Economy, Trade, and Rural Affairs Committee

We'll move on, therefore, to item 3, and this is the third evidence session that we will receive for our inquiry into post-EU regional development funding, and we'll be receiving evidence today from funding beneficiaries. Can I welcome you here? Before we move straight to questions, can I ask you to please introduce yourselves for the record, and perhaps I'll start with Matthew Brown?

Bore da. Matthew Brown, director of delivery and development with the Wales Council for Voluntary Action.

Hi. I'm Kiera Marshall, deputy head of policy for the Federation of Small Businesses.

And we have two more witnesses joining us virtually. James Scorey.

James Scorey, vice-principal at Cardiff and Vale College, representing CollegesWales.

And Amanda Wilkinson.

Amanda Wilkinson, director, Universities Wales.

Thank you very much indeed for those introductions, and thank you for being with us this morning. Perhaps I can just kick off this morning's session just with a general question: do you think that the UK Government is meeting its commitment to replace EU funds received by Wales through the shared prosperity fund? So, can you explain the reasons behind your view, and perhaps I can start with Matthew Brown?

Thank you. For me, the commitment—a lot of the focus is on the money, and rightly so—but the commitment by UK Government was much greater than the sums of money to be deployed. And, for me, the policy initiative that came out, through the levelling-up White Paper, there was much that the voluntary sector actually felt that we could get behind here, actually; a good policy that could go on to deliver. I think the commitment, for me, falls down in the operational roll-out delivery and the timescales being used are actually letting down the policy initiative here. And so, hopefully, we'll come on to a bit of the detail later. So, in terms of the actual operational roll-out, I don't think the commitment is being met by UK Government in terms of what it'll deliver.

Okay. Kiera Marshall.

From our understanding, the total value is not being met between the structural funds and the shared prosperity fund. We are aware that there are different ways to measure this, so people may answer the question differently, and whether the tail-off of EU funding is being counted, and if this is going to be included post 2025, but, to us, it does look like there's going to be a shortfall. We are concerned about this and we have constantly stated that we believe that Wales should get an equal value post Brexit. This view is also supported by our membership—78 per cent of our membership believe that Wales should be getting equal funding.

We're also concerned that we want small and medium-sized enterprises to get the same quantum of funding as they had with the previous funds, and we're not sure if this is going to be the case yet, but yes.

Okay. Thanks. James Scorey.

Thank you. So, from a further education perspective, I think there remains significant uncertainty that access to the shared prosperity fund at a local level will be anywhere near close to what the further education sector has accessed in the past through the European structural funds. Whilst we recognise that, obviously, local authorities have worked tirelessly to establish new systems and engage with stakeholders and discuss ideas, whilst that's happened, and has happened to a better extent in some local areas than others, I think there's been a huge challenge in them trying to replicate the function that was previously held by the Welsh European Funding Office and trying to mobilise those structures in such a short space of time. Obviously, inflation as well is a consideration here, in terms of when the allocations were made and the impact that that will have, and the fact that we're only working on a three-year funding window, in comparison to a seven-year ESF window, is another area of concern that we have at this moment in time.

And Amanda Wilkinson.

So, I think I'd probably echo some of the comments that have already been made in relation to the allocation and the delivery. I'd probably also say that we got €51 million from INTERREG in the last programme as well, and that is certainly proving problematic in relation to university work. I think that a shorter term nature is problematic. I think local implementation and local impact aren't the same things. We are looking, as you know, at some serious closure of projects. It feels a bit like a game of ping-pong, when, actually, I think there is a really strong consensus around the need to drive skills and innovation being an absolute priority across all parts of the UK, but we're taking out capacity to do that. So, I think there are some serious issues in relation to the allocation, delivery, and also the ability, as has been said, for us to work together and across sectors, which is proving problematic.

And to what extent has the shared prosperity fund allocated funding to areas most in need of levelling up, and what impact do you think has the approach taken by the UK Government had on different parts of Wales? Who'd like to start on that? Matthew.

So, there does appear to be a shift from west Wales and the Valleys to east Wales. Previous committees have looked at that split between west Wales and the Valleys and east Wales. So, there are always different ways to do this, but there does seem to be a shift from those regions that we've had for a good 20 years or so in Wales to east Wales. I think the biggest thing for us was the lack of engagement, consultation, and working with partners and academic partners as well, looking at what is the best way to distribute those funds in Wales, as based on the case that we have in Wales at the moment. I think that was a disappointing bit.

Kiera.

It's still early days for us in understanding how post-EU funding is working and what its impact is going to be, but the community renewal fund has indicated there are places that have moved out of priority areas that we would consider disadvantaged, and, similarly, more prosperous areas have been added. We have some examples of this from previous research that we've identified, such as Caerphilly, Bridgend and Gwynedd. We're worried that the design of the SPF creates issues when allocating funds to the areas most in need. The way the bidding process is working and the atomised approach mean that local authorities are bidding against each other, and we're worried that this is going to make certain local authorities who need that funding lose out. There's also a concern that if a regional bid is put in, one local authority can not approve it, and this will stop other local authorities getting it. And we're worried that the SPF is going to lead to unfairness for small and medium-sized enterprises operating in different regions; it's going to create a postcode lottery of business support, especially for SMEs, again, in areas that need it most—they might not be getting that support they need.

James.

