Climate Change, Environment, and Infrastructure Committee

So, we will move, then, to meet in private. In accordance with Standing Orders 17.42(vi) and (ix), we resolve to meet in private for items 4 and 7 of today's meeting. Of course, we will be in public when it comes to scrutiny of the budget. Are you content with that? Everyone is content. Okay, thank you very much. We will go into private and we will resume the public section for budget scrutiny at 10 o'clock. Thank you.

Welcome back to this meeting of the Climate Change, Environment and Infrastructure Committee. We now move to the main focus of this morning's meeting, which is to take evidence on the Government's draft budget in the areas that this committee scrutinises. I am delighted to welcome the Minister, Julie James, and the Deputy Minister, Lee Waters. Joining them are Gian Marco Currado, who is director of environment and marine; Peter McDonald, director of economic infrastructure; Dean Medcraft, who is director of finance and operations; and Jonathan Oates, deputy director of climate change and energy efficiency. A warm welcome to each and every one of you.

I'll start with the first question, if I may, and it's quite a broad-ranging question. We know that inflation and the cost-of-living crisis are having an impact on the budget in the context of your portfolio, and maybe you could tell us first of all about what can't happen in the coming financial year, what will be different, and which areas you've prioritised as a result of that.

Diolch, Cadeirydd. It's absolutely axiomatic to this budget that inflation has been front and centre of our consideration, and it's eroded the budget to, as you all know, very worryingly low levels for us, and much more importantly, in some ways, for our delivery partners. Basically, we're spending a similar amount of money and getting less for it. It's just a classic result of inflation.

We also have a number of other pressures, though. We also have rising pay pressures and energy costs all effecting the main expenditure group right across the piece. So we've been really struggling with what the best way to juggle that diminished resource actually is, and we've been trying to make the best of being able to reprofile out budgets and to undertake an exercise to just run through after the spending review last year where we could help. We were also asked through the Cabinet sub-committee on the cost of living, which I'm sure you've heard of, to contribute anything we could towards the cost-of-living crisis, and actually, as a result of that, we've got a net increase in public transport allocations of £35 million, as a result of the budget exercise that's been going on. So, that's the prime beneficiary.

We've been able to squeeze money in other areas across the MEG; not necessarily the subject of this committee, but obviously we have housing as well, so we've done some work with housing and homelessness to squeeze some money as well, mostly from reprofiling spend. So, we haven't reduced the spend in any area, but we've spread it out over a longer time period, effectively. I think that's broadly what we've done, and we've contributed to the Ukrainian crisis, for example, as part of our overarching MEG as well. So, that's broadly the gist, but we can get into the specifics.

We will indeed, I think starting with Jenny and transport.

Thank you. I just want to look at transport poverty first. Sustrans says that it's really widespread, and we know that at least 13 per cent of all households don't have a vehicle themselves. If they can't even afford the price of a bus, what, if anything, does this budget offer them?

I'm really pleased you've raised transport poverty, and I'm pleased that Sustrans are continuing to highlight it, because it is a neglected area of policy debate. I think we're familiar with fuel poverty, where if you spend 10 per cent of your income heating your home you're said to be in fuel poverty, and we take that seriously. We know that, consistently, amongst the 20 per cent poorest households, they're spending around a quarter of their household income on running a car, and we don't sufficiently talk about transport poverty. So, I absolutely recognise the issue, and the Wales transport strategy is very much about achieving modal shift and supporting measures for public transport in order to tackle transport poverty.

Back to the initial question about the impact of the budget, it's very much in this area, because it's stopped us doing some of the things we really wanted to do, particularly around bus fares. Also, we've had to make some adjustments to some of our modal shift objectives this year because we simply didn't have the money both to offer money to the centre for broader Government commitments and to deal with the cost of inflation increases, particularly on the metro. So, we are sustaining things as they are, but not able to do as much as we want to do in order to tackle modal shift and transport poverty this year.

But we are still doing a lot, and more than is happening in England. We're sustaining a rail service to a higher level than is happening in England. We have rescued the bus industry and are keeping a bus network. There's a story, I believe, in The Guardian about 10 per cent of routes having been cut across the UK. Wales is in a much better position than other parts of the UK because of the priorities we've put in there, but we wanted to do more and we haven't been able to do more this year.

What impact, if any, is the £50 million that the UK Government has announced for what appears to be just a small branch line from Cardiff Central to Cardiff Bay actually going to have on the efficiency of our south-east Wales metro system?

It's a helpful contribution to a much larger project. The metro is a circa £1 billion project and they're contributing £50 million. And bear in mind rail infrastructure is not devolved, although most of the metro is on the Cardiff and Valleys lines, which are. But the bit you're talking about is part of a broader package. So, it's helpful, but when you put it in the context of how much money we've lost, which levelling up was meant to be replacing—circa £1 billion a year worse off, the Welsh budget, as a result of leaving the EU—it's a drop in the ocean. But we're glad of it—it helps towards the plans we have. It's going to be the first stage of the metro in Cardiff to link central station down into the bay, and that will help with the council's ambitions around a new arena, and so on. But it's a network, so it's one piece; a network is only as strong as its weakest part. This is the first stage. We've got much more ambitious stages, working with the council on their crossrail ambitions. So, it's a step, we're glad to have it; we'd like more.

On the more significant upgrades that are needed to the four lines that run east to west that are the spine of the metro project, there's no indication that the UK Government is addressing that issue.

No. The huge backward step was not fulfilling the promise to electrify the Cardiff and Valleys lines and the south Wales main line to Swansea. That was a broken promise, and we're living with the consequence of that. The new trains that we're launching at the moment are diesel trains. We don't want to be running diesel trains, but we have to run diesel trains, because there aren't electrified railway lines.

So, there's no change in the appetite from the Government.

No.

Nor in the consequentials for Wales from any of the other projects either. That's worth mentioning.

Absolutely, but we can address that—

Just on the levelling-up fund bid, Jenny, that's match funded by us, just be clear. So, £50 million from them, but also £50 million from us.

Thank you for that clarification. Could I just move on then to the Transport for Wales budget and how easy it is to understand? Because TfW was set up eight years ago. How do you think—? What progress do you think has been made in enabling everybody to see exactly how TfW is apportioned?

I think your report highlights that there is a lot going on in the TfW budget and we are committed to simplifying the way that is reported, just as we're committed to moving to a multimodal key performance indicator structure. The journey TfW has been on—. Yes, it's been going eight years, but what we're asking it to do has changed a lot in that time. It started off, essentially, as a consultancy to deliver the early stages of the metro. It has now morphed and evolved into what we hope will be a multimodal transport delivery body that's not just doing rail, but doing bus, doing active travel, and with the potential to doing roads alongside and take a truly multimodal approach to get us to our modal shift targets. I met yesterday with the chair and chief exec of TfW. Again, we are making progress in this evolution into a TfW 2.0, if you like. So, the way they report on that and the way they gear up themselves is changing all the time.

Do you mind if I just come in on that? I see TfW undertaking not a dissimilar journey to Natural Resources Wales, in a sense, where there are increasing duties and responsibilities being placed on them, not always reflected in an increased budget or capacity in order to deliver. So, are you confident that in asking them to—? We took evidence recently on electric vehicle charging as well, and these additional bits and bobs are going to be added to their duties. Are we necessarily seeing therefore that being reflected in the budget that they receive?

Well, there's a lot of them. We are resourcing them properly and the budget has gone up. The money that Jenny mentioned, that £40 million, went into TfW. Yes, we're asking them to do a lot and we'll be asking them to do more, but they're also being funded.

On that point, actually, Cadeirydd, just to blow Lee's trumpet a little bit here, we've been fundamentally recalibrating the relationship between the Government and this portfolio and TfW, and, actually, NRW as well, since we came into post. So, we've had a lot of extremely difficult discussions, early doors, about the relationship between us and them, and how the budget process in particular works, and who does the due diligence, for example, on various projects. And I think, over the two years, we—Lee and TfW in particular—have done an enormous amount of work in recalibrating the approach. So, I think you'll find that we are much more speaking the same tune, humming the same tune, in talking to you now than we would have been two years ago, and that's because of the really huge amount of work that Lee's done, in particular, with getting them into a new relationship with us—one where we aren't treating them as the kind of, 'People who do it over there', but, actually, we treat them as part of our delivery arm, for the people of Wales. And I think that's been really successful, and I think you will see a real step change in the way that that works, going forward.

Dean, did you want to come in?

Thanks. I was just going to add to what the Minister and the Deputy Minister said. I think it's a maturing relationship, and it's similar with NRW. So, the Minister and myself met the NRW chief exec and chair yesterday. It's similar in that the Deputy Minister meets the chair and chief exec. I meet the finance director on a monthly basis. And it's evolving, and we are getting in a better position, so they're aligning with our budget process, which never used to happen before, for example, and NRW was always out of sync. But there are things outside the main core budget, and what we're trying to do is ring-fence that, bring it all together, so it's easier for that organisation to deliver and for us to actually manage as well. And I think that that relationship is getting better; it's not perfect yet, but we are a long way on the journey, basically.

Okay. Thank you for that. They did tell us, didn't they, that their budget-setting process involved, I think, about 20 or 25 bilateral meetings. So, we're moving away from that, are we? That's the kind of change that you're talking about.

Yes, that's right.

We're not there yet.

No, I accept that, but let's—

No, but I think if you—. Well, we hope that they will tell you as well that it's significantly improved, and we expect a really serious improvement in both organisations next year as we recalibrate it.

But just to say, I do think scrutiny of TfW is really important, and the committee has a valuable role to play there, to help us, because they are significantly bigger than our civil service parallel team, if you like, so there is an asymmetry there. And we've been talking to the chair about the governance arrangement and the board membership, and how we look at that. So, I'm very keen that we keep them on their toes, whilst also seeing them as partners. It's a little bit of a dance, but the committee's help in doing that is appreciated.

The same for NRW.

And I'm sure the committee is up for playing our part in that respect as well. Great. Okay. Diolch yn fawr iawn. Sorry, Jenny, back to you.

That's all right, Chair. I welcome the holistic approach that we now have to getting from A to B, via whatever means.

I just wanted to move on to how the budget may have impacted on your plans for the decarbonisation of buses and taxis and private hire vehicles, because you've set 2028 for 50 per cent of buses and all taxis and private hire being decarbonised. I just wondered if you could tell us a little bit more about whether you still plan to meet that target.

