Economy, Trade, and Rural Affairs Committee

We'll move on to item 2, therefore, papers to note. We have a number of papers to note. I won't, of course, go through all of them, but are there any issues arising from these papers at all? No.

We'll move on, therefore, to item 3, which is general scrutiny of the Minister for Economy. May I welcome the Minister and his team to this scrutiny session? Before we move on to questions, can I ask him and his team to introduce themselves for the record? Minister.

Okay. I'm Vaughan Gething, I'm the Minister for Economy. To my right—

Peter Ryland, director of regional investment and borders.

And to my left—

Bore da. Good morning. Andrew Gwatkin, director of international relations and trade.

And on the screen—

Bore da. I'm Duncan Hamer, director of operations.

Thank you very much indeed for those introductions. I'll just kick off this session, just with a few general questions around skills and apprenticeships. So, Minister, could you tell us what work is the Welsh Government undertaking into the expansion of degree apprenticeship frameworks, and are there any plans to address that, at present, only 14 per cent of degree apprentices are female?

Well, I always expect the question on degree apprentices, and it's interesting that it's not Hefin David asking the question. But it is an area that we continue to take an interest in. We're looking at construction, digital and rail to develop new pathways, and all of those are areas where there's a skills need for employers and opportunities for workers as well. We expect delivery for rail occupations to start in January 2024, and then construction and digital in September 2024. We'll work with the Higher Education Funding Council for Wales, universities and employers to try to widen participation.

It's a point that is well recognised by both providers and the sectors themselves, that they do need to widen participation. And gender is a key factor in that, as this committee has pointed out, and as I have had discussions with all those of sectors whenever I meet them. It's partly doing the right thing, but it's also a very practical point: they can't recruit and retain the numbers of workers they need without actually doing much better at recruiting and retaining women in those sectors. And it is supported by the way the new curriculum will work, but, actually, in the next few stages, you're talking about people who are nearer the end of their school career, and, at the same time, they've got to invest in a conversation earlier on in their school career, as well as what then takes place post 16 and post 18.

And what conversations are you having with different sectors regarding the potential for the co-funding of apprenticeships?

We've had the report from Dr David, on the screen, and we're going to discuss that in Plenary in the near future. So, actually, I'm interested in a discussion and generally listening and taking some interest in the debate and the report, and to then see, because our current position isn't on wider co-funding, as that report sets out. But I'd be interested in a discussion around whether a mix of co-funding in different sectors could actually help us to stretch further what we're able to do. So, it's a conversation I'm interested in having. It's very much a live issue, and I'm sure when we come back to the committee in the future, we'll have reached a view on whether we will take forward the suggestion that's been put forward, and, if not, we'll have to explain why we haven't done that as well.

And at this point, I will bring in Hefin David. Hefin.

Thanks, Minister. I was a bit late putting my bid for questions in, so that's why I wasn't called straight away. The issue that you've identified with the debate on 4 July I think is really important, because the discussion I'd like to have is: if we are serious about expanding apprenticeships, we need to look at how they're both costed and funded, and the fact that, for regular degrees, there's a vastly different funding model that is not seen, for some reason, as appropriate for degree apprenticeships. I think that conversation needs to be had, but I appreciate the fact that, at this point in time, you're awaiting that debate, and I think that probably is entirely appropriate for now.

Having had your name taken in vain, yes, we are looking at the realities of where things are, because there are different expectations in some of these routes as well. Most apprentices are going in by a different route, and they start off combining work, and, actually, we know that if you're not in a larger apprenticeship provider and employer, then you don't earn a significant amount of money. If you go through a degree route, you have an expectation about a living and doing something full time. We're obviously interested in the industrial—or, if you like, in old money, in the way that the Chair will understand—sandwich courses that used to take place, to understand how the world of work is part of what that degree learning is. So, you're learning and learning for a purpose in a range of those courses as well; that doesn't apply to everything, I understand. But, is there now a time to look seriously at the funding model and our expectations?

But there's a broader message here, though, that I think is really positive. I was at the Paris Air Show for the last two days, and, again, the message is really clear: we have a sector there—and it's only one sector; there are others—where we punch well above our weight. We have 10 per cent of the aerospace employment in Wales for just under 5 per cent of the UK population. Our challenge is still, though, how we find people with the right skills who are willing to go into a range of those courses. And in lots of those areas, you can end up having a degree-level qualification, often after you've worked for a long period of time. Actually, that route to having a really good job with a good career doesn't mean you have to follow a traditional higher education route. It's about understanding what's appropriate for different learners, rather than trying to force people onto one route or another.

And I think there is a conversation to be had on equity of funding, but I deliberately left it quite broad for the Government to make a decision on that, because there will be voices, not least NUS Wales, who will say that they would not countenance any student-led funding of degree apprenticeships.

The other issue, though, is vertical integration and the fact that there need to be clear pathways from levels 3, 4 and 5 into level 6. I think that's something that could be improved upon. Certainly, Transport for Wales are offering level 3, 4 and 5 apprenticeships, and you've mentioned a rail degree apprenticeship. They've got one on the books ready to go, which would achieve a degree of vertical integration in that area. But, of course, there are other areas that don't have that vertical integration. So, is the Minister looking at that as well?

Again, it's set out in your report, so it is one of the things we're directly looking at. And I think that the rail degree apprenticeship—we're going to make a start on the delivery of that at the start of the next year—is helpful for us. So, this isn't something where we're talking about several years into the future before there's any learning; it is actually going to start in the not-too-distant future, and then to learn more about what we think we're able to do, as that's a practical delivery in place. There are, of course, employers with degree-level apprenticeships, but often that's a slightly different model to the point the Member is making. I think it's not just interesting as a discussion; it's very practical, and could be practicably useful as well as interesting.

Okay. Thank you, Hefin. I'll now bring in Sarah Murphy. Sarah.

Thank you very much, Chair. Thank you all for being here today. I'm going to ask some questions around research and innovation. So, to start, Minister, when do you expect to publish the action plan that will provide more detail on the delivery of the Welsh Government's innovation strategy, please?

We're looking to publish those over this autumn, so there’s work ongoing both within the Government and with people outside Government about what those action plans will look like, to try to give us some more detail around each of the mission areas. Obviously, we’re talking with designated Members from the co-operation agreement as part of what we are carrying on discussing and looking to deliver. As well as that, I think it’s really important to remember we’ve got one-, three- and five-year opportunities to review, because after the first year we’ll know more about the impact of the changed funding landscape, and, in year three, how much we’ve actually done and delivered at a time when there’s still an opportunity to try and influence things before we get to year five to see the end impact of it.

Thank you. And what conversations have you had with the UK Government in regard to the bridging funding that Welsh universities are calling for in the context of concerns about the loss of European funding?

Well, we haven't had any really practical discussions with the UK Government where they've offered that bridging funding. So, we regularly discuss, whenever we talk about research and innovation, the reality that money has gone from the sector and there are jobs going from the sector, and I’m sure you’re all aware of the evidence that universities have given to the Welsh Affairs Select Committee. You won’t need to look very far to see there’s a similar message being given by higher and further education in other parts of the UK as well. So, it is a genuine challenge in the way that post-EU funds have been developed. I’m not sure it was deliberately intended to carve out these jobs from the sector, but it is a direct and unavoidable consequence of the design and delivery of post-EU funds and the change in the amount as well.

It's partly linked, though, to whether we can make more progress on Horizon as well, because as well as the funds we used to directly put in, we also had access to Horizon, and Wales, again, punched above our weight when it came to Horizon. So, not having access to that is a real and disproportionate challenge for us. Association is our end goal, and George Freeman, the science Minister in the UK Government, says it’s still his goal as well, and that’s very welcome. The challenge is how quickly the broadly constructed negotiations, as we understand them, can actually reach an end point where association could take place. Because if we get to another academic year without being associated it makes the prospects more difficult, and people have to put alternative arrangements in place. So, we’re really keen to see association agreed, and if that isn’t possible, then the money that’s been held back from Horizon, you’ve got to think about how that’s going to be used, and used effectively.

All these things go together, though. So, it’s not that we’ve stood still and are waiting for things to happen. We signed the memorandum of understanding with Innovate UK. That’s really helpful for strengthening our partnerships, because they do need better access to UK funding sources. So, that’s good for us. And, on our flexible innovation funding offer, we had a good response from businesses, both those that attended and registered for the initial event as well as the follow-up conversations. So, with the resources we have, we need to make them work even harder and to deliver outcomes for us, whilst still carrying on the conversation about the direct impact of the change in funding and what’s still left if we can get association with Horizon Europe.

Thank you. And that follows on to my next question. Could you provide an update on your understanding of the latest position in respect of the UK securing access to Horizon as an associated member, and your views—you touched on this, but I suppose a little bit more—about where you think this is really heading. Is it really a possibility?

Yes, so, the starting point is Horizon Europe is even more important because of the shared prosperity fund challenges. You know, losing £1 billion is a big hole. A significant chunk of that was money we put into research and innovation in Wales, and there isn't another ready-made pot of money waiting and looking for a home. So, then Horizon becomes more important and the good news is that, whilst the Windsor framework isn't perfect, it has changed relationships between the UK and the EU. From the different sides of politics, it's important to recognise that's had a practical impact in thawing relationships. All of us understood—and I think understand why—Horizon didn't make progress while there were still issues about the implementation of the trade and co-operation agreement and the agreement that had been reached with the EU. So, that's a helpful unlocking of better relationships. They are prepared now to negotiate, and, to be fair, if it were the other way around, I think the UK Government would probably have refused to budge on something if something else had happened in the agreement. So, I think that's helpful progress. The challenge then though is the speed at which we're able to move, because whilst there's—. When I was in Brussels, and I was able to join Senedd proceedings from Brussels, we met with a number of people. I do think it's fair to say that there is a willingness to try to reach agreement. The challenge is that the willingness to reach agreement doesn't account for the detail of the negotiations you need to go into. It's about whether, actually, with the EU, which is used to negotiating, we can reach a deal that actually wins for both sides.

Higher education in Europe is keen to have British universities in, and that, obviously, includes Welsh universities. As I said, we did better than you would have expected in terms of our HE share from Horizon Europe last time. So, there's lots of goodwill, but it's the details of the negotiations that we're not directly part of, and it's whether those can be agreed through the summer or not, which would be optimal so you would get the start of the academic year. It really does depend on how far apart the sides are, if we don't have agreement at the end of the summer. It's hard to forecast that, but, compared to where we were six months ago, we're in a much better place. Like I say, I think it is helpful that the stated position of the UK Government is still that they want association rather than opting for a plan B, and I think that would unlock funds for not just the institutions here but the partnerships that go alongside them that I think are really important for the practical delivery of research and innovation, where we have lots of shared challenges.

Thank you very much. That's very helpful. Thank you, Chair.

Thank you, Sarah. I'll now bring in Luke Fletcher—Luke.

Diolch, Cadeirydd. If we could think about decarbonising the economy for a second, the Climate Change Committee recently recommended that the Welsh Government develops a decarbonisation strategy for Welsh business and increases support for small and medium-sized enterprises in terms of getting to net zero. How would you respond to those recommendations?

I think it's a fair challenge and it's what we're trying to do. Our challenge always is, 'Can we move at the pace and the scale that we would all want to see when we're thinking about the future of the planet?' The Climate Change Committee is there to be a constructive and critical friend. It's no surprise that it's urging us to be able to move faster.

What we are doing is we've already put in place the net-zero skills action plan, and there's action that comes from that as well. We've got in place a range of support through Business Wales—the green growth pledge that businesses can sign up to. There's one of the pillars in the economic contract and, also, the relatively recently launched Development Bank of Wales green business loan scheme. There has been lots of interest in that and we've already had a significant investment from that, and there's more to come as well. The green business loan scheme is a pilot for what we might then be able to do to expand it, to see whether it is reaching the breadth of opportunity that it has in the support requests that we know are out there.

In addition to all of this, there is still the opportunity for any SME to contact Business Wales on any issues, including how to decarbonise and how to protect their bottom line. Lots of businesses are approaching this from: decarbonisation is now an opportunity to invest in their bottom line and to reduce costs, because energy prices are still very high. They may not be as high in the markets as they were previously, but, actually, from a business point of view, they're still a really big challenge. There are businesses who want to see it—doing the right thing is what motivates them. It's a very practical business if you can turn a profit and keep going, and if you can turn a profit and keep going by improving your energy efficiency and your impact on the climate, and reducing that, that's a good thing to do.