Just to add, I think that the major challenge, really, has been the local approach that's been taken here. I think we've missed opportunities to truly work at a national and regional level. So, I think that's been the major challenge. The local approach, obviously, offers benefits, in terms of, previously, the way that lines were drawn in ESF between east Wales and west Wales and the Valleys meant that there were, obviously, pockets of substantial deprivation in east Wales communities that couldn't access the same level of funding. So, where you're measuring something by volume rather than by percentage, there's more of an issue there. So, there's definitely an opportunity for those areas to be addressed. I think some of it's a little bit premature in terms of how we assess some of this, because, obviously, we've had huge delays in terms of projects being mobilised. But it's something that we will need to reflect on, moving forward. The opportunity seems to be there to really address local issues, but I just think we're missing some of the best practice that we've previously had in terms of how we work at even a sub-regional, regional and national level, where we've got common problems and we can use solutions to address those common problems rather than trying to create local approaches in each of the local authorities. I'm not saying that's across the board, but it's certainly evidenced in some of the regions.

And Amanda.

Yes, again, I would agree with what's been said. I think we're very appreciative of the difficulties local authorities have faced and the timescaling that was set in place in relation to the prospectus for the SPF. But I think we have missed a really big opportunity to think about not just local delivery, but local impact. Sometimes you'll get better impact across a wider range of areas through a more joined-up approach, and that could give us better economy of scale, so better value for money. We've got some projects in higher education where that could be the case. And, if we're delivering to beneficiaries, if we're delivering to SMEs, then if you've got that kind of strategic approach, some bits can be funded through SPF, but you've got a project that can also be delivered in other areas and services that can be provided in other areas, potentially through other routes of funding. So, I think we've missed a bit of a trick in terms of getting the best impact.

Thank you for that. I'll now bring in Vikki Howells. Vikki.

Thank you, Chair, and good morning to our witnesses. I'd like to ask you some questions on the design of the shared prosperity fund. Firstly, what do you see as the key differences between structural funds and the shared prosperity fund? And what are the implications of these, do you believe, for the success of the SPF? I don't mind who answers that first, Chair.

Amanda, would you like to start on that?

I suppose, in terms of universities, we're now facing quite a severe cliff edge in terms of the projects that we have at risk. So, we have 60 projects potentially at risk, and at least 1,000 jobs across the sector. Whilst we're working quite hard to redeploy staff and look for alternative funding, I think that is really quite an uphill battle. We are working with Universities UK to look at bridging funding. There are, obviously, other parts of the UK who are suffering similarly, and we think, for Wales, we're looking for £70 million-worth of bridging funding so that we can properly address how we're going to support what are some very important impact projects. As I said earlier, they're really important in relation to innovation and skills. These are key challenges for us, going forward, and key challenges for our beneficiaries in the public sector, in business and in social enterprise. So, I think, really, at this stage, given some of the issues that we've had with the design of the programme and where that leaves us with some very important beneficiary projects, we're at a stage where we need bridging funding so that a proper strategic assessment can be taken as to how we're going to support these projects into the future.

Thank you, Amanda. James.

Yes, I'd echo many of those points. Obviously, SPF wasn't done through a competitive mechanism, in terms of the allocations, so it did create, almost, the opportunity to do something different and to try to streamline, perhaps, some of the bureaucracy that may have been associated with previous funding and to deliver reactive, responsive programmes that could be aligned to, perhaps, a shorter time frame than the seven-year window in the past. So, there's certainly an opportunity to do that and to look at things differently, whereby, I don't know, things could have been commissioned using unit costs, as an example, in different areas of intervention where we've got a track record and history of what it does typically cost to deliver certain projects and programmes.

But, I think that opportunity has been missed to date and we've, in essence, created a different layer of bureaucracy now, whereby we've, obviously, got engagement—a lot of engagement—in south-east Wales happening very much at a local level. I appreciate that north Wales has taken a different approach with more of that sort of regional co-ordination, which has been commented upon as being positive. We do need to have that—there's a greater need for regional and national working across Wales. That seems to be the main ingredient that we've lost, almost, through how these funds have been administered. But, still, the opportunity does sit upon us. Things could still change, but, unfortunately, time is passing now and a lot of projects have happened through, obviously, the local authority level, rather than, perhaps, the commissioning arrangement that was in place previously.

We've identified a number of issues and differences between structural funds and the SPF. Most focus around the fact that delivery is at a local authority level rather than through the Welsh Government. I've briefly touched on this already, but we are concerned about inconsistency that, depending on the outcome of the SPF, is going to result in unfairness for SMEs in different areas, creating that postcode lottery of support and an uneven playing field as well.

We're really concerned about a lack of overarching structure. Having delivery at that local authority level creates a situation where there's not much cohesion. Previously, at the Welsh Government level, regional and national projects were being supported, whereas this ability to achieve wider aims seems to be lost a bit with this kind of delivery. We really feel like there's an opportunity here to learn from previous EU funding. We just don't want to see money being spent in isolation, without a holistic view of the outcomes of what we're trying to achieve and how that aligns with wider economic development and Government policy.

We are worried about efficiency, or a loss of efficiency, under the current delivery—that economies of scale between partnerships are going to be lost, and that wider regional working is going to be less efficient when it's done in isolation. We're worried that the bidding process is going to create duplication between projects. We're yet to see this, because it's still quite early days, but we're particularly concerned about net-zero and green projects being duplicated with funding that's already available from the development bank.

Finally, we're a bit worried about awareness of the funds. We've got some evidence from our businesses so far that there is less awareness of the shared prosperity fund, compared to previous EU funding. Especially in the current climate, that's not what we want; we want SMEs getting all of the support that they can.

Matthew.

