Y Pwyllgor Cydraddoldeb, Llywodraeth Leol a Chymunedau Y Bumed Senedd

Equality, Local Government and Communities Committee - Fifth Senedd

21/01/2021

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Dawn Bowden
Delyth Jewell
Huw Irranca-Davies
John Griffiths Cadeirydd y Pwyllgor
Committee Chair
Mandy Jones
Mark Isherwood

Y rhai eraill a oedd yn bresennol

Others in Attendance

Alyson Francis Dirprwy Gyfarwyddwr yr Is-adran Gymunedau, Llywodraeth Cymru
Deputy Director of Communities Division, Welsh Government
Debra Carter Dirprwy Gyfarwyddwr, Cyllid Strategol Llywodraeth Leol, Llywodraeth Cymru
Deputy Director, Local Government Strategic Finance, Welsh Government
Emma Williams Cyfarwyddwr Tai ac Adfywio, Llywodraeth Cymru
Director of Housing and Regeneration, Welsh Government
Hannah Blythyn Y Dirprwy Weinidog Tai a Llywodraeth Leol
Deputy Minister for Housing and Local Government
Ian Williams Dirprwy Gyfarwyddwr, Cartrefi a Lleoedd, Llywodraeth Cymru
Deputy Director, Homes and Places, Welsh Government
Jane Hutt Y Dirprwy Weinidog a’r Prif Chwip
Deputy Minister and Chief Whip
Judith Cole Dirprwy Gyfarwyddwr, Is-adran Cyllid a Gweithlu Llywodraeth
Deputy Director Local Government Finance & Workforce Partnership Division
Julie James Y Gweinidog Tai a Llywodraeth Leol
Minister for Housing and Local Government
Rebecca Evans Y Gweinidog Cyllid a’r Trefnydd
Minister for Finance and Trefnydd
Sian Gill Pennaeth Adrodd Ariannol, Llywodraeth Cymru
Head of Financial Reporting, Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Catherine Hunt Ail Glerc
Second Clerk
Chloe Davies Dirprwy Glerc
Deputy Clerk
Jonathan Baxter Ymchwilydd
Researcher
Naomi Stocks Clerc
Clerk
Osian Bowyer Ymchwilydd
Researcher

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Cyfarfu'r pwyllgor drwy gynhadledd fideo.

Dechreuodd y cyfarfod am 13:30.

The committee met by video-conference.

The meeting began at 13:30. 

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Okay, welcome, everyone, to this meeting of the Equality, Local Government and Communities Committee. We begin today with item 1, introductions, apologies, substitutions and declarations of interest. In accordance with Standing Order 34.19, I have determined that the public are excluded from the committee's meeting in order to protect public health. In accordance with Standing Order 34.21, notice of this decision was included in the agenda for this meeting, published on Monday of this week.

The meeting is, however, being broadcasting live on Senedd.tv, with all participants joining via video-conference, and a Record of Proceedings will be published as usual. Apart from the procedural adaptations, all other Standing Order requirements for committees remain in place. The meeting is bilingual, and simultaneous translation from Welsh to English is available.

I'll just remind all participants that microphones will be controlled centrally, so there's no need to turn them on or off individually. Are there any declarations of interest? No. If for any reason I drop out of this meeting, for technological reasons or otherwise, the committee has agreed that Dawn Bowden MS will temporarily chair while I try to rejoin.

2. Craffu ar Gyllideb Ddrafft Llywodraeth Cymru ar gyfer 2021-22 - sesiwn dystiolaeth 2
2. Scrutiny of the Welsh Government draft budget 2021-22 - evidence session 2

Okay, item 2 then on our agenda today is scrutiny of the Welsh Government draft budget 2021-22, and this is our second evidence session. We'll be hearing from the Minister for Finance and Trefnydd, the Minister for Housing and Local Government, and the Deputy Minister for Housing and Local Government in relation to their portfolio areas within that draft budget, which was published last month. And then this session, together with last week's evidence session with the Welsh Local Government Association, and our forthcoming session today with the Deputy Minister and Chief Whip, will inform the committee's report on the draft budget. I know that the Minister for Finance and Trefnydd will be with us for the first hour to respond to questions relating to council tax and non-domestic rates, so our first hour will focus on local government, and the remaining time on the housing aspects of Ministers' portfolios.

So, let me welcome then Rebecca Evans MS, Minister for Finance and Trefnydd; Julie James MS, Minister for Housing and Local Government; Hannah Blythyn MS, Deputy Minister for Housing and Local Government; Emma Williams, director of housing and regeneration with Welsh Government, of course; Judith Cole, deputy director of the local government finance and workforce partnership division; Ian Williams, deputy director, homes and places; and Debra Carter, deputy director, local government strategic finance. So, welcome to you all. It's good to have you with us today.

Perhaps I might begin then with some initial questions before other Members ask further questions and, first of all, in relation to equality, whether Ministers could explain how budget allocations within the local government and housing portfolio will help reduce inequalities exacerbated by the pandemic, which the committee has heard quite a lot about in relation to a recent inquiry that pre-existing inequalities have come to the fore during the pandemic and been worsened. So, we'd be grateful for your response. Who would like to begin?

Which one of us do you want to go first, Chair?

Okay. Fine. So, the pandemic has absolutely made more stark some of the inequalities that we were already aware of, and so the settlement is aimed at enabling local authorities to deliver an increased service level in those areas, and there are numerous examples, which I can list. For example, there is an increased requirement for social care; there's an increased requirement for homelessness and housing services; there's an increased requirement for free school meals; there's an increased requirement for council tax relief funds; and there's an increased requirement even for domestic waste as more people work from home and spend more time in their housing. Virtually every area of local authority services is impacted by the change that we've all been experiencing, and so the increased settlement alongside the COVID hardship fund is entirely designed to ensure that the most unequal people in our society have those services that are most needed by them. So, I'd say the entire settlement is aimed, really, at that kind of a equality piece.

Just the last thing to say on that, of course, is that the vast majority of the settlement is unhypothecated, and it's down to local authorities, then, to make the choices for their locality. But the pandemic has meant that I've met with the leaders of local authorities on at least a weekly basis throughout, and they are very well aware of the inequality agenda and its exacerbation by the pandemic.

13:35

Okay. If we move on, then, to impact assessment work. This is, I guess, a fairly dry area that not that many people take a particular interest in but is obviously very important, potentially, in terms of budgetary allocation. So, I just wonder how that impact assessment process within the department has changed in this budget cycle, if it has, following the findings of the gender review and the joint committee scrutiny.