Two points I wanted to pick up on there. In terms of the green business loan scheme, what has the take-up been, generally, of that scheme? A particular worry I have in certain sectors of the economy—. I've done a lot of work with the craft brewery sector, and their concerns are that they can't take on any more debt or any more loans. They would prefer something more like green grants, for example, because of the large amount of capital that they had to take out over the course of the pandemic and, obviously, now, as we hear about the cost of living. So, what has the take-up been and what have businesses been saying about the scheme itself?

I'll bring Duncan in for some more detail, but the first point I'd make—and it's a fair question, about, 'Are we in a position to have a mix of grant and loan, or to provide grants?'—is we do still provide grants to help businesses to develop for their future; that's still an option. But, actually, the financial resource available to us is such that we're not in a position to say, 'We are going to have a large, chunky grants scheme to help all businesses.' I know that, in the craft brewing sector, and there are others as well—we could talk about bakeries, we could talk about lots of the food sector—. There are lots of energy intensive industries beyond that, you know. There's a steelworks in my constituency just over there; that is obviously an energy-intensive industry.

I don't think people had thought until the recent energy crisis how many businesses are genuinely energy intensive. The craft brewing sector has been a success story up to now, with significant growth. The challenge is how can we help to sustain them, and the honest truth is we don't have the resource and the financial levers to produce a significant grant scheme. The loan scheme is there to try to deal with some of the gaps in the market and it's also about the conversations that we do have with traditional lenders about the products they have available. There's regularly a positive view from banks themselves about the fact they're prepared to invest in the future and in decarbonising the economy, and you then have the challenge of businesses saying, 'Well, can I practically access that?' with the reality of a business that should work. But I recognise that lots of businesses are not cash rich and a number of them are taking on debts to survive and to keep going. So it's a practical challenge, I know.

I'll go over to Duncan on some of the practical delivery so far of the green business loan scheme. I don't know if you want to talk more about the scale of what we've actually done with the green growth pledge since that was introduced as well.

Thank you, Minister. On the loan scheme specifically, we've got about £5.5 million actually in the pipeline. Demand is good out there, actually, and we're seeing the incentive effect. On your question on grant versus loans, the loans scheme itself is a reduced interest rate, so there is an incentive there. We're well on target to hit the £3.5 million targeted for this year, and we've awarded £1.2 million to date. Bearing in mind this is a pilot at the very early stages, we're looking to understand how we then build this into our mainstream funds. So, aside from the green business loan scheme, the bank also has much more capital available to deploy in areas. The Minister mentioned that we do have a specific element of the economy futures fund as well, which does grant aid in this area, but, as the Minister mentioned, access is limited, purely because the scale of that fund—it can't service every need. But, also, for the brewers you mentioned, food and drink has a specific fund as well outside the Minister's portfolio, so there are a range of activities.

For those where funding is an issue and, actually, they couldn't take on more debt, potentially, as the Minister mentioned, that's where our advisory service comes in. We work with around 5,000 SMEs on the green pledge and different activities, and ultimately that's all targeted on how they reduce costs, impact their bottom line, which, in effect, puts them in a better position without actually spending that capital. So, in the round, this has really become a core and central part of our offer. I wouldn't really want to think about sustainability as something bespoke and special. We're really trying to build it into our core offer so that every business gets this support every time we have contact and work with them.

On the food sector, Lesley Griffiths is the lead Minister, and, actually, there's a capital scheme there that can provide up to 40 per cent of the capital cost. So, actually, when you're looking at how you help a business to both de-risk the future and invest in it as well, there is significant support available from the Government. The challenge is whether there is going to be enough for every business we would recognise as a good business that should have a future. And I think with inflation figures again today, my concern, and I'm sure it will be the concern for every Member with businesses in their constituency or region, is there are businesses that you think should have a future that may not survive through the end of this year. So, as I've said before, it's a really difficult environment for some sectors where I think we will see challenges and businesses closing, whereas, in others, we will still see continued growth and good prospects for the future.

On that second point that I wanted to touch on, on the net-zero skills action plan, the Climate Change Committee also recommended that the action plan itself needed to be firmer now, with specific actions within the plan as well. How do you respond to that?

The starting point is that the Climate Change Committee has been broadly positive about where we are compared to the rest of the UK. So, every now and again, we should recognise we've done something relatively positive in Wales. But, also, the plan itself has seven key areas and 36 actions. One of the things that we said we would do, and this came from the launch as well, was that there are eight key emission sectors and so we're looking in more detail at those sectors, and so you'll then have what looks with more detail at the challenges and the opportunities within each of those sectors, and how we can then look at investing in the skills of people around those significant eight emission sectors. The challenge comes back about, 'We want to see more detail'—well, that's what we're doing. And as we get to publish those—we will publish them—I'm sure there will be questions here and in the Senedd as well about the work that we've then published and then where we're able to invest in skills.

We've got the personal learning accounts, we've got a particular fund, I think it's £2 million we invested in greening skills, and, again, I think we'll end up stopping talking about greening skills, because it will have become really standard about the skills that people will need for the world of work that is changing around them. I know the climate change Minister regularly makes this point around gas fitters. In the not-too-distant future, we won't have new gas heating systems going into domestic properties. We'll still need lots of people to maintain those legacy systems, and there may be times when, actually, it's still the right thing to do to replace a gas system rather than do something else, but more and more you'll see people needing different skills for the future as well.

So, people coming out now, it's how we equip those people, and people in the future, as well as, if you're my age, as opposed to yours, and you're still working in this field, you're not going to be thinking about retiring any time soon. So, actually, in 10 years' time, if you still want to be in work, you may well need to think about how you re-equip your skills and the skills that exist within your business as well. That's part of what we're trying to do with personal learning accounts, so you don't ask people to take all of their time out of work to re-equip themselves with skills for a situation that is changing around them. We want it to change around them, as well, because that shows we'll be making progress and having new products that are more efficient, with less of a carbon cost, that are being introduced at a scale where they're commercially viable.

Just finally on the skills element, obviously I've been raising concerns around retention of students in both the college setting and the university setting, and we have now the education Minister committing to reviewing education maintenance allowance. How involved are you going to be in that review? Because this is something, obviously, that does cross into your portfolio when we're talking about that skills element and retaining those students to be able to then operate within this new green economy. So, I'm just interested to know how the Government is working across portfolio on this particular point.

The education Minister is the lead Minister for the EMA and he makes the budget choices around it. I've got an obvious interest in the levels of retention and what it allows us to do. The, if you like, traditional offer that still equips most students is one of the things we think about with our young person's guarantee as well, so there is a deliberate cross-over. I will take an interest in the potential choices to be made, what that means for the future, bearing in mind he's already made a financial commitment to the EMA as well. So, it is always about using the resources we have and how it actually makes a difference for the learner, and that learner will go on to become someone who we hope will be productive in the economy for themselves as well as the country, remembering that we're talking about people, not just numbers to help businesses with the bottom line. It's more than that, as well.

So, you'll be taking a keen interest—

I will definitely be taking an interest.

Great. If I could move on then to steel. I'm sure you were expecting some questions on steel. The BBC recently reported that Tata have warned of uncertainty within the sector not just in Wales, but in the UK. I'd be interested just to see if I can get an update out of you in terms of the conversations that are happening between the Welsh Government and the UK Government in supporting the decarbonisation of the sector.

This was part of the conversation I had yesterday with Minister Ghani when I met her in Paris. There is a need to try to get some certainty, and there's more than one department in the UK Government that has an interest. There's, obviously, the Department for Business and Trade. I have had a response to my letter from Kemi Badenoch. She has said that she is keen to meet me. I look forward to be able to have a direct conversation with her. But there's also very direct interests in No. 10 and No. 11 Downing Street.

There's always been a keenness to say that Tata's potential investment in battery production in the UK is linked or isn't linked, and it's not entirely clear how explicitly linked that investment is. I know we saw some pre-agreement publicity claiming that there was a site that had been agreed on, but, actually, Tata as a group are thinking about their investments. They've been here for a long time. It would be a significant challenge for all of us if they left. They aren't saying they're going to up sticks and leave. The challenge is what asset we have in south Wales and whether, actually, those conversations are recognising the level of urgency that needs to be there. And that is frustrating, because it isn’t at all clear to me that there is a plan to reach agreement within the sort of investment timescales we’ll need and the knock-on consequences for that.

I know the headline often focuses on how much is the UK Government prepared to invest to move to a different way of producing steel, but actually, there are other consequences, too. Energy prices for industry is a big factor in that, and it’s a fact that energy prices in France and Germany for the same sector are significantly lower. It’s a point that’s been made over years and years and years. If you can remember as far back as when Carwyn Jones was still the First Minister, it was a point that was regularly raised by him in the Chamber and in meetings he had. So, there’s a long-term issue there about what support is available.

There’s also a policy question that follows on, in that if you are going to generate more steel from scrap production, then you’ve got to do something about where scrap goes; we export lots of it at the moment. So, actually, you need to do something about that scrap not being exported, as well as doing something—and this is certainly this Government’s view—. And again, if you can remember into ancient history when Kwasi Kwarteng was in the Government—at the Department for Business, Energy and Industrial Strategy, as it then was—there were active conversations then about a border adjustment mechanism—basically, what are the carbon costs of the steel that you are using, and how is that factored into your procurement decisions, so is it okay to import steel from somewhere else and then to roll it, and then say that’s UK steel, and you only think about the cost in price and carbon terms of rolling it, or do you need to look at the carbon production costs where it’s originally produced, how it’s produced, and the transportation costs as well.

I think it’s fair to say it’s broadly accepted now in terms of the investment that’s needed in the steel sector, as well as then tackling some of those energy issues, so a lot of that has to come from the UK Government, but to what degree do you see the Welsh Government being able to at least not so much intervene, but support the sector further than it is already? An example could be the skills gap that we can see forming in the sector now.

This is regularly part of our conversations when we're with Tata. Though actually, their bigger concerns are all of the UK issues. Welsh Ministers have met with UK Ministers on 10 occasions since March last year to talk about Tata. We’ve met with senior managers, between myself and the First Minister, on six occasions, at least, in that time, and we’ve met with the trade union. All of their biggest concerns are the ones that I’ve set out. We are, though—and we always have—making it clear that we would have a further conversation with Tata about the sort of skills support we can provide. We’ve continued to invest in skills around there. There are still apprenticeships in Tata, so if there’s more we can do in terms of skills for whatever the future of the plant is, then we stand ready to be a constructive partner in that. Tata have never doubted our commitment or willingness to be straight dealers with them, and to be upfront in what we could do with them. In the same way—. I need to be careful here, Chair, because Celsa, who’s one of the other steel producers in Wales, is in my constituency. The conversation with Celsa as part of the sector is obviously undertaken by a different Minister, but we have always been prepared to think about areas where we can help them, what it means practically, and skills is often the biggest part of that.

Great. Thank you, Minister. Thank you, Chair.

Diolch, Luke. I’ll now bring in Vikki Howells.

Thanks, Chair, and good morning, Minister. You’ll be aware that the cost of doing business is an issue that I’ve raised in this committee and in Plenary several times as well. The latest figures from the Office for National Statistics show that a higher proportion of Welsh businesses report energy prices are their greatest concern than anywhere else in the UK. Is there anything more that the Welsh Government can do to provide additional support to businesses with their bills? Appreciating that much of this is non-devolved, have you had any discussions with the UK Government about further support?

Yes, it's a regular point we raise, and, actually, again yesterday, when I met with Minister Ghani, one of the points that I made was that the support that’s there at the moment is coming to an end soon. And actually, I’m sure you’ve heard very direct testimony from a range of business organisations that the support that is there at present isn’t actually making a big difference. The problem is that if and when it’s withdrawn, as it’s planned to be, I’m genuinely worried we will then see businesses making choices about whether they can or will continue. So, it’s a real concern for me about what that might do, and it’s regularly raised with me by businesses, individually and collectively, in their organisational groups. The reality of energy costs, not just for what you consider to be an energy-intensive sector, but high-street occupations as well—energy costs have been a real challenge in the bottom line of those businesses.