Without repeating a lot of what's been said before, two of the key points that I want to focus on here that I think a lot of the problems we're facing come from are, first, of timescale. There was far too much time wasted in terms of moving on this agenda and we're paying for that now, in terms of the time that local authorities had to engage, the time they had to set up and implement and the time before we're going to end up with actual delivery. We're talking about dealing with deep-rooted, long-standing issues here of disparity and inequality, and the voluntary sector projects that we're going to see coming out of UK SPF are probably going to be measured in months, in terms of actual delivery. We all know that that's not really going to make a difference, in terms of what we want to see and what the policy context of levelling up really sets out. So, the timescales, I think, underpin a huge amount of the issues that we are facing here.

The other is around infrastructure. These are big quantums of money. They require a backbone infrastructure of people and organisations to ensure that they are delivered well, planned for, reported, monitored. And we'd be really keen to move from EU funding to this funding and to see a much more streamlined bureaucratic process, but I think we're lacking infrastructure in terms of making the most of these funds, and that comes to the difficulty and the timescales placed on local authorities, and the sidelining of organisations like us that had built up an expertise that could have been useful for UK SPF, if we had had that engagement.

Thank you. Some witnesses have touched on this already, but just to check if there are any further comments that anyone wishes to make about the extent to which the projects that your organisations deliver through the SPF are likely to differ from those that you're able to deliver using structural funds.

Who'd like to start on that? Amanda.

I'm happy to start. We have had some projects approved for the sector, but, as colleagues have already touched on, they tend to be short term and lower value. So, for example, Swansea has a project looking at the skills gap in battery manufacturing and related industries; it's worth about £175,000, I believe. Again, part of the issue is the short-term nature. And the set-up costs for projects as well, I think, are just going to be a real inhibitor, and also, in fairness to our local authority colleagues, the timescale, and the ability of local authorities, where we're asking local authorities to do something that's now become quite complicated. We're really missing a trick in relation to how we work cross-sector. So, for example, a big emphasis on town-centre development—really important that we're able to support and tackle that. We have projects and resources that we could bring to that, but there is really no way of capitalising on it within the structure of this programme. So, if you look at what Cardiff University planning department is doing, they've got a funded project from a research council in relation to post-COVID high streets. That's just one example, but we've got lots of areas where we could be delivering in to provide something really quite strategic in what is a very important and identified space within the SPF. But it's simply not set up to do that.

Anyone else on this? Matthew.

Just to give an example, looking at some of the structural problems we have in the UK labour market at the moment, one of the biggest issues facing us is the number of people that are economically inactive. That was shown yesterday again by the labour market statistics, especially for Wales. And what we've got at the moment is the ending of the European structural fund interventions that were targeted at that. So, specifically, one example was the active inclusion fund that WCVA ran. That supported around about 130 organisations to engage with 23,000 individuals across Wales, those who really are the furthest from the labour market. That activity has all ended. That has gone. All of the people, the skills, the institutional memory, the trust between communities—all of that has gone and has still not been replaced. Yes, we will probably get some local activity in this space. That has not really started yet, and is not expected to start yet for a few months, and, again, will only run for a max of 18 months or so. So, there's a real step change in terms of the level of provision that we had. Targeting some of those areas that we all know need to be targeted has been lost, with no continuity.

James.

Just to add, in terms of the timescale, I think that that is the major hurdle that we've got now, because even though, originally, we were talking about a three-year programme, the reality is that possibly only a couple of projects will be delivered, and for a maximum of two years, including a closure period, and the most, the vast majority of the rest, will be lucky if there's 18 months, including closure. Because of the approach in some areas, one of the major differences, I suppose, from an organisational, college, perspective, is that, obviously, most colleges serve across multiple local authorities. So, when you're seeking a solution that is being driven at a local level, that acquires a duplication of effort in terms of engagement with multiple local authority partners to ensure that, as a college, we can have parity of opportunity with the learners' communities and employers that we serve. So, that's creating an additional challenge and perspective at an institutional level.

Similarly, when we're talking about skills projects, particularly those that are employer focused, similar to what Matt was saying, what we've been left with now is very much a lack of any form of joined-up approach within the FE sector across Wales, and that's a challenge both for SMEs and large employers, where they're seeking a consistent approach to their workforce development needs. And, if we've got almost that sort of patchwork model in terms of different interventions and different solutions at a local level in different areas, then that is not the best circumstance for Wales plc, really, moving forward, in terms of how we try to support the growth of business and support that upskilling and reskilling that's needed as we move into the next cycle of skills needs and opportunities for business. So, it's a difficult situation.

Thank you. And—. Oh, sorry, Chair.

That's all right. I was just going to ask Kiera: do you have anything to add?

I don't have loads on this. We as an organisation ourselves don't deliver projects through the shared prosperity fund, and, in terms of our members, it still is early days in knowing what is going to be delivered. We had some concerns that some local authorities have put in a minimum application budget of £250,000, which is a level of spend that is not achievable for the vast majority of SMEs. We also know that some local authorities have put in bids for larger amounts, but then shared it out for SMEs to be able to apply to it. But, we're going to have to wait and see, basically, what projects are going to be delivered.

Thank you. I have one final question. Again, these issues are so intertwined that I think this has been covered fairly well by all of you already, but I'll ask it just in case there's anything else that witnesses want to add. It's around timescales: what impact have the timescales for planning and delivering the shared prosperity fund had on your organisations' ability to shape the design of the fund, and how will they impact the ability to deliver transformative projects through the fund?

I know that many of you have touched on that, but, anything to add? Matthew.

