Public Accounts and Public Administration Committee

Croeso. Welcome back to this morning's meeting of the Public Accounts and Public Administration Committee for our evidence session with Industry Wales. This will provide an opportunity for members of the committee to explore with Industry Wales the issues that they raised in their letter to this committee, which we noted during our meeting on 22 January. So, again, welcome to the witnesses. Rather than me identifying you, I'd be grateful if you could state your names and roles for the record, perhaps starting with the chief executive officer.

I'm Dr Jenifer Baxter, and I'm the CEO of Industry Wales.

Keith Ridgway, and I'm the chair of Industry Wales.

Thank you very much indeed. The meeting is held bilingually. Headsets provide simultaneous translation on channel 1 and sound amplification on channel 2. Obviously, we have Professor Ridgway taking part remotely. If you press the globe icon on your screen—

I think that's already been done, yes. It's in English.

It's all done, is it? That's great. Thank you very much indeed. I understand that you, like me, are hard of hearing, so if you want anything repeating, please just say so.

Thank you.

As convention has it, I'll start the questions as Chair, but all the Members will have some questions for you. I'd be grateful if you could start by describing, in your view, how the Welsh Government's oversight arrangements for Industry Wales, as one of its wholly owned companies, operated, and how these arrangements actually worked in practice.

Shall I start with that, and then we can maybe go to Keith, who will have more history? So, in terms of the way in which the Welsh Government oversee Industry Wales, they have an observer on our board, and so, with every board meeting we have, which is four official board meetings a year, and then the rest are shorter update meetings each month, they are invited to attend. They don't always attend, or they may send a substitute, so it just depends. They don't have any say exactly in what we do or how we make decisions on operations, but they're there so that we have a communication conduit between us and them to make sure that we're not going in different directions, basically. So, it's a fairly open conversation and it's a pretty good open relationship that we have in terms of discussions around the work that we do.

When it comes to remit setting, we've never had conventional key performance indicators. We've only ever had, 'Here is some work that we want you to do over the course of the next four years', much of which has been achieved. Over the last two years, during the time that I've been chief executive, we've gone back a few times to try and look at future remits, but because of the other elements that were happening in terms of the review process and the decisions that they had made around that, we didn't ever get to make any progress in terms of reviewing the remit itself as we went forward. When I came in as chief executive, I put in place an interim business plan for the two years to the end of this remit, and that's what we've been following in that time.

Okay. Thank you. Professor Ridgway, do you wish to add to that?

No, I think that's a very concise description. There are, obviously, the review reports that go in quarterly and so forth, and generally the minutes of everything—the meetings—are all available to the Welsh Government.

Okay. Thank you very much. On 12 February, in evidence to the committee, the Welsh Government said

'the world has shifted a lot since 2013',

when Industry Wales was first established. Was this changing landscape reflected in the Welsh Government's term of government remit letter for 2022-26, and, if so, how and to what extent? And was any need to change arrangements in this context flagged during the Welsh Government's oversight of Industry Wales prior to its review?

The short answer to that is 'no', and also, bearing in mind that I came into the role in March 2024, in good faith, I had no idea that within nine months there would be a review put in process to discuss the closure of Industry Wales. I would have expected that in that process of being employed, that we might have discussed the option that it may not be an organisation that was going to continue. And throughout that process of reporting back—and, as Keith says, we do have quarterly integrated reports that we produce for the Welsh Government, so that we receive grant payments—at no point during that process was that part of the discussion. So, the short answer is 'no'.

Thank you. Professor Ridgway.

I can confirm that the remit letter of March 2022 was business as usual in that respect. There were no changes.

Okay. Thank you for clarifying that. What action did the Welsh Government take following the Auditor General for Wales's qualification in December 2023 of his regularity opinion on your 2022-23 accounts, due to the failure to follow public procurement regulations? I note this is not connected to the decision to dissolve Industry Wales, but, nonetheless, perhaps it would help our understanding.

Just to clarify, 2022-23 or 2023-24? There was a qualified audit the year prior to me starting, where the main procurement issues were raised. As board members—because I was on the board at that time—we discovered this when the chief executive at the time told us that he'd been asked to put in place a procurement policy following the qualified audit at that time. I don't think that the Welsh Government had any involvement in that. The board itself said that we should be following Welsh Government procurement rules, and that was subsequently the policy that was put into place by the previous executive. Until the point that that was raised, the board had no idea that no procurement policy existed, partly because the board was not operational; it was strategic in terms of the direction of Industry Wales. In the following audit, which was disclaimed, that's a slightly different issue. There were some procurement processes that had happened from the previous year that fell into that year. So, they weren't made in that year, they were continuing from the previous procurement process, but the policy had already been put in place by that time.

Thank you. Just to clarify, it purely relates to the auditor general's qualification of December 2023, before you had taken over.

Yes. I can only tell you what I know from being a board member at that time. There was no interaction between the board and the Welsh Government on that particular issue.

Professor Ridgway, do you have anything to add?