The honest truth is that we don’t have the sort of grant support to fill in the hole that those businesses identify. And as we discussed earlier, our ability to provide some loan support, even at a discounted rate, is still loan support. Now, businesses that think they can make it through the next period of time, and think that if we can help them to both decarbonise and to influence their bottom line, they can do that, that’s an option for them and it’s a good option with lots of interest. My concern is that we won’t get to that stage for every business. And in the food sector, energy costs have been a factor in some of the larger unemployment events that we’ve seen—not the only factor, but a factor. And it’s also been a factor—. I know you had a closure of a bakery in your constituency as well, and energy costs were a very real factor in why that business—a family-run business with strong local roots—decided it couldn’t carry on. So, it’s not a theoretical discussion—it’s a real practical challenge for lots and lots of businesses.

Thank you, Minister. There's an aeroplane going overhead, so, if you can hear a lot of noise in the background, that's what's happening here—apologies.

So, the Welsh Government's green business loans scheme is a really interesting take on how we might encourage businesses to diversify into different areas and assist with their energy costs. So, when you came before us last time, you highlighted that there'd been 10 successful applications to the green business loans scheme, and there were a further 25 in progress. Do you have an update for us as a committee on the progress with this scheme, and whether demand is reaching the levels that you expected?

Yes. So, Duncan Hamer earlier referred to the fact that we've got £5 million in the pipeline. There's been a really significant start with one business that had a £1.2 million investment with 200 solar panels installed. They've got opportunities to not just use that for their own business, but the potential to sell that either to the grid or to nearby businesses as well. So, I am confident that the green business loans scheme will make a practical difference. There'll be learning for us, as it's a pilot, about whether and how far we are able to expand it further in the future. But we'll get through this year. The initial target was £3.25 million or £3.5 million to actually deliver in the first year, and we're certainly on target to do that.

In addition to that, we have continued to practically press the sector. So, I held a round-table with energy suppliers about the choices that they are making. It's also been a factor in the conversations with banks. We know that Ofgem have called for flexibility because a number of people fixed prices at a rate that now looks uncompetitive, and there's a varying degree of flexibility that's being shown. And it's a very real challenge in all sorts of sectors, but, without that sort of flexibility, there are some businesses that could look at the green business loans scheme for the future, but may not be able to. But, the scheme in itself, I am positive about the level of interest and the delivery that is taking place now.

Thank you, and one final question from me. So, the Welsh Government recently awarded a number of contracts to deliver the Business Wales service from 2023 to 2029. Can you tell us what your expectations are for the service over this period, and what targets and key performance indicators have you put in place there?

So, three broad aims underpin what we want Business Wales to be able to do: that's to build confidence, inspire individuals, entrepreneurs and others to reach their full potential—that means we need to work with stakeholders to do that—about addressing one of the gaps in creating the conditions for businesses to start and to sustain—that's about trying to address the missing middle that I know this committee and others have recognised—and then to support productivity, resilience and growth. That includes decarbonising whilst doing that as well. We've got some KPIs that I can tell you about. I'm happy to write to the committee again if it's not in the written statement. One of the KPIs is 1,400 new business starts a year; 4,000 new jobs created per year; investment in enterprise at £80 million a year; and a net gross value added uplift of £245 million; and to have a four-year survivability of 80 per cent. One of the things that I think is really interesting is that firms that do go to Business Wales for support, the start-ups, their business survivability is significantly better than those that don't. So, there is a real message here that Business Wales can genuinely help to start up and sustain businesses already. And then there's a point about digital maturity and adoption.

When we went through the manufacturing action plan in the previous session, I think I pointed out that one of our challenges is that, whilst there is a lot of understanding about the digital environment around us changing, including the opportunities, not every business is looking at this as a key part of its business offer. Some businesses are being set up in this area, so they're very much people who are looking at it as, if you like, digital natives, whereas there are others who are looking to retrofit and to reconfigure their own understanding of what this can do, and there's risk in not doing that as well. So, the digital section is an important part to the KPIs. We're looking to try to influence behaviour, and that will definitely affect productivity and resilience of businesses as well.

Thank you, Minister. Thank you, Chair.

Thank you, Vikki. I'll now bring back Hefin David. Hefin.

Diolch, Gadeirydd. How is your relationship with the UK Government with regard to ongoing trade deal negotiations?

At official level, it's constructive. Information sharing has improved. At the start of this, when trade deals were first being done, and, again, Liz Truss, if you remember her, she was the international trade Minister—. It was harder at the start than it is now to get information shared and to have a trusted environment. There was, frankly, a suspicion that devolved Governments would not respect the confidentiality of those negotiations and, actually, as you'd expect, we have, and there has been an improvement in information being shared, and including some progress on what's devolved and what isn't, and our interest in non-devolved areas, where they can definitely have an impact in devolved areas too.

The challenge still is that, even with the trade deals that are being done, and we publish our assessments of them, there are opportunities in them, but those opportunities need to be seen through. So, as well as investing time and resource in doing the trade deal you've then got to implement it, and there's still a concern about the capacity to do that, but it is then about that and the relative value of our trading relationships with Europe as well. I should say, though, that, on the ministerial fora part of it, I met Nigel Huddleston relatively recently—within the last month, I think—and it's a constructive forum. So, whilst we don't always agree, the fact that there's constructive conversation, I think, is important to recognise.

So, you're suggesting ministerial relationships have improved since the former Prime Minister has moved on.

No, that's true. The current Government, for all of the disagreements that we have—

[Inaudible.]

Well, it's been of benefit that Nigel Huddleston has been a trade Minister before, and, since he's returned to that department, some stability is welcome—I think for UK Ministers as well as us. Minister Ghani has some interest in some of the trade deals, though, so it's not just—. He's the lead Minister on most of the trade negotiations that are ongoing. But, yes, a period of stability to mirror what we're able to deliver in the Welsh Government would be most welcome.

I credit you, Minister, for not taking the political bait there. With regard to negotiations with Canada and India, are you going to publish the Welsh Government's perspective on those and future deals, as you did in the same way with Australia and New Zealand?

Yes. You can expect us to publish those, and, as well as publishing them, to write to the relevant committees. I think it's the constitution committee. I think LJCC are their current initials. So, Huw Irranca-Davies and his committee will get to run the rule over it, as well as this one as well.

I appreciate that. Any idea when?

No, because it depends on when those negotiations actually result in a deal, and the announcement we have at the time, and what changes from our current understanding of what's being negotiated and what actually ends up happening. There are risks and opportunities in all of these. Canada, for example, is well used to running trade deals, not just at the federal level, but they have also got to take account of their provincial governments and their interests and their say in this. So, they're not pushovers. So, these are not straightforward trade negotiations, where everyone agrees and everything is wonderful and we'll just sign on the dotted line.

Thank you very much.

Thank you, Hefin. Before I bring in Sam Kurtz, obviously you mentioned that the relationships have improved as far as trade deals are concerned. So, do you feel that your voice is being heard, then, in these discussions?

I do think they take seriously what we have to say, but it doesn't mean they always agree. I do think, at the start, there was—. At decision-making level, I don't think there was the same appreciation and interest in what we had to say. I think there was a different objective of 'just get some deals over the line', bluntly, and you'll have seen—. I don't know how well informed the newspaper articles are about what did or didn't happen with the dinner with the Australian Prime Minister and our Prime Minister at the time. But, actually, I think there's been an understanding that that approach has given us some challenges for the future, because people look at Australia and New Zealand as their starting point for future discussions, and why they've moved from that.

So, in the agriculture sector, it's a challenge, and what George Eustice has said in public is what we were saying in those discussions that we were having at the time about our concerns. I think there's a recognition that if farming is continuing to be seen as a thing that you can give up, then, actually, that produces significant challenges for us. The proof of the pudding, as I say, is always in the eating, so we'll see if the better environment, and, I think, the greater trust that is genuinely there, actually leads to deals that we can be more positive about. But the point about capacity to deliver is really important. If you keep on saying, 'We've signed a new trade deal', that almost always says there's a process you then need to go through to make the whole thing work. And actually, if you're not putting the resource into doing that, but the country you've agreed is doing that, you can end up not gaining the benefits you'd want to as well.

So, there does need to be a rounded view from the UK Government on not just the range of deals it wants to get over the line, but what it then does with them as well.

And I'll bring in Sam Kurtz. Sam.

Diolch, Cadeirydd. Morning, Minister. I'm going to start with border control posts, BCPs. I was just wondering if you could update the committee on the BCPs, including your preparedness to go live in January of next year.

It's worth pointing out that I'm also an honorary member of the British Veterinary Association; my father was a vet.

Look, we continue to have discussions with the UK Government about the practical delivery of border control posts. And those are challenging. You'll have seen when the draft target operating model was published—the model for operating border control posts and the different things that go into it—that it was envisaged as a real possibility that I think is likely, and what should happen, that Britain's eastward-facing ports would implement something with continental Europe ahead of what happens on west coast ports. So, that's Cairnryan and Liverpool, it's Holyhead, and, obviously, the two Pembrokeshire ports—and we have two constituency Members with those here in the room as well—and that's because the issues around the island of Ireland are more complicated. And we have an honest challenge around what happens with goods from Northern Ireland and goods from the Republic and the trade routes that exist through Rosslare and Dublin coming into Welsh ports, and not wanting to see trade diversion either through other parts of GB—. So, if we implemented different rules in Wales, and you could have a route from Dublin or Belfast to get into Cairnryan or to Liverpool, you may well decide, 'Well, I'll do that instead.' There has, though, been a continuing dislocation of trade direct from the island of Ireland into continental Europe. So, when I was at the port at Milford Haven, it's well over 40 per cent diversion of trade from pre-Brexit days. So, there's a real challenge.

We never said that we'd go live in January next year. That's not realistic, and it's part of the reason why we've got to work through the different schedules in this. The Cabinet Office wanted us to review again the plans for Holyhead, and we have reviewed those. That's introduced an extra delay. I think we've got agreement on what can now happen, so, I hope that will take place. And because of the dislocation in trade and the fact that trade's been diverted, the previous plans for Pembrokeshire—we now think that we'll be able to deliver BCP activity within the area of the port. That means that you don't need to go and build a single BCP for those two ports, which was our working assumption earlier in this Senedd term. I guess it's good news if you live in Johnston, but not good news because that means, overall, there's less trade coming in.

So, where did the January 2024 date come from as a suggestion for going live?

The UK Government suggested that they wanted to go live then, but in all of our practical conversations, we've been really clear that—to get ready, to get the information ready, so turning on pre notification, and we forced the issue there, and we've got some of that, we think we'll be able to do that hopefully this autumn to then get more information, and then you've got to create either a temporary facility or a permanent facility, so we're not looking at go-live in January. We've always been clear about that with stakeholders, and in the statements that I've made as well.

So, what's your assessment of the Windsor framework on the implementation of BCPs? I've taken a bit of interest in the Windsor framework given that there's a port in my constituency and what opportunities may present themselves from that. What's your assessment of the framework and BCPs?

It's difficult, because on the one hand, it unlocks the political environment, and I referred to that earlier. So, on that front, that is genuinely positive. The difficulty comes with the definition of qualifying Northern Ireland goods. So, those are supposed to have unfettered access, but it's what is a qualifying Northern Ireland good that is a challenge. Is it a qualifying Northern Ireland good if it passes through Northern Ireland and leaves Belfast? That appears to be the working definition, and that's problematic because if you were going from Dublin or Rosslare to Holyhead or Pembrokeshire ports, and you face the potential for checks and paperwork, then that's a factor—it's friction. If you can drive to Belfast without doing anything else, and you become a Northern Irish good, then you can go to Liverpool or Cairnryan. You may find people want to invest in a route to Holyhead—well, that may resolve some of our issues, but you still then have an issue about trade being dislocated and the potential for very direct impact on jobs in Wales and Welsh ports. You also have some of our public health and food safety challenges then as well, because whilst we maintain a broadly common position and confidence about what happens in the whole island of Ireland about those standards, it does introduce extra risk if there's no additional checking at all, if you can't do that.