Just to say, in terms of shaping the fund at a national level, the input was basically zero, despite representation and efforts. And local authorities were then put in a difficult position with really tight timescales. Some local authorities did put some real effort in to engage with the voluntary sector—again, a complete patchwork across Wales of some really good practice and then some practice where it didn't really happen. So, there are some pockets where it did happen at a local level, but at a national level, in terms of our ability to work with UK Government and influence what they were trying to do, it was virtually zero.

James.

Just one small point to add, really. In terms of the opportunity, I think we now need to be in a position where we're looking at April 2025 and beyond, and if we've learned the lessons from the current round, where we haven't had, perhaps, that seamless transition between funding streams that we'd all hoped for, I'd hope that we're in a position whereby, from April 2025 and beyond, what's next beyond the current iteration of SPF is where I'd hope that there is particular effort being made now, so that many of these lessons that I think we've learned in the current window can be incorporated into a future iteration of funding. Because if projects are to have impact, then they need some form of continuity with regard to understanding what's next, and it's very difficult to switch on large-scale programmes during an 18 or 24-month window. So, hopefully that's a lesson that can be incorporated into future iterations of funding to address these deep-rooted challenges that we've been sharing.

And Amanda.

I do think the variability of approach across local authority areas is problematic, particularly if we're trying to work with this structure to try and get some big impacts through. I think we can look ahead to April 2025, but we're losing some serious capability. We've got some very skilled and talented people who really know how to deliver to beneficiaries and it's core to our levelling up and to the challenges we face. You just have to think that, you know, we're an SME economy to a much larger extent than other parts of the UK, and we know we've got major challenges coming through artificial intelligence, so we need to be able to deliver, to be on this for some of these businesses and some of these areas, and I can't see how we're going to be able to do that. I just don't think that waiting until 2025, frankly, is a realistic option. There are things that we need to action now. We need to be moving faster.

Anything to add on this, Kiera?

From our interaction with the process so far and from speaking to our members, we're really concerned that the timescales and processes of the SPF are not SME-friendly. We don't believe they're implementing a 'think small first' model. We're concerned that, without doing so, we cannot fully support SMEs in Wales to achieve their goals and ambitions. We believe that post-Brexit funding streams should be learning from best practice here in Wales and including the 'think small first' model. This should see the pots of funding broken up into smaller amounts, creating networks for smaller businesses to support the consortium, and with higher education and further education as well. We want to see more information out there for SMEs on how to apply for funding and support with the processes. Again, I mentioned that £250,000 minimum application. We want to see that broken down into smaller amounts from the offset, and, on those smaller pots that some local authorities are creating, how the application process will work for those as well will also depend on how SME-friendly the fund is going to be, towards the end of it. With the consortium, we're just worried that it's not supporting that working across regions for SMEs and is mitigating the ability to do regional collaborative work.

Okay. Thank you. Thank you, Vikki.

Thank you, Chair.

I'll now bring in Sarah Murphy. Sarah.

Thank you very much, Chair. Thank you, all, for being here today. I was a researcher myself at Cardiff University before I got elected. I used to be given blocks of 150 hours, you know, on fixed-term contracts and things. And the work that many of us were doing was really important. But I do really understand how precarious all of this can be.

I just wanted to say, though, of all the evidence you've given so far this morning, I know that you know what you mean, but what we're hearing at the moment is a lot of 'capability', 'big impact', 'deliverability', 'SME-friendly', 'goals and ambitions' and 'best practice'. What I'd like to ask you now is: we need the detail. We need to know what is in your head, exactly what this means. So, what I mean by that is that you've all said that the way that the funding is designed has created difficulties for regional and Wales-wide projects and organisations, with consequent job losses in some sectors. Can you give us a bit more detail? What does that mean? What kind of jobs are going to be lost? I know it's hard to predict the figures, but can you give us some kind of idea of what the figures would be for that? What projects are you talking about that could be lost? What do you think the short-term and the longer term consequences could be? Is that okay? Who would like to go first?

Matthew, would you like to go first?

Yes, I'm happy to go first. I'll give the example of the WCVA's work, acting as a go-between between the Welsh European Funding Office and local voluntary sector organisations in Wales. So, for about 20 years or so, we've taken big parcels of money that can be quite inaccessible to small organisations, we've taken that money at scale and divvied that up into accessible amounts, so that local organisations can engage with people in their communities to help them back towards work. So, over the last programme, that was £30 million-worth of grant funding that was supporting around about 300 jobs in the voluntary sector at any one time, to work with 23,000 people across Wales during the lifetime of that programme, and to support those people back into work. We know via evaluation how the sector reaches people that public sector schemes of a similar ilk don't reach. We know the return on that investment that it makes, we know how much that supports voluntary sector organisations in their other services, because of the contribution to full cost recovery, et cetera.

So, if we just take that one instance, 23,000 people that were being supported by a project that was joined up with Welsh Government activity and Department for Work and Pensions activity, was an ecosystem that worked and was understood, and so we could pass people from the very furthest away from the labour market into activity like James has talked about in terms of FE and DWP activity, that has all now gone. That infrastructure and that ability to deliver at scale has meant that the WCVA has lost around about 25 members of staff who’ve been doing that for 20 years to enable that work to happen in our communities. That has now gone and will be replaced by at least, hopefully, some activity that's still yet to be approved, but in its very nature will be a patchwork and won’t be joined up and won’t enable that best route for those participants to get back into the labour market. Hopefully that’s a specific example for you.

That’s really helpful. Thank you very much. Also just to say, I don’t know if it’s just me, but I can’t hear—. Your microphone seems to be cutting in and out, Matthew. I did catch all of that, but there seems to be an issue with your microphone.