I'll ask Peter to come in and add to this, but essentially, yes, we've had to change our target because it simply was not realistic—the original target we had on bus decarbonisation. So, we've now changed it to 50 per cent of the most polluting fleet. We've been doing quite a lot of work jointly with Vaughan Gething on looking at the foundational economy agenda within this, because we know we're going to have to get our entire bus fleet onto electric within the next decade or so. And there's an economic opportunity there: rather than just buying all our buses from China—and China make good electric buses, and they have some in Cardiff and in Newport—there's an opportunity here to make them in Wales, just as we are assembling some of the CAF trains in Wales as part of our new rail rolling stock roll-out. So, there's been a lot of work going on. We set up a special group, led by James Davies from Industry Wales, to look at how we would do this, the practicalities of it, and we've made significant progress. We're not there yet, and it's very complicated, but that's our aspiration. Perhaps, Peter, you could pick up on the specific point.

I was just going to say that that group will be reporting shortly. I know the committee is looking at electric vehicle charging, and I think it would be worth while having that task and finish report when you consider that, so you could look at both the bus fleet and the broader car fleet electrification programme in the round, because there are a lot of central points that link across the two—in particular, grid connections, for example.

And the other point that I would make is that it's worth reflecting on the decarbonisation of the fleet in the context of future plans for bus franchising. So, it is an excellent opportunity to be reflecting both on the composition of the fleet and the composition and the organisation of the network at the same time. It's a challenge, but also it's a significant opportunity, and that's a type of conversation that we expect to be having with the industry, across all partners, and with this committee over the coming years, but we should certainly see them as two sides of the same coin.

Well, we've been doing some work on electric charging, which we will see in due course, but I just want to focus on the buses for the time being. Cardiff and Newport were both successful in getting money through the Department for Transport in Westminster. Are other local authorities focusing on the money that is available from the UK Government? Because, at one point, people were just not—

The difference is, of course, the rest of the bus companies are entirely in private ownership. You know, Cardiff and Newport have a different model, so we've been able to help them with some of the costs. But we are talking with the rest of the industry. The electric bus move is not as simple as it looks, because it challenges the fundamental business model of many buses. When you think particularly of SMEs, who provide the school market, they are typically family firms, particularly in western Wales, where their model is to buy buses at the end of their life at a relatively low cost and to do them up, because they enjoy doing them up, and that's the family business, and they run them at a very small profit and they keep them on the road. Now, they're not going to be able to do that with electric buses. So, there's a real challenge for the industry, and franchising, in a sense, intensifies that challenge for the SME sector. So, we're trying to think creatively when it comes to franchising how we can help with that transition both to decarb and to franchising. Could we look at a foundational economy model, where maybe TfW owns the buses and leases them to the SME, who then charges an operating fee. So, I think we need to think differently about the way the bus industry has worked, which indeed is part of our whole bus Bill reform. So, there's a lot beneath the surface to this question, Jenny.

Okay, that's useful to know. Just moving on, because, obviously, otherwise we'll run out of time, could you just tell us how the active travel ambitions are affected by the reduced budgets?

Okay. Well, I'll try to be brief. We're spending less than we had originally thought we would, and that's partly because, as the cross-party report on active travel that Huw led has pointed out, there are some real capacity and capability constraints across local government, and they simply haven't been able to spend all the money that we wanted them to spend. So, there have been a fair few underspends over the last two financial years, which have caused us some challenges. So, I think what we need to do—we are planning to ramp up active travel spending in years to come—and I think what I've come to a very clear view on, with the help of the excellent work that the cross-party group has done, is that we need a pretty deep reform to the delivery mechanisms for active travel. So, we're talking with TfW now, who haven't been doing enough on active travel. They've been focusing, as we'd ask them to, to do a grant-giving function and the monitoring, rather than development and capacity building, and there's some good work going on in Active Travel England on this that we want to work alongside and learn from. So, there's a big reform piece to be done, building on that cross-party report. So, we're spending a lot; we're spending double what we were spending four years ago, so let's not undersell ourselves. But we're not able to ramp it up as quickly as we need to because of the delivery constraints.

Okay. My personal frustration is on the lack of any map connecting schools to communities of pupils and how we ensure that all pupils have the capacity to get a bike.

Well, we've put in the guidance for the active travel plans that they have to map all schools and, over time, need to identify how people are going to travel to those schools. And all new schools, similarly, have now, as part of their business case, which they didn't before, under the successor to the twenty-first century schools programme, have to consider the journey to school using active travel as well. It's slow burn, Jenny; I share your frustration, but we are making progress.

Okay. Thank you.

Just to add to that though, Jenny, obviously, in some parts of the country, having just discussed my hilly constituency, it is much more difficult, and so, actually, there are some successful schemes with Sustrans to lend out electric bikes, for example, or help with the cost of buying them, and that's been very successful in some parts of the country. So, we do hope to be able to roll out schemes of that sort as well, because, for many families, an electric bike is just out of reach, and in some parts of the country, if you don't have an electric bike, you're not going to be cycling to school any time soon.

I appreciate that, but—

That's where budget constraints come in, because that Sustrans scheme, E-Move, has been successful and we're looking to extend it. We'd like to really ramp it up, but we simply don't have the budget headroom.

Okay. Well, thank you for that clarification. Are you in any position to tell us how funding from the schemes included in the roads review might be redirected in the future towards these excellent projects that we've just been talking about?

Yes. This is a bit of a red herring, this one, because most—not most, all—of the schemes that the roads review is looking at are schemes currently in development. The whole criteria was that we're not looking at schemes where shovels are in the ground—they're being built. So, the schemes we're looking at are not schemes that currently have much budget attached to them—they're mostly at the study stage. So, we're not anticipating a great release of funding in the short term because the roads aren't being built yet, but it will produce a different spending priority in the medium to longer term.

Thank you.

There are some particular issues around highway maintenance that come up every year, both trunk roads and local roads. Can you tell us a bit about the backlog there and what your assessment is in terms of what needs to be invested in what we have?

Well, there's a very significant backlog—over £1 billion worth of backlog. Your predecessor committees have written reports on this, and made the recommendation, in fact, that we should be maintaining existing roads before we build new roads. That's one of the missions we gave the roads review, to look to how we could reallocate funding. The roads review, when you see it, which hopefully won't be too much longer, has quite a bit to say about the way we approach maintenance. We've also commissioned a separate review, which we're calling the Lugg review, led by Matthew Lugg, also Jeff Collins and Phil Jones, who did a very good job at looking at how we currently spend money on maintenance, and in a very high-level way said that, in fact, we are gold-plating some schemes and neglecting some of the more mundane stuff. That's a very crude summary; it's much more sophisticated than that, as you might imagine. We'll be publishing that report and our response in due course. But, that means we're going to look at the way we maintain in a different way, so hopefully we can do more with the money that we've got. So, it's very much on the agenda, part of the roads review, part of a separate review, which we're working through.

Just on more significant infrastructure then, in terms of roads, as well, obviously Menai bridge is one that crept up on people, let's say, at a certain point last year, but we've also seen significant infrastructure like the road in Newbridge that was affected in Wrexham, there's been a landslide in Flintshire that's affected infrastructure there, and the Trefnant bridge that collapsed because of flooding. It does point, doesn't it, to huge issues in terms of creaking infrastructure. You're aware of that, I'd imagine, and clearly concerned about it.

I had spotted it. [Laughter.]

Yes. But, obviously, budget limitations mean that what you can do has to be tempered by reality. But, can you reassure us that there is a significant or a meaningful programme in place to try and not wait until these things happen, but to actually try and keep up with what needs to be done?

Sure. Well, I would say, Senedd Members generally can't have their cake and eat it. They can't expect us to live within a limited budget, to continue to build new roads and to tackle the backlog of maintenance. It doesn't add up. So, when we do announce the roads review, I would welcome some full-throated support from members of this committee for what we're trying to do to genuinely address the maintenance backlog as well as create more modal shift in when we are creating transport schemes. That's exactly what we're doing. It's a fact that our infrastructure is ageing and requires more maintenance. Allied to that, laid on top of that, is climate change adaptation, which is putting greater pressure on our infrastructure. So, we do need to be spending more on adaptation, and that's one of the things that the roads review looks at.

And it's a never-ending process as well, isn't it, really. Yes.

Yes, and just to add to that, on the flooding, of course, there's a separate programme that includes some infrastructure work for flooding itself. So, we do have a programme that looks at that. But, it's a fact that our climate is changing, and I think it's worth the committee taking note of the fact that, therefore, the parameters of build are different. So, one of the things that we're always asked is, 'Why do the trains keep running in Northern Ontario in -50 degrees C when they don't run here?' Well, the answer is because they're spec'd differently; it's a spec that's built to withstand that kind of temperature. And, the truth is, our roads and infrastructure aren't, and what's happening is that we have a climate that's changed to the point where it's outside the spec of the infrastructure—it's both hotter and colder than the infrastructure can manage. So, we also have to factor that in, and that's very new. So, in doing the flooding programme, for example, one of the things that the flood engineers are now looking at is what the spec of the original infrastructure is, and what's required to get it to the point where it might be resilient at both higher and lower temperatures and, frankly, higher rainfall, which is a huge issue for us. I'm sure that we'll get on to water quality and so on, but there's no getting away from the fact that the climate change is causing a pressure on our infrastructure that most of us haven't really thought about—about what the resilience of that infrastructure was ever intended to be able to withstand and what's now happening.

Sure, okay. Delyth.

Diolch, Gadeirydd. That's a really interesting point, actually. I wonder, is there an international example of another country that's had to deal with not just the climate change colder weather, but also the—? Are we in a kind of perfect storm situation because of where we are on the globe for that, or is there another country that's had to deal with this ahead of us that we can learn from about how to do it well?

This is happening all over the world, basically, and what's happening is that lots of countries’ infrastructure can't cope with the new weather conditions—higher rain fall, more flooding, colder or higher temperatures. More wind is a really common one for a lot of countries. So, one of the really great things about going to COP15 and talking about the financing models for biodiversity was actually getting together with the congress of sub-national states, as it's called—we really must find a better title for it—and sharing the learning. So, we're now part of a group of countries that are working on exactly that—how to do it—and one of the big issues here is that we're going to have to find different investment models for this. The world's banking systems and financial systems are going to have to find different models for this. So, we're in that process, Delyth, but nobody has solved it because we're all facing it together, but in different configurations.

It's changing all the time, as well, isn't it?

So, I suppose, for temperate countries, the extremes are a problem, but Canada, for example, has massive problems with flooding and different soil conditions that they didn't have to cope with before. So, it's not unique to us.

And it's a particular problem with the railway, and Network Rail are doing a lot of work on this because, when you think, a lot of our railways are on the coast, hugging the sea. It's very pretty, but very vulnerable to rising sea levels.