It's important to reflect that goods coming in to the Republic of Ireland from the rest of the European Union, there aren't the same checks that you would otherwise have. Say, for the sake of argument—and it is entirely at random—say we had goods coming in from Cyprus, and they want to come in direct to Cardiff, then there'd be a regime for checking. If those goods went into Dublin, to Northern Ireland, to the UK, there'd be no check. So, actually, your line of sight for those things is more challenging and more stretched. We're awaiting written advice from the Food Standards Agency and our own chief veterinary officer, and I'd like to be able to publish that alongside any choice that we make, alongside what we do, because it's not as simple as saying, 'Change everything', because the Windsor framework came at real pain, cost, and negotiation. So, understanding what those Northern Irish goods are is important, and whether, actually, the extra risk that is there is something that we nevertheless say that we will sign up to, because some evidence of what is happening is better than potentially none.

So, it's a real practical challenge, and it's far from perfect. I'm obviously having those conversations with not just my officials and Peter's team, but obviously with people in Lesley Griffiths's and Lynne Neagle's departments, because Lynne is the lead Minister on food standards.

You mentioned publishing a report then—what's the timeline for that publication?

Well, the UK Government are keen to publish and to do something this summer. It's complicated by the fact that the Scottish Parliament goes into recess at the end of June. Things are different in Scotland—aren't so many things? You can't always say, 'For Wales, see Scotland.' So, actually, wanting something that the Scottish Government, the UK Government and the Welsh Government agree—but if and when we do get to doing something, then I'd want to be clear about not just the choice we've made, but to be able to make available a summary of the advice we've had, to underpin the choices that we'll make, but this is another one of those choices where there is no perfect choice to make. The perfect choice you'd make would be, you've got a greater line of sight on what's happening, whether that's animals, plants or food coming in. We don't have access to the same early-warning systems we had when we were part of the European Union and that's part of what increases the challenge, and it's a risk that depreciates over time. We don't yet have a veterinary agreement with the EU, so all those things would help to add to the level of confidence we can have.

You don't know this at this point, Sam—I know it's your ambition to have some of these challenges—but, regularly as a Minister in Government, you have to make choices where you don't get a good, shiny option; you get a less perfect option and a terrible option, and you still have to choose.

I appreciate that. Moving on to free ports, something that you'll be aware I've been a passionate advocate for, and I've spoken to you in the Chamber and privately on on a number of occasions. In your written evidence, you set out the next steps for Wales's two free ports. I was just wondering if you could give us an indication of timescales that you're anticipating to move these forward.

We would anticipate that designation would be around the spring for the final designation, because we're going through the detail of the business plans and what that then means in terms of the impact for devolved and non-devolved reliefs and support. There are some really practical challenges, then, about when those reliefs come into force. So, if there's more you need to do before you start all activities, what happens then. And again, to be clear on Luke Fletcher's challenge that has been part of our concern: is this really about growth or is it about dislocating economic activity and concentrating it in one area? So, that's broadly what we're working towards.

So that's spring of next year—spring of 2024.

Yes.

Helpful. So, obviously, there's been a lot of engagement with local authorities. I'm thinking of the Celtic Freeport bid, two local authorities are key stakeholders within that. What engagement have you had with the finance and local government Minister, given the input of local authorities and the cross-portfolio implications of free ports in these areas, be that transport, planning, for example? Who's leading those discussions within Welsh Government to co-ordinate the cross portfolio-isms of the free port?

My department is the lead department co-ordinating and working with this, but there are regular and really constructive conversations between officials and, indeed, as you'd expect, a really constructive and pragmatic working relationship with Rebecca Evans, because she's both got the interest from a local government point of view, but, obviously, the devolved taxes she has a definite interest in. So, Welsh Treasury have to understand and be part of all the conversations and any decisions that we make about either one of the free port consortia, what happens with devolved taxes, what that means for the overall ability to grow the economy, what that means for the overall ability to generate income, for us to then make choices here within the Government, and the Senedd at that, as well.

Myself and Rebecca have a definite interest, and obviously, climate change Ministers have an interest as well, because lots of what both free port bids say they want to do in terms of economic activity does rely on significant exploitation of our renewable energy potential as well.

So, in terms of the free ports, then, the good working towards the end of the free-port process between both UK and Welsh Government—and I note the great imagery of the First Minister and the Prime Minister at Holyhead when it was announced—is that being replicated, are you feeling, amongst other dual governmental projects? Has that been taken as a good practice and levered into other areas?

We regularly talk about the second half of the free-ports discussion and the way in which we practically work through growth deals as a marker of what should happen in conversation between the two Governments, but it's not even. So, I don't think you should hold your breath for future photo calls between the First Minister and the current Prime Minister. But it is a marker of what's possible when you take a genuinely pragmatic approach to what you can do to grow the economy, where there are definitely non-devolved levers as well as devolved ones that could and should make a difference.

Swansea bay city deal are going to be doing something on promoting an event in the Baglan Energy Park, where there's a really positive development to welcome—it's really good news. But, actually, Baglan Energy Park wouldn't have existed if this Government hadn't taken action when UK Ministers were significantly less than helpful. So, there are examples of, there's an endeavour, with the city deal, where you can say both Governments are part of supporting and enabling this work, but, actually, the wider picture is you might not be able to do that because we didn't have any pragmatic relationship on that issue, where people were jointly committed to doing practical things, to keep open the opportunities for development and benefit. So, it's uneven is the truth.

And the comments we heard about steel earlier is one of my frustrations, where, actually, I think we could and should do more. The conversation about what does the future of nuclear look like—Trawsfynydd and the opportunity for radioisotope generation and a research reactor. We've had lots of press releases and ministerial visits, we're actually developing something at risk there, and it's a key part of the north Wales growth deal, with cross-party support, but we've got to see practical measures taken. So, again, as well as having some stability in ministerial posts, I'd welcome the ability to then make some decisions.

So, just finally on free ports from me, Minister, I was just wondering if you could tell us how you are incorporating fair work and social partnership within the free ports, and what thought you'd given to how the workers' consultative fora will operate.

Well, as you know, fair work is a key plank of this Government's approach; it's entirely consistent with the future generations approach as well. So, it's part of what makes the free-port consortia, and the bidding process and the assessment process in Wales different to what happens in England. So, we will expect to see points around how, practically, each consortia will deliver fair work, and that will be part of our assessment, as you would expect. And the workers' consultative fora, I think there was some anxiety in calling it a workers' council—that's what it is, really, and it's terminology that businesses and trade unions understand; I don't quite understand the squeamishness about using the title. If you go to Airbus or to GE, large multinational, successful companies, they understand what a workers' council is, and they're not squeamish about it. But there we are. And actually, on that, we're still working with partners about how that will be constituted, the points around what agreement underpins it, around the membership, and of course, on the governance side, there'd be a trade union nominee. And so, we've got to think through what happens between the trade union nominee on the overarching board, and then the workers' council element of it, around the links between those, and there's a practical conversation to be had with both the trade union side as well as with the businesses and other interests around that too. So, I'm not anticipating there being a big problem, because this is an area of work that, as I say, businesses are used to and expect to deal with when delivering here in Wales.

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

Diolch, Gadeirydd. Coming back to Sam's first question on free ports around the next steps in implementing some of these bids, I'd be really interested to understand what sort of work the Government have done in fact checking and assessing some of the claims made by the free-port bids in the process.

We'll be publishing a decision note that sets out some of what happened and the assessment of both Welsh Government officials as well as UK Government officials and then the ministerial choices. And the challenge always is that, when you say there's a potential to generate X number of jobs, to be fair, if you were generating the sorts of jobs that are available in the renewable sector in advanced manufacturing, then those would be jobs that would be well above the real living wage—they're supposed to be good jobs in the sector. So, that isn't a difficult claim to make. This next stage, that's going through the detail of some of the claims made about where and how you get the job creation, what that looks like. And it does rely on other investment choices being made. So, I was talking earlier about the port of Milford Haven; there are opportunities to invest there. If you don't invest there, in the scale that is required, then you potentially don't generate the jobs benefit that you would otherwise see that is part of the free-port bid.

So, think of this as a practical example: Erebus is 100 MW, a handful—I think it's seven—of floating wind platforms, which have been consented, and they're going to be delivered. They want to do their work, lots of it, from the port of Milford Haven. If they could invest in developing portside, there will be more jobs that will go there, and you could actually construct the platforms there as well, which is what we want to see happen. And it's not just Pembrokeshire Members, but what we collectively in Wales want to see happen. It isn’t guaranteed you have to do that, though. So, in Scotland they have a demonstrator project where they have constructed those platforms and towed them from the port of Rotterdam. Great news for the port of Rotterdam; not great news for the economic benefits to be delivered.

Actually, so, the choices that are made in UK Government support in some of this are actually really important to unlocking the potential benefit from the free port, and some of that is in the acceleration of opportunities that do exist. It forced people to come together with some pace, and I think that is helpful. You’ve then, though, still got to see through those other choices around the free port, and, like I say, there is a real and long-term consequence for not doing that. Because if you get your supply chains delivered, if you get all of the infrastructure delivered to create these platforms in other parts of Europe, and there’s certainty around that, and we in the UK—and particularly the Welsh opportunities in both west and north-west Wales—don’t get that done, then some of the benefit leaks, and those are jobs that are permanently somewhere else. If you’re a politician in Rotterdam in the Netherlands, you’d be celebrating the fact that that’s there, and you’ll be advertising that to the sector that is looking to develop and decide where to invest. So, there are real choices to be made in this next immediate period, well before any general election takes place, that will be real and consequential—potentially positive, and potentially not so.

Specifically on job creation, then, because I think the bids here promised quite a lot to very low-income communities, essentially—. What was it? The Celtic free-port bid said they could create upwards of 20,000 jobs. What I'm trying to get at is what did the Government actually do to assess, say, that particular figure, and whether or not actually there was concrete evidence behind the creation of those 20,000 jobs.

Well, the headline figure does go through, and actually the official who’s the lead on this is one of my deputy directors and so has gone through the detail of this. When the decision comes, there’s a bit more about it, but actually you’ve got to go through and then you’ve got to take it in those broad areas. What are you looking to do? So, you’ve got to look at what is the potential offer for advanced manufacturing, what is the potential offer on whether you can deliver some of the manufacturing of platforms. You’ve then got to go through the detail of that in this next stage.

So, with the headline bids, we have never said, ‘We guarantee all these jobs will be created’, but if you can deliver the activity that is proposed, then there is obvious potential to deliver high numbers of good jobs. And if you’re delivering advanced manufacturing within this area, whether it’s Port Talbot, whether it’s Milford or if you’re talking about activity on the island, on Ynys Môn, then you’re talking about access to generally good jobs. So, I don’t think that part of the offer is not a fair one. The challenge is the granularity, and some of that comes in this next stage and in the delivery phase, as well.

So, I’m trying to be honest about this—from the headline and our broad assessment of whether there is a significant jobs impact, without saying that the Government has signed up to agreeing and supporting every single part of the deal, whatever that might be, to then work through the detail to see where and how, of what does the delivery look like, how much risk is there, what can we expect, what do we then tie in with the support we’re prepared to provide, and not just the seed funding, but the devolved reliefs as well as the non-devolved support. And what does that then look like in terms of growth from the economy as well? So, that’s an active conversation that’s taking place now through this next phase.

Granted, the Government never guaranteed x amount of jobs being created, but it was happy enough to parrot those lines in talking about free-port bids, and how much they were saying they were going to create. I mean, the reason I'm asking this—

That isn't true, Luke. I didn't say—

In the statement you made to the Senedd, you repeated the claim that a Celtic free-port bid would create 20,000 jobs.

'Could', not 'would'.

Okay, it was 'could', but you still repeated that claim, and the reason I'm asking these questions is because there's been some analysis in the Financial Times by Peter Foster that has basically said that there's no concrete evidence between any of the data that was put out by the free ports, and that they were all essentially back-of-envelope calculations. So, I'm just trying to gauge here what exactly is going to happen in this process, because a lot has been promised to the communities where these free ports are going to be set up. Are we in a position now where, yet again, they've been promised the world and nothing's going to come as a result of it?

Look, I understand why, particularly in some of these communities, the promises of levelling up, the promises of 'there's a much brighter future that's coming', there is some cynicism on whether it's real. But that's why this next, detailed phase really does matter. The detail and the granularity in the plans, what it requires for the investment and, you know, the visibility of the scale of construction that needs to take place—so, the jobs in the construction phase, as well as, then, the permanency of those jobs—. The pipeline of activity in the Celtic sea is really important for delivering those jobs. It's part of the reason why, when we talk about this, we regularly talk about not just decarbonising power supply, but you've got to then capture the economic opportunities around that as well. That's very much my interest, and that is why, as I say, the detail of what happens now, what happens in terms of those devolved tax reliefs, will be really important, and we'll then have a much better idea of our expectation on job creation and the level of it as well.