All right, Sarah. Thanks for bringing that to our attention. We’ll have a look at that. Kiera, would you like to answer that?

I think for us it’s just very early, as we don’t have figures yet. We work across so many sectors, we don’t have that breakdown of what isn’t getting funding currently. That is something we’re going to monitor and we can get back to the committee on. That in itself shows what you're talking about around SME-friendly—the fact that we can’t tell you yet what is happening for small businesses is because they’ve been an afterthought. These pots of funding haven’t been made available to them. They’re not being thought of in the process, and that’s what SME-friendly is. I can give you more of a breakdown of what that 'think small first' model should look like, again with the pots of funding. It’s cutting contracts into smaller pieces, reducing regulation on businesses, reducing that bureaucracy and the length of application for smaller businesses, and giving them an equal playing field. It’s just that sort of stuff, and it’s not treating them as an afterthought. In terms of what you want with figures and more examples, we can get back to you on that once we know more from our members.

Yes, we’d appreciate that. If you’ve got any more information, please send it on to us. James.

I can give you some rough figures, but likewise, I can liaise with CollegesWales to get specifics. But if you want to talk about one specific project under previous ESF funding, most—if not all—colleges in Wales were engaging with a project around intervention for those not in employment, education or training. Those most at risk of becoming NEET within the further education system were provided with additional support, be that well-being, behavioural, pastoral specialist support, to reduce that risk of them in essence becoming NEET. That intervention within colleges was—. Probably, we’re talking, in some of the colleges, five, six members of staff; in others, up to 20 to 25 members of staff. Those would be engaging with hundreds of learners each each year. The opportunity to continue those projects has reverted very much to a local position, as we’ve described, rather than the opportunity to do joined-up regional working, which was done in partnership between local authorities and colleges at a regional level. So, that’s a specific example of something that is at risk.

In the context of wider college pressures and budgets in terms of increasing energy costs, increasing costs of living, consumables, material costs, balancing those budgets is obviously increasingly challenging in terms of being able to assign how much support goes into each of these different areas, because we’ve got obviously competing demands within the institution. And from an employer skills perspective, I think we’ve still got hope that there will be some form of perhaps regional projects, but again, if that doesn’t materialise, then we are talking about thousands of individuals each year who have not had the opportunity to upskill or reskill as they were previously supported through ESF. But we’re really interested in the opportunity to do things differently. I think the hope with the SPF is that we would encourage innovation and it wouldn’t just be a repeat of projects that have happened in the past. We’re hopeful that, over perhaps the next few months, we’ll have a far clearer position on some of those projects, and that will give us a better picture on the impact that it would have in terms of that employer space.

Thank you very much. Amanda.

Diolch. As I said earlier, from a university perspective, 60 projects, 1,000 jobs, thousands and thousands of beneficiaries. By way of an example, I'll talk about the knowledge economy skills scholarship project led by Bangor University on behalf of the higher education sector across Wales. It has been going for many years and it supports collaborative research projects, replacing Master's and PhD students with external partners, small and medium-sized businesses, social enterprises, public bodies. The benefits from this project are local—local impact, local companies. You get great experience for those Master's and PhD students. You get great benefits for the companies themselves, which then have a wider access to what the university can do to support them. And, frankly, we also will get a workforce of people who are used to working in that wider context, which is going to be so crucial for us. We need to be able to repurpose what we're doing again and again and again for impact.

I don't think we can assess yet what the withdrawal will mean for our beneficiaries. I think that is a real concern. But when we looked at the work we did with the Welsh Government through the regional investment framework development, there was a very strong sense of the collaboration and partnership that we were going to need, and of the benefits that you can get from all of that continual sharing of projects and ideas. I really feel that, in terms of the impact, both in terms of the withdrawal of this sort of a project, but also the approach, we are missing a huge trick in terms of how we repurpose and get multiple impacts from what we're doing, because we don't have huge capacity as Wales—we need to be able to do that.

Thank you, Amanda. And just to follow up with you, Amanda, as well, Universities Wales have called for the UK Government to provide £70 million of bridging funding to provide the universities with the capacity to make those longer term decisions about future projects. So, what response have you had from the UK Government?

We're still awaiting a response on that and we're working with Universities UK on that. Obviously, there will be other areas of the UK that are similarly in need of bridging funding. I think we need to really call a halt to the kind of ping-pong that we've had about where some of these projects sit. Because these projects are about levelling up—they're about impact—and I think we need to be able to see a clear way forward in terms of how we're able to support the activity in future.

Thank you very much. And finally, Matthew, the WCVA, in your written evidence, note that the approach of the fund makes it easier for smaller, community-led projects to secure funding, and that they experience less of an administrative burden than with structural funds. So, can you just tell us about how these organisations are benefiting from this approach? I know it seems like an obvious question, but any kind of examples that you have will be really helpful.

We don't have any examples, because the money is not really flowing yet and the activity is not really happening. The decisions are not being made. But what we do have is some examples. I would cite probably Rhondda Cynon Taf and Gwynedd as good examples of where they have worked well with the local infrastructure to put in place plans for distributing some funds through key fund activity, looking at where local voluntary sector organisations can really play a role in delivering to it. We've got some pockets of good practice that are being worked on and assessed as we speak. We can't really talk about the delivery, because it's not happening. But also, there are some areas where that kind of approach is not really being seen and that engagement is not happening at all. What we're talking about here is probably small-scale, 18-month projects, which is not really going to nudge the dial in terms of the difference that we really need to see from this kind of fund.

Thank you very much. Thank you, all; thank you, Chair.