I'll start and then I'm sure my colleague Rebecca Evans will want to add to it. Obviously, the bulk of the settlement is unhypothecated, so the local authorities themselves will be doing impact assessments for the way that they set their own budgets as part of the process. But, for my part, in making my submissions to the finance Minister for making the case, if you like, for the local government settlement, then we prepared a number of impact assessments for various policy areas that were used to identify the pressures and priorities for the portfolio, along the lines of the equality piece that we were just talking about. So, for each area of spend as a local authority, we would look to see what impact the pandemic was having and any impact of 10 years of austerity, and what we thought the spend was likely to be. And, of course, we then put that forward to the Minister for finance for her consideration, alongside the rest of the Welsh Government budget.

Shall I just add, from a wider Welsh Government perspective, the important role that the budget improvement plan has played in our preparations this year? So, you'll recall that last year was the first year in which we published a budget improvement plan, and that's a five-year rolling plan that looks at what we can do to bolster and enhance our processes that surround the formulation of the budget. Three really important developments took place this year: the first was the production, for the first time, of a distributional analysis. So, we're starting to work out, at a cross-Government level, the impact that our choices have on different cohorts of people across Wales. And then the second was a carbon impact assessment of goods and services. Again, this is the first time that we've tried this. So, both of these pieces of work are quite experimental. And the third, which I know committee will be particularly interested in, is the work around the gender budgeting, which we announced last year. And that's based on some of the work that we undertook consulting with Government officials in Iceland. They're known to be, I think, a world leader, really, in terms of gender budgeting, but they will happily admit that it's taken them seven years to get to where they are now. So, I think that we are very much starting down this road, although we can learn plenty from what they're able to share with us.

The first area where we looked at this was in personal learning accounts. So, this isn't an area of direct interest necessarily to the committee, but there's so much that we can learn from that for future areas of Government spend. So, I think that, in terms of the process of developing the budget, we're starting to look at it in new ways and finding out lots along the way, which, I think, will help us in future years as well.

Okay. Thank you for that. COVID-19 and local government finance: I wonder if you could respond to some of the concerns we heard when we took evidence from the Welsh Local Government Association last week regarding the social care sector. Obviously, there are likely to be fewer people in care homes over the coming months and years as a result of COVID-19, sadly. It was put to us that there's a need to tide over the care homes and the residential homes over what's likely to be a difficult period in terms of their financial sustainability and stability. So, perhaps there should be some short-term targeted support for the social care sector. How would you respond to that? I guess this is one for the finance Minister, really, isn't it?

13:40

Well, actually, John, if you don't mind, I'll start, because I've been very involved in the discussions on it. So, we've supported the adult social care sector through the local government hardship fund throughout the pandemic. Some £88 million has gone in. Very specifically, we've looked at targeted support for care homes that have been unable to fill their spaces because they've become what's known as red homes, so homes with COVID-19 actively in them. I just want to put on record that that's a very small number of our care homes. I think there's a tendency, especially in the media, to think that that's nearly all of them, but it most certainly isn't. But for those that are impacted, then the impact can be extensive. So, early on, we made it very clear that the money could be spent not only on an uplift to the payment to the social care sector to cover off additional expenses and so on, which we'll all understand—increasing the need for agency staff and personal protective equipment and all sorts of other things—but also that payments could be made in order to ensure that care homes stayed viable and able to cover their bills, because they couldn't take new residents or whatever. So, that piece of work was done as a direct result of the pandemic, and then my colleague Julie Morgan, the Deputy Minister for Health and Social Services, has very recently put out a White Paper building on that work, which is consulting on the new arrangements, and one of the very direct questions it asks is exactly that question. So, building on our experience across the pandemic and of working with the local authorities—the local authorities, of course, are both direct providers and commissioners of the service—then we very much come to that conclusion. So, it's very much in our minds as we put the budget together for this year, and, indeed, the consultation to take it forward.

Okay. And I don't know, finance Minister, if you want to add anything.

I would just say that the support for the social care sector has been part of the £500 million of additional support that we've put in place for local government during this financial year, but we're very aware of the pressures that will face local government and the NHS and business as well for the next year. So, you'll remember at the draft budget I announced that we were keeping back a significant amount of our COVID-related spend, and I would be intending to make some allocations between the draft budget and the final budget. And, actually, even since we laid the draft budget, we've had new variants of the virus come forward and so on. So, I think that was very much a prudent thing to do at that time, but it will allow us to make some further allocations in respect of some of these particularly acute pressures at the final budget. And that will give local authorities and the NHS and others some certainty for the months ahead as well.

Actually, Chair, can I just add as well—I should have added: I'm very grateful to local authorities because they have, of course, administered the enhancement to the statutory sick pay scheme that we put in place for the social care workforce as well. So, they've more than stepped up to the workforce issues, and, as you'll know, they run the test, trace, protect system and so on for us as well. So, the hardship fund covers off the social care specifics, but it also covers off some of the things that have affected the social care workforce as well.

Okay. Thanks for that. Amongst the evidence that we heard from the WLGA as well was the view that, on the preventative agenda, local authorities might do more in the future in terms of mental health. A lot of their services are very relevant, and they were particularly referring to youth services. But their view, I think, was that there might be an expanded role for local government in the future in terms of those mental health support services. So, obviously, that overlaps Welsh Government ministerial responsibility, but I just wonder, Minister—Julie James—whether you might offer a view as to whether you see value in that approach.

Yes, thank you, Chair. I think, in this instance, actually, my colleague Rebecca Evans will have more to say, but I would just say, very briefly, there's been a very active discussion with local authorities, and the integration with the youth service, in particular the youth engagement and progression framework, has been a matter of some discussion, and this is about the early-warning systems. And, of course, we also put in place all the early-advice systems in order to pick up in particular young people in the education system. But the wider piece is, of course, in my colleague Eluned Morgan's policy area, and I'm sure my colleague Rebecca Evans will have more to say about the wider Government approach to that.

13:45

Protecting mental health services for the next financial year absolutely does remain a priority, and we really recognise the impact that the pandemic in particular has had on many people's mental health and their well-being. As a result, we're allocating an additional £42 million to support across a range of areas, and that will include £20 million of additional funding within the health and social services main expenditure group to increase mental health support across a whole range of areas, and they include increased support for front-line non-clinical services, all-age crisis support, memory assessment services and support for the mental health clinical pathway through the 111 telephone service. We're also adding £4 million of additional funding to support the roll-out of child and adolescent mental health services in-reach support across Wales, and that builds on the £2 million that was allocated during this financial year's budget; and an additional £5.4 million for the NHS child and adolescent mental health services for tier 4 community intensive teams; and then, finally, an additional £13 million in the NHS growth fund to provide additional support for the aspects of mental health that are party to that part of the budget.