Or in the Conwy valley, which is an annual event.

And to deal with these climate pressures in an age of austerity is doubly difficult, so we need to be investing far more in our infrastructure. We don't have the firepower to do it on our own.

Finally on transport, I think, and then we can move on. You mentioned the age of austerity—what is there in the budget that will support local authorities transitioning to the 20 mph approach? Because, clearly, we wouldn't want that to take away resource or to put additional pressure on local highway authorities as well, really, would we?

Well, it's interesting, isn't it, that it's being presented as an additional resource. This is a key measure for our road safety strategy for reducing deaths and casualties on the road, which cost us, public services, a significant amount of money. We've published some research sponsored by Public Health Wales showing that, in the first year alone, they estimate—obviously, it's modelled, but it’s an estimate—it’ll save public services £100 million per year—three times the cost of introducing it, in the first year. We'll save that in the first year alone from reduced pressures on the NHS. Every time somebody dies on the road, it costs more than £1 million to the system. With more than 200 casualties turning up seriously injured at accident and emergency units, that puts significant pressure on the system. So, this idea that this is an additional extra cost and 'How can we afford it in a time of austerity?' needs to be directly challenged.

But in the next financial year, there is a squeeze, isn't there?

Yes, absolutely. It's not a squeeze—it's an investment, upfront. So, we have taken money from the local transport fund to fully fund this—some £30 million this year and we had some money last year. There will be a little bit of money next year, but much less. These two years are the big years because we have to replace the road signs, and so on. So, as far as we're concerned, we're fully funding this change from central budgets and we're also confident that it’ll bring a long-term saving. In terms of the Well-being of Future Generations (Wales) Act 2015 and taking decisions for the long term, this is a very good example of doing that.

There we are, okay. Thank you.

Can I just add one last thing to that, as well?

Yes, sure.

We've been talking to local authorities about seeing this much more holistically. So, this is very much part of the placemaking programme that we have with them. So, rather than saying, 'It's going to cost our road maintenance budget X', we're saying, 'Well, what is it actually doing for you across the board, and can you please factor those kinds of saved costs in?' So, it's not just the saving to the NHS, which, for the local authority, is nice to have, I'm sure, but doesn't affect their budget, but it actually does quite a lot of things for the local authorities' other budgets that they aren't currently factoring in, so we're having that conversation with them as well.

It's about looking across the piece at what this achieves, because, of course, it lowers the speed, but it makes the neighbourhoods more friendly. You can absolutely see, in villages where it's in place at the moment, that there are more people out; there are more children out; the streets are safer, basically, quieter, cleaner. So, I think the local authorities really need to be pushed back at when they're saying that they're looking at one narrow budget across their piece for what it achieves.

Okay, thank you. Thank you very much. Right, okay, we'll move on, then. Huw.

Thanks very much, Chair. Could I just continue with this theme for a moment on climate adaptation? You've commissioned the Intergovernmental Panel on Climate Change to have a good look at where we are on climate adaptation in Wales. All the things that you've mentioned in terms of highways, rail, flooding, significant infrastructure—all of that suggests to me that much of this heavy lifting cannot be done in Wales alone. So, my question to you is: how much of this can be dealt with within this budget, or future budgets within Wales, or how much of this is going to rely on joint England and Wales working, and significant infrastructure from the UK Government, where we at least have consequentials?

I'm interested in what discussions you're having with the UK Government, because whilst we're focusing on this budget, realistically, are you going to be able to deal with these issues on rail and roads and other adaptations just with your Welsh Government budgets?

No, clearly not. We constantly complain, and 'complain' is the word about the HS2 situation, which is clearly nonsensical. Ministers who have attempted to publicly defend it have been getting themselves into a right pickle because it is not defensible, effectively. The idea that it somehow reduces the time of travel between London and some part of north Wales, and therefore—. It is just a nonsense. So, quite clearly, that doesn't work. We have constant quarrels about consequentials and all the rest of it, if you're talking about just a narrow infrastructure programme, but then, on the net-zero piece overall, then, obviously, we do need contributions from the UK Government to reach that, and that's a very complicated, interlocking piece; I'm sure that the committee has seen the Chris Skidmore report for example.

So, the broad answer, Huw, is 'yes, of course', we have those conversations with various Ministers all the time, but we also have very specific conversations with them about narrow pieces that we're either doing with them, or trying to get them to do things that we'd like them to do. There is a good tale to tell in some areas where we are collaborating well with the UK Government. I'm sure that the committee's going to get on to this, but we're currently looking at the emissions trading schemes, for example, and all of that. So, there's a lot of joint work going on, but we cannot get to our net-zero targets in general unless the UK Government steps up to the plate.

But, if I can just keep the focus on the climate adaptation plan for the moment, which we're anticipating in summer 2023, I understand, if we're still on target with that. Will that reflect not just what Welsh Government is doing, but will it also reflect where the levers of UK partnership spending will also be done, because the scale of the things you've just described to us, in terms of climate adaptation, require, I would suggest, a climate adaptation plan in Wales to reflect where UK Government has also reached agreement with Wales that it will assist?

No, no, absolutely—absolutely the case, and I'll hand over to Jon to give you the nitty-gritty in a minute, Huw. But, absolutely, it is the case that we have to have the UK on board with a number of these things, or we will simply not get to it.

So, even if you look at flood defence, for example, you only have to—I don't know if I want to even raise this at the moment—but you only have to get into the TAN 15 discussion to see what the problems are around very many of our major conurbations for example. The UK Government is going to have to address that across the UK, because Wales is not the only place where the cities have been built on the coastal plain and by a river, because that was excellent for trade when the cities were built. So, of course, but Jon has all the detail of it.

Just to clarify one point, the next plan, we're scheduling to publish next year, so autumn 2024, is—

Yes, but it's the committee on climate change that—[Inaudible.]—in the summer, which will inform—

The committee on climate change—yes. So, that commission—what we've deliberately done with that commission is ask that to be quite forward looking to, again, aid us and guide us in the right areas. You'll be aware that, in 2021, they published their third climate change risk assessment, and we have accepted that in full, and when we published out adaptation plan progress report just before Christmas, we reflected a number of the things that were in the CCRA—so, things that we were already doing, things that we've subsequently adopted since the plan was published in late 2019. But clearly, there's more work to be done, and next year we'll try and set out a team Wales kind of approach. That will reflect that we don't necessarily hold all the levers in all places. There are places where the UK Government predominantly holds the levers. There are places where we clearly have to collaborate, and yes, the plan will touch on that, in similar ways in which we've tried to do that through Net Zero Wales.

I guess my point is—. We'll look at this as it comes forward, Chair, obviously, in more detail, but my point is that if we're going to have the IPCC report, then followed by our updated adaptation plan, then we need to see an adaptation plan that actually says, 'Here are the challenges and here are the solutions,' including what will be done from an England and Wales perspective in terms of levering investment in, as opposed to, 'Here are the problems and the challenges and we haven't got a solution'.

Absolutely. And the approach that we are hoping to take with the next plan is a system-based approach, so that does not only address the actions that we need to take, because we've got a whole bunch of risks where the CCC have said, 'You're taking action, but you need to take more action', but they're all interlinked, as you will understand, and so, we're hoping to take a whole-system view to those challenges and propose whole-system solutions.

Joyce wanted to come in on this as well, I think.

I want to come in on the effect of working with the UK Government and what we can do here to decarbonise industries and move towards the net zero. Of course, I live in the Milford Haven region, so you won't be surprised, and I know that you're fully aware of the concerns of Milford Haven port authority, LNG and Valero about the emissions trading scheme. They have written to us saying that it's an unfair disadvantage that they're now facing, according to the inconsistencies between the EU ETS and the UK ETS, and how that will negatively impact on their ability to carbon capture, which is what they want to do, so that their industries become less carbon intensive. So, whilst you may not have all of those answers, because I know that you've been in detailed conversation and we've spoken about it too, I think it is a serious issue, and we've seen investment in the steel industry only this week from the UK Government, but there has been no announcement in terms of helping this industry, which employs an awful lot of people, and captures skills—moving on to the other side of what's happening in Milford Haven—and keeping those skills in a way that those people can transfer into the new industries. So, as I say, if it's too much of a question at the moment—

No, no—that's fine, Joyce. So, we're still in conversation with the four nations. The ETS scheme is a four-nation scheme. It has to be agreed by the authority, as it's called, which is the four nations acting together. We've been in a lot of conversations about this. It's hampered by the Northern Ireland position at the moment, unfortunately. But, in general, we are looking to have a scheme that is more difficult for industry, if that's the right word—challenging for industry. Because the EU had to cover the whole range of industry in the EU, frankly, nobody in Britain ever had to decarbonise at all; they were just getting inside the headroom, because they were dealing with a much wider set of things.

We are looking to get our industry to have a decarbonisation strategy, so the cap is going to be coming down. Consultation will ensue about exactly when, once the authority—. Jon can give you all the exact detail of the timing, which I don't have in front of me. We've had a lot of conversations, you won't be at all surprised to discover. Myself and Vaughan Gething, alongside Jon and the officials, met with the industries in question and so on. There's also going to be a question of a carbon border tax, which is the thing that the industries are really concerned about, because of their global competitiveness. So, that's under consideration. But we can't have a situation in which the free allowances mean that those industries just don't have to do anything for years into the future. So, they have to step up to this, they have to find ways to work with it, and what we want is a cap that's beautifully calibrated to match their ability to invest so that it comes down over time in a way that allows them to become more sustainable in a new green future.

There are conundrums here. We can't build any of the renewable energy production without steel. There are a lot of conundrums here. It's not as simple as just saying, 'Don't do that anymore; let's make them out of something else.' That just does not work. So, there are lots of things going on here. And that's what when I was answering Huw—. We do work very closely with the UK Government, especially at official level, on all of these schemes, because we have to do this together for the greater good of the UK as a whole and, actually, we're trying to push the UK Government to be a bit more vehement in some of these areas, because we want these industries to both be supported but incentivised to actually go on this path.

But that becomes very interesting for us as a committee, you see, trying to disaggregate or at least to identify what proportion, whether it's climate change adaptation or emissions reduction, or the zero carbon strategy, comes from Wales or comes from Wales together with the UK. We'll have to keep an eye on that.

I'll allow the Deputy Minister just briefly to come in and we'll have to move on then.