Thank you, Sarah. I'm conscious of time, so, if I can ask you all to be as succinct as possible from now on, and I'll bring in Luke Fletcher. Luke.

Diolch, Gadeirydd. If I could stick with delivery of the shared prosperity fund, are there any areas where delivery is going well or is there particular cause for concern? I'm looking at the screen towards James, because James mentioned earlier the challenge of a local approach. Has the approach of directly funding local authorities led to different delivery and processes between different areas, and is that having an impact on organisations looking to bid? I know we've said today now that it's early days, but are we seeing any sort of impact? I'll start with James and perhaps I'll come to Matthew, then.

I think, from a sector perspective, there's been evidence of good practice, which has been noted by Coleg Sir Gâr with regard to Carmarthenshire council, and Grŵp Llandrillo Menai with regard to north Wales, with regard to how those projects have run, but, in the context of south-east Wales and other areas, I think there's been, like I say, that challenge, really, in terms of the opportunity to get things going and get things off the ground. There's not too much delivery at all happening within the FE sector at the moment, and the opportunity—. So, within south-east Wales, the amount assigned to regional working on the people and skills aspect is 1.43 per cent of the budget. That was confirmed back in the summer of last year, and, to date, that is still going through the process because of all the delays that we've spoken about. So, we're hopeful that, like I say, things will happen and get going over the next few months, but I won't repeat myself or the issues that we've spoken about in terms of that the challenges that the diminished timescale creates are a major problem, and there are different levels of transparency and engagement at a local level with respective colleges, which is making it, again, difficult to have any form of consistency in approach where you would like to have consistency in approach.

Before we bring Matthew in, I think Hefin just has a supplementary question to this—Hefin.

Yes. I've just been speaking to Dr Francis Cowe of the University of South Wales—so, this is for Amanda and for James—and he told me about the USW strategic alliance with partner FE colleges. Isn't that a vehicle that would resolve some of those issues, James?

The issue is more in relation to the opportunities actually being published, if that's the right way to describe them, and commissioned at a regional level. We've got vehicles to bid and collaborate both jointly from an FE perspective and from an FE and HE perspective, but the challenge we've got is, on the ground, you've got things that are—. Some local authorities are coming out for open call to have local projects, but there's no real opportunity at the moment that we're seeing in south-east Wales for true regional projects. We do believe something's on the horizon with regard to, like I say, the 1.43 per cent that has been put into the city deal office—

Yes. So—

[Inaudible.]—on a practical level, those opportunities are still not visible to bid for.

I was going to say, the city deal is a similar vehicle that could be incorporated into a strategic alliance, couldn't it? I know that the strategic alliance is related to programmes, but there are clearly opportunities there to expand strategic working.

Yes. There certainly are opportunities, although I think the other challenge that we've had in this space is, I suppose, the risk appetite to commission things, rather than go down the procurement route, and I think that's created additional challenges too, because the appetite to directly grant-award into strategic alliances has been, I think, minimal to date, because of authorities having concern around, I suppose, the potential for challenge on a procurement basis. So, that's created another layer of complexity, which should have been removed in terms of, perhaps, the UK Government position on SPF, but I think, at a local level, where officers have taken their own legal advice and interpretation of that, it's the balance of that risk appetite, I suppose, where some things are falling over.

Luke.

Matthew?

Yes, just really quickly to add, I think north Wales have really tried to come together to do something regionally, but it's proving really, really difficult. We've put in an—. For a long time, we've been a funder of social enterprises, supporting the social enterprise sector in Wales. We've put in an application to north Wales through the open call; that was some months ago. Four local authorities we've still not heard from. One has said 'no', one has said 'yes'. So, we come to this; we're trying to put a regional plan together, but we've got six local authorities all viewing it through their own lens, against their own budgets, which are hugely different. So, it's become really difficult to actually achieve that regional work, despite some of the best efforts that are going on, especially in the north, in this space.

Thanks for that, Matthew. Is that reflected in the written evidence provided by CollegesWales then, James? Because there's specific mention—we've already touched on it a bit with the South Wales East region—that local authority projects are being prioritised. So, is what Matthew saying reflected in that evidence that you've provided us?

Yes, certainly, from a south-east Wales perspective, I think most local authorities have looked internally first, in terms of the opportunity to continue or extend projects. From Cardiff and Vale's perspective, we've had really good engagement with both local authorities over the last 12 months or so, but, ultimately, it comes down to decisions of how those budgets are allocated at a local authority level. And some have come out with a sort of open-call opportunity locally; others haven't yet, because, I suppose, they're not sure of exactly what gap they may have in terms of how much funding they're not able to commit to through their own local authority before seeking external partners to deliver. And, again, that will only reduce the timescale when that happens, but there's a real mixed picture in terms of engagement between colleges within south-east Wales and their local partners.

And, like I mentioned earlier, the big challenge is most of the colleges, and certainly three of the colleges in south-east Wales, service more than one local authority. And where you're seeking this parity of offer to our learners, to our communities, and to our employers, that's challenging, because you've got to engage with multiple local authorities to seek that consistency of approach even at college level before looking at anything regional.

Thanks, James. I'm conscious of time, Chair, so I'll come to the FSB, if that's okay. The FSB said that the process and timescales for applying to the shared prosperity fund isn't SME-friendly. Could you explain why that is?

Yes, I think one example of that is, we were approached, and given a week's notice, to come and consult on application processes and so on, with a week's notice for, basically, a meeting that was a whole day long. That's just not how—. That's not feasible for us to actually be able to represent small businesses' voice fairly.