Going back to the previous CEO, I think what he did was what he thought was the correct procedure. There was actually no policy in place, and he followed what he thought was the sensible procedure. It was a Welsh company delivering for a Welsh company. It was developing expertise in Wales, which I think was actually a good thing to have done. So, although it broke the policy that we eventually produced, I think it was done in good faith.

Okay. Thank you very much indeed. Can I bring Mike Hedges in, please?

Diolch, Cadeirydd. When did the Welsh Government inform you it was undertaking a review of Industry Wales, and what did you understand the purpose of that review to be?

January of 2025 was when we were informed that there was going to be a review. Prior to that, I'd had some minor conversations with my Welsh Government handler about some internal reviews that they were going to conduct, but it wasn't really clear before that what they were.

At the initial time, my understanding of the review was about how we were going to restructure in a slightly different way, because we have forums as subsidiary companies that are membership bodies for manufacturing and engineering companies. The idea behind it was how can we restructure, if you like, for the changing world and the way in which manufacturing is changing in Wales. It very quickly became clear to me—the official who was running the review called it 'a review to close Industry Wales'. So, that was a bit of a surprise to me at the time, and I actually went back to the Welsh Government handler and said, 'I'm a bit confused by this', and there was some commentary that they shouldn't have said that. But that sort of gives you an idea. From when it fell within the work year, that would have been part of that department's work programme for the year, so it would have been known that that was a discussion that they were going to have, which kind of brings me back to my previous point that it might have been nice to know that when I took the job.

You might not have taken the job. [Laughter.] Was it an appropriate time for the review, and what were they hoping to get out of the review upon closure?

We were given a time scale of six to eight weeks. The idea was that it would be finished before the end of that financial year, and I think, to be fair to them, they had mostly got through it. The idea was to do a market survey with their internal stakeholders and external stakeholders to understand Industry Wales and the role of the membership forums and the contribution that they make, and how we might then restructure or change the delivery around Industry Wales for the future. That was my understanding of what was happening. I think, as it progressed, the conversations changed slightly, and I certainly became quite, I suppose, downbeat. I knew where this was going quite quickly. Then, from spring time, when I had a discussion with the official running the review, and the review that they talked through then was slightly different to the one that was actually finally submitted, we heard nothing then for six months, until the decision. So, we were just left to wait and see.

I think the first indication was when Jen was at a meeting in mid August and somebody said then, 'Industry Wales will be closing'—the review had come to the conclusion that Industry Wales was to be closed. So, I had an e-mail from Jen on 17 August saying that that was the case, but that was the first we heard.

What opportunity did you have to engage with the Welsh Government's review through each stage of the process, and how did this happen?

I think that's a tricky question, because I don't know how many stages of the process there were. We had initial conversations—[Interruption.] I'm just making sure that you're all right.

Are you okay?

Yes.

I was interviewed as part of the process in spring 2025, but the review report and the findings have never been discussed with us.

I would say that I had a couple of discussions with the official running the review and put forward lots of different options and ideas and ways in which that might meet the demands of the future of manufacturing in Wales, and also, at the time, the industrial strategy that was coming out from central Government and how we might contribute to that. But I would say that, maybe, I only spoke to them a couple of times and then the rest of it was done without our knowledge or our input. And I think Keith was the only board member who had any conversation with the official and we actually don't know who the stakeholders were.

And you still don't.

No.

Because you can not know something and then know about it later, but you still don't know who—

We did ask around. We asked colleagues working in other organisations similar to ours, or who may have an interest, and very few people were contacted. I think there were conversations with the directors and chief executives of the forums to find out their understanding of their role, as well. But I also think that when the announcement was made and I spoke to them and gave them that information, the outcome was a bit of a surprise.

And finally from me, you'll be pleased to hear, and I'll definitely try not to cough: how did Welsh Government officials engage with you about the emerging findings of the review and the draft report?

I had one conversation with the official who had written the report back in the spring of 2025 and then we didn't have any other further conversations on the potential outcomes or any ways of finding another solution than the one that was presented to us—that was given to us as a fait accompli.

Diolch, Cadeirydd.

Thank you. Are you okay?

I'm okay. It's fine; it's just an unpleasant cough.

Do you know why the Welsh Government triggered the review, what led them to instigate this, and, if you do, what their objective was when they began the process?

My only understanding is that it was an internal review process that they have to go through. That's sort of how it was sold to us, which is absolutely fine. I don't have any issue with that; you should review the work that's being done. I think where I'm a little bit sceptical is that, prior to that, I tried to hire, going through the public appointments process, new directors to support us in the delivery of a new strategy for the future remit, and this would be September 2024 time, and that was sort of—. I was always delayed and there was always some reason why I shouldn't do that. And I think, when I look back on that—. You can't really deliver a new remit or a new strategy without the sufficient number of new directors coming in from the type of sectors that you want to work in. That delay, I think, was part of the process of the review. They wanted to wait for the review for that decision to be made, so there was no point, if you like, in going through what is usually a 12-month process with public appointments to hire new non-executive directors.