Just as a counterpoint to Joyce's statement there that carbon capture reduces the intensity, it doesn't reduce the intensity. It continues the intensity; it just buries it in the ground. That's not decarbonisation. And if you read carefully our energy statements, you'll notice a tinge of scepticism about carbon capture. Now, it may well be necessary as part of a transition, if it can be proven at scale, which it hasn't been. A lot has been placed on this by the UK Government as a get-out-of-jail-free card, and so far it's pie in the sky, if I can mix my metaphors. So, I do think we need to challenge a little bit the assertions of industry here, that they will simply just have this and they'll get off the hook, to introduce a third metaphor. So, I think we should just be a bit more challenging in our thinking on this.

Okay, thank you. We'll get back to the budget before us now. [Laughter.]

In terms of this budget specifically, how will it accelerate emissions reduction progress in the sectors where reductions have been minimal or, indeed, where emissions have increased?

So, that's the same answer, really. So, what we're doing is we're looking to put a range of measures in place that incentivise, if you like, the adaptation programme. So, you don't need very much budget to start the incentivisation process. What we will need in the future, of course, is investment, both by private investors and from us, in the methodologies for that. So, one of the big budget issues for us, I guess, is whether we have enough in our budget to leverage in some of the private investment. Again, sorry to harp on about COP15 for a minute, but one of the big issues there—there were two days there on how you make sure that the kinds of schemes that you lever in are actually doing the right thing. So, we don't want greenwashing, we want proper carbon credit schemes coming in here from companies that are doing their absolute best to decarbonise, to get to net zero, to reduce their emissions. All of these things are interlinked, Huw. So, our budget is structured, we hope, in a way that allows us to leverage in some of that. There is absolutely no way we can do that as a Government. No Government can. It was clear from the conversations that no Government can do that. So, there we are.

Dean wanted to come in.

Dean, do you want to come in about the specifics?

Yes. So, the Minister said at the start the economic and financial context that we're working within, and I think sometimes we forget this is a three-year budget as well, so we're in the second year, and I think the Minister did a great job working with Cabinet to divert resources in this area last year. However, the challenge with the UK Government is that we've had no capital increase at all within this budget. So, we've maintained budgets and the Minister has prioritised the areas she's talked about, but it is a very difficult budget position we are in. And the Minister covers so many different areas, like I said—housing, homelessness, which we discussed last week—and they are all priorities for the Minister, but she has done well with the budget we've got.

Okay, which leads automatically, then, to the next question. The 90 per cent reduction in total emissions suggested in your own net zero strategic plan, to get there on target, based on the 2019-20 baseline, to get there by 2030—can you do this? What's your level of confidence that you can do this, bearing in mind some of the challenges you've just described, some of which are outside your power?

So, we've met the first carbon budget. We're on track to meet the second carbon budget. The third carbon budget is very, very challenging. That's where we're at. So, we've taken some, I don't know what word to use—well, the 'right': we've taken the right decisions in Cabinet to not, for example, use headroom to flatten it off. I'm very delighted to do that—that sends the right message about where we want to go. This isn't a game of smoke and mirrors; this is a real-life thing happening on our planet. So, we've made those decisions. But make no mistake: the challenge of the next 10 years is huge and we've picked off much of the low-hanging fruit—it's a good day for metaphors today. So, a lot of the early wins: shutting the coal-fired power stations and so on, although the UK Government is not entirely on that page right now, but anyway—. The next steps are absolutely much more difficult. So, we've got a significant package of investments in this budget, but we will need a huge push from across Wales—the team Wales approach that we talk about all the time—which is why we talk to all of our partners right across industry, commerce et cetera, to get on this pathway because, otherwise, we're not going to make that third carbon budget. That's the bottom line, really.

And can I just say, it's not certain, is the honest answer—it's not certain we're going to meet it. Transport is particularly challenging, for example. Transport is the sector that has provided the least contribution since 1992 [correction: 1990] emissions, so, that's the reason why we're doing the policies we have, but there is pushback, there is resistance, political and societal. And that is going to be very challenging for us, plus finding the budget, again in the age of austerity, to do the modal shift measures we absolutely have to do that we currently can't fund. So, we're not blasé about this at all, and I think it's only fair we alert you to our concerns that, across the piece, we're not moving at the pace we need to move to hit these targets.

And the other thing is, Huw, and I'll ask Jon to say a little bit more about this—this is a two-hour answer all by itself, in truth, but—we have a whole series of things in the carbon plans and in the net-zero plan where we do not have the data, really, that we need. So, we're having to work on a set of better data, better emissions and so on. And also there's a big lag: so, it's a two-year lag between us getting the—. So, I think I'm right, Jon, in saying that we got the emissions data just before the December report, didn't we, for two years previous to that. Yes. So, there's a big lag in what we're looking at as well. So, Jon can give you chapter and verse on this, but we have a whole series of issues inside the plan. So, the plan is fine for what it is; it needs refining as we go, as we get better data, better emissions. So, there's a whole other piece here where we're kind of projecting what we think we know, but we may have to review it as it becomes clear what we know, if that makes any sense to you, but Jon has a lot more of the detail.

I think—. A couple of points to make, and I think part of your question was about Welsh Government's corporate footprint, so I can touch on that a little bit. At the risk of stating the patently obvious, not all things are equal, so, certain sectors are able to go faster than others where we have the technologies. We've seen that in the power sector, where we've moved away from coal; the next transition is to move away from natural gas, or unabated natural gas, and there are not clear pathways there, but reasonably solid pathways that will—. And UK Government thinks that the power sector will be decarbonised by 2035, and we clearly hope that that's the case.

The CCC's balanced pathway, their advice for Wales said that, by 2035, a third of the residual emissions would be agriculture emissions, because agriculture is a more challenging area to decarbonise, because animals tend to ruminate. So, all things are not equal. So, we should expect that there will be different trajectories for different parts of the economy, but that doesn't mean to say, clearly, that parts of the economy where we've seen little progress are impervious to progress. We've got to change the policy landscape and a lot of what the Minister has said about the work that is happening to try and achieve modal shift and reduce the reliance on the private motor vehicle is very long term and will, hopefully, pay the dividends in many different ways.

Okay.

Did you want me to touch on the corporate?

If you could, yes, please.

So, as you're clearly aware, we published our strategic plan for Welsh Government's corporate footprint, and that was part of the work that we've done to try and understand the true carbon footprint of doing public sector business in Wales. So, the inventory that we rely on for these big numbers that we publish once a year is just—. The public sector thing that says 1 per cent; that's just public sector buildings. It doesn't account for the fleet, which is in the transport sector, or—. The goods and services are there—[Inaudible.]—which is in the business sector. But what we clearly recognise is that Welsh Government spending power has an enormous opportunity to stimulate change wider within the economy, and therefore we've asked the public sector, and they've all voluntarily—the larger organisations that we've asked, all 22 local authorities, health boards, almost all the universities as well, actually—have published, and Welsh Government published its own carbon footprint and a plan to achieve that. It's a high-level plan at this moment, and it's now the responsibility of the chief operating officer in Welsh Government to develop the detailed plan to achieve it. That current high-level plan doesn't get us to where we need to be by 2030. There's currently a policy gap. So, the work of the chief operating officer, working with colleagues across Welsh Government, including myself, is to try and understand how do we close that policy gap, so that we achieve what we need to achieve. And clearly, we won't know the cost of that until plans and options have been developed.

Okay. I'm conscious, Chair, that time is rushing ahead. So, I'm going to try and rattle through some other things. I want to focus on renewables and on energy as well. We had the renewables statement with increased ambition on the floor yesterday there, but, of course, we've already got within the budget funding allocated to Ynni Cymru, the new state-owned energy developer. I'm interested in how those two projects will work together going forward, and what their focus will be over the next 12 months, but also did the statement that you did yesterday add any fuel to this, and it is reflected in the budget going forward?

The short answer to that is, 'yes, it is'. So, we've got the—. Ynni Cymru funding is ring-fenced inside the clean energy BEL. It's £1 million for 2022-23, £2 million for 2023-24, £3 million for 2024-25. So, easy for hard-working Ministers to remember—nice round figures. [Laughter.]

So, we're doing them as two parallel developments at the moment, because they're focusing on very different parts of the sector. They may come together in the future; who knows, but it's perfectly possible. Maybe not, maybe so, but, for the moment, because they're in very different scales of the sector, they're different. So, the renewable energy development bit is focused on large-scale renewable generation on the public estate in Wales to start off with. It may morph out into other things, but, for now, it's to focus on the opportunity that the Welsh public estate gives us, and, frankly, to drive better profits for the Welsh people and the Welsh state out of that than we are currently getting from auctioning it out without doing that. The new company will be established this time next year, so there's a lot of work to do it, and then we're actually simultaneously paralleling the feasibility work for various sites for the developer to get into.

Just to be really clear, there's no way, unfortunately, that the Welsh Government can afford the kind of investment necessary to build any one of them. So, we'll obviously be looking for partners in the private sector, but that will give us better leverage in terms of what we get and, obviously, it's our stated aim—and I know the committee shares it—to get more of the profit from the exploitation of this set of resources into Wales than has ever been achieved in previous industrial revolutions. So, this is very much part of that piece.

Also, the 'private sector' that we're partnering with tends to be sovereign wealth funds from nations who've gone ahead of us, and, actually, they're pretty sympathetic. We've had really good conversations with Swedish and Norwegian sovereign wealth funds for example, and they're quite sympathetic to where we want to be. So, that's that one.

And then Ynni Cymru, we're still working with Plaid Cymru, so I have to be very careful not to pre-announce things, but that's much more in the community, domestic, farm business type parts. We've done very well in Wales on that, but we could do a lot better, so it will be about giving, filling in the gaps that we have identified by people who've tried to do this, identifying finance, whatever—. There's a whole series of things; I'm in danger of pre-announcing myself now. So, together with the designated Member for Plaid Cymru who's been working with me on this, we're nearly there, so I hope we'll be making an announcement shortly. But you can see that it's two very different sectors. Now, at some point in the future, they may come together, because they'll be established and we'll know what we're doing, but they may not, it depends on what direction each of them takes. There is a very definite need on both ends of the sector, and, unfortunately, this committee is just before we're likely to make an announcement, so apologies.

It's like one of these BBC Breakfast interviews, where you ask, 'And what's the next series going to look like?' [Laughter.] 'I can't tell you quite yet, but it's coming, it's really exciting.'

It's not quite as glamorous as that. [Laughter.]

Oh, I don't know. [Laughter.]

Okay, thank you for that. Just one other thing I wanted to ask, it's in respect of the Welsh Government energy service and the £10.5 million increase in capital funding for it. What do you expect the outputs to be on that, how this is going to help achieve a net-zero public sector by 2030?