To be fair, it is perfectly reasonable for you to ask questions and say that you're interested in seeing more detail on this, not just about what's happened at the outset but when we get to next stage, and, if we're going to approve and go through the final stage of these, how much confidence people can have. So, I won't try to suggest that it's wrong to ask questions. It's perfectly reasonable for you ask those and perfectly reasonable to expect the Government, as we're getting to that decision phase that will come up, about whether the consortia do proceed through, to say what certainty we have, how that's going to be measured and what you can expect to see if you live in or around one of these communities.

Thank you, Minister. One final question. I have been consistent in my criticism of free ports—

I know you're a sceptic.

—so I imagine, when the Chair called me, you were expecting some questions that were going to, potentially, delve a bit more into the process. I'm just wondering, because it doesn't fill me with confidence when we see what goes on in places like Teesside, for example, where there are allegations of potential corruption and wrongdoing, what sort of lessons the Welsh Government could learn from there as well, in terms of putting in solid governance structures within the Welsh free ports to ensure that something like this couldn't happen in Wales.

Well, I think you can have a great deal more confidence about what is happening here. Apart from anything else—the allegations around the mayor of Teesside and what's been said in the House of Commons about industrial-scale corruption—we haven't sold land at a pound a pop; you know, that isn't what we've done at all. We haven't taken on board the public cost of all of the remediation and then given away the benefit. You aren't seeing dividends going out to the private sector for people who haven't put their own money in. This is a process that involves a number of people from the private sector who are visible. It involves building on assets that we already have within our ports and it involves us understanding, if we are going to put in devolved tax reliefs, what do we get from that.

The other thing that I think people should take real confidence in is the governance structures that are set out and written down about the fact that you will have a range of partners around the board and you will have a works council in operation. You will be able to test and understand, because trade unions are never afraid to say if they think that there is a problem with the way employers are behaving. Also, you'll have direct scrutiny here from Ministers as well. You won't find out that a secret deal has been struck months after the event, and I expect this committee will take an interest. We know our Public Accounts and Public Administration Committee here is certainly not shy about coming forward if it's got concerns about how Government money is being spent, and I think that's a good thing. Part of the strength of what we're able to do is the fact that there is real scrutiny here in the Senedd, and that is a definite strength of what we're able to do to give you some certainty that what is happening on Teesside isn't going to happen here. You don't just need to rely on my assurances; you'll see that as we go through.

Diolch, Luke. I'm afraid that time has beaten us, so our session has come to an end. Thank you, Minister, and your team, for giving up your time to be with us here today. A copy of today's transcript, obviously, will be sent to you in due course, so if there are any issues with that, then please let us know. Once again, thank you very much. We'll now take a short break to prepare for the next session.

Welcome back this meeting of the Economy, Trade and Rural Affairs at the Senedd. We'll move on now to item 4 on our agenda, which is the general ministerial scrutiny of the work of the Minister for Rural Affairs and North Wales, and Trefnydd. May I welcome the Minister and her team to this session? Before we move straight into questions, may I ask her and her team to introduce themselves for the record? Minister.

Thank you. Lesley Griffths, Minister for Rural Affairs and North Wales, and Trefnydd. On my right is Richard Irvine, Chief Veterinary Officer for Wales, and on my left is Gian Marco Currado, director for rural affairs.

Thank you very much indeed for those introductions, and perhaps I can just kick off this session with some questions. Can I just, first of all, ask you, Minister, has your ambition or focus of the sustainable farming scheme been altered following development of the payment scales and associated economic analysis?

Well, we're currently still in the co-design phase of the sustainable farming scheme. We have, obviously, done a significant amount of evidence gathering and analysis. We've been working with a variety of working groups. We've had some modelling undertaken by the environment and rural affairs monitoring and modelling programme. We've also had some economic evidence and analysis undertaken by the Agricultural Development and Advisory Service. And what we're doing is using the evidence that's been gathered and the analysis that's been gathered as we're going through the co-design of the scheme, but also looking at payments. We need to refine and develop the range of likely actions that are going to be required, the interventions that are going to be required. We need to look at the impact of all these and, as you know, I will go out to final consultation by the end of this year, but there's still a lot of work being undertaken.

You mentioned the co-design phase. Have you consulted the co-design group on these payment scales?

Yes, absolutely, and I think what they have—. If I've got one big take-out from that group, it's the fact that, if we want as many farmers to be part of the scheme, which we do, we need to make sure that the payment scales are correct, because, clearly, they will want to know what the payment scales are before they come into it. So, I think we absolutely need to listen to what the working group is taking—. But that's my big take from that.

Obviously, the Agriculture (Wales) Bill is currently going through its passage through the Senedd, so I think what we will do is the same as we did with that, with our stakeholders, and developing the regulatory impact assessment that accompanied the agriculture Bill. We'll do the same with the sustainable farming scheme.

Now, if the sustainable farming scheme is found not to be a workable model for common land farming, will you look to develop an alternative scheme for common land farmers?

We will certainly have to take a different approach if we find it doesn't work. We've got so much common land in Wales, so it's really important that we work with that group. One of the working groups for SFS is, indeed, a common land working group. I think, in particular, it's really important, if you look at the proposed three levels for SFS, that those levels—those tiers, not levels—those tiers are correct for farmers who farm on common land, particularly the collaborative level. That's one of the things that has come out of the working group, as well.

So, would it be a different scheme? There definitely would have to be different approach, I think, if we found it didn't work, but, hopefully—. At the moment, it's too early to confirm what that support would look like, but we are certainly working with that sector of the agricultural sector to make sure that we get it right.

So, if you do develop a different approach, perhaps, rather than a different scheme, would this be ready before you intend to phase out the basic payment scheme payments?

It would have to be, I think. We've said all along there mustn't be a cliff edge. It's too early to say what the design of the scheme is going to be, because we've still got—where are we now? June. So, we've still got quite a few months' work ahead of going out to consultation. It is too early to say. But I've said it many times, I said it in the Chamber yesterday at the Report Stage of the agricultural Bill, it's got to work for every farmer, every type of farmer in every part of Wales.

Okay. I'll now bring in Sam Kurtz. Sam.

Diolch, Cadeirydd. Minister, firstly, thank you for attending the future food and farming event in the Senedd yesterday evening. One of NFU Cymru's future generation farmers who spoke, Carys Jones, mentioned this cliff edge of BPS payments coming to an end and uncertainty around that future. Can you give some certainty to those farmers that what they're looking at is not a cliff edge? Because the words that are coming out from the industry that I'm hearing are that some of the Glastir funding that's running now is going to be directly in opposition to what the new sustainable farming scheme is looking like. There's concern that, 'Well, I'm going to set up and be involved in this scheme. Come 2025, it's going to be a completely different scheme.' The example that was given to me was a hedgerow that had been replanted that would then potentially need to be replanted again. There just doesn't seem to be a commonality with Glastir, moving forward, and there's that uncertainty.

I think we need to be very, very clear: the world's changed. It's very hard to give certainty in very, very uncertain times. The only way we could have had that certainty that I think farmers, particularly, are talking about is to have stayed in the European Union. We knew every year how much funding was going to land in my portfolio to go straight out in the basic payment scheme. That world has changed completely. EU funding is coming to an end this year, and everybody needs to remember that, and, obviously, Glastir fits in that as well, and I've extended and extended it.

It's very complex trying to decide what to do after Glastir ends at the end of this year. I'm awaiting advice from officials. That's currently a major piece of work that is being undertaken by officials. I do hope to get that advice soon, because we're in the middle of June now—

I was going to ask on the timetable.

—aren't we? If I say 'imminent'—[Laughter.]

Pre shows would be good, I'm sure.

Everything's pre show at the moment. [Laughter.] Everything's pre Royal Welsh Show. But, seriously, I do need to make that decision. But the uncertainty for me is that I don't know what my budget is. It would be great to have—. If you look at rural development programme funding, seven years of funding plus three—you know, 10 years of funding that you were absolutely assured of having. That's gone. So, from a UK Government that gives us, usually, annual budgets, that's really hard, and I absolutely understand the uncertainty that farmers feel. It’s a long-term—we discussed this yesterday in the Chamber—it’s a long-term sector; long-term planning is needed, but it’s really difficult to give that certainty. What I can say is that I will do my very best—and I’ve said this all along—that we won’t have that cliff edge. So, if you think our major scheme is going to be the sustainable farming scheme, that will absolutely be ready to go by the time BPS finishes. And the extension of BPS was to try and provide some certainty to our farmers in very, very uncertain times.

So, while I sympathise, let’s have a reality check here: the world has changed; EU funding is finishing this year. Our budgets are very constrained by what the UK Government—. Agricultural funding—. And I think it was at the event last night—which you sponsored, which was excellent—I think it was the president who said from the platform that the UK Government had promised to ring-fence agriculture funding, and the Welsh Government, well, that’s only ring-fenced for—I’m on about the UK Government now—for that current term. If the next UK Government doesn’t ring-fence the money for Welsh Government, that’s really difficult for me, or my successors, to be sitting around that Cabinet table arguing for funding, because I mean, Aled was talking about inflation, and I absolutely get it, but the reality is that life has changed.

Okay. Sticking with the SFS, is 10 per cent coverage of tree planting still going to be a fundamental part of the SFS?

Yes, that will be a proposal, yes.

Okay. On what evidence is that being brought forward; on what basis?

Well, obviously, that has been in the mix, if you like, for quite a while, and that was part of our requirements to reduce our carbon emissions. So, we all know we haven’t planted enough trees, and I hold my hands up; it was in my portfolio, and we didn’t plant enough trees. We need to plant more trees. Farmers are absolutely the right people to help us achieve the targets that we’ve set for new woodland.

It was at this time last year at the show, it was a big thing, and there was a lot of interest in it. I think that’s waned a little bit. I think people absolutely accept—. Because what we have said, and maybe we didn’t make this clear enough last year, is that if you can’t plant 10 per cent trees, if you really can’t, if you’re in Pembrokeshire on the coast, or Anglesey, and you really can’t, then we don’t want you planting wrong trees in wrong places. So, maybe we weren’t clear enough last year, but, yes, that certainly will be a proposal.

So, are hedgerows being counted in that 10 per cent coverage?

We’re having a look at that, because obviously we've got the habitats as well, but hedgerows is, yes.

Okay. Yes, and then just on that, you mentioned the sort of cliff-top farms of Pembrokeshire; it wouldn’t be possible to grow that. So, does that mean that a finance scheme is unavailable for those farms, if they can’t comply with the 10 per cent tree coverage?

No, if they can’t comply because of the reason that they really can’t plant trees, no, we will have to look at—

There’s going to be another avenue for them to access it.

Yes.

Okay.

So, as I say, there’s lots of consultation still to have, there’s lots of co-design; the working groups will continue. I was talking to officials on Monday; we had a sort of, 'This is where we are the moment.' I think we could even look to be bringing some different working groups in; it might be, from discussions, that we’ll need different working groups to help us as well.

Fab. Just moving on to national minimum standards, just an update on the consolidation of a regulatory baseline, and whether you think legislation is needed on that.

So, officials are still having a look to see if we do need primary powers. Obviously, the regulatory baseline is there, so it’s there, and that will be fine for the SFS. We don’t need anything new. Officials are looking to see if we do need legislation. Obviously, the legislative programme is very full at the moment. The First Minister will be making his annual statement on the legislative programme, so we are looking to see if it’s necessary to bring in further powers to appropriately regulate, I think, the sector. But that baseline is there now.

Okay, helpful. Thank you, Chair.

Thank you, Sam. I’ll now bring in Hefin David. Hefin.

Diolch, Cadeirydd. Can I ask the Minister if she's aware of The Mirror’s ‘Tame the Danger Dogs’ campaign? Keir Starmer’s given his support to the campaign, and Wayne David, the MP for Caerphilly, has been instrumental in developing and helping The Mirror in developing their asks. So, what they want is the overhaul of the Dangerous Dogs Act 1991—an urgent review of the law is needed—to enforce the rules to stop the illegal and irresponsible breeding and selling of dogs, and a public information campaign to promote the importance of responsible dog ownership and the need for training. Some of this obviously crosses into devolved responsibilities, so would she be willing to join with The Mirror and support the campaign, and would she be willing to have further dialogue about it if she hasn't already?