To be fair, the original remit letter was 2022-26, so we could expect some discussion coming up to the end of 2026.

Okay, thank you. Could I bring in Adam Price, please?

Yes. Good morning. From what you've just shared with us, I wouldn't categorise this as an open-ended evidence-based review. It seemed as if, from what you were saying, they already had a preferred outcome in mind, and the review was a means to that end.

That's certainly how it feels from my point of view.

I think the review report almost supports that, that there were different options that could have been taken besides closure.

You've seen the review report now, yes?

Yes.

Yes, we got a copy in January, 9 January.

Do you have some concerns that you want to share with us just in terms of the quality of research that you would expect in any piece of work, really?

Yes, I think 28 people, 28 interviews, is not very many. When you look at interviewing chairs and CEOs of the various forums, that takes eight, and then you've got Government officials. It's not really a wide review from that point of view. I think the evidence provided in the review supports some trimming rather than closure. It also actually says things like the organisation should be a Welsh organisation acting for Wales, and then advice could come from that organisation and then go to Make UK, as the reference point, who don't want that role, haven't got that role and have only got one person in Wales. So, I don't think the answer at the end of the review is correct.

Just for me to understand that, much of the evidence, you're saying, confirmed the need for a bespoke, Wales-specific entity—from what you're saying. But the recommended option then is to get rid of Industry Wales and rely on UK-based business organisations. So, there's an obvious contradiction there, is what you're saying, yes?

Yes, really.

And were the—? So, there's a relatively small set of interviews, with unnamed organisations, even; they're not set out in the report. Were the statements checked for accuracy, for example, to your knowledge, from reading the review?

I was alarmed and made a point to the board that the review refers to Microsoft Copilot as being used to evaluate the returns. I don't think you can rely on artificial intelligence to do that. It's just wrong; to me, it's just wrong. It should have been discussed. If you wanted it validated, in my view, it should have come back to the board. We have a good, diverse board, an experienced board. I think it would have been very sensible to have brought the findings back to the board for validation and triangulation, not to use Microsoft Copilot in whatever use. Whether it's just to evaluate the responses or to come up with the final report, I don't know, but I think that's not what it's meant for; it's not what it's there for.

Yes, just to drill into that for a second, for example, what Copilot will do is it will give its own weighting to certain voices, and unless you're actually transparent about that and ask the AI, if you like, then you might easily give—. The AI itself might overweight particular voices, loud voices, for example, in a way that isn't a fair reflection of the true evidence.

Yes, exactly, and you can put the review through AI and it'd be very critical of the review, so I don't think you should—. When you've got a board of experienced, sensible people, from across the community, I think the right thing to do would be to take those views back and triangulate them with that board.

And were there numbers in the review, or was it just kind of qualitative statements, which can sometimes be impressionistic? Was there a focus on outcomes? Was there an attempt to look at a sort of cost-benefit analysis of the different options and risks across those different options at all?

So, one of the areas that actually we picked up on was that there was no sort of value-for-money offer, looking at the various different options—so, what would actually happen; so, any risk-based scenario development, which was what we might like to have seen. I don't think either Keith or I are, you know, saying that you can't make decisions about closing an organisation. We're just saying that, if you're going to do it, do it in a way that is transparent and makes sense to the person who's reading it at the end. So, those were some of the areas where it's like: how can you say that this offers you better value for money if there are no scenarios developed?

I mean, you are Industry Wales, aren't you? You know, just from your own experience, is this how a business, for example, would make this kind of decision, based on a report done with Copilot without a proper cost-benefit analysis with numbers attached, or at least some kind of attempt at a value-for-money analysis?

So, I'm not from the public sector prior to this, and it isn't the approach that I would take. It'd be much more of a business-case approach, and that would have to be pretty detailed, particularly where there are indirect and direct job losses.

So, it is a little unclear as to why this approach was taken, and you could just have made a decision without doing the review. I think the review possibly adds confusion to the decision, and I think that that sort of disingenuous approach to it is the part that we feel—I don't know what quite the right word is, but—kind of more hurt by. You know, just to say, 'We're going to close, we're not going to continue this at the end of the year,' would be perfectly acceptable, but, with all of the added confusion from the review, it makes it look like one thing when you're going to do something else.

Because somewhere in the report it says that closure could be more expensive than keeping it going—you know, it's not a cheap thing to close the organisation. There are no figures at all in it, and, in any applications we'd put in for any business or public sector investment, you'd expect a five-case business model, fully costed. That's the way things normally operate, so it is unusual not to see any financial figures or risk analysis.

Yes. Okay.

And value for money is the primary reason given for the closure, but we don't know what that looks like.

The framework document that set out the parameters for the relationship between the Welsh Government and Industry Wales talked about fostering a relationship, and I'm quoting now,

'based on mutual trust and respect and open and honest communication.'

In your view, has this been the case through the review and the decisions resulting from it?