That's very much where Jon was coming from just now, so this is about us attempting to get the public sector into a better position. So, there are a number of things that are standout projects we can direct the committee to, and if you get the chance to go and visit them, they're great. So, the solar farm that currently powers Morriston Hospital is well worth a visit. It's the first hospital in the UK to have its own solar farm with a direct feed—you can actually see the direct feed into the hospital. It's terrific. It's a 4 MW project, and it's got a 3 km private wire. I went and opened it with the chair of the health board, it was absolutely great—

How do you open a wire up, then?

You cut a lovely ribbon, Lee, and, magically, the electricity flows once the ribbon has been removed. [Laughter.]

That sounds cool. [Laughter.]

I believed it, anyway. [Laughter.]

So, it's a great project. We've been able to talk to them, as well, actually, about some of the lovely-to-have things that we'd like to see alongside our solar farms, so the panels there are raised off the ground by some distance, allowing under planting. There's a hedgerow that's wooded all the way around. We've talked with them about increasing tree covering by two more lots of trees all the way round. It doesn't affect the operation of the solar farm. We can get a species-rich meadow running underneath it. There are lots of nice-to-haves here, it doesn't have to take the land out of other uses. So, I'm really, really keen on that.

And then we've got Anglesey, where Amlwch leisure centre is heated using air-source heat pumps, also done through this, and that's, again, another great project. The building and the swimming pool are all heated by heat pumps. The committee will be aware of the real plight of leisure centres around the country with the energy crisis, so anything that allows that kind of public sector investment, so that you have a much valued public resource of that sort not being subject to the current energy fluctuation is fantastic. So, both of those are examples of projects that we're looking to do with this budget and to help that decarbonisation of the whole estate.

The health minister and I have had a couple of really good meetings about the health plan to decarbonise, and we have a similar conversation with local authorities about helping them, and that's very much a part of what Jon was talking about. Jon will be able to tell you a lot more, chapter and verse, if you want him to.

Well, we haven't got time for that, I'm afraid, Jon. [Laughter.] Joyce wants to come in very briefly, and then we will take a short break.

A very brief question, in terms of the not-levelling-up fund that the UK Government are rolling out without any consultation, which local government is applying for, what, if any, restrictions can you put on the rolling out of these—all capital projects, by the way—to ensure that they comply with our net-zero targets, rather than increase them? I'd just be interested.

So, the answer is: we can't, at all. But, fortunately, we have a very good relationship with most of our local authorities and so, actually, they've all been anxious to speak to us about it. There's no getting away from this: we're very cross about it, it's a daft way to do investment—

Absolutely.

—so we have a really good regional strategy in Wales, we've worked on it for ages, we have a really good relationship with our local authorities and our regions. We have a very well-developed programme with our city regions about where the investment is required and so on. The idea that you just step over all of that and go to individual authorities and say, 'What would you like?' is just mad, frankly. There's absolutely no way of getting around that. I do not understand how that produces a reasonable infrastructure programme of any sort. The local sacred cow is what you're going to get there. Actually, we've been quite lucky in this round, because the project that was agreed was one that we had worked on with the local authority; we're match funding it, et cetera. We know that other authorities had put in projects that we really didn't like and didn't actually get them. I don't know what process went on in the UK Government. We're pleased with the outcome, but I suspect that's luck more than judgment. It's not a sensible system, from our point of view.

And without that complementarity, you don't get the best value out of every pound. Every investment needs to pull in the same direction and be part of a bigger plan. But, there we are, that's a whole other session, which is probably one that the Finance Committee has and will continue to grapple with.

We'll now take a short 10-minute break. We've covered two significant areas of policy in the budget, in your portfolios, and in our respective remit as a committee. There are about four or five other areas that we will wish to pursue in our second hour, so we'll reconvene ready to start again at 11:10. Diolch yn fawr. Thank you.

Welcome back to the Climate Change, Environment, and Infrastructure Committee. We are continuing our scrutiny of the Minister and the Deputy Minister in relation to the budget. We'll turn to another area of questioning now—and there we are, Joyce is just arriving.

We're just reconvening, Joyce, and I was just about to invite you to start with the next area of questioning.

That's perfect timing. I want to ask about tree planting and the impact of the £1.1 million reduction in the planned revenue for forestry. What will be prioritised, or what might you have to deprioritise, as a result of the reduction and the budget squeeze that you've mentioned previously? And how will it, if it will at all, affect Welsh Government's aspiration to increase tree planting?

So, although there's a reduction in the planned revenue, it's still more than was in there, so it's a reduction in the planned increase, if I can put it that way. So, it's not a reduction, just to be really clear, in the original level. It should still allow us to meet our plans for a national forest for Wales, develop the timber industrial strategy and increase woodland creation.

We are funding national forest liaison officers across Wales to create new areas of national forestry through the woodland investment grants, and funding work to support the increased use of timber in building homes, which is a really major commitment for us. And then we've got £30 million in woodland creation grants over the next two years to go with it. So, it's just part of the squeeze we talked about right at the beginning of the committee, and it's very indicative of what we'd tried to do in the budget this year. So, what we've looked at is where we can maintain what we've got—as Lee said, for the transport things—trying to maintain where we are, and then look to see where are the best places to put the limited investment we've got. We've tried to calibrate it. I'm confident that this will get us to where we hope to be. It would have been lovely to have the additional money, but, nevertheless, it's still a good scheme to get us going.

Jenny would like to come in specifically on that.

I wanted to ask you what planning powers you have to ensure that trees are planted where they're needed, rather than on prime agricultural land. Because there are these categories of land, and I understand the farming unions' anxiety that proper land for growing food could be removed by somebody just wanting to offset their carbon emissions.

This is a really difficult, wicked issue to cope with. We want to make it easier for people to plant trees where trees should be. We don't want to put planning consents in place for that. If you want to plant six trees in your garden, I don't want you to have to have planning consent for it. So, trying to calibrate it in just the right way is—. We're having a looking at it, is the truth of it, but it's actually quite difficult, because it applies to everything, a planning consent. You can't say, 'Well, it applies to this bit here, but not over here.'

The categorisation—Gian Marco will know far more about this than me—of agricultural land has not been upgraded since about 1940 something, and they're just beginning to look at it, as I understand it now, to have a look to see whether that's fit for purpose in terms of the new biodiversity and all the rest of it—food production and so on. So, it may be that the current categories we have aren't particularly useful.

What we've done instead is we've made sure that if you're in receipt of any Government money, then you, obviously, have to go through a process, and therefore you would never get permission to plant Sitka spruce on peatland—to use the spectre of what everybody looks at from the past. We approach companies who we think might be trying to do that with offers of assistance and help to make sure that they're going to do the right thing on the right land.

The truth is that what we want across Wales are mixed-use woodlands. So, if you look at some of our commemorative woodlands, for example, we will have places that are clearly a forest, we will have places that look much more like parks, because of their sparse tree canopy with other things underneath, and we will have food production areas, because what we're trying to show is that these things are not in conflict—that you can have them all in an area that has the right kind of diversity.

Britain has been inhabited since, you know, forever, and so our species are highly adapted to that. We don't have any species looking to have dense woodland with nothing in it; they're not adapted to that. Lots of our most iconic species, like the curlew, don't want forests at all; they want open grassland. So, the real trick here is to make sure that we have the right designation on all of our land so that we are giving people the correct indication of what it should be. Should this be a forest? Should this be open grassland? Should this be peatland? What should it be?

Part of the big thing that we'll do for the 30x30 goals is a review of where we are with all of this so that people have a much more granular understanding of what their area would look like if it wasn't degraded, and that's the other issue. Sorry, I'm going to go on at great length about this, but one last thing, Chair—this is the other issue, and it was really apparent in discussions with other nations that this has happened—is that what we think of as the way Wales should look is a degraded landscape for almost everywhere, and so what we've got to do is shift people's perception of what that ought to look like. What would it look like if it wasn't degraded? Then it would look very different. So, what we want is we don't want a sort of nostalgia for a degraded landscape; we want people to be proud of and understand what their community would look like if it wasn't a degraded landscape. That's quite a big piece of work to do for people to understand that. Part of what we're doing in the commemorative woodlands is an exemplar project to show people what it could look like if you really did understand what that land should be.

We'll come on to much of that—the biodiversity stuff—in a minute. So, back to Joyce, and we do need to retain the focus on the budget as well.

Going back to the £32 million that has been allocated over three years for new woodland creation, how will we measure the outcome and the positivity of that?

Yes, so, we want to create 43,000 hectares of new woodland by 2030 as part of the net-zero plan and as part of the biodiversity planning as well. It's completely dependent on landowners applying for the grants to do this, so we'll be working with landowners right across Wales. It's a great opportunity for farmers in particular to get ahead of the sustainable farming scheme. Lee and I have met with a large number of groups across Wales that are getting ahead of this. If the committee hasn't gone to see Stump Up For Trees, may I highly recommend that you do?

Really, what we're doing is trying to get the pipeline in place for the woodland creation and make sure that people know how to apply for the grants. We've got the liaison officers I spoke about already to help people get out there and get ahead of it.

Okay.

Okay.

We'll go on to environmental governance, which is one that constantly pops up in our scrutiny of you as well.

We'd like an update on the review of resources for the interim environmental protection assessor, including how much flexibility there is in the draft budget to respond to the outcome of that review, if additional funding should be needed.

Yes, so, we're in the process of having the conversation with the interim assessor about what her findings are. I just want to pay tribute to the great job that she's been doing. What we want to do is structure the oncoming environmental governance body accordingly; I've had this conversation with Delyth, amongst others, many, many times. We're very confident that the draft budget is flexible enough to meet the oncoming needs for that, and then we'll be sweeping this up into the 30x30 goals, because I want the environmental governance body to be the protector, if you like, of the 30x30 goals. We want them to have some teeth in that regard as well.

So, for this piece of work, I'm absolutely sure that the budget is flexible enough to do this. It's an enormous MEG; we have sufficient flex in it to do that. But, for the oncoming work for 30x30, then there's a whole different ball game that we'll have to have a really good look at. So, how we get from where we are now to 30x30 protected is quite the ask. I think that will be something we're going to have to work really hard on over the next six months, to make sure that we're in a position to be able to put the investment in that we need to. As I say, I think probably—and this is very much a 'probably', Chair, so I'm happy to come back and talk to the committee in a policy one—we're going to have to do a review of all of our designations to make sure that they're fit for purpose and that the investment is going into them to make sure the landscape is protected. So, that's a whole different ball game. But, for this narrow piece of work, I'm sure the budget flexibility is there for us to do that.

You've allocated £480,000 for work to legislate and establish an environmental governance body. How did you arrive at that figure, and what do you expect it to fund over that period?