Thank you and I know this is something that you've got a particular interest in and we've had discussions around it. Just yesterday, Richard and I were discussing this because I’m very keen to see some improvements, and I don’t know about you, but in the press at the weekend, I read two very concerning articles about American bully XL dogs, so I’m very, very keen to do all I can.

I think that we've discussed previously that I’d written to the Home Office, because I don’t think the Dangerous Dogs Act is probably fit for purpose anymore. I think it would be very complex to change it, and I might bring Richard in, because as I say, we discussed it yesterday. Obviously, Welsh Government has got a real focus on responsible dog ownership. One of the things that Richard’s office will be doing at the Royal Welsh Show—. As you know, they have a little stand—that's probably too grand a word for it—a gazebo adjacent to the Welsh Government pavilion, and one of the main focuses of the Office of the Chief Veterinary Officer at the Royal Welsh Show will be responsible dog ownership. I think that’s where we need to be making some progress as well.

But I think, in general, yes, I am aware of the campaign. Yes, I’m very happy to continue those discussions with the UK Government, because most of the levers around this are reserved. I’ve had several meetings with Rob Taylor, the rural crime and wildlife commissioner—sorry, co-ordinator; I keep promoting him to a commissioner—co-ordinator, who is very, very concerned that the police don’t have the necessary tools in relation to current legislation to deal with some of the issues that we are seeing. We’ve seen far too many fatalities—far too many dog attacks. I really do think the UK Government should be looking at the legislation. Unfortunately, they’re not prepared to do so at the moment, but it is something that I’m very happy to pursue and I’ve asked Richard to do that. But I will bring Richard in, because we did have a conversation about this yesterday.

Diolch, Minister. Well, you framed it very succinctly. I'll try to add some other areas just to bring a little bit of extra colour for the benefit of colleagues. As you rightly say, the Dangerous Dogs Act is UK Government-reserved, and I share the Minister’s concern with regard to the fitness for purpose of that legislation.

One of the elements that we’re working on from Welsh Government, in concert with colleagues in England, is the responsible dog ownership working group. That working group will be reporting later this year or early next, and that is going to be a fundamental part of understanding the evidence base, but also the next steps.

As the Minister has rightly said, my team are working closely with colleagues in the Department for Environment, Food and Rural Affairs and other parts of GB administrations on this topic. We all recognise the importance of it, and responsible dog ownership, in concert with responsible animal ownership, is absolutely fundamental from the point of view of, not only dealing with dog attacks, but other facets such as livestock worrying and the like.

Breeding elements are a facet of this too, so we are working in my team, in OCVO, on short, medium and long-term actions here. And as the Minister has rightly highlighted, multi-agency action on the ground, co-ordinated, is one of the key facets from the point of view of dealing with the real-world realities of dogs that may be out of control and that can cause injury and indeed, tragically, fatalities.

The final thing I’d say to the committee is that we all recognise the concern around certain breeds and the Dangerous Dogs Act, in terms of its principles, may seem to be a vehicle, but, unfortunately, where it’s difficult to define a breed, and particularly with some of those that we’re seeing associated with injuries and fatalities, that inability to discretely define the breed is a limitation.

But it’s a key area of concern; it’s a key area of activity, and as the Minister has highlighted, not only for Welsh Government, but working with UK Government and other administrations. And we look forward to the responsible dog ownership working group reporting, but they are also taking action right now from the point of view of education and, again, encouraging that multi-agency action, putting the tools in the hands of those who can enforce on the ground. But also, as I say, education is a key facet too.

I hope that helps provide some extra colour for the committee, but I'm happy to take any further questions.

Well, from both yourself, Richard, and the Minister, that’s very comprehensive, and I think what I'd like to do is have a look through the transcript and perhaps come back to you outside of this meeting with some views, and maybe a further discussion, but I really appreciate the detail of the answer.

I don’t want to test the Chair’s patience any further, so I’m going back to my area of questioning. Just taking a swift turn, the new Clwydian Range and Dee Valley national park, I'd like to know how the various reviews into national parks in recent years have been considered in the development of the new national park, and in particular the status of the Sandford principle.

Thank you. This came into my portfolio. As you know, this was one of our manifesto commitments and has gone into the programme for government. Natural Resources Wales is leading the work, as the legal designating authority. Welsh Government Ministers' role, really, is just confined to agreeing or rejecting a designation order from NRW, but I think this is really exciting, the proposal to have a new national park in north-east Wales.

So, at the moment, I meet bimonthly with NRW to make sure that everything's on track for this term of Government, and at the moment, they're carrying out the very complex background work. I hadn't realised how difficult it was, really, to wade through all the current existing legislation and looking at the statutory purposes that are required to have a new national park, around conservation and access, for instance. They're reviewing the existing designation guidance as part of the work. One thing I’m really clear on is that public engagement is very important, so that will be—. Everything happens at the Royal Welsh Show, doesn’t it? NRW will be there and people will be able to discuss with NRW officers the new national park proposals.

Sustainable management of national resources principles are absolutely embedded in the designation of having a new national park. Probably, this will take the full term of this Government. We're into year three now. I'd be very surprised if this work wasn’t completed before year five, really, of this term of Government. But it's very exciting, and certainly in north-east Wales, which as you know I represent, in Wrexham, it is something that's of huge interest to the general public.

I think I've taken up quite a lot of time, there, Chair, so I’m going to stop at that point.

Thank you, Hefin. I'll now bring in Sarah Murphy. Sarah.

Thank you very much, Chair. Thank you, Minister. Thank you for being here today. I'm going to ask some questions about the rural development programme. So, Audit Wales's recent report states that there is £58 million of the RDP grant left to spend by the end of 2023. Do you think that that will be spent?

You will have heard my exchange with Sam Kurtz last week during my oral question session. As you say, there is just around—well, it's a bit under 10 per cent now of funding still to be spent. That funding has to be spent by 31 December this year, when EU funding finishes. I've fully committed that funding. In fact, I've overcommitted by £28 million, of which £14 million is EU funding and the other £14 million is domestic, with the aim of ensuring that every penny is spent, because that's what we absolutely want. We've learnt lessons from previous years where there is always an underspend in RDP funding. So, I hope I made it very clear. I've done everything I can do. It's now over to the beneficiaries. In order to get that money, they've told us they can spend that money, so they need to do that now. I've done all I can do. They need to make sure that they deliver on the plans and on the timescales that they've committed to.

You'll be aware of the recent audit report. I think the audit report accepted that there have been challenges, if you think about Brexit, so a lot of the beneficiaries perhaps haven't been able to spend the money as quickly as they would have anticipated if COVID hadn't come along. The report also highlighted the excellent work my officials have done to try and ensure that all that money is spent. What is really important is that if any of the beneficiaries have any concerns, they come to us quickly. So, at the moment—. We're in June now, aren't we? So, really, they should have the plan to spend all that funding. But if they've got any concerns, come to officials, officials will work with you. It's an incredibly difficult time now for officials. It's very intense work to make sure that money is spent. So, if you've got any issues, please come to us, and officials will work with you to do so.

So, 90 per cent of the whole programme funding has been spent. So, I think that's brilliant. But we do need to make sure—I don't want to send any money back, and I don't want any money not to be spent. So, that overcommitted money is, really, to make sure that we don't have any underspend.

Sorry, Sarah, just before you go on, I think, Sam, you just want to come in very, very briefly on this.

Yes, I was just wondering if you would be willing to publish a full list of those projects and beneficiaries, and the values they've received.

So, in the oral question session last week, one of your colleagues, James Evans, asked if I could, and I said I would look into it. So, I have looked into it, and apparently, it is public knowledge. I thought it probably would be public knowledge, and there's something called the—I've got to get this right now—'common agricultural policy beneficiary database'. So, I will be writing to Members pointing this out, and I'll put a letter in the library. But there is a link that's easily accessible, a website, sorry, and I think it's 'CAP beneficiary database', and all the projects are there for everybody to see. So, I'm very happy—. Well, I won't be publishing it, it's already there, but I will draw it to the attention of Members, Chair.

Yes, that will be very useful, thank you very much. Sarah.

Thank you very much. And just to follow on, then, as you said, there are only six months left to spend this grant. How are you making sure that, as well as, like you said, being there to give that support, you are guarding against the risk that, in the rush, maybe, to make sure that it is spent, the checks and oversights will not become relaxed, I suppose?

Yes, absolutely. So, officials have been doing this for a long time, and, I think, if you look at Welsh Government's track record, it's exemplary. We've got the lowest level of disallowance right across the UK, and I think we've had that several years on the run. So, we've got very robust controls in place, so officials will make sure that they remain. Every claim that comes in now has to be carefully considered to make sure the money is being spent in the appropriate way, in the correct way, and on the correct things. So, that compliance with scheme rules and still, obviously, the European Commission regulations, is there. So, as I say, if you look at our record, we've got an exemplar record. I don't see why anything would be any different as we approach the end of the programme.

Okay, thank you very much. The Audit Wales report highlights a lack of staff, though, for the RDP administration. Do you think this could limit the ability of staff to retain a full audit trail for the required checks and audits on expenditure after the programme end date?

We've made great strides to try and get more officials into Rural Payments Wales. If you look at my very large department, the majority—probably the majority—of officials do work in RPW. I forget how many—

It's around 350.

Yes, around 350 of my whole department is in RPW. We've taken 15 new—. Obviously, staffing isn't for me; I should be very clear as Minister. Staffing is for the Permanent Secretary, and I'll bring Gian Marco in to say a bit more about staffing, if needed. But I know we've just brought 15 new members of staff in, I think they're all on two-year contracts—they're going through the checks, I think, though, at the moment, but they'll be taking up post. But it is a big—. It's a very resource-intensive department, as you can imagine. But as I say, the staffing of it isn't a matter for me, but I don't know if Gian Marco can say any more.

I'm happy to add, Chair, if it's helpful. So, it is a large workforce. It's a workforce that is under a lot of pressure at the moment. It is an unprecedented period in the sense that we've got, obviously, the rural development programme coming to an end, and all the pressures that the Minister has talked about. We're also in the middle of delivering a suite of rural investment schemes that, again, the Minister announced last year, and, obviously, there's all the work to look at how we will operationalise the sustainable farming scheme in 2025, which, clearly, RPW is leading. So, it is an unprecedented moment of pressure.

We review the pressures all the time, but what we have done is basically twofold. We've taken measures to stabilise the existing workforce, including, where necessary, extending contracts, et cetera, to cover this period, and, then, as the Minister said, we've literally just completed an external recruitment campaign for 15 additional people who are going through the checks. So, I think, overall, in coming back to the question you asked previously, we're confident that we can do the processing, but also do the checks and ensure that we've got the audit trail that we need to comply with European Union rules.

That's fantastic, thank you. And you actually answered my next question, so that's wonderful. And if I could ask, what are the lessons learnt from the RDP to be taken forward through into the SFS?

Absolutely. There are always lessons that you can learn from anything, and as you say, we can take them through to the SFS. We're also going to do an evaluation of our RDP probably next year. But, as I say, because any funding model going forward is going to be so different, because this is seven plus three years—so, I think it's highly unlikely we'll ever see that kind of funding again, and really, you do need that multi-annual approach, really, to funding. You know how quickly a year goes. If you're setting something up on an annual funding basis, it whizzes by and it's really difficult. So, I think we do need to look at lessons, but it will be quite hard to take some of them over in the way that perhaps we would want to. But there will be a post evaluation done in 2024 of that.

I think we've done quite a few scheme evaluations as we've been going along, and they've been very well received. So, there are lots of lessons I think we can learn.

Thank you very much. Finally, there's six months before Glastir contracts end, Minister, and your evidence paper says that a decision is yet to be made on the agri-environment support from December 2023. So, is there a risk of a cliff edge in terms of agri-environment support at the end of 2023? And any details of the barriers to that support would be welcome. Thank you.