We're also maintaining our investment in support of mental health within education, and it's that whole-system approach to mental health that we've been developing, and it continues, of course, our preventative approach and will include an increase in school-based counselling, for example, to support young people, and also maintaining the additional funding provided in this current year's budget into next year for additional funding of £2 million each for higher and further education to build on their services for staff and students, and the innovative approaches that they're taking to mental health. And, of course, then, more widely again, we're looking to increase our use of digital technology in support of mental health, particularly through the provision of online cognitive behavioural therapy. So, lots is happening across different areas of Government in this regard.

Chair, could I just add very briefly—my fault for not saying it in the first place—how much the sector appreciated the increase in the housing support grant, which obviously has mental health services aligned to it, and the production of the 'Together for Mental Health: delivery plan', which has been—? I just really want to put on record my praise for the way that mental health colleagues have worked alongside housing colleagues to produce that integrated service plan that's been so essential to our homelessness response.

Yes, okay. Thank you very much, Ministers. We'll move on then to Delyth Jewell.

Diolch, Cadeirydd. There's been an increase of £176 million in the provisional local government settlement, but the WLGA, in their evidence, have said that there are still likely to be ongoing pressures on councils. Is this increase enough for councils to be able to deal with those underlying pressures and could you tell us, please, what conversations you have had with councils in coming to this decision?

Yes, absolutely. So, this is the second decent settlement that local authority colleagues have had, although, obviously, when we first made a good settlement last year, we weren't expecting the pandemic. So, they've had to move mountains in adjusting their previous budget arrangements to that, and we've been keeping a very careful watch on that alongside them, just to make sure that all of the councils remain resilient throughout the piece. I'm pleased to say that we're in a position to be able to say they all have managed to stay resilient throughout what's been a very difficult year.

The cash injection this year gives an overall increase on a like-for-like basis of 3.8 per cent, which is a good settlement by anybody's estimate. The average disguises a range between 2 per cent and 5.6 per cent in fact, largely driven by population changes across the Welsh piece. I'm not sure if this—I'm sure you're going to ask me this, I'm sorry if I'm answering it out of order, but there's been a discussion with them, for example, about whether we should have a floor for the funding. We've taken the view that there should be no floor, because a floor is intended to make sure that there's no negative impact on a local authority. All local authorities, including the ones at the bottom of the table, have at least a 2 per cent increase, which, only three years ago, people would have been absolutely ecstatic to have. That is based on the amount of population they have to spread their services out over, and the problem with a floor is that you end up eventually having to align it properly, and so you get people who have—it's very difficult to get away from a floor, I suppose is what I'm saying. So, for example, if we were to depict the increases taking into account previous funding floors, for example, it would look very different, and that's because a floor puts an artificial layer of funding into a council that wouldn't otherwise get it because of the way that the distribution formula works.

We do an awful lot of work with the distribution sub-group on the formula, and my official Judith Cole, on the call, I'm sure can give you an hour and a half's summation of how the distribution formula works, Chair, should you want her to do so. But, of course, the whole point of that group is to take into account the technicalities of what the settlement will eventually look like, how the formula works, and what the resilience looks like as a result of that.

So, I think that's a very long-winded way of saying, 'Yes, we are sure that the councils will be resilient', although obviously the ongoing pandemic has got to be taken into account with that, and you'll know that we've had flooding over the weekend, and so on. So, as an American president famously once said, 'Events, dear boy.' I believe that was a British Prime Minister, but you know what I mean.

So, we have to just work with them at all times to make sure that we have an understanding of the current situation for each local authority, and one of the huge benefits of the pandemic and digitally working has been that we've been able to have that individual relationship with each local authority in a way that's never been possible before. And so for the first time, I can honestly say that we've had a look at each local authority and with its leadership, we're able to say that they are as resilient as we can make them in the circumstances.

13:50

Thank you for that, Minister. You did—. I know that Mark Isherwood is going to want to come in in a moment with a supplementary.

If you're okay, Delyth, yes, I'll bring Mark in now on, I think, the funding floor probably. Mark.

Yes, thank you very much indeed. I wonder how you respond to the news today that ratepayers in Wrexham are facing a council tax uplift of 6.9 per cent following the Welsh Government's announcement that they'll have the second lowest increase, and their statement that they've asked for the floor to be put in place to protect authorities out of the 22 who have the lowest settlement, which as they emphasise is agreed and supported by every council leader across Wales. They say,

'It always has been and always will be and that’s supported by the WLGA (Welsh Local Government Association)',

and how disappointed they all were that the floor was taken away last year, and that you're indicating that you'll do the same again this year.

I would characterise it slightly differently, I have to say. Absolutely, they all want a floor to be put in place, but they want that floor to be separately funded by the Welsh Government. They do not want the floor to be funded by local authorities and, unfortunately, we've already been very generous with the local government settlement, so I'm sure my colleague Rebecca Evans will be telling you shortly that there is no additional money. So, if we were going to put a funding floor in, what we'd be effectively doing is taking off the authorities that the distribution formula has given more to and giving it to the authorities that the distribution formula has given less to, which just shifts the balance on the distribution formula, and, as I say, makes it much more difficult to make it equitable in subsequent years.

I'm very clear that a funding floor is there to prevent negative effects in the formula, so where authorities would otherwise have got a below-zero funding effect, and would obviously have had a very difficult time adjusting to that. It's a matter for Wrexham council how to organise its services and whether it thinks putting its council tax up or organising its services differently is what it should do. This Government also doesn't put a cap on that, so it's absolutely a matter for local government and the democratic accountability of that council to make that decision for itself. We believe in local accountability and democratic decision making, and that's why there's no cap on the council tax, as there would be if you were an English authority, for example. So, it's a matter for the council in the end how they make those decisions, but we're very certain that the distribution sub-group has worked very hard to make sure the formula is as equitable as possible across Wales.

Okay. Before you resume, Delyth, I think Mandy Jones wanted to come in on this as well. Mandy.

Yes, if you don't mind, Chair. I've just heard what you said, Minister, but five of the six authorities in my region are having settlements below the Welsh average, and only one is receiving 3.8 per cent, which is the average in this settlement. Have you actually calculated the cost of providing any kind of funding floor at, say, 3.5 per cent overall? Or is the Welsh Government once again treating north Wales unfairly?