Again, the short answer to that would be 'no'. Our new framework agreement came into force in December 2024, so that's the newest one. Prior to that it was very minimal, the management framework. We haven't—. Since that point, bearing in mind when that was, and that it was in January that this review began, we haven't really had any opportunity to do that, and I think that there was a reluctance, certainly from officials, to engage with us during the period of the review, which meant that we had quite a considerable amount of time, of about nine months, with very little communication from Welsh Government. So, we—. You know, you make your own way, you try to continue to make yourself relevant, even though you know the direction of the outcome of the review, that it's going.

So, in terms of trust, as I say, I came from the private sector prior to coming into this role, and I would say that I don't have a huge amount of faith now in the Welsh Government to support the delivery for Wales. And that was the whole purpose of coming in, to make things better for people working in industry and to ensure that our new industry coming into Wales had all of the support that is needed, and so that doesn't feel like something that I have felt that the Welsh Government was working towards.

And do you think that this whole episode will have enhanced or damaged the credibility of the Welsh Government in the wider business community?

Well, that's a tricky question to answer. So, we know that, in the last week, we've had two further announcements of the closure of two of the forums: one is Technology Connected, which has delivered the Wales Tech Week for the last five years; the other is the Welsh Automotive Forum, which has been supporting automotive for over 20 years. And so those are the indirect job losses and closures that are a result of this decision. And then we have two further forums—one that's gone its own way very successfully, and the other one that we're currently still working through the final solutions for them to continue operating. And this is costing all of these organisations a lot of money. It's costing people's jobs—there is a human element to all of this that hasn't been recognised at all in the review process, or, honestly, until we wrote to the PAPAC, by officials. So, there is a sort of element of, 'We don't see it, we don't need to worry about it.' And I do feel—[Interruption.] Sorry, Keith, carry on.

Sorry, go on, Jen.

I was just—. That was the only thing I was going to say, that it feels like that bit has been missed out altogether.

Thank you.

I'll just say, on the well-being and support, one of the senior board members did write to me privately and say that she was worried about the amount of pressure Jen was under and that it was affecting her well-being. And I think that was a very good comment to have made, and we tried to support Jen more, but it put her under a lot of pressure.

I think what Keith's saying is that, at one point, I had a bit of a meltdown about the whole thing, because you're put in a position where you have to let go the people that you work with, you have to tell other organisations that they have to close, and that isn't what I signed up to do. I signed up to support industry in Wales, not close it down.

Yes. Okay, thank you.

Thank you. Before I bring in the next Member, because you referred to the human aspect of this, and the well-being aspect of this, more broadly, what message do you think this gives to people currently employed in, or considering, future employment in, or representation, on boards of public or publicly owned bodies in Wales?

So, I suppose I look at this in that—. There are a couple of things that I take from this. One, I have learned a huge amount about the public sector, and particularly the administrative side of the public sector, working not just with Audit Wales, but with Welsh Government and trying to understand how that actually impacts people directly. I would always now be cautious. Board roles within the public sector are not very well paid and the responsibility that you have is significant.

So, I think both from my experience as being on the board of Industry Wales and becoming the chief executive, and for our other board members, there is a question about how much is it worth it, for not only the reputational impact that you could find yourself under, if something has gone wrong or does go wrong, but also the whole—. We're a very small board, so I rely very heavily on Keith and the other two board members when I do have to make tricky decisions, or when I'm dealing with difficult communications with people, or where there's reluctance in communication between different parties. And that is a lot of pressure on people who are only paid a few hundred quid a year to support an organisation that's delivering for Wales.

Thank you. I'll bring in Tom Giffard, please.

Thanks, Chair. In your 8 January letter, you said that, quote:

'Despite assurances from Welsh Government that it would work closely with Industry Wales and its forum partners to develop a transition plan ensuring continued support for advanced manufacturing sectors, no formal meetings with officials have yet taken place to discuss handover arrangements'.

So, can you provide an update? Has there been any progress since early January?

I guess this depends on what you mean by 'transition'. So, I've had a meeting with the Welsh Government on providing them with the information that they will need upon closure of Industry Wales. So, there are obviously some elements around audit, finance, HR, that they need to make sure that they continue to have access to after Industry Wales closes.

We don't have any transition plans. We have asked for transition plans. As far as I understand, there are none, and that may be because we're coming into a pre-election period, and that just means that they're not able to provide any information on that.

As I say, two of the forums have announced closure, which means that, for those sectors, there is now no longer a Welsh focus on those areas. So, there's no transition planning, but there are probably opportunities to provide some support to the Welsh Government for the incoming new Government, but I don't know what that looks like.

In terms of the decision to dissolve Industry Wales, on 12 February, the Welsh Government told the committee that, quote, it was

'very mindful that it has a set of impacts on individuals',

and that it was, again quote,

'trying to manage that process as smoothly'

as it could. End quote. How do you respond? What's the position for the board and staff at Industry Wales to the end of March and beyond that date?