That's the cost with the policy development and external research, and so on. So, we've got a work plan over the next 12 months that I've just been talking about, really, to get to where we need to be. So, that's just calibrated for staff costs, research costs and so on, to run alongside that. That's not intended to be the investment programme or the revenue stream to do that.

Okay.

Okay, diolch yn fawr. Thank you. Delyth.

Diolch, Gadeirydd. Moving on to biodiversity, could you tell us how the draft budget will address biodiversity loss and restoring ecosystems, and specifically could you tell us how Ministers will be working together to embed that work across different portfolios, and how the Government will be monitoring and reporting on the impact of spending decisions on the nature emergency, please?

Yes, so this is where it's important to remember Dean's 'this is a three-year budget' comes in. So, we'd already got plans in 2023-24 as part of our 2022-23 budget, so this is an ongoing programme. We've £160 million of investment there—I am desperately trying to find the right BEL page, forgive me, at the moment; there we go—and a £1.8 billion package of targeted capital investments, which takes us up to 2024-25. So, this is the three-year programme rolling out, and that's where the 30x30 targets come in, and the investment that we need to do that.

Then we've got a whole other series of initiatives like local places for nature. So, there's £60 million for local places for nature in this budget. Then we've also got to embed our response in everything we do. The programme for government starts by saying that we will embed our response to the climate and nature emergencies in everything we do, so we've got an integrated whole-Government programme. We're still in some discussion about the governance for that, but I think we're nearly there now to do that, so that we can make sure that we're co-ordinating efforts not just in my MEG, my portfolio budget, but across the Government so that I have other Ministers—every Minister, actually—coming to the overarching Government to say what they're doing not only in their own estate—so, hospitals for health, for example—but actually in their approach to their own budgets, so that it's embedded. So, that's very much an ongoing programme right across the entire piece.

Thank you, Minister. When the governance of that is finalised, it would be really interesting, actually, if you could send us the information on how that's going to be working across Government, please. Looking at your evidence paper, when there were questions about how the budget would respond to or reflect the nature and climate emergencies, the responses tended to focus on climate change work, but not on biodiversity. Now, I know, Minister, that you do deeply care about biodiversity, so I know that this isn't an exhaustive paper, but could you explain why that wasn't reflected as much?

Because we weren't geared up enough to do it is the truth of it. So, we've been gearing up slowly to do that. So, net zero is sort of embedded, and this is a global phenomenon as well, actually—the net-zero call has been really successful across the world. One of the sadnesses of COP15 was that we didn't get the nature positive agreement, so I think that biodiversity desperately needs its own brand in the way that net zero is. The Race to Zero has really got into the public psyche. So, we need to do that with biodiversity, and the Government's no exception to that. So, we'll want to gear that up. We have a number of very specific budget programmes at the moment but we don't have that overarching thing, and that's one of the things we want to work up. So, we have very specific things you'll be familiar with—the biodiversity deep-dive, the peatland restoration programme, which I'm very proud of and which we've been exhibiting on a global stage; a number of those very specific things—but we don't yet have, and we will be developing, this overarching strategy. That's one of the big things that we've got to work on. So, the budget is sufficiently flexible for us to begin the process of that, but we will obviously have to look again once we've got the review done, and all the rest of it.

Minister, I was just going to emphasise that point that, clearly, as the budget sets out, there are some very specific strands of activity dedicated to biodiversity. The nature networks fund is probably the best example. But if you look through the budget both in this portfolio and more widely, you've got money allocated to other activity where biodiversity is also a benefit that will be delivered from it. We've talked about woodland creation. Whilst, clearly, the main aim there is to plant trees, we want to do it in a way that also encourages biodiversity. If you look at things like our flood defence budget, some of that is about natural flood management, and one of the by-products, if I can call it that, of natural flood management is also biodiversity. I think it's important to look at it—and I know it's not even easy for me sometimes to unpick it all—as there are direct funds but also an awful lot of other activity that will deliver for biodiversity indirectly, I guess, or as a by-product of the main objective.

Yes, and, actually, Chair, if you have a look at some of the lines in the budget, you can see the mix. Just because I was looking for the environmental one and didn't find it, I hit on the marine one here, for example. So, the marine budget BEL has marine planning. It also has marine biodiversity, and it has marine resilience and climate change rolled up into it. So, it's that kind of thing, and because we don't have a similar thing to the net-zero plan across the Government, we're not pulling it out of the various lines. So, it's in there, but the next task is for us to corral it in that way and then make better use of the programme against a review that we really need to do to make sure that we know—. The whole point of the biodiversity deep-dive was to start the expert work on what exactly is it that we need to do. As I've said many times to Delyth, I could say now that we want to protect 30 per cent of our land by 2030, job done. Well, I have no idea what that means. I still don't know what it means. We will have to do a review of each part of our designated landscape scene to understand what it means for that field, that bit of copse, that bit of—. So, it's a piece of work, and then what we hope to do is develop the goals as we go. So, there'll be high-level goals, more detailed goals and then, I think, very specific goals for some of them.

And then—sorry to hobby-horse for one moment—a lot of the designations are old and they don't really mean much to anyone anymore. What is a site of special scientific interest? What can you do in it? What is protected exactly? So, I think there will be a real need to get this rallying cry for nature that we've had for net zero, and to try and find a way to make people really connect into it themselves. If you've got a SSSI next to you, I'm not really sure that most people fully understand what that means. So, I'm really keen to make sure that we get a similar piece for biodiversity as for net zero. So, the budget sets the process off, but, as Gian Marco has just said, it doesn't pull out all the strands as yet.

Thank you, both, for that, and I appreciate your honesty about that, Minister, and I appreciate that this is a global phenomenon as well and the points that you were making about how actually it is there but it's just not seen in the same overarching way. So, thank you for that. Could you tell us how much funding, please—something more specific—is allocated for the recommendations and actions coming out of the deep-dive, like the biodiversity taskforce? Minister, you talked about how, after COP15, you almost left evangelical about this, which is wonderful to see. Could you tell us how much funding is allocated to developing, building legally binding nature targets and the biodiversity action plan?

So, there isn't any specific funding yet. We're using a very small amount of money, actually, to corral what is people giving us their time for free, which we have a huge wealth of in Wales. We have the group that Jane Davidson is now running for us as part of the co-operation agreement as well. All the experts on there are working for nothing for us. So, we're very lucky in that and they've been absolutely tremendous. As you'll remember from the outcomes of the deep dive, they agreed to establish a core group. They have a task and finish monitoring group, and they're designing an effective monitoring and analytical framework for us. We're in the process of doing that right now, and then they'll allow us to meet our international reporting requirements, as well as develop the goals. I'm sure that, along that pathway over the next year, one of the asks will be to set a budget up in order to be able to do it in a more systematic way, but we're not there yet. And then obviously, once we set the environmental protection governance regime up, that will come with a budget of its own, clearly. So, we're in the formative processes of this.

But I don't want to give the committee the impression that there isn't money in this; as I said, it's spread into the budget in various bits that we're picking out to do various bits of work. I imagine that, once we've got to the end of this task and finish group, we will restructure the budget accordingly. So, next time, I'll be coming with a supplementary budget, at some point, saying that we've moved money out of specific BELs into perhaps its own one. But we're not there yet is the truth of it. And we've been immensely fortunate in having people with serious expertise who've been prepared to give us a lot of time and effort to put this together, because they're very concerned, and they want to help us do this.

Thank you for that, Minister. By the way, Chair, I'm aware of time, so, if I'm going into too much detail, please tell me.

I was going to ask you if you could give us more information on the—. You talk about an innovative future finance model in terms of tackling the nature emergency. Could you write to the committee with any detail on that, or, if this is something that, again, is still developing, when that—

I'm happy to write to the committee; it won't be right now. We are part of a global group that are looking at various financing models for this—I think I've mentioned it a few times now—from COP15. So, the officials who accompanied me there are now working as part of the global group. I'm sure we could tell you what they're working on, but we don't have the models yet, and neither does anyone else.

Sure. Thank you for that. Could you tell us specifically what funding has been allocated to the delivery of the nature recovery action plan? So, that would include the nature networks programme, the national peatlands action programme, Natur am Byth and the marine conservation zone designation.

That's a whole mix of things. Dean might have to help me out here.

Do you want me to help with that?

Yes, one of you might have to help me out there.

So, local places for nature is £60 million. The peatlands programme, I don't remember. Does somebody remember?

The core budget is £1 million per year, but we've then allocated an additional £1.1 million in capital for the current financial year. The Minister announced, I think it was around last summer—I forget now—that additional investment to recover more areas of peatland. In terms of the nature networks programme, I think that's £15 million for 2023-24—so that's directly funding biodiversity. You asked about Natur am Byth; that's, I think, an allocation of £200,000, which match funds NRW's contribution. I see Dean nodding, so that's always encouraging.

That's great. I don't want to—

Is that okay?

The marine conservation zones.

Yes, the marine conservation zones. In effect, we haven't got a specific allocation, but it's within the overall marine biodiversity allocation of £1.9 million, so we will—.

Huw, did you want to come in on this?

Yes. Rather than spring this on you, I'd be grateful if perhaps you could write to the committee. It strikes me that, with all of this work to try and restore nature and enhance nature, a nature-positive future, you're going to need a lot of people with a wide range of skills, going forward. We don't really have the time to touch on it today, but I would be interested if you could write to me. Because I'm envisaging that, whether it's in the voluntary sector or the statutory bodies sector and so on, we do not have the capacity to deliver the monitoring and the reporting and the review of this, and how we do it on MCZs and how we link up nature-positive sites across Wales and do the redesignations. But it's the ongoing stuff—

We've got a task and finish group, which I've already mentioned, and that task and finish group arose out of the deep dive. That isn't a Welsh Government thing, that's across the piece. That task and finish group has got Welsh Government on it, obviously, NRW, it's got ENGOs, it's got Dŵr Cymru, it's got the future generations commissioner—it's a whole range of people. I won't to be able to do it tomorrow, but we're happy to update the committee as the task and finish group goes along. But it's obviously a piece of work over the six months to 12 months that is to help us get to the specifics of the goals. It was the deep dive group's recommendation to us that we set up that group and then they were all volunteering to be on it, which is really great.

I wouldn't want you to misunderstand me; I think it's beyond that. There is an ongoing need for skills and capacity across the sector to actually deliver this replenishing of biodiversity, restoring nature. So, I'm wondering, is that task and finish group looking at a specific area within skills?

We've also got Finance Earth procured to give us advice on the delivery of a sustainable delivery model for some of that, and the final committee report is due in March. I'm happy to share it when we've got it. There's £115,000 allocated to fund the advice for that, from the 2022-23 budget, not from next year's budget. So, that's ongoing as well.