13:55

The council that's third from the bottom is Caerphilly, but I don't hear you saying that we're treating south-east Wales unfairly. So, it's nothing to do with whether the authority's in the north or the south. It's entirely to do with the way that the distribution sub-group formula has worked out for this. All the local authorities contribute to that—I cannot emphasise that enough. So, yes, of course we've worked out what a floor would cost in terms of reallocating the money, but again, I emphasise that what we would be doing is taking it away from the authorities that ought to get more as a result of the way that the distribution formula works, so that is basically removing money from those with higher populations and giving it to those with lower populations, thus giving each member of the public in those authorities less than they would otherwise get under the distribution formula. That's the effect of what you're suggesting.

So, there isn't any extra money, and as I'm sure my colleague Rebecca Evans will tell you shortly, I have made the best case that I can for local government, and I'm very pleased with the settlement, as are local government, I have to say. If you ask them whether they want the floor to be in place if there isn't an additional funding envelope, you get a different answer to the one put to me by Mark Isherwood.

Diolch, Cadeirydd. It would be remiss of me not to make the case for Caerphilly, in my region, and also Ceredigion, which has the lowest, but I think that this point has now been rehearsed thoroughly, so I'll move on to another question. Thank you for that.

Could you tell us, Minister, please, how the allocations within the settlement reflect the impact of Brexit, and the impact that's going to have on local government? I know that, because of the pandemic, some of the funds that the Government had initially hoped would be earmarked for this have had to be reallocated. But, what is the picture looking like at the moment, please?

Exit preparations have been going on for a very long time. We put a set of structures and support programmes in place to help local authorities in Wales work together and prepare for and create resilience right back at the beginning of 2018. A key element of that structure has been the establishment of the local government European Union transition preparedness advisory panel—sorry, I just had to read that, because I get the words mixed up. So, it's the local government European Union transition preparedness advisory panel, which is a strategic group made up of regional local authority representatives, chief executives, service leads for education, waste, social care and so on, the WLGA and Welsh Government officials, and that group has met monthly since January 2019. It's very valued by local government. I can assure you they've all got enough to do, so you rapidly don't get attendance of groups that are not thought to be useful, but that group has been well attended throughout, and they've got real consistency of preparedness and messages. They oversaw the structures necessary for elsewhere in the system, if you like, and they've been able to recommend good practice and put in place mutual aid and that kind of thing. So, it's worked really well.

The WLGA EU transition programme, which was funded by Welsh Government, provides all the tools, analysis and research to support them in their preparedness, and we put out toolkits and regional mapping work to help them do that. So, that was all done more than 12 months ago, and then we've updated it to include the impact of COVID-19 across the local authorities to help them review their preparedness. We also fund local authority Brexit co-ordinators in each authority, which has been really essential for their capacity and to help the two-way communication. So, they're obviously a group of people who work both inside the local authority and together across Wales. We've also worked with Audit Wales to make sure that they're happy with the increased resilience and capacity of local authorities.

So, again, the short answer is that we're happy that they have done everything that they could have done to be prepared. It's such a volatile situation now, with the trade deals and the problems of the ports and so on, so we're still working very carefully with them on that. We've worked very hard with them on, for example, things like food security and making sure that they've got the right menus in place across social care and across education settings, so that we won't have any difficulties with any of that, just as an example. Frankly, it's still pretty volatile, but we're confident that the settlement gives them the flexibility to be able to cope with that, and that we have the situation in hand. Hand on heart, we've done everything we could have expected to have done, and we're as resilient as it's possible to be going forward in such a volatile situation.

14:00

Okay. Diolch. Thank you for that, unless any of the other—. Either the Trefnydd—. Not Trefnydd, sorry, the finance Minister in this guise. Unless there's anything you wanted to add, I'm happy with that.

Okay. Diolch yn fawr. We'll move then to Mandy Jones with some questions on non-domestic rates.

Thank you. Can I just pop back on just one thing, please? If Welsh Government is not providing enough revenue support grant, then councils will inevitably raise council tax to meet the shortfall. Years ago, there was always a standard spending assessment for local authorities, which was an assessment of the expenditure necessary for each local authority based on the population and demographics of each council area. These were used to measure the efficiency of local government spending and ensure enough was being spent to maintain the service provisions. Do these actually still exist? Either Minister can answer. If not, how does Welsh Government now assess local government efficiency?

So, yes, they do; there are still standard spending assessments. We use those to give us an average of what we'd expect the spend to be in each authority, given its population, demographics and other things that are taken into account. But, of course, the local authority isn't hypothecated to do that, and it's only an indication. So, it's up to each locally democratically elected council to decide how to spend its money. The RSG is unhypothecated. So, although the SSAs are there for us as a guidance, it isn't a command from us to spend in that way; it's entirely down to the local authority whether they choose to spend their unhypothecated resources in that way, or choose to spend them another way.

And just on something else you said, if the local authority wishes to provide services, the alternative to just always putting up the council tax is, of course, to look at best practice across the piece and try to understand why some local authorities seem to have to spend an awful lot more to deliver the same amount of service as others. And one of the big issues in our just-newly-turned-into-an-Act local government and elections Bill—just had the seal only this week, Chair, which I'm delighted to say—is, of course, that we are putting in place a system for performance management across local authorities, which will enable them to see who is best in class, and to explore whether their services would benefit from that kind of transformation, rather than just having more money put into the service. 

Anybody else want to come in on that one, or is that okay? Right, I'll go to my question. To what extent are Ministers estimating a long-term impact on NDR income due to the pandemic, and will the Welsh Government guarantee to provide additional RSG funds if there are reductions in NDR income in the future?

Great, thank you. So, we've been working really closely with local government and the WLGA to monitor the impact of COVID-19 on the collection of non-domestic rates and also, actually, on the non-domestic tax base because that's going to be important not only this year, but going forward as well. So, we would propose to keep on monitoring very closely with local government, but in respect of the budget for next year, we've made an adjustment to the settlements to increase the RSG component by £35 million, and that matches the decrease that we've estimated that we would see in non-domestic rate revenues next year. The non-domestic rate revenue component of the settlement is always based on estimates and based on forecasts and, as always, we monitor the actual position then as it emerges, and we take that into account in terms of our future estimates. 