In terms of making the processes SME-friendly, again, what I talked about are these huge pots of money that are beyond the level of spend for SMEs—£250,000, in, I think, it's Flintshire, Wrexham. It's just not feasible and we're leaving small businesses with uncertainty on whether—. Conwy, for example, has put in a bid to have a pot broken down into smaller amounts for small businesses. But it's that uncertainty. They can't plan. They don't know if they're going to be able to access that funding in different regions. They don't know if that's even going to be available for them. That is not a way to engage small businesses in the process, or make sure we're supporting what is 99.4 per cent of enterprises in Wales.

The timescales vary across all the local authorities on when they want bids in. So, this makes it really difficult for SMEs who operate across regions as well, to try and navigate very different processes. I'm just looking to see if I've got anything else. I think that's most of it so far, just, again, what I've already covered in other questions.

I think the FSB has talked about, I think, a 'small first' approach.

Yes.

How do you see an approach like that addressing these issues?

I think it would be including small businesses from the outset, ensuring that there is support for application processes. They should be holding events for small businesses, virtual ones, to be able to see how to do the application, where they're going to find the documentation they need and so on, hosting networking events for small businesses, with higher education and further education, so they can put in applications together, get that consortium and collaborative working going.

We also would really like to see, especially on the issue of sustainability, where projects are being delivered where there might be some duplication. We want Welsh Government to be working with local government and partners to get that information on Business Wales, so that small businesses aren't trying to navigate 22 iterations of Business Wales. We want all that information in one place and have it easy for them to access.

Great. Diolch, Kiera.

Diolch, Luke. I'll now bring in Sam Kurtz. Sam.

Diolch yn fawr, Cadeirydd. Good morning, everybody. Before I delve into these questions specifically, and knowing that we're conscious of time, we've used the term, as witnesses, 'levelling up'. This is quite an ambiguous term, and I just want to know what you each think of levelling up and its definition within your context. Matthew, I'll start with you.

Reducing the disparities between the regions in the UK, simply put.

Okay, thank you. Kiera.

Yes, I'd agree with that. It's boosting the economy of regions that previously had deprivation or disadvantage.

Fantastic. James.

Yes, I'd echo that, and ensure that there's, obviously, parity of opportunity as well between those areas of most deprivation.

Fab, and, finally, Amanda.

Yes, I'd agree with that.

Okay, that's helpful, because it's been the term banded around by UK Government and other Governments and politicians, and understanding what the sectors see within the definition of levelling up is very helpful.

What would your assessment be of the UK Government's decision to work with local authorities rather than Welsh Government on the shared prosperity funding, solely? So, not any of the other funding announcements, just the SPF. We'll start with Matthew again.

It shouldn't have been an either/or—it should have been both. Local authorities have a central, important role to play in the levelling-up agenda and with SPF, and some of the delivery, absolutely, should be done in a model similar to what's being delivered at the moment. But there should have been much more of a broader conversation with Welsh Government and other stakeholders to identify the best level for activity—whether it's national, regional or local—to occur. And especially with the timescales that we had, as we moved into this funding, to look at what was already in existence that could have been repurposed quickly to enable activity to happen, so we didn't have this cliff edge.

Okay, just to come back to the initial point on this relationship with local authorities, is there scope then for that relationship to continue, with local authorities and UK Government, but by means of inclusion of Welsh Government in that as well?

Yes. It is about including other partners in that conversation, and not just being almost exclusive as we've seen at the moment between UK Government and—

So, not a binary choice.

Sorry?

Not a binary choice of having—

No, it's not a binary choice—it should be everyone.

Very helpful, thank you. Kiera.

Yes, I'd definitely agree with that. I had it written here myself: is there some sort of model we could use that isn't hyperlocalised or highly centralised? I think that's exactly right. But we have always said we do believe that Welsh Government should be involved in the shared prosperity fund, and there are a number of issues arising from them not being involved, such as that lack of overarching structure I've touched on earlier. We're also worried about that weakening of institutions and regional structures that are working really well here in Wales, such as Business Wales. We don't want to see those great supports for small businesses weakened. And then again, issues of duplication and so on. But, yes, we'd love to see Welsh Government involved in some way.

So, just sticking with the two witnesses in the room for the time being—I will come to the two on Zoom now—if Welsh Government involvement was a sliding scale, and on one side there was no involvement, and one side there was total control of post-EU funding, where would you pitch that sliding scale? Is it a 50:50? Is it predominantly Welsh Government, with UK Government involvement? Or is it predominantly UK Government, with some Welsh Government involvement?

I don't know where to put the number, but it's about all of those people coming round the table and saying, 'These are the range of interventions that we want to make to deliver the outcome that we want, which is a more prosperous and equal Wales. These are the interventions we need to achieve that. Who are the right people to have round the table then to deliver those interventions, whether that's the voluntary sector, higher education, FE, private sector, public sector? Let's work out who is best to deliver.'

And, actually, we did a lot of that work through the regional investment framework work we did with Welsh Government. From a voluntary sector point of view, that wasn't perfect, from our point of view, but over a period of time we all came together to work out the best way forward. There was a lot that could have been taken from that and, actually, would have really helped with the timescales and could have helped move it forward. So, again, it's about identifying who is best placed, geographically and sectorally, to be able to deliver on the aims of the fund.

Thank you. Kiera.

I agree with that. I'd also say that it depends on the detail of it. We don't want to just go back to EU funding as it was before. There were many issues with that, and it wasn't perfect, but we should learn from that and what we can do better and what worked in that. And I think it depends on the project itself, on how much involvement Welsh Government should have with it. But, where it's trying to reach overarching aims, that needs Welsh Government in there to have some sort of lead in it.