So, as I said in my earlier answer to Sam, I really want to make a decision before the Royal Welsh Show, which is in about four or five weeks. I know that officials are looking at getting that advice up to me imminently. I don't want a cliff edge; I've been saying I don't want a cliff edge, and I really don't want to have that. I know we've extended the contract twice. We've extended Glastir—

Several times.

Yes. And we've done that to try and provide some certainty in very uncertain times. I think it's also that you don't want to throw the baby out with the bath water, and I think, what Sam said about if you're planting a hedge under Glastir, then you don't want to be ripping it out and planting it under the SFS. It's really important. So, it's very complex; I think it's fair to say that the advice is very complex. We've had a few discussions about where we think we need to go, and, of course, it's so important, isn't it, that we help farmers build that resilience into their business ahead of what's coming. We want to help them with schemes. If you look at the rural investment schemes that Gian Marco just referred to, what we're doing there is helping them reach net zero, helping them with sustainable land management, preparing them for the sustainable farming scheme. So, I think, imminent. That's the only thing I can say. Before the Royal Welsh Show—we'll just keep saying that.

Okay. Thank you very much, Minister. Thank you, Chair.

Okay. Thanks, Sarah. I'll now bring back Sam Kurtz. Sam.

Thank you very much, Chair. Just moving on to control of agricultural pollution, Minister, I was just wondering if you could give the time frame for announcing the implementation of the new 250 kg per hectare licensing scheme. And, given that you've not wanted to extend the implementation of the 170 kg for a third time, what's happening here in terms of deadlines and time frames around this?

So, I wasn't aware that I had decided to have a licensing scheme. As you know, we've been out to consultation and we're currently considering that. So, I haven't confirmed that we're having a licensing scheme—

That's the comms from the co-operation agreement with Plaid Cymru, I think.

As you know, I'm working with Plaid Cymru as part of the co-operation agreement around the water resources control of agricultural—

So, those discussions are ongoing then, Minister.

Those discussions are ongoing. I met last week with the designated Member Cefin Campbell and shared the advice that I've had with Plaid Cymru, and we're looking at that, and I think it's fair to say we need to make that decision before the Royal Welsh Show as well, because I think it is important to do that. No, I don't want to extend again; we have extended that one regulation. We're still seeing a number of substantiated pollution incidents—I've got the figures somewhere—and it's still too many. We all accept the detrimental impact it's having on our environment. So, it is really important that we do that. I'm fully aware that the sector want to know and need to know, and absolutely understand that, and, as I say, working with Plaid Cymru, we'll be bringing that announcement forward.

The consultation was very clear. Certainly, there was support for a licensing scheme. It's really important we work with the sector, to make sure that we reduce those numbers of agricultural pollution incidents. I don't think we can ignore the impact on the environment—we've seen far too many and we need to take that action. But we need to take time to get it right, and I think, certainly, Plaid Cymru agree with me on that. Obviously, I can't pre-empt what the announcement will be in committee today, but I absolutely accept we need to do it before the show.

Just on the most recent postponement, then, of the implementation, there was a little bit of a perception within the industry, from the comms coming out of the Welsh Government, that the whole regs, as they were, were being delayed, rather than just the specific point. I can see Gian Marco and you nodding along there. Is that something that you've learned now, for when announcing future schemes, how to be clear and concise—because this is such a wholesale change to the agricultural community—about being right and articulate with the information, and specific, to avoid any unnecessary concern for the ag industry?

I agree with you. I think, at the same time, I did make it very clear that, if anybody was concerned about it or if there was any confusion, help is available. I always say about Farming Connect, because, for me, Farming Connect is the go-to place for our farmers here in Wales. So, please, if you are concerned about any of the regulations, go there.

But you're right, we do need to clarify as best we can. It was just that one regulation, and, as I say, I don't want to extend it. We've extended it to 31 October. It's just that one measure, and I do not want to extend it again. In fairness, Plaid Cymru absolutely accept that as well. So, we do need to get that response to the consultation out as soon as possible, well before the new implementation date, so farmers are aware of what's required of them. We will continue to do that and, as I say, bring a decision forward before the Royal Welsh Show.

Fab. Thank you. Just sticking with that as well, and just hammering home the point around alternative measures, can you just outline again the Government's position on, should an alternative measure to these water regulations come forward, what process is there in place so that they don't need to comply specifically with the regs, but they're hitting the targets that are required, just through an alternative solution?

I've written to this committee, Chair, around proposals that came in, and what we took was a very pragmatic approach to considering the options in detail, rather than the package of measures that were set out in each proposal that came in. We did have a few proposals. It did lead to a much more complex assessment, I think it's fair to say. It was very time intense, but what officials were able to do was look at each component of each proposal, as they came through, to take forward work under a much wider range of activities, I think it's fair to say. So, we will continue to look. I set a time for those proposals to come in. That was for me, really, to make sure that I looked at, or officials looked on my behalf, all the proposals. But if any alternative measures still want to come in, we can look at them—I'm very happy to look at it. And certainly, the ones I went to see with Cefin at Gelli Aur—I'd been previously to see them—they've come on leaps and bounds. It was really impressive to see the significant work, so, hopefully, that work will continue and we will continue to have a look at alternative measures.

Can I just clarify that, then, Minister? Because, obviously, in your letter, I think you said that you would obviously review alternative technologies, for example, during the review of the regulations, and I think you intend to review these regulations in up to four years' time. Is that still the position?

Yes, that's still the position. I've just seen in my briefing note now: we had five proposals, and they've been looked at, but I think they're still continuing to be looked at.

In effect, as the five proposals stood, none of them, at the moment, would meet the test of the regulation, to provide the same or a better level of achieving the objectives. However, as the Minister said, for a number of them, there's some really interesting potential there. So, we will continue to work with those proposals, to see whether there may even be support that can be provided by the Welsh Government to help those develop further, and there may be others, as the Minister said, that might come in in the future that we will build into our review processes for the regulation. What we're trying to achieve here are the objectives of the regulation, which is to reduce water pollution to the environment. If there are better ways, using new technology, of achieving that than what we've set out in the regulation, we're always open to considering those and to looking at that.

But just to clarify again, then, because, obviously, in the letter, you suggest that you'd only introduce those alternative technologies when you're actually reviewing the regulations. But that's not the case, then—you would actually look at alternatives anyway.

On an ongoing basis, yes.

You would.

Yes. I think, realistically, timescales may be similar, just because of the speed at which some of these things can actually be developed and turned into deployable alternatives. So, yes, but, obviously, it depends on the availability and the suitability of those measures.

And with regard to reviewing the regulations, again, can I just be clear on this? When do you actually intend to review these regulations? Because you've said up to four years; am I right in therefore saying four years from when you actually introduced them, back in 2021?

Yes, because that would be 2025. Yes.

Right. So, what work are you doing now, then, at this stage, to review those regulations? Because 2025 isn't that far away.

No. Do you want to come in?

In many ways, the work that we've been doing as part of assessing the alternative measures is very much with that time frame in view. That's what I was trying to allude to, Chair—that two years is not a long time. So, even if some of the proposals that have been made to us develop rapidly over the course of the next few months, the reality I suspect in practice is that, by the time those can be considered fully, the timescales will probably fit quite nicely with the intended review of the regulations in 2025.

What happens after the intended review in 2025? Sorry, Chair, I've cut across. What happens after that? Because technology can accelerate or it can take its time to develop. Once these are reviewed and implemented fully, and after 2025, what then happens should an alternative measure come forward?

I would say that we would take a similar approach, in the sense that, clearly, if—. I'm going beyond the realms of speculation here, but let's say that, by 2025, the review concludes that, actually, the regulations as they stand are broadly okay, and that's what Ministers decide, it doesn't mean that the door shuts to developments at that point. The reviewing of regulations is ongoing in any case.

Because my focus is on the farming-by-calendar element, which, for me, intrinsically is the most contentious part of it, given the climate that we have here in Wales. That seems to be the part that could be solved most easily by technology—allowing the spreading of manure during those perceived closed periods, knowing that the rain doesn't always fall when we want it to, and it's not always dry when we want it to be. So, that would be the part that, I think, even after the regs have fully bedded in, could be the most contentious and could be changed quite easily if technology comes forward.

As Gian Marco said, this is ongoing. We've only extended the implementation date for one measure—the other regulations are going. I'm not saying they're being reviewed specifically, but because we've just been out to consultation, we're doing this piece of work now that we need to bring forward, either a scheme or not a scheme—. It's an ongoing process, really; I don't think you can pick one thing out. But if, as I said, colleagues—. And I'm picking that one out of the five, because that's the one I've got experience of and been to see. I'm trying to think when I previously went. It was probably three years, and, in three years, the technology had improved, not to the standard that would be ready to go, but if, in another three years it makes the same amount of progress, then one hopes you'd be able to use it. But it's just really important that we reduce the agricultural pollution that we've seen. Because that's what we want, that's what everybody wants—the industry wants it, we want it, and that's where we want to get to.

Excellent.

Back to you, Sam.

Thank you very much, Chair. Moving on to bovine TB, I was just wondering if you could outline plans for more stringent TB testing measures for cattle movement—what your plans are around that, and what's being done to mitigate the socioeconomic impact on cattle holders in Wales.

Yes, of course. As you know, we had a consultation on a refreshed approach to the TB eradication programme that ended last year. I waited to bring forward the statement until Richard came in post at the end of March, because obviously he's got a specific interest in TB, and I thought it was really important to get Richard's input into our refreshed programme. As you know, I did announce a number of changes to testing. So, we've got the reinstatement of pre-movement testing for cattle movement in the low-TB area whilst maintaining post-movement testing. We’ve got the introduction of farmer-paid post-movement testing for all cattle movements to holdings in the intermediate-TB areas from high-TB areas, the high-risk area of England and from Northern Ireland. And we’ve got the intermediate-TB area north—we’ve got a focus on there. The legislation change will make it a legal requirement for farmers not to move cattle between test day 1 and test day 2. As you know, we continue to pay compensation to businesses where animals are removed because of our TB testing policy, and we will continue to do that. It’s a statutory responsibility. What we really want to do is reduce TB incidence and prevalence. That’s what will help farmers the most.

And just moving on to a topic that I've raised with you previously and gathered quite a bit of interest around the human aspect of it, namely the culling of in-calf cows and heifers on farm and the distress that causes, I know in your TB statement you made reference to taking a look at that again. I was just wondering if you could update the committee on your views on it.

We did have a pilot. Richard's predecessor, Christianne Glossop, did that, and it didn't really take off, I think it's fair to say. So, when Richard came into post, I asked Richard to have another look at this, because as you say, it's incredibly distressing. I mean, it's distressing enough, isn't it, but the scenario you just described is even more distressing. So I have asked Richard to have a look at that as a piece of work. I don’t know, Richard, if you can give any update.

Yes, certainly, Minister. As you rightly say, this is an area that raises concern for keepers in that situation. Where we will take this from the point of view of the assessment of the policy is that once the technical advisory group that is part of the new TB governance arrangements that will be being brought in—. It will be a specific question that the technical advisory group will look at for us. So, as the Minister has highlighted, there was a pilot project, and there was also an assessment of evidence some years ago. But it's right that we relook at that evidence, and the technical advisory group, as part of the new governance arrangements, is exactly the forum in which to take this type of question.

Can I suggest, then, that it's not a binary choice between the culling of in-calf animals on farm or their removal, but it's the option given to farmers? Because I know, speaking to a vast majority, they're distraught seeing it happen, but there are some that understand, actually, 'This is the easiest way for me, within my compound, within my farm holding.' So, it's not put to the technical advisory group as a binary choice between the two.

No, I absolutely agree. When we had the pilot, the intention of that pilot was to try and work with the industry to find out what those choices would be. And you're right, it's not that one or that one, is it? It could be somewhere in the middle. So I think it is really important. Because what one farmer might want, another wouldn't. So you're absolutely right on that.

Excellent. You mentioned one pilot project. Just moving on to the Pembrokeshire pilot that went out for tender, I'm just wondering if you could give us an update on the progress of that procedure.

I don't have any information on that. I don't know if you have any further information.