We consider the Welsh local government settlement in the round and as a whole, rather than in terms of the individual components of the funding that come together to provide that total figure for the settlement. So, yes, it's absolutely something that we're alive to at the moment, and you will see it reflected in that £35 million for the budget for next year, but we also recognise, potentially, this is something that will have longer term implications too.

Thank you for that, Minister. I actually asked Jon Rae of the WLGA this very same question I'm going to ask you now. Has there been an assessment of the impact empty business premises have on NDR revenue? To my understanding, empty business premises pay full business rates, whereas when they're occupied many would have had business rate relief. Has the Welsh Government considered giving rate relief to empty business premises during this recession caused by the pandemic?

14:05

There are some rates and exemptions for empty businesses. I might ask Debra to come in and provide some of the detail to that.

Can I check everyone can hear me? 

The position, really, is similar to that for NDR as a whole. Obviously, COVID-19 is having an impact on business occupancy, and we are monitoring that, and the extent to which we provide relief for empty properties was also something we've taken into account in the estimates of NDR that we calculate for the purposes of the settlement. I won't go into the process of it, and the calculations, but we basically make the best estimate we can of the demand for reliefs in the coming financial year when making the estimates, and as the Minister was saying, they are forecasts, so given the uncertainty of the current situation, we have to constantly monitor things and adjust our estimates going forward.

Thank you for that. My final question is: what impact does freezing the NDR multiplier for 2021-22 have on future local government settlements?

That doesn't have any impact on future local government settlements. We're providing the funding to cover the costs of freezing the multiplier for 2021-22, and as with all of our decisions in previous years, for example to use the consumer price index instead of the retail price index to increase the multiplier, the funding is baselined into our calculations of NDR rates yield for future years, so there is no impact on the amount of funding available to local government.

Thank you, Chair. Good morning—. Good afternoon, everybody. I forget what time of day it is at the moment. I just wanted to ask a couple of questions on the council tax reduction scheme and whether Ministers could comment on the Trefnydd's response to the scrutiny in Finance Committee that there would be additional funding provided to plug gaps around the CTRS this year, and whether you're confident that that can happen and what that level's likely to be set at.

We're working closely with the WLGA, again in a similar space to the way in which we're doing so on NDR, to monitor the impact of the pandemic, particularly on the council tax reduction scheme. We've already paid councils £5.4 million for the increased use of the scheme in the first two quarters of this year. I have meetings over the course of the rest of this week, now, to firm up our support for local government in respect of the rest of this financial year, because there's absolutely no doubt that the pandemic has had a significant impact on that. As I said when we published the draft budget, I'll be holding some funding back in respect of COVID, to allocate at the final budget. I'll be looking at what support local government might need, and the big building blocks around the health response, PPE, field hospitals, test, trace and protect—that kind of thing—and then making some further allocations at the final budget.

Okay. Is there anything further you want to say about the allocation thus far? What you're talking about, that was the additional allocation that you might be looking at, but the funding allocation within this year's budget settlement—as I understand it, there's not been a change in that settlement since the council tax benefit was abolished in 2013.

We've maintained the council tax reduction scheme funding at £244 million for 2021-22, and that figure has remained unchanged since we introduced the scheme, as you say. Those funding arrangements were very much the shared decision between the local government sector and also Welsh Government. So, we developed this particular scheme together. I think it's important to recognise that local government does benefit significantly from the operation of a national model, whereas, of course, across the border, local government have to create bespoke localised arrangements. I think the national model does assist greatly. Clearly it's more efficient and less expensive to deal with.

There has been some increase in applications for the council tax reduction scheme in 2020-21 as a result of COVID, as we've just talked about, but overall, actually, the caseloads remain below the level that we saw when we introduced the scheme in 2013. So, I think, actually, that says that there's a job that we continue to do, actually, to try and encourage people to take up those exemptions, should they be eligible for them, because that's a concern—that there are people who are eligible for support who aren't yet coming forward for it.

14:10

Okay. That's a helpful explanation. Thanks for that. Can I just move on now to a couple of questions around—

Dawn, just before you do, I think the local government Minister wishes to—

That's okay. I just wanted to highlight that, elsewhere in my portfolio, we have a piece of work going on to make sure that people who are entitled to benefits receive them; it's called the income maximisation scheme for families. One of the things there is highlighting eligibility for council tax relief schemes and how to apply for them, and also passporting people who already get free school meals or council tax benefit onto the other one and vice versa. So, elsewhere in my portfolio, we're working on doing exactly that.

Are you launching that as a specific campaign at some stage?

Yes. In the next couple of weeks, there'll be a formal launch of it.

Lovely. Okay. Thanks for that. If I can move on now, Chair, to a couple of questions around transformation and legislation and whether the finance Minister could explain why the transformation and legislation budget expenditure line has been reduced in the region of £1.8 million in this budget.

I'll ask Julie James to take this particular question. It's portfolio related.

This supports a range of work that is around strengthening local government, including implementation of the new Act and a series of actions around workforce partnership, leadership development, digital transformation, funding reform and so on. This year, for example, we've used it to successfully implement canvass reform and prepare for the extension of the Senedd and local government franchises. So, it's a budget expenditure line that does a lot of work in a very large variety of areas. We'll continue to support that in 2021-22 with funding allocated for electoral reform, the implementation of the new corporate joint committees, sector-led improvement support and further rounds of the local government digital transformation fund.

There are three transfers that lead to the overall reduction of £1.8 million. The reduction also relates to the transfer to the emergency services network. The emergency services network replaces the core critical functionality of the existing UK emergency services Airwave communications system. The Welsh Government is a founding sponsor body for the programme, along with the Scottish Government, the Department of Health and Social Care and the Home Office. Also, this is balanced against a transfer in of £200,000 for social partnerships—to support our ongoing work on the social partnership and fair work agenda, which my colleague Hannah Blythyn can talk a little bit more about, Chair, if you want. That provides us with capacity to work with employer bodies and trade unions alongside. There's also a transfer in of £132,000 for the balance needed to support Welsh police forces with the ongoing costs of areas of their estates that were set up through private finance initiative expenditure. That's to cover that off. So, this is a BEL that does a lot of hard work in a lot of different areas, with a lot of bespoke projects. It's quite a complicated picture—

Is this really about shifting money to deal with more pressing priority areas? So, it's not cutting the budget, it's repurposing or reprioritising.

There are transfers in and out of the BEL, depending on what the projects look like and where they're being led from. We mostly use it for implementation of existing legislation or transformation projects, or support to local authorities that are struggling in particular areas, or that kind of thing. So, as I say, it's a BEL that does a lot of work. We're in conversation with the WLGA at all times about what this budget looks like and what we might be projecting its use for over the next financial year.