All employees of Industry Wales, apart from me, will have left the organisation by 31 March. I've been retained for closure purposes. You do need to have more than one director in place in order to do that. I would say that the closure of Industry Wales is being done at very little difficulty to the Welsh Government. I've done all of the work.

How is the Welsh Government supporting staff through the process? Is it seeking to redeploy staff elsewhere?

No. Frankly, the day we were told of the closure, we were told that there was no redeployment. There was no opportunity to look for opportunities for staff elsewhere, whether they were working in the supply chain and skills area, public affairs or someone in the sort of role that I'm in. That position has been maintained from the decision point. There's been no support for staff.

To tie, I guess, the two points I'm trying to make there together, in terms of that knowledge transfer and the transition, from your perspective, you're not really too clear on what the next stage looks like because the transition hasn't been properly explained, and it doesn't seem that the Welsh Government is keeping that institutional knowledge in the first place. Is that a fair assessment?

Yes. They haven't asked for any institutional knowledge.

On 12 February, the Welsh Government told the committee that it had sorted out the future of the Aerospace Wales Forum. Do you know what that means and what's the position with the other sector forums and their staff?

For the Aerospace Wales Forum, the articles have been changed, the guarantor process. Previously Industry Wales acted as the guarantor for the organisation, and that has been transferred to them. So, they're now an entity of their own. As I said, two of the forums have announced closure, and then we have one other forum that is currently still working through how to have a different guarantor. But we're still in the final stages of supporting them to do that.

And finally, the Welsh Government told the committee that it didn't think people working and looking for support about advanced manufacturing or the material sectors in Wales would be affected by the decision to dissolve Industry Wales. What's your response to that and what's your current assessment and the feedback that you've had from businesses in those sectors?

A lot of people have been very surprised. I think one of the elements that's particularly been fed back to us is the convening power of Industry Wales across our around 57 small membership organisations that support manufacturing and engineering in Wales. The other side of it is that we are still having requests for, particularly, supply chain evidence. One of the areas that has been closed down as part of Industry Wales is analytics around supply chain and the development of supply chain, particularly for areas where Wales has a particular interest. So that could be offshore wind, for example, and actually also nuclear power at the moment. Those areas are completely missing. And in addition to Industry Wales, you're probably aware that Cwmni Egino, the other organisation that might hold some of that information, is also being closed at the end of the year. So, there are some interesting questions to ask about why. There's nothing wrong with the landscape changing and the ecosystem of how we provide support to industry across Wales changing, but all of that knowledge will just disappear.

It was surprising that the supply chain and training and skills aspects were not picked up elsewhere, or at the moment don't seem to be picked up elsewhere. We have put proposals and have been discussing for a number of years a national manufacturing institute for Wales and how that could help innovation and bringing a lot of things together. But nothing's been taken forward on that yet. But I think, as Jen says, supply chain and skills training are things that are going to be missing, particularly around SMEs who haven't got the capability to do that themselves.

Thank you very much. Back to you, Chair.

Can I ask about the timing of this decision? Does it strike you—? I don't want to tempt you into political commentary, but just the timing, given that it's so close to an election. And the landscape, if you like, within Wales, of economic development delivery is going to be an issue, as some political parties, including my own, want to create and develop an agency.

But isn't it a bid odd, basically, to make the decision to end Industry Wales, with knock-on effects for other bodies, so close to an election, and, effectively, it's a fait accompli then for the new Government, which might have taken a different view? Wouldn't it have been more sensible to have delayed that decision, at least until a new administration could form a view?

It's a very difficult question for me to answer. I don't know exactly why they made the decision that they did, but I can also tell you that I work for another organisation whose remit is coming to an end at the same time and was given funding for another year to formulate some ideas to present to the incoming Government, for them to make the decision. So, a different department took a different approach.

Could I ask you a slightly different question then, as well, in terms of the landscape, the change in the landscape? One of the things that is referred to is the UK industrial strategy. To what extent has that been a driver, and the implicit assumption that the Welsh Government wants to align with the UK Government's industrial strategy, and, therefore, possibly, with UK bodies? But, again, that is one view, and other views are possible, aren't they? Was that a driver, do you think, in the thinking?

Again, it's a tricky question to answer. What I would say is that we put forward the idea that Industry Wales could deliver for the industrial strategy, but very much with a Wales focus on the areas of the industrial strategy that were particularly relevant to Wales, because it isn't all completely relevant to Wales. And so, where the funding may come from, and where the opportunities were for businesses in Wales, we could lead on those areas. And that would have meant a structural change to Industry Wales in terms of which type of manufacturing and engineering you were supporting. So, 'it's hard to say' is the answer to that question, but we did put forward a number of different scenarios that would have enabled Industry Wales—and not just the current forums, but also other forums across Wales—to have contributed through that model.

I think it's important that Wales has its own voice, and we push this all the time. Gross domestic product in Wales is, I think, 17 per cent manufacturing, compared to 8 per cent or 9 per cent in the rest of the UK. So, it's important to the Welsh economy. I think innovation is the thing that we've brought up many times. Innovation spending in Wales is low. Quite often, salaries are lower in Wales. I think Wales has got some particular problems that we need to address, so I think it is important that Wales has a voice.

