the use of public space is just one opportunity that we need to pick up and use moving forward.

Chair, the one thing that, just as I look back at the Welsh response, the networking, the relationships, the collaboration in the response across public services and right up to Welsh Government, for me has been a standout part of the way in which we've tried to do things differently here in Wales. There's a natural advantage of knowing these organisations, whether it's the arm's-length bodies or whether it's the NHS, but, actually, to use them in the way that we've done, I think it's been very easy to create that collaborative outlook in Wales, and I would really want to feel that has now moved on to a different phase in the way in which public services work together in Wales. I've already referenced the one-public-service-type philosophy, but how could we continue to develop that kind of approach into the future.

Would you include the other sectors in that, given the way that you worked differently with them?

I think there clearly is a public service relationship in a number of examples that we've introduced, but I actually think that, through the pandemic response, we have reached out differently to other sectors too. They've been aware, they've provided expertise and they've given advice on actions that could make a difference along the way. And I do think that whilst that might have felt more secure on the public service side, I think the way in which we've been able to open up our conversations with others, including the business community, the use of the social partnership council, for example, and a wide variety of views around the table, both at a ministerial level and an official level, has really made a difference.

Excuse me, Chair. Cefin's indicated.

Cefin. Yes, please.

Could I ask an additional question, Chair?

Yes, please.

Thank you very much. It follows up on the point that was made by Mike Hedges about sharing back-office functions, and possibly public bodies sharing buildings. I'm very aware that our major town centres, particularly in west Wales and in rural areas, have deteriorated terribly over the last couple of years because of the pandemic. Shops have closed, and banks and post offices and so forth have left these towns. I wonder whether there is a conversation to be had in terms of moving some public sector buildings into some of these towns in order to increase footfall in those areas, which could boost the local economy.

Certainly, Chair. Obviously, these are more policy areas that Ministers will have an interest in, but I would say, absolutely, those are conversations that will be taking place. They can take place at the Government level and allow Ministers to discharge their expectations; we, obviously, need to follow through on that with officials. But I think that's a very active conversation that is already taking place across local public services, for example, and their own partnership arrangements as well. I'm very happy to take that away and ensure that we use your reflection as part of our policy thinking as well, but I think it's already in train; we just need to start to make some of that happen.

Thank you.

Okay. Well, thank you, everybody. The clock has caught up with us and we're a couple of minutes over, so it just falls to me to thank all three witnesses for their answers today and making the time to be with us. As you'll be aware, we'll provide you with a transcript of today's meeting in draft form, which will be sent to you so you may check it for accuracy before publication of the final version. So, diolch yn fawr. Thanks very much. No doubt we'll be seeing you in committee again before too very long.

Thank you very much. Goodbye.

Goodbye. Thank you very much.

Thank you very much.

Right. We're going to move on to our next item, consideration of matters around Cardiff Airport. Following the evidence session on 3 November last year on Cardiff Airport, I wrote to the Welsh Government and Cardiff Airport of behalf of the committee, seeking clarifications on a number of issues.

Members might also recall that some of those questions directed to the airport management were unable to be answered in public sessions due to commercial confidentiality. I included those questions in my letter. Having agreed to provide, in private, information about the milestones and performance indicators set for it under the rescue and restructuring plan agreed with the Welsh Government, the airport states that these are commercially sensitive and cannot be divulged. Therefore, no information has been provided.

The airport was asked by Welsh Government officials to respond to the committee's question about the payment of any bonuses or benefits to its executives since it has been in public ownership, since March 2013. The airport confirmed that it has not paid any bonuses to its employees and directors, adding that the benefits paid to staff are in line with standard employment contracts, which are confidential. The letter provides little detail on the measures that the airport took to reduce its costs during the pandemic, but reports a decrease of over £9 million in its administrative expenses in 2019-20 to 2020-21. However, the administrative expenses were higher in 2019-20 than in previous years. It provides a copy of its accounts for 2020-21, filed at Companies House on 6 January this year, which we will be scrutinising during the summer term.

The letter repeats much of the oral and written evidence provided to the committee last November about what informed Welsh Government's latest financial support package for the airport. It does, however, provide some further detail. It reports that, without any support, the airport would have run out of funds and would have been forced into liquidation. The advice it received from independent experts was that, in this scenario, the airport will continue to require resources, most of which will be needed to fund future losses and critical capital expenditure for its operations.

The Welsh Government also provides more information about the basis for the valuations of the airport, which, it says, reflected alternative uses for the land in the event that the airport ceased to operate and went into administration. It notes that the Welsh Government will not consider alternative future funding options, such as private partners or sale to a third-party operation under a management contract, until the airport has recovered to a sustainable business model. However, it does not mention any future funding from the Welsh Government. The Welsh Government have advised that they will submit six-monthly updates on the situation at the airport, starting from May.

So, I invite Members to note those responses and advise that further sessions with both Welsh Government and airport management will be scheduled for the summer term and advise Members that I've asked the clerks to draft a letter in consultation with the committee's legal adviser, inviting them back to committee in the summer term. This letter will include their commitment to discuss in private, with us, the areas they deem to be commercially confidential.

Are Members in agreement with this course of action? If not, please speak up now. Good, I can see heads nodding the right way. Oh, it's a hand up. Yes, Rhianon?

Thank you. I'm content. I have some reservations, so I'll wait and see the response and that is—. At this point, I'll wait to see the response, but I know that we have a hugely packed forward work programme, and I wouldn't want us to be deviating into areas that may not be as much of a priority as others. So, let's await that response, Chair. I'm content, to date, but I will be keeping a very close eye on this as well. So, just to note those comments. Thank you.

Okay, thank you, Rhianon. Those comments are noted and I'd therefore be grateful if the clerks could proceed with the letter on that basis.

So, I now propose, in accordance with Standing Order 17.42(ix), that the committee resolves to meet in private for items 5 and 6 of today's meeting and the committee scheduled for 9 February. Are all Members content? Thank you. I see that all Members are content, so if no Member objects, we'll take a short break and invite you back at 11 o'clock, please. Thank you.