And then, I think the only other thing we haven't mentioned is we have some international obligations on this as well that we also fund from the same budget expenditure line, because we have to report to the UK convention on this as well.

Joyce.

Of course, wrapped in all of that is climate change, and observing the difference that that's going to make to biodiversity is a critical part. I can give you a very brief example. I've kept a log for 10 years about an area in my region—well, actually very close to my home—on the birds, and what I do know is that there was an impact through the summer on the berries on the trees, because they all dropped off. I expected the result to be fewer birds—the specifics I won't go into, although I could—and they're not there. I didn't expect them to be, and they're not there. So, that has to be part of all of this. We can't mitigate that immediately, but we can recognise it and perhaps offset it somewhere else.

That's quite right, Joyce. Part of the biodiversity piece is understanding what the effect of the different changes in the climate will be. We're already seeing species here that have never been seen this far north before. We've also got the species that were here moving north. The curlew is a very good example of that. We will have to adapt and we will have to help the species adapt as well, and we will have to make sure that we've got habitat protection and restoration as part of this. These things are absolutely hand in hand. As climate change happens, and it's happening all around us, then the species that can adapt to that are changing, and it's one of the real issues for us to make sure that we can protect as far as possible. Migratory species are particularly impacted by this. Anyway, I just want to assure you that it's very much part of what we're talking about in terms of habitat protection.

Thank you. Delyth, back to you.

Diolch. Gian Marco, thank you for all of that information. I'm sorry I was putting you on the spot about so many different areas all at once. I really appreciate it.

I'm glad I was able to find it.

I was very impressed, so well done. Thank you. Just finally from me, could you please give us an update on the development of a European Union LIFE replacement scheme?

I went and opened the very last EU LIFE scheme in Wales. I cannot hide that I was very upset about it. They are great schemes. We've allocated £1.2 million in 2023-24 to match fund the final two EU LIFE projects. They always require match funding, and we've been happy to do that. They're in the nature networks programme deep dive recommendations for the protected site network there. We're just now in discussion with DEFRA about replacement funding for this; nothing so far. It doesn't look like there's going to be a scheme for 2023-24 at the moment. The Scottish Government and ourselves have been really shoving DEFRA on this in the various inter-ministerial groups and so on. But, you know, I'm sorry to echo the First Minister here, but this is very much part of the broken promise about 'not a penny lost', because it is lost, and it's a real, real problem for us. There's no way that we can match, out of our own resources, the £10 million that was spent on the last two projects, both of which I had the privilege to open—the Crymlyn bog and the Rivers for LIFE projects. I'm sure that if the committee wants a day out, both projects are very, very well worth visiting.

I know that many Members have visited a number of projects that have been funded through this, and we would support your comments and echo your comments as a committee, I'm sure, around the need to fully replace those funds, because the contribution they've made over recent years has been significant. Obviously, we'd want replacement and more, where possible, but clearly we wouldn't want to find that resource diminished in any way. So, we'd certainly support any calls that you make for that money to be fully replaced.

Diolch. Thank you.

I want to move on to Natural Resources Wales, because no budget scrutiny would be proper budget scrutiny without reference—

I was beginning to wonder, Chair, when we were going to get to Natural Resources Wales.

Well, we've still got half an hour left, so don't worry. [Laughter.]

The baseline review seems to have been going on for a very long time. Maybe you could give us an update of where we are on that, and also, clearly, what kind of arrangements might be put in place for more of an ongoing process in that respect, and not finding ourselves having to have another one, maybe, a few years down the line.

We've got through the baseline review. We've already mentioned in this session that we've been trying to line up NRW's budget process with our own, because it was completely out of sync, which made no sense to anyone at all. The baseline review was delivered just after the budget settlement, for example, which was extremely unhelpful. We've been working with NRW now that we've got the baseline review on how to line it back up.

We've got some really difficult problems here—there's no getting away from it. We've got a gap in NRW's funding, identified through the baseline review, which we acknowledge. We're working very hard with them to cover that gap. We've been able to allocate an additional £2.5 million over the next two years for the control of agricultural pollution water regulations. I'm sure the committee is very familiar with that. And we're in an ongoing discussion with NRW about how to close the gap. We acknowledge that we need to and want to close the gap, but the discussion is ongoing.

The gap is made up of a number of different problems inside NRW. There's an ongoing pension liability that we need to cover off, there's the fluctuation of timber income, which is causing a huge problem. It was up, and now it's down, and it's very difficult for them to calibrate that against the requirements in the service level agreements. We're currently looking to see whether we can lift NRW's grant in aid, their main budget, in the final settlement, just to cover off the pensions problem that we've got. It's a historic issue, not of NRW's making—

I remember from the predecessor bodies—it was one of those areas, wasn't it?

Absolutely. Really, we need to cover that off. So, I'm hoping that I can come back to the committee and tell you that we've managed to figure out a way to do that very shortly.

And then, as I've already said, we're moving with NRW to have a complete cultural change in the way that we work with them. We've had a number of specific grants over the years that are hypothecated, which give NRW very little room to manoeuvre in terms of reprofiling or anything else. I don't think that's a particularly helpful way to work; I didn't think it was a helpful way to work when I was local government Minister, and I don't see why NRW is any different. So, we will move towards—and we're having intense discussions with them about this—as far as we can, a system where we give NRW a sum of money agreed between us on the basis of the baseline review. We understand what their costs look like, we will have service level agreements with them about what is delivered for that money, and we will not have the bureaucratic processes of, 'Here is £10,000 and a 27-page letter about how you can monitor it for us.' I obviously exaggerate, Chair, but you get the point. We are in the process of doing that. It's neither easy nor simple to do, but we will, over the next year now, start to go through the process of making sure that we debureaucratise—if that's even a word—the process.

It should be a word, if it isn't.

Simplify.

Simplify; yes, you're right.

It's not just simplifying, though, because it's a complex set of things to deliver, and we've layered it over with another complex set of terms and conditions, which I think are unnecessary given the recalibrated relationship between us and NRW, which I think we've all worked hard on over the last two years.

The bottom line is that we know there's a gap at the moment. We've been very upfront with NRW that we understand that, and that we want them to budget as if the gap was not there, and that we will be able to cover that gap off over the next year as far as we can. And then we will, I hope, be able to mainstream at least the pension funding going forward, so we don't have this continued conversation.

Sure. But, ultimately, if there is a gap, then, there are only a few ways that that gap can be closed—either Government stumps up the money, which has its challenges, or you don't expect NRW to deliver certain aspects of the work that they're currently charged with, or you increase their potential in terms of generating their own incomes. Basically, those are the three options, or a combination of each.

Yes, that's absolutely right, except there's slightly more nuance on it. Because of the baseline review and because of the way that service level agreements have been set out, we kind of have a menu. So, we can have this level of service for this much money and this level of service for this. So, we've got a much better understanding between us of what can be delivered for how much money and how that can be calibrated. So, the conversation is much easier to have than it has been in the past.

Yes, I see that.

And we've also got a much better understanding with NRW of what our resources can do and what their resources can do, rather than any kind of duplication over that. That's an ongoing process, absolutely.

And we've also done a review of their fees and charges with them. They've been doing that all the way through. We're going to move to full-cost recovery where that's possible. We have to calibrate that, because we don't want sudden jumps in prices for NRW in a way that's counterproductive to some of the things we're trying to do. I'm afraid, it's a personal view, I've long not understood why the Government subsidises planning applications. If you want to do something, I don't really see why you shouldn't pay for the cost of the planning that goes with it. Licensing, very similarly—if you're asking for a marine licence for an enormous renewable wind farm in the Celtic sea, I'm not entirely certain why we're subsidising the cost of that. So, that is an ongoing process to be looked at.

And very much of the moment as well, because the consultation process has suggested quite significant hikes in some charges. Are you concerned that some of the—? I don't want to characterise the whole process as being of that magnitude, but there have been from the single-hundreds to the many-thousands jumps.

Absolutely.

Should that not be tapered or introduced in a more reasonable manner?

Part of the consultation is to ask exactly that question and part of the consultation is to understand which parts of our economy are most impacted by the changes. So, if you're talking about individual farmers looking at huge hikes, that's one thing. If you're talking about a global international renewable developer, that's a wholly different kettle of fish, it seems to me. So, part of the consultation response, when we've got the responses back in, we will be working with NRW to calibrate them, as you say, and to call it what it is, frankly. So, if we are going to subsidise the cost for individual businesses across Wales—they may be farm or agricultural businesses, they may be other businesses—then we need to be saying that that's what we're doing and why we're doing it, not have a hidden fees structure that doesn't acknowledge that. And then, for us, if we're asking NRW to do things, which we're not allowing them to full-cost recover for, then we need to be upfront about that in their budget. So, I'm just trying to get into a very different place, in terms of how we perceive these things, and then we can understand with them what the income looks like, what the service that's delivered for that income looks like, and then what the demands from us look like. And that's a wholly different place to where we were when I started in this portfolio two years ago.

Okay. Huw.

You are already having enormous pushback from some of the farming community. You're probably going to get pushback from small-scale hydro schemes. You're probably going to get pushback from building and housing developers and so on. What's your approach going to be to that, looking at the responses to the consultation, because you're very seized with the need to move to, as much as possible, full-cost recovery, which has been done in many areas previously? So, there is an argument that says, why shouldn't we do this? But the transition to it—that might hit you. If they come back and push hard and you give way, the baseline with NRW is going to need readjustment again. Are you going to hold fast or are you going to see—?

I don't know, because we'll see what the consultation comes back with. But what I do want is transparency. So, if we decide to calibrate it or taper it—. And these are fees that have not been moved for 20 years; this isn't a sudden hike from last year's changes, some of these things have been held static for years and years and years. And again, that's not sensible either. They should be fluctuating so people expect it. But I'm quite serious about this. If we are publicly subsidising something, then (a) we should say we're doing that and (b) we should say what we're getting for the public subsidy. So, we need to be much more upfront about it, we need to be much more transparent. So, if we're saying that individual SMEs, or whatever, need to be subidised because of x, well, then, fine, but we need to be able to say that, and why, and what the review process is, and at what point we say, 'This service is too expensive to deliver', because that's one of the other issues.

And, then, the last piece is, NRW often gets a good pasting for not delivering various things that people want, but then, when you say 'Well, it costs blah to do that, would you like to pay for it?', people have a slightly different view, it's been my experience; I'm sorry to be cynical about it. But, I think, it helps for us to be transparent about how much it costs, and for people to understand that it is, in fact, being subsidised. So, that's where we'll get to. Now, the consultation will tell us what people's views are about all kinds of things. It asks about tapering, it asks about sudden jumps and it asks about cost recovery and so on. We'll wait to see what comes back. But I want to be very clear that NRW understands the cost of delivering the service, they understand what the income looks like over time, they understand what the review period is, and they understand what they're asking us to subsidise, and that we reflect that.