14:15

I just wanted to expand, really, on what Julie said with regard to the work around social partnerships and fair work. That's just to take forward that agenda in terms of the progression of the draft partnership Bill that we're working on, and things that were in the fair work recommendations that were brought into sharper focus by the pandemic—so, the establishment of a health and safety forum, looking at health and safety within the workplace in respect of public health when it comes to COVID, and around taking forward work to use all of the levers we have, really, to ensure that people are better placed to know both their rights and their responsibilities in the workplace.

Okay. Thanks for that. My second question on this section is around—I think, Julie, you may have answered it in the last question, which was about some of the money that's been made available to deal with the implications of the Local Government and Elections (Wales) Act 2021. Are you satisfied that there's adequate financial resources now for all local authorities to meet their obligations under the new Act?

That splits nicely into two bits. I did mention some support for the setting up of the corporate joint committees and implementation. Principal councils have also had £2.2 million over the last two financial years to support electoral reform, including extension of the franchise included in the Act. This year, we're providing £500,000 to support the implementation of the digital democracy elements of the Act, like the broadcasting of meetings, the establishment of online petitions schemes and so on. We've been working with the Centre for Digital Public Services and the WLGA to explore what further support councils might need to implement the provisions in the Act. If you remember, we pulled across the COVID-19 arrangements permanently, because local authorities had so appreciated the new way of working, so it's working on what the extension to that might look like.

The implementation timescales for the majority of the provisions of the Act are aligned to the May 2022 local government elections, so we're keeping that closely in mind, but that's obviously at the end of the next financial year, rather than the beginning of it. We're working closely with the WLGA just to put some seed funding into the start-up of the CJCs and so on, which will be towards the end of next year. The regulatory impact assessment for the Bill estimated costs of just under £15 million, but it was over a 10-year period as the Bill beds in, so you wouldn't expect to see that upfront in the budget. So, we're very happy that we've provided what's necessary for the year ahead, and then you'll see that budget spreading out as the Act is fully implemented.

Is that taking into account any risks that are associated with the potential delay of Senedd elections and so on?

At the moment, we don't think there'll be any delay in the local government elections for next year, even if the Senedd elections were delayed, because the delay we're talking about is only a matter of months. But, obviously, we have to keep a weather eye on that. God forbid, if we're in the pandemic this time next year, then, obviously, we'd be looking at that very closely. But at this point in time we're not imagining that that will change. There is a small movement in the window for local government by-elections, which we're also looking at, but it's very marginal in terms of expenditure. 

Okay. Thank you. My last question, Chair, is relating to capital funding and whether the Minister could expand on the time-limited capital allocations that were due to end in 2021 and have now been rolled into this local government settlement.

I don't know which one of us you want to—which one of us do you want to do it? Rebecca, do you want to pick that up, or—?

I guess you had to negotiate it, Julie, but Rebecca had to sign it off.

You can see that Rebecca and I are, obviously—although bits of this fall into one portfolio and bits of it fall into the other, in point of fact we actually work on them all the way through together. Perhaps, actually, the best person to answer the question, then, is Judith, who's the official who actually does the work behind the scenes.

Can you hear me?

Thank you. There's a number of chunks of this. So, over the last four years, we've had a number of capital additions that haven't been put in for the long term, but we're now rolling forward in a way that we didn't expect to. So, in the 2019-20 draft budget, we allocated £60 million. That was over three years, and that was for public highways, which was designed to be both roads and active travel. So, we're now continuing that into 2021-22. In the 2019-20 budget, we also put in £100 million capital, and that was just to boost local authorities' general capital funding, and that was £50 million in 2018-19, £30 million in 2019-20, and £20 million in 2020-21, so this year, and we're continuing the £20 million now, so there's £20 million going in in 2021-22 that we hadn't expected to be able to put in. Does that make sense?

14:20

And just to complete that picture then, in the draft budget, there was an additional £15 million allocation to general capital last year, which has also been extended now into next year as well. 

Thank you very much, Dawn. Thank you, Ministers and officials. Is this at the stage when we see your departure, finance Minister, or do you stay with us? We're moving on to housing now, and homelessness and housing. 

No, I'll leave you there, Chair, because the main items within my portfolio responsibilities are non-domestic rates and council tax, and I know we've managed to cover those, but I'll probably be watching from elsewhere—[Laughter.]—to keep a note of the scrutiny, because I'm taking a close interest in what committees are seeking to find out more about. 

Okay. Well, diolch yn fawr, and thank you for your attendance. 

Okay, we will move on then to Mark Isherwood. 

Thank you. Good afternoon. Currently, there are several thousand people in temporary emergency accommodation. What discussions has the Welsh Government therefore had with both local authorities and the wider housing support sector to establish whether the increased allocation for the homeless prevention grant is, on the one hand, required or, on the other, sufficient?

Yes, thank you, Mark. So, the additional funding will enable us to maintain the emergency provision for accommodation support into the early part of the next financial year as required, and ensure continuity of provision. We obviously keep a weather eye on this and the pandemic both, because I'm very pleased to say that we've managed to continue our pledge that no person would be homeless during the pandemic, and so we've been able to continue that pledge, and I'm very pleased to be able to say that, because that's in stark contrast to elsewhere in the UK. 

In order to be able to make sure that decisions best meet the evolving challenges, we've kept as much flexibility in the system as possible, both, as Rebecca just said before she left us, from the further allocations from the in-year COVID funding at the final budget when we better understand the impact of the winter months, and then we'll be able to consider what additional funding is needed to support both the NHS and local government, because they're right in the teeth of the response to the pandemic. 

So, the homelessness team work very closely with every authority across Wales. We have embedded officials with each local authority working inside the homelessness teams to ensure that we understand exactly what the pressure is in each individual local authority and what they're responding to, and we've been responding in a co-produced way with each local authority depending on their particular circumstances. And not surprisingly at all, the circumstances that pertain in Swansea or Newport are very different to the ones that are in Ceredigion or Denbighshire. But every local authority has had pressure in this area, and we're very, very proud of the work that all of them have put in to make sure that enormous numbers of people have been housed. 

We've got new presentations monthly in record numbers, and we're also moving record numbers of people out of temporary accommodation into full-time accommodation. So, I think it's something to be really proud of for every single person who's been involved in it, and we're really grateful to the finance Minister for having funded it all the way through. 