To take the point, I think there are two answers there. One is you keep it running until the new Government comes in, so you have an effective handover and you keep that knowledge within the organisation and pass it through. That's one option. The other option is you clear the decks and say, 'Well, the new Government can start from scratch'. So, it's whichever way they go. But I think there is an influence, and it's probably not coincidental that it's coming up to an election.

Thank you. Mike Hedges.

Many apologies for my coughing fit. I think every political party is in favour of advanced manufacturing; that's not an area of political disagreement. How it's achieved is a different matter, and we all have different views on that. I'm much more about the use of universities, and we don't use our universities enough in Wales. But that was just me getting a chance to check my voice. The question I've got for you is: what happens next?

That is, again, a really tricky question. I guess that's down to the incoming Government to make a decision on what they do. But I would say that there is still a huge need to support industry, and to grow industry in Wales. I think one of the things that we really miss out on is identifying where the gaps are for the incoming businesses that we need, and actually targeting them and bringing them to Wales, and the collaborative work across arm's-length bodies and Government departments and, possibly, other organisations in order to achieve that. That seems to be perhaps not as good as it could be.

Can I just make a comment there? Wales does very badly from the high-value manufacturing catapult funding. We have helped set up Advanced Manufacturing Research Centre Cymru up in Broughton, and Warwick Manufacturing Group has got a site down in Baglan. But the total funding from the catapults is probably around £1 million to £1.2 million, per year, into Wales.

Typically, the Sheffield area gets £20 million, Scotland gets £15 million to £20 million, the midlands gets around about £50 million, with two of the organisations there. Every other region in the country in the UK seems to get innovation funding from catapults, but not Wales. So we have proposed, from Industry Wales, that we have a national manufacturing institute, which is a body that can become part of the catapult and bring in innovation money.

The other issue, and exactly the point you make there, is that Welsh universities are not represented in that catapult. So, as we move from a strategy within UKRI or Innovate UK to support start-ups and spin-outs, Welsh universities are disadvantaged. We think that they should be part of a catapult-type organisation. A national manufacturing institute will support that in Wales. At the moment, they have no exit, no way of bringing that out. There is no exit for that knowledge or that expertise.

I recently wrote about Sheffield, along with other areas, and the work they're doing, which involves the university, involves the manufacturing sector, actually making sure that everybody's working on the same side. And that seems to be working quite well in Sheffield, which is very similar to south Wales in many respects. It used to have lots of steelworks, now it's got lots of university students and big, huge universities. Could we learn from Sheffield?

I was the founder of the AMRC in Sheffield and the AMRC up in Broughton and National Manufacturing Institute Scotland. So, yes, I do believe we have a lot to add there. Why was Sheffield successful? Why was the Advanced Manufacturing Park so successful and inward investment so successful? We have the answers, in a way, to that. We know what happened. For 20 years, I ran and led the organisation and worked closely with the three vice-chancellors in the university to the point where we set up an apprentice training centre to support inward investment. I think we changed the perception of Sheffield as a manufacturing city, from being processed steel oriented to high-value manufacturing, with McLaren, Boeing and Rolls-Royce coming into the city, which we facilitated.

Yes, Sheffield has achieved what we should be achieving in Wales.

Exactly. My concern—I've said this tongue in cheek, really—is that we build four or five reactors over in Wylfa and, if we're not careful, all Wales will get is a cafe on the A55. We need to be part of that nuclear renaissance.

Perhaps it's worth noting, as you mentioned AMRC in Broughton, that that was originally established, if I remember correctly, with Wrexham University, and that was then transferred to Sheffield university, which perhaps indicates the consequences—

No. Originally, there was some concern that the Wing of Tomorrow would leave Wales. With the Welsh Government, we wrote a proposal to build a facility that would be shared with Airbus, so it was always Sheffield. We did urge, as leaders of the organisation, that we didn't plaster 'University of Sheffield' all over the place, because there was a little bit of a 'parking our tanks on your lawn' type of thing with Welsh universities. We thought it could have been done more sensitively. But our estates department wanted to plaster it everywhere. My concern then, long term, is that the amount of catapult funding flowing through that organisation into Wales has not been achieved, it's quite low, and that it actually survives off Welsh Government funding and Welsh proposals funded by the Welsh Government.

Okay, thank you. Moving on, what is your take on the statement given to the committee on 12 February by the Welsh Government that it could have handled elements of the closure process of Industry Wales 'a bit differently', and what would you identify as the main lessons for the Welsh Government, as well as for yourselves?

Shall I go first, Keith, on this? I'd agree with that statement. I think the primary thing is around communication and having frank conversations with people. There seems to be a reluctance from Welsh Government to have real conversations with people. You know, we're all grown-ups in the working environment; particularly once you get to a chief executive role, you expect people to be telling you the truth about something. So, communication, understanding and methodology that they're following, why they're doing it, and communicating continuously through that process.