As you rightly say, the invitation to tender has gone out, and naturally that entails, then, a review process of applicants, and that's where we're at in terms of the stage of progression. But things are moving forward, and once we have the evaluation phase completed for the tender applicants, then I'm hopeful that there will be the opportunity to announce a successful bid. But we must let the necessary process run through. This is public money, after all. We would want to ensure that taxpayers' money is being used effectively, and therefore we have that process. But I can provide assurance to the committee that it is progressing, and consequently, once the evaluation and necessary steps have been completed, appropriate announcements will be made. We look forward then to the Pembrokeshire project taking flight and learning from it.

So, are the aims of the initial group that co-ordinated and brought this forward—? Is that integral to this tender process or have the markers been moved somewhat, as to what was initially suggested by the Pembrokeshire pilot team, led by Abi Reader, your predecessor, who had involvement, and Roger Lewis, for example? Is what they were suggesting—? Does that make the fundamental basis of what that tender process was seeking from tenders?

Would you like me to respond, Minister?

Yes, please.

So, the tenets of the project are clearly specified in the invitation to tender. So, the basic tenets remain, but the detail is in that invitation-to-tender spec—specification, beg your pardon. Consequently, that's what any applicant who's interested to throw their hat in the ring, so to speak, will have had to meet, and that's also what the evaluation will be looking at, is against that invitation-to-tender specification. But the basic principles remain sound, and one of those key principles is partnership. I'm sure you will want to recognise and celebrate that, from the point of view of what is also in the new five-year TB delivery plan that the Minister alluded to a moment ago, which was announced at the end of March. Partnership is right through the middle of that, like a stick of rock; 'partnership' is there in the wording. This is what we want to see develop through the Pembrokeshire project as a test bed, if you will, using that principle, as well as the specific detail that the tender document sets out, and that, as I said, will be that against which any applicant will be assessed.

Fab. Because one of the key markers of the initial pilot project as it was brought forward was the use of the Enferplex test in diagnosing TB animals and at-risk TB animals. Just on the focus around compensation, is the Enferplex test on an approved list of testing regimes within Welsh Government to be compensated for, should an animal be removed?

So, Enferplex is an area where not just Welsh Government but other administrations are looking at the utility of that test. Naturally, with any test, we need to have evidence that it is appropriate in the setting in which it is being used. So, currently, we have our prescribed set of tests, and we'll continue to evaluate Enferplex from the point of view of the evidence that is available with regard to the wide-scale programme for TB eradication that we have in Wales.

As you know, we all share the goal of eradicating TB by 2041, and this is something that is a shared goal that we want to see—vets in practice, the Animal and Plant Health Agency and Welsh Government working in close partnership to achieve, with farmers, on a daily basis. It's through partnership, working together, by whatever testing regime, wherever you are in Wales, because, as you recognise, we have different levels of bovine TB in different parts of Wales, so we also have to ensure that we have the testing programmes that are associated with that disease level.

Excellent. There's a question on mandatory informed purchasing that I hope we can write to you on and seek, because I'm conscious of the time, your response on MIP, but, just finally, I note from the Farmers Guardian this week that Thérèse Coffey, your counterpart in the UK Government, has vowed that badger culling will continue. Then, there are statistics to show that the number of new herd incidents is decreasing by 7 per cent in England and the number of herd restrictions is decreasing by 16 per cent in England. I was just wondering what scientific basis the Welsh Government is using to not include a badger cull in its TB policy.

Well, as you know, it was a manifesto commitment on which my party was elected and it's in the programme for government. We have that commitment to forbid culling of badgers—certainly an England-style cull of badgers—as part of our TB control. The basis of that manifesto commitment was on science that was—. So, obviously, it was a previous term of Government. I saw nothing in the science that Richard's predecessor ever gave me that an England-style badger cull was the way to eradicate TB.

So, if you were presented with clear science that proved that it was, would that change the Government's perception?

Well, obviously it's a five-year—. It wouldn't change in this term of Government, because it was a manifesto commitment, and I think we all feel that we should deliver on our manifesto commitments; I certainly do. So, it certainly wouldn't change in this five-year term of Government that we're currently in, no.

But should scientific evidence come forward ahead of the next 2026 Senedd election that clearly demonstrated that specific culling of infected badgers did reduce the risk of TB incidents in herds in Wales, then the Welsh Government would look at implementing it.

Well, that would be for the next Government to decide.

Okay. Thank you.

Okay, thank you very much. I'll now bring in Vikki Howells. Vikki.

Thank you, Chair. Good morning, Minister.

Morning.

Just some questions from me on food policy, following Peter Fox's food Bill. I know that you've committed to publishing a cross-portfolio document for stakeholders that would summarise Welsh Government policies. Do you intend to go any further than that now, and to produce a national food strategy?

No. There won't be a national food strategy. There are no plans to do that, and obviously that was a focus of Peter Fox's Bill. However, there was definitely a perception that—I think that came through very strongly with the evidence that, certainly, this committee heard during the scrutiny sessions in relation to Peter's Bill—Welsh Government food policy wasn't joined up. I personally think it is, but it would be a very foolish Minister not to take note of what stakeholders' perceptions were. So, what we said we would do, during I think it was the general principles debate of Peter's Bill, was that we would look at all those cross-Government policies. It was something we had done already, as we were preparing for the community food strategy, but my plan was to bring all Ministers together and see what work was being undertaken across Government, and bring that forward in a document.

Things moved on then, and the First Minister then committed to chairing a cross-Government group of Ministers and officials, which took place a week yesterday, whatever that date was—13 June—and the First Minister chaired it. I'm trying to think. I think there were about eight Ministers and Deputy Ministers present, and it was fascinating to hear about the level of food policy work that was being undertaken. So, obviously, I've got responsibility for food and drink in my portfolio, but if you look at free school meals, for instance, the Minister for Education and the Welsh Language is involved. So, all that came together last week in the meeting. I think some of it we can put to use within the community food strategy, which, as you know, was a bit on hold while officials were dealing with the food Bill. Now that's done, the community food strategy work needs to be progressed, again, a manifesto commitment of ours, a programme for government commitment. So, we need to fulfil that and bring forward a community food strategy by the end of this term.

What I have committed to now—. So, what I've asked officials to do is for all those officials to bring forward those pieces of work across Government in one document that I can then share with colleagues, and, again, in my OAQ—sorry, OQ—session last Wednesday, I think it was Peter himself, actually, Peter Fox himself, that asked me when I would publish that. So, all the work will be brought forward together by the end of this term—so, three weeks. Over the summer, I've asked officials to prepare a document. I would hope to be able to publish that—I said at autumn, I think, in the Chamber, but, I think, realistically, before the end of 2023—to show the breadth of work that is being undertaken.

That's really useful. Thank you, Minister. So, just to clarify a few issues there, that cross-Government forum was a one-off meeting. It won't be ongoing then, is my understanding from that.

It was a one-off meeting—as I say, the FM chaired it—so, yes, certainly with the First Minister chairing it. What I probably will do—. It depends. I might do another one maybe later on. Let's see what comes together by the end of this term, get the document prepared, and if I feel there's a need for—. Officials do this work, and obviously that Minister will know what work is going on. If I think that we need to have a look at the work across Government, I'd be very happy—I probably wouldn't ask the First Minister to chair it again—I'd be very happy, to make sure that that work is joined up in a way that stakeholders didn't think it was, because, as I say, from the inside, it certainly appears to be joined up, but I absolutely take on board the perception that, from the outside, it isn't. And even I was genuinely very, very surprised—Gian Marco was there with me, and I'm sure he was as well—at the huge amount of work that's going on in relation to food policy.

Thank you. So, would it be fair to say that this is still a work in progress and you're open-minded as to what might arise from the forum and from the paper in the long term?

Yes, absolutely, and, as I say, certainly quite a bit of the work that's being done across Government, not just in my portfolio, we can use in the community food strategy. So, again, the community food strategy is part of the co-operation agreement with Plaid Cymru. I think it's fair to say—you know, the word 'community' is a bit of a clue there—it is a community food strategy; it's not for our large farming businesses or anything like that. What I want to see is from the bottom up, if you like. There is fantastic work going on right across Wales in our communities, and it would be good to capture that in the community food strategy. Some of the work that's being undertaken, particularly in the Minister for Social Justice's portfolio—. As you know, she's got responsibility for eliminating food poverty. So, some of the work that's going on in her portfolio will definitely fit into the community food strategy.

It is ongoing work. It won't be done this year. As I say, I hope to bring forward that document by the end of the year. The community food strategy is not going to be done this year. It's a programme for government commitment; it will be done before the end of this term of Government. But it is fascinating to see how much work is being done and just making sure that everybody knows what everybody's doing and we're not duplicating. I think that's really important. We haven't got the money to do duplication at the moment.

I hope that if any Members—. You know, you don't have to be a member of Government to come forward with any ideas. Our colleague Jenny Rathbone is very keen; Peter Fox's Bill—lots of ideas come from that that I know will fit into the community food strategy. So, we haven't got all the great ideas; I want to hear from other Members of the Senedd as well.

That's really helpful. Thank you, Minister, and I'm sure we'll all appreciate following this work as it unfolds. Thank you, Chair.

Thank you, Vikki. I'll now bring in Luke Fletcher. Luke.

Diolch, Gadeirydd. Moving on to the Retained EU Law (Revocation and Reform) Bill, I'm sure the highlight of your job at the moment—[Laughter.]

All the reasons I went into politics.

—I'm just wondering what conversations are you having or have you had with UK Ministers, given that the Bill itself will give them powers to, essentially, interfere in devolved matters.

'Lots' is the answer, and a great number of Ministers have been involved in the discussions. The Counsel General leads on this, but in every DEFRA inter-ministerial group this has been a standing item. I'm very pleased the UK Government listened to us, because we were banging on that they really needed to look at that sunset clause. It was just ridiculous to have that cliff edge, if you like, at the end of this year. I had to do a complete reprioritisation exercise of work that I needed and I wanted to be undertaken in my portfolio to allow officials to do this massive, massive piece of work. It was on a par—the level of work officials were having to do was on a par—with when we thought we were going to leave the EU with no—

Deal.

'Deal'—that's the word. When we thought we were going to leave with no deal. A huge piece of work. So, it's great now that we can reprioritise again and put people back on things that are important to me as a Minister and are important to Welsh Government. So, we're very pleased that the Bill doesn't seek to revoke all EU-derived subordinate legislation and retained EU law.

I want to make it very clear we do absolutely, fundamentally oppose the whole intent of the Bill. There are lots of powers in that Bill that mean a Minister of the Crown can make decisions in devolved areas without asking Welsh Ministers. It's absolutely appalling. So, lots of conversations have been going on, particularly at an official level, but at ministerial level as well. We've made our position very clear around the nature of the Bill, the timing of the Bill, as I said, and I am pleased they've moved that sunset clause. We're in regular contact, not just with the UK Government, but with our Scottish counterparts. Obviously, the Northern Ireland Executive at the moment—. I've had meetings with members of the House of Lords around this, and I know the Counsel General has too, who, as I say, is leading on it. But, real concerns around this Bill.

So, how do you see it affecting your ability to perhaps improve or maintain food and agricultural standards? Are you confident that you’ll be able to improve, for example, without any interference? How do you see it affecting?

So, again, when we came out of the European Union, I made it very clear that, for me, it’s unacceptable to lower our environmental standards, our animal health and welfare standards, and I think UK Government shared that ambition; they certainly said they did. I think if you look at some of the trade agreements, that is a matter of concern, because clearly, standards are not the same in other countries, so I do have concerns about food. But I think, ultimately, the UK Government share that ambition as well, and we’ve made it very clear that we wouldn’t want to see a reduction in that. So, I don’t feel that that is an issue for me at the moment.

So, confident, essentially, in the maintaining of standards—

Yes.

—but there's concern around if you were looking to improve those standards, then there might be some interference.

I think there could be, but you just have to deal with that on a case-by-case basis, really, and we've certainly made it very clear that we wouldn’t expect that level of interference.

Thank you. Great. Diolch.

Diolch, Luke. And we’ve come to the end of our session, so, thank you very much indeed for giving up your time to you and your team, Minister, for being with us today. 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 very much indeed.

Thank you.

Before we move on to item 5 on our agenda, I think it’s worth noting that as a committee, we will be undertaking visits to Anglesey and Builth Wells in July, and this will be the last formal meeting before the summer recess. The next formal meeting in this Senedd will be on 13 September.

We move on, therefore, 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 all Members content? I see that all Members are content. The motion therefore is agreed, and we move on to our private session.