I just wanted to say—this is slightly straying into policy, Chair, but forgive me, because we talk about a phase 1 and a phase 2, and just to be clear that those things are active at all times. They're about the individual and not the system. So, when you first present as homeless, you're in phase 1, and then, when you move on into your temporary accommodation, and, hopefully, into your permanent accommodation, you're in the phase 2. So, I just wanted to be clear that it's not linear; we won't come to the end of phase 1 and then move to phase 2. Because that's a common misunderstanding. 

And in terms of discussion with and evidence from the wider housing support sector, I wonder if you could tell us what they've been telling you. 

So, the significant increase to the housing support grant demonstrates our commitment to ending homelessness. The sector have been very pleased with the funding this year. It's slightly more than they were actually asking for, which I'm delighted to see. Specifically, it supports a transformational shift to a rapid rehousing approach and it provides additional service provision and bolsters existing provision. So, it helps address the recommendations that we had from the homelessness action group, which, Chair and committee members, if you cast your minds back to the beginning of the pandemic, we got a housing action group in place to give us recommendations on how to move to a situation where we didn't have ongoing endemic homelessness in Wales. And, of course, what the pandemic has enabled us to do is accelerate that from a five-year programme to a single-year programme, quite extraordinarily.

I cannot pay tribute enough to the staff working at the front end of this, because this has not been an easy thing to do at all. It's also demonstrated the high level of previously unmet need. So, this is something I've rehearsed in the committee in policy scrutiny many times. So, what this is doing is allowing us to put the budget in place, not just for what we always call 'bricks and mortar', although, in Wales, it's mostly timber-framed houses that we're building, but actually of course all of the vital support services that keep a person able to sustain their tenancy once they're placed in accommodation, and so this allocation to the housing support grant underlines our commitment to being able to do just that.

14:25

My question in that context was more about the earlier question relating to the homelessness prevention grant. Clearly, housing support grant is completely interdependent with that. It's a great relief to the sector and their staff that, for the first time in years, they've not had to run a resource-intensive and protracted campaign to protect this and have actually seen an increase in the budget this year. You referred to the homelessness action group and the forthcoming action plan, but what evidence can you provide regarding their statements to you regarding how this allocation aligns with the recommendations from the action group?

Yes, so, we're in constant—. I've done a lot of work with Jon Sparkes in particular over the course of the pandemic in making sure that we understand exactly what's being proposed to us and that we're able to carry it out, and we've recently asked him to do another piece of work, in fact. So, we've been very keen to make sure that we understand the expertise across the sector, including the lived experience of people who've experienced homelessness, and we've designed a system that closely aligns to what they are telling us will enable us to move to a rapid rehousing policy. So, you know, Mark, that's a whole-system approach, isn't it? So, we have to both build the houses that people are going into and we have to build them as fast as we can go, but we also have to have a system that's got the capacity to build them—and that's not just about the houses; it's about the land and all the rest of it, the supply end—and we've also got to have the support services necessary to support people in that accommodation once they've been allocated. And there's a raft of very complex policy behind that. So, this is about finding the right home in the right place for the right person, with the right support network around them. And I'm really delighted that we've been able to increase the grants that allow a very large number of third and voluntary sector organisations, as well as our statutory partners, to be able to come along that journey with us, which they're all very delighted to do.

Well, in that context, you've stated that you want to make, quote, homelessness 'rare, brief and unrepeated', and I think we'd all share that goal with you. You refer in both your previous responses to increased housing supply—you referred to timber-framed properties and so on—and to support once people are in those. To what extent are you also addressing the point that you need to tackle the issues that brought people into homelessness beforehand and that might need to be tackled before they themselves feel comfortable in accepting a new home? And to what extent are the budgets we've spoken about so far designed to reflect the longer term provision of housing supply, or are we talking about that more broadly within the other budgets that have also been announced?

So, you're absolutely right, Mark—they're completely interlinked, of course, because, as I said, it's not just about building the houses, it's building them in the right place for the right people and the right configuration of houses. So, you know, are we building one-bedroomed houses? Are we building four-bedroomed houses for big families that are experiencing difficulties during the pandemic? Where is the supply required? So, that's the whole point of working with the local authorities across the piece: to understand what homelessness looks like in Denbighshire and Gwynedd, as well as in Newport, Swansea and Cardiff or Wrexham or any of the other places. And then it's about making sure that we've got the right investment in place to build the right houses in the right place. So, we know the biggest problem is houses for social rent. So, we're building enough private sector houses; it's building houses for social rent that's the problem. So, we've been able to ramp that up ever since the UK Government saw sense and removed the restrictions on the housing revenue account. So, the councils have really ramped that up and, of course, we've worked very hard with our registered social landlords to make sure that the supply is coming through, and you'll know that we've been putting a lot of work into modern methods of construction type housing as well—that goes up very rapidly once the land supply is secured.

And then on top of that, of course, we've got to work with all the agencies to understand what the causes of homelessness are, and that is a very complicated thing to do, because each individual's circumstances will be hugely different, and trying to capture that and make sure we've got the services in place is really important. So, that's all around all the things about relationship breakdown, domestic abuse, lesbian, gay, bisexual and transgender issues, youth issues, poverty issues. There's a raft of things that need to be looked at there, and we absolutely need to get into that. There's a big data piece going on in Welsh Government around how we capture that data, and I'm sure that one of my officials will talk about that if you want them to. There's a big piece about how do we capture that data, given it's so diverse and each individual's experience is so difficult, because we also need to turn the tap off, if I could express it in that way. So, it's all very well to be housing the large numbers of people still presenting, but we need to understand why they're still presenting and if there's anything we can do.

So, my colleague Jane Hutt, for example, has been able to invest a lot of money into advice and support services, trying to stop the relationship breakdown and so on in the first place. But the pandemic, of course, has exacerbated that. Even for those of us with long and happy relationships, being cooped up in the same house as somebody for a very long period of time will put a strain on that in the best of circumstances. So, if you're not already in the best of circumstances, you can see how that strain is multiplied tenfold. So, we've been working really hard to do that, and I'm really proud of the way the system has responded, and this budget allocation is in reaction to the way the system has responded in order for us to assist the sector to keep on going, because, frankly, they're as exhausted as everybody else after all of this.