Because the size of the opportunity that you mentioned there, in terms of getting right this time what was wrong under EU structural funding, is an opportunity. I can see you nodding along there. So, turning attention to the two witnesses on Zoom. James, I'm just wondering about your thoughts on UK Government's decision to work solely with local authorities in the roll-out of SPF.

I'd agree with what's been said: there's definitely a missed opportunity. Welsh Government has to be at the table to have these conversations where we're talking about these devolved policy areas, and particularly around skills and employability. So, that, for us, I think has to happen. UK Government colleagues have been very good in terms of engagement with the CollegesWales forum, but in terms of the question, Welsh Government has to be involved, to join this together, and there needs to be a way of seeking consistency of approach with regard to some of this. And the consultation exercise, which was referred to, and the work that the Organisation for Economic Co-operation and Development did on some of this, has to be taken into consideration for future iterations.

Working with the analogy of that sliding scale of Welsh Government involvement, from autonomous to completely ignored, where would you pitch that from your perspective, from your sector's perspective?

They have to be involved with the regional perspective is the work that was coming out of the previous consultation exercise. They've got to be at a table at a regional level, which is probably the balance that we'd have, and where Welsh Government has a role, then, is how you can seek consistency on a national level. So, I'd lean towards Welsh Government being heavily involved with the process.

Okay. Excellent. Thank you. Amanda, over to you, and you can include the analogy in your answer there as well.

So, we've had a position since late 2016 that the Welsh Government was the appropriate vehicle for any future funds; that view hasn't changed. The key issue is that Welsh Government touches all stakeholders who should be delivering in this space and should be able to deliver impact. I mean, just going back to part of the previous question, and whether they can deliver in small enough chunks to multiple beneficiaries, I mean, you're asking an awful lot of local authorities to do that on their own without using other stakeholders who are also well positioned to do that. So, our view hasn't changed: Welsh Government is the appropriate vehicle, with a responsibility, then, to work with all of us as stakeholders.

Agreement there amongst witnesses as to where that sliding scale would end in terms of delivery of this. But, coming back to James, just my final point. You've mentioned examples of best practice, and you gave Carmarthenshire as an example. Part of my constituency lies within Carmarthenshire, so I'd be interested to know the good practice here and how this could be more widely spread. If there are those good practices there already under the system that exists, is it a case of making better use of that, or is it needing wholesale changes to how SPF is administered?

Yes, definitely, I think there are good examples. As I say, Carmarthenshire, there's good working between a few of the colleges and local authorities in terms of the consultation involved with the process. And likewise in north Wales, too, in terms of Grŵp Llandrillo Menai. I noted how there's a north Wales approach, led by one local authority. So, only one set of documentation, and each county had various stakeholder meetings to take a view on projects, and colleges were included in those events. And the regional skills partnership were also involved in supporting FE regional bids, and there was very much a clear timeline for bid submission and approval. 'Strong, informal dialogue', really, is the headline that's come out of north Wales and Carmarthen too.

Thank you, panel, Chair.

Diolch, Sam. I'll finally bring in Hefin David. Hefin.

Diolch, Cadeirydd. I really enjoy Sam Kurtz’s inventive questions, and also his dogged pursuit of them. It’s really good, and I can therefore use those questions to ask: is Multiply an example of exactly what he’s talking about? James Scorey.

'Yes', in one word. If you think of Multiply in terms of—. We've got £101 million allocated in Wales to support adult numeracy. Over three years, £101 million is a substantial investment. We’re probably now looking at nearer towards 18 to 20 months for most of those projects. I appreciate there has been some virement of moneys recently from Multiply into people and skills, but it’s still a substantial pot of money. It’s a Welsh Government policy area, as we know; it needs to be complemented with other interventions. But that’s a prime example where there could be a common, consistent approach to strategic, national projects. The problem is common in these areas where we’d address; many of the solutions will be. They may be slightly different solutions in some areas. But that is a major challenge. And if you think that the Welsh FE budget for part-time adult education is around £60 million per year, and we’re talking about just over £100 million, talking on adult numeracy alone, it’s a massive opportunity, huge potential, but needs to be joined up and done in a way whereby we collaborate with one another and share best practice and work across. It’s not just FE involved in this; obviously, third sector, the adult community learning partnerships—. But 'yes'; to go back to the point, 'yes'.

And I'd say, Chair, it might be worth referencing evidence that was also given to the culture, Welsh language and international affairs committee, which was reflecting very similar problems with local authorities. If I'm remembering rightly, unless—. I'm thinking it was this committee; I'm sure it was the other committee. I'm on too many committees. But that's it, Chair. Thank you very much.

Thank you very much, Hefin. I'm afraid time has beaten us, but thank you very much indeed for giving up your time to be with us here this morning. Your evidence will be very useful in our inquiry.

A copy of today's transcript will be sent to you in due course, so if there are any issues with that then please let us know. But, once again, thank you for being with us today.

We move on, therefore, to item 4, which is a legislative consent memorandum on the Non-Domestic Rating Bill. This memorandum relates to a Bill that was introduced to the UK Parliament on 29 March 2023. The LCM for this Bill was laid on 11 April 2023. Are there any comments that Members would like to make about this LCM for the public record? Of course, we will be discussing the report on the memorandum in private session today, but are there any comments that Members would like to make publicly? No.

Therefore, we will move on to item 5, and I now propose, in accordance with Standing Order 17.42, that the committee resolves to exclude the public from the remainder of today's meeting. Are Members content? Yes, I see that they are. Therefore the motion is agreed. And we'll move into private session.