The radio silence element was, even from my point of view, unbelievable. Because you're talking about months—not a couple of weeks, but months and months and months—during which time, your employees, the forums, are all asking you the same questions every time they see you: 'What's going to happen to us? Are we going to lose our jobs? Are we going to continue? Why aren't they telling us anything?' And I had no answers to those questions. I think that that, for me, was the fundamental failing. And also, probably, from the outset, be truthful about what it is that's happening here and we can kind of all, then, just move on and get on with things. And we could have approached this last year of Industry Wales in a very different way. Whereas there's been a lot of hanging around, waiting for things to happen. From a taxpayer's point of view, that's not a good use of money.

Professor Ridgway, did you want to add something?

Yes. I'll just add my view, really. I think that sometimes the impression was that we've not given advice to Welsh Government; I think that was a comment that was made. You know, you're asked for advice. I haven't met the Cabinet Secretary—the latest one—since I've been the chair of Industry Wales. The original one, Ken Skates, I did meet. There's no advice been asked for. Every meeting's been cancelled, which has been very disappointing. I think that the first real knowledge of the closure being Jen being told in a meeting on a Friday and passing it forward in an e-mail to us was bad. I think the first real formal statement was almost a press release statement from the Cabinet Secretary, which was passed to us, which one of the board members, who is a very experienced industrial player, said was brutal and unprofessional, and we had to rewrite chunks of that statement.

And, you know, the fact that—I do feel strongly about this—we've made a very big effort to encourage people to apply for board positions. We've got a diverse board—gender, backgrounds—and I do feel that the disrespect to those members has been felt very badly by them. So, it's right; yes, it could have been handled a lot better. I think involvement in the review, the opportunity to discuss the review as sensible, grown-up people, would have been very helpful. And more working together, which did happen at one time, but since the review started, that hasn't happened; we have not worked together.

Thank you. As you may be aware, throughout this Senedd term, this committee has explored the Welsh Government's arrangements for the oversight and review of arm's-length bodies—the Welsh Government's arm's-length bodies—in different ways. What, if any, reflections do you have on that that you might wish to share with us now?

Jen, do you want to go?

Yes. I suppose part of the reason that we wrote to you in the first instance was because we couldn't get a response from Welsh Government, and it did trigger the kind of response that we needed. But that's not a good way—. That's not good governance. So, I think what we want is for other ALBs not to go through the same experience that we have, and to ensure that there is a really clear process for internal reviews, external reviews, audit processes that is really well understood by all chief executives, chief operating officers of all ALBs across Wales. And that there isn't deviation from that, or it isn't just done ad hoc by different departments in different ways—that it should be really clear how that's managed. And that that guidance, or best practice, is available for everybody to see. So that as the process is undertaken, you can say, 'Okay, we're at part 3 of this process now, this is what we expect.' I think that would have made it much easier for us. I appreciate we are the smallest ALB in Wales, that it might have just felt like, 'Well, you know, we'll just do what we like. It's a small budget, a small group of people.' It's not as important as if you were doing it with, you know, an NHS trust, where it might be very different.

So, I think there are some ways in which we can ensure that people's experience of working in the public sector is more positive, and that you ensure that the outcomes are transparent and evidenced, and I'm not sure that that's the case with this particular review.

Mike Hedges, please.

Please tell me I've got it absolutely wrong, so please do. When you have an organisation, you have expectations of what that organisation is going to achieve. You have stages when they should achieve things, and you mark them, like I used to mark my students on their achievements against that. So, if you've set them to achieve 10 things and you expected five of them to be achieved by the end of year 2, and they didn't achieve any of them and they weren't getting anywhere, then you've got a problem with the organisation. Did the Government sort of tell you, 'This is what we want, by when'?

'No' is, again, the short answer to that. What I would say is it's quite an interesting comment, because when I joined as chief executive, we were a grant-giving organisation to the forums and there were no terms and conditions to those grants, or KPIs that were expected from the grant process, when I came into post. I put all of that into place in order to achieve just that: 'This is what we expect from your money, and this is when you'll do it by, and we will monitor that as we go through the process, and review it, because obviously things can change within a year.' So, all of that was done as I came in, but we didn't—. Until the review outcome, interestingly, our claims for funding were not monitored in the same way.

When the review outcome came in, we then had to start to produce reports to be cleared by the finance department within Welsh Government. I don't know if that was a change just coincidentally within Welsh Government or whether it was related to the outcome of the review. But, prior to that, I'd already put in place integrated reporting for Industry Wales and all of the forums anyway, so that was actually pretty easy for us. But it was an obvious change following the review. So, I would agree that those things were already missing, but that may have been because it was a four-year remit letter and there was maybe an underlying feeling that they didn't need to do anything, because it would be coming to an end at the end of that anyway.

Well, if that was the case, all they had to do was say, 'This is a four-year remit letter; this is giving you notice this will end in four years.'