14:30

Yes, they are and they're doing a great job, and they're regularly in contact with me, and I'm very pleased and delighted that they—. I'm proud that they've risen so well to the horrible challenge that they're all facing. I take from that, therefore, that housing supply, which I'll come on to in a minute, is the other budget that we haven't yet got on to, and we're really talking here about support and prevention, which are the other matters that you've touched on. How do the budget allocations we've already spoken about—support and prevention—support the partnership working called for by Audit Wales in its July 2020 report into rough-sleeping, when it said that the pandemic

'provides public bodies with an opportunity to fundamentally change how they work together to address rough sleeping', 

so, we're not just talking about talking with local authorities, but we're talking with the myriad successful and vital front-line housing support providers, physical house providers, particularly emergency and intermediate housing, and fledgling social letting agencies being delivered on a multi-agency basis?

So, we have liaison groups set up with absolutely everybody in the housing sector. Officials have regular meetings with support providers and so on. We've got a particularly good tale to tell here on mental health, where the mental health teams have really stepped up and assisted us. And as I said in a response to an earlier question, we're particularly proud of the way that those teams have pulled together to assist people with a range of difficult problems as a result of having insecure housing during the pandemic. So, I think what I would say, Mark, is that the pandemic really has allowed people to pull together in a way that's been exemplary across Wales, actually, and, in weird kinds of ways, the way that we're all working digitally has allowed better liaison with some groups, because it's been—. Whereas before we'd have all travelled for two and a half hours to get to a half-hour meeting, it's been possible to use that two and a half hours to have five half-hour meetings with people that you've been able to get a good dialogue going with. So, that is the one big silver lining coming out of this, and we've absolutely taken advantage of that in being able to do it.

Having said that, there is a down side. So, some of the mental health and support for people who've had a very traumatic time and have found themselves to be homeless or in very insecure housing. It's not been possible to deliver the kind of face-to-face personalised service. So, we have a small number of people who have fallen out of temporary housing and back in again, and I'm sure the lack of face-to-face has been really instrumental in that, and we'll be able to work on that as we bed in the systems in the pandemic. So, we've got around 112 individuals currently, we think, who are rough-sleeping. We do not know whether those are rough-sleeping for the first time or whether they're falling out of temporary housing, but we've got outreach workers working with them in order to try and get them back into services. But, often, those people are the ones with the most complex problems that really need a face-to-face personalised service that's been harder to deliver during the pandemic, to be fair.

14:35

Moving on, then, specifically to housing supply: what assessment has the Welsh Government made of the economic impact of the pandemic on home building for open-market purchase, for affordable housing, and, separately, for social housing?

Sorry, I lost you at the end there, Mark. I didn't quite catch the end.

The impact of the pandemic: what assessment has the Welsh Government given to the impact of the pandemic economically on home building, both for open market but also for affordable homes, and then, distinctly, social homes?

Sorry. Thanks, Mark, for repeating that. So, yes, absolutely, the sector's been impacted by the pandemic. There have been some issues with supply chains, including shortages of materials for particular things, but we are in regular contact with the Builders Merchants Federation about access to supplies. And we've been working with the sector and representative bodies and really welcome their ability to adapt and put in place safe working to take that into account. The official on the call, Ian Williams, works very closely with the Home Builders Federation and the various industry representatives, and myself and my colleague Lee Waters appear in front of them, on a regular basis, to discuss particular issues with the sector and so on. I'm sure Ian will be able to set it out for you, but there's a complex chain of people all working on the supply-side stuff. So, there's a whole series of working groups, under a working group that my colleague Lee Waters organises, around construction and manufacturing in general. I'm sure Ian will do a better fist than me of explaining the intricacies of the interaction. But I attend regularly the construction and house builders parts of that, and Lee comes along with me.

We have absolutely concentrated our efforts on the affordable housing and social housing supply. We've absolutely demonstrated in the pandemic that more than ever we need a better supply of affordable and social housing. So, we've put £2 billion into that over this Senedd term. We've made our 20,000 affordable homes; we would have made a lot more than that, had we not had the pandemic, but we've been able to carry on going, and we've got there.

We've also seen a continued demand on our housing investment funds. So, we've got application increases in Help to Buy, unlike across the border, where we've got higher applications during 2020-21 than the same period for 2019-20. We've also got something called the Wales property development fund and the Wales stalled sites fund, which are both aimed at bringing forward pieces of land that would otherwise be difficult to develop. And we've just been able to put an additional £30 million in that to increase access to development finance for small and medium building firms across Wales, so really pleased with that. And I've been working with my colleague Rebecca Evans on freeing up money from the system to put into those funds that are always spent out, and, pretty much, we can meet the demand. We can put as much money into them as we can get to meet the demand, so I'm really pleased with that.

We've also been doing a piece of work, across with our councils, looking at their local development plans and looking at land allocated for housing, especially where it's been allocated for housing for a long time without coming forward, to understand what the problems with that are, to see if we can work with those councils to bring forward particular development sites. And, again, my official Ian Williams on the call has been doing a lot of work in that regard, with planning colleagues and so on, to understand the housing land supply, not just the building of the houses, to make sure that we can free up as much of that as possible, and, frankly, to get the councils to look again at their LDPs if they've allocated a lot of land for housing, which is now demonstrably not ever going to come forward for housing for various, complex reasons. So, there's been a big piece of work across that, and the budget allocations into those funds will really make that come to life as we assist our small and medium-sized builders to take advantage of that and to develop some of those sites. Sorry, I'm a bit evangelical about it, Chair—

14:40

Well, that's for the Chair to say, not me. [Laughter.] You referred to Help to Buy. It's my understanding that Help to Buy is funded with recyclable Treasury loan funding, as opposed to direct Welsh Government budget. How have budget allocations been prioritised to allow new council housing specifically—social council housing—to be delivered either directly by local authorities or in partnership with registered social landlords? And aligned to that, what steps are being taken to ensure that your new framework for the social housing grant you plan to introduce is being prioritised to address this objective? 

Just before I address that, Mark, if you don't mind, just on the financial transactions capital—absolutely, you're right, that is what it is, but we do have an allocation for that, so we can't exceed the allocation. And, actually, we're having a bit of an argument with the Treasury at the moment because Help to Buy has fallen off in England, so our allocation is much less than it would normally be, and actually we could spend a lot more than we're getting. So, if you want to intervene on our behalf in that regard I'd be very grateful, because we could do with a lot more in terms of financial transactions capital than we're currently getting, because, as I said, our Help to Buy scheme is going from strength to strength, which has not been the case across the border. So, I just wanted to make that point.

In terms of council housing, we've given them access to the social housing grant for the first time from April 2021. We're going to top-slice an allocation