Okay, fine. Thank you very much.

Okay. Can you give us an update as well on the end-to-end review of marine licensing processes and what budget has been allocated to that, and, as well, to develop [Inaudible.] energy?

Yes. So, we've done the end-to-end review. I keep putting my page down, Chair, give me one second. I keep finding marine, and, then, putting it down again.

No, that's fine. You take your time.

Let me find it again. There we go. So, we've done the end-to-end review; we had ICF Consulting in to do it. We're going to publish the high-level findings next month, and we had just short of £300,000 allocated to undertake the review from the 2022-23 budget. I can pre-announce, if you like, that there aren't any real fundamental issues with the process, but there are certainly improvements that have been suggested, and a series of strategic recommendations, which, when we publish it, you'll be able to see.

So, we'll get a prioritised list of actions coming out of that, working with NRW to do that. And, then, we'll be looking to see what the likely budget and resource implications of that are as we map it through. We need to be able to understand—and we are able to understand as a result of the SLA work I've just described to you—what level we can get for what, and part of that has been the marine licensing process. And, so, we'll need to look, with NRW, at what an increased service level looks like, if that's what the end-to-end review is asking us to do.

Some of it is about corralling resource in a particular place. It's not particularly budget-heavy to do that, and the committee will able to see, when we publish, that some of it doesn't require a budget; some of it is around calibrating the level of service that you want to have a look at. So, I think the budget is fine for now, and, then, we'll have to look at it again once we've got there.

Fine. Thank you for that. Just briefly, and finally from me, before we come on to one other area that we want to cover, you mentioned the review of designated landscapes. Would that include national parks as well, and, if it does, does that impinge on your plans in relation to the Clwydian hills and the Dee Valley? And, on that, I don't see—. Well, the allocation for that piece of work is unclear as well. I don't know whether you can tell us a bit more.

So, that actual piece of work moved, in the small moving around of resource, to my colleague, Lesley Griffiths. So, it's not in my—

Ah, right. Fine.

So, that's the new national park. The existing national parks stay in this MEG.

Okay.

Sorry to be complicated.

No, that's fine. But the review of designated landscapes would include that?

So, there's no budget for that at the moment, because that is one of the initial things coming out of the deep-dive, and, then, as we go forward with that, then, as I've explained already, we'll be looking to put a budget allocation towards it.

Okay, fine. Thank you for that.

Just to say on that, though, that, as part of this year's remit letters to the national parks, we emphasised biodiversity exemplars upfront. And, I know the national parks have been really acting on that and trying to recalibrate their own resource. So, I was very privileged to spend the day up at Brecon Beacons national park last week, and they were very, very excited to emphasise the change in the remit letters that we've sent out, emphasising the biodiversity and designated landscape aspect. So, we've started the process already, really, is the point.

Okay. Thank you. Very briefly, then, Gian Marco.

If it's helpful, on the budget—and Dean will correct me if I'm wrong—but, I think, at the moment, for this draft budget, the amount that was set aside for the new designation is still included in the landscape and outdoor recreation line that's in this budget. I think the intention is—

Yes, it's not my responsibility.

It's not your responsibility. So, I think the intention is to clarify that and to define it. So, just to be clear, it's part of that wider—. I think it's BEL 2490, for reference.

That's very useful. Okay, thank you very much. Thank you. Right, Joyce.

Water.

Water, yes.

There's plenty of it at the moment. Can we have an update on the progress made and the funding allocated to the independent review of reports into extreme flooding events?

Water is 'W', so it's right at the back—sorry. Yes. The action plans are owned by a whole series of organisations across the piece, so this is another one where we're co-ordinating rather than funding a piece of action. We've got NRW, water companies, Ofwat, Consumer Council for Water, Afonydd Cymru, Welsh Government, et cetera, all taking part in it. They're all expected to eat their own smoke, to use yet another metaphor—pay their own costs of being part of the taskforce. We'll want to evaluate that once we've got the first bits coming out.

I'm sure that the committee is aware that we had the summit with the First Minister back in the summer on this. We've got some really serious problems across Wales with the whole phosphates issue and the tying-up of house building land in particular against this. We've had a whole series of action groups working since then—the better river quality taskforce and we've got something called SAC RAG, which somebody is going to have to help me remember what the acronym stands for, but it's the overarching group on river quality. And we've got a series of meetings chaired by Sir David Henshaw, with his NRW hat on. And then, there's another follow-up summit on 9 February—I think I'm right in saying—that the First Minister will chair, in which we hope to have the action plan that has come out of all of the other groups agreed at that national strategic level. At that point, we'll start to look at what the budget requirements are, if the action plan—. Well, I very much hope that the action plan will be agreed, it's going through all the groups and my understanding is that it's having a fair wind at the moment. I know this is budget scrutiny, but I will take the opportunity to say that we are very grateful to all of the sectors for having stepped up to this. They were asked to look at their own problem and not point the finger across, you know, 'It's not my fault; it's yours,' and they absolutely have done that, and so we've been really impressed by people coming up with what their own sector can contribute to this.

Okay. You've mentioned the better river quality taskforce, so I'm going to move on to a question of my own. We've got climate change—we all know that. We've got plenty of rain at the moment—we all know that. But we also know that we're not likely to have that much rain in the summer. So, my question, therefore, is self-explanatory. What are we doing, if anything, or what are your thoughts about capturing that rainfall when it comes down and preserving it for the dry spell, but also to help in the alleviation of flooding, especially if we're looking, going forward, to redeveloping any area? Should we not be thinking now, because the pattern is pretty clear: we've got a surplus six months of a year, and a deficit at the other six months? So, the obvious conclusion would be, if you were in your house you would put a bucket or some receptor so that you could water your garden in the summer.

Indeed, Joyce. The water companies, in particular, are having a real look at this, and we hope it will be part of the price review for the water companies. I'm sure that the committee is aware that we're working on the price review for 2025 at the moment, and we're putting a lot of pressure on Ofwat and the UK Government to make sure that the investment models that come out of that price review are good. They're good for things like combined sewage outflows, which I'm sure the committee will have heard a lot about. A lot of investment needs to go into that. The water companies need to be enabled to make that investment, but they also need to be able to make the reservoir system and the delivery system, the pipes, more resilient. So, a lot more money needs to go into stopping leaks, which are a real problem across the piece, for both of our water companies. Obviously, Dŵr Cymru is the biggest by far, but for both of them. I mean, it's horrifying to think that, even with all the rain we had in the autumn, we didn't actually come out of formal drought until the end of November. So, it was scary. And, if you'd told me growing up that Wales would have a drought through the whole summer, I'd have laughed. It's just really frightening how fast that's happening.

So, we do need the price review to enable the investment that we need to increase the capacity over the winter, as you rightly say, so that, if we are going to look at a drought/deluge kind of weather pattern, we need to be more resilient for it. And then all of the other resiliences as well. So, the price review for the water companies needs to reflect that.

But I know you've long gone on about people who pave over their front gardens, and so on. So, I will be writing out to local authorities reminding them that they have the power to make people ask for planning consent to do that, and helping people understand what happens if you pave over your front garden. So, even if you need to park on your front garden, there are plenty of ways to do that in a way that allows the water to drain through. You don't have to put an impervious surface over it. I know, Joyce, that's been a campaign of yours for many, many years, but we will need to re-emphasise those kinds of things, and so on. But, the resilience of the water system is one of the biggest issues we have.

And then, as well, Chair, we hope the price mechanism will help us sort out some of the extraction problems that we've had. So, you may or may not be aware that we've got real problems with extracting water from rivers for canals and things like that in drought situations. That's a really serious issue for us to be able to calibrate that. So, we need to be able to ensure that we have other methodologies for that in place, if this climate pattern is going to be one that we're going to be forced to become familiar with.

I'm really pleased to hear that, because we had a situation where I think it was 10,000 fish were moved in the summer because there was no water left in the river and what was there was so badly polluted they couldn't have survived anyway.

Okay. Thank you. Just finally, I was going to ask you a few questions around the deposit-return scheme and an update around that, but clearly we've read in the news recently that there has been a significant announcement made. Maybe you could just tell us a little bit about how that is reflected in the budget and whether it's there in sufficient quantity to deliver the level of programme that we all want to see as soon as possible, really.

So, it has a go-live date of October 2025, just to be clear. So, at the moment, what we're working on is—it's just the resource internally to work on the various impact assessments, the explanatory memorandum and all the rest of it that go alongside that. So, the next phase of the work for us is in preparing the actual detail of the regulations, which we're doing alongside the UK Government. It will be very interesting to monitor what happens in Scotland as well. So, we're just going to be revising and further publishing the arrangements as we go on that, Chair. So, there's no specific big-ticket item at the moment.

No, that's fine. It is early days, but obviously there's work to be done leading up to that date, isn't there?

Indeed, but just to emphasise the fact, though, that the deposit-return scheme does two things. It absolutely will get the level of recycling up into the high 90s; it has done everywhere else that it has been introduced. But the other thing that it's important to remember that it does is it shifts the burden of the cost away from the public sector and onto the producers of the items in the first place, because for many, many years, the burden of recycling the packaging that people produce has been on the public sector, and this is yet another initiative where we actually, effectively, shift the cost from the local authorities to the manufacturers, therefore hoping that they will develop themselves reuse—I just want to emphasise reuse—schemes, and then obviously recycling. So, if you take glass bottles, there's absolutely nothing to stop you washing the bottle and using it again. That's clearly better than crushing it and making a new one out of it. So, we are very hopeful that this, alongside the other extended producer responsibility items that are coming alongside this, will force people to think again about the sheer cost of producing the packaging and the recycling of it afterwards, and recalibrate their businesses accordingly.

Indeed. There we are. Okay. Any further questions? I think we've covered all of the bases that we were hoping to pursue, so can I thank both the Minister and the Deputy Minister, and your officials, not only for appearing before us but for being with us in the room today? With the intensity and the length of the session, personally I feel it's much more effective and valuable in terms of scrutiny for us all to be in the room. So, we appreciate you being with us.

The meeting will now go back into private session, because we agreed earlier that we would do that to dispose of a few final items on our agenda. But, with that, thank you very much. You'll be sent a copy of the draft transcript, as I always have to remind people, to check it for accuracy. But, diolch yn fawr iawn. Thank you. So, the committee will now go back into private session.