It's very difficult to say. They may not have known that when they wrote the letter in 2022.

I think you've been very good at defending them. I mean, either they knew it, in which case they should have told people, or they didn't know it and they should be explaining why they didn't set stages to be achieved, and explaining why—. Again, I would expect them to then say, 'You've failed in doing this, you've succeeded in this.' I mean, I just don't understand how you can run an organisation where the people who are funding you haven't told you what they want you to do, haven't told you how they're going to judge you, and then decide they're going to close you down anyway.

There have been previous remit letters, to be fair. So, we would expect another remit letter for 2026 to 2030, or whatever, so I had expected that. To be fair, we did have a member of the Government on the board as an observer and adviser, who worked with us, so there was feedback in that respect until the guy retired and wasn't replaced. But then, it is an issue. Yes, you're right. I think more feedback along the way. But I think it was always very positive, to be honest. We're reviewing various strategies and reports—the manufacturing strategies and so forth, training policies. It was always very positive what was fed back from Industry Wales.

Yes. And a huge amount of work during COVID as well that was done by Industry Wales, through the whole process.

A massive amount, yes.

The point you're making is a holistic view of the effectiveness is also a review of the Welsh Government as the sponsor, and their engagement, their setting of clear parameters in terms of KPIs. So, there are issues there for them, which aren't, from what you're saying, sufficiently acknowledged in the review document.

No, I'd say that the review document is primarily about Industry Wales and not the whole relationship across all of the different tiers. Because there's a Welsh Government and the strategies and the policies that they're trying to deliver, there's us as Industry Wales as the ALB, and then there are the forums as well. So, it all filters down to those different forums to deliver under different elements of the strategies as well. And I don't think, from my point of view, there was ever, really, a clear story or idea of how Industry Wales, from the Welsh Government's point of view, should deliver those. I had my own ideas, which we were trying to implement, but that's very different to what the expectation was from them. And, as I say, because the last year particularly has been very much about the review and winding down, there hasn't really been the opportunity to discuss what that might have been at any point either. So, we could have had, in 2024, some far more detailed discussions about the expectations from Welsh Government for what they wanted Industry Wales to deliver.

The new administration now is going to have to make a decision in terms of a successor body, a replacement, or whatever they decide to do. It would be really useful to have a detailed evaluation of the entire history of Industry Wales, so that there's a body of evidence and knowledge as to what worked, what didn't work as well. Is that work being done?

So, there have been some requests, which is probably not fully understood yet, for some work for me to do in the next three months to support that. But it's not totally clear what that is, and some of it could be historic information, but I think more of it is about what do we really need in Wales, particularly around economic development and the delivery of growth in industry across the sectors that are particularly relevant to Wales, and also looking at what we do really well and how we build on that, and how we do place-based industry as well. Because I think, sometimes, that's kind of forgotten from the conversation too.

Then there's also the relationship between the Wales Office and Welsh Government, and the way in which there could be tighter collaboration working towards the needs of Wales, rather than the needs of Westminster. So, there are some opportunities within that that I could potentially cover in this document, but, at the moment, it's still not fully understood what that might look like.

Okay. Thank you.

Sheffield without a devolved Government seems to have got it much better than we have in Wales with a devolved Government. I don't expect you to answer that, but I think the professor will.

I just missed that. Was it saying Scotland seems to have it better organised?

No. Sheffield without a devolved Government seems to have got it much better than we have in Wales with a devolved Government.

I think it did do, yes. I'm not quite so sure now. The Advanced Manufacturing Research Centre was started under the regional development agencies. So, we had Yorkshire Forward at the time, which was very, very supportive in the early days. Then we sort of had a bad period, when nobody quite knew what local enterprise partnerships were, and then we went into mayoral authorities. I think the problem with mayoral authorities is that maybe they become very inward facing, and it becomes very much south Yorkshire, west Yorkshire and so forth. To be honest, within Sheffield, it's a lot about people and personalities, and people actually getting on well together and wanting to work for the same argument. I think somebody once said that if you change anything, you have five people that don't give up, and we had that very much in Sheffield.

Okay. Thank you.

Thank you. So, in summary, was this a case of evidence-led decision making or decision making leading the evidence? Or could you not possibly comment?

You're maybe asking the wrong person.

I think we probably know the answer. [Laughter.]

Thank you very much indeed. Well, that brings to an end our formal questions. Do you have any final comments on any matters we've not covered, before we finish?

No. I just really appreciate you listening to us and taking on board the concerns that we've had about the process.

Thank you.

[Inaudible.]—the type of things you do.

Thank you.

Diolch yn fawr.

Thank you. A record or a transcript of this meeting will be sent to you to check for accuracy before it's published. Otherwise, that brings this session to an end. I thank you again, both of you, for being with us today, and for having written to us initially to trigger today's session.

Members, can I propose, in accordance with Standing Order 17.42(vi) and (ix), that we resolve to meet in private for the remainder of today's meeting? Are Members content?

Content.

I note Members are content. Can we go into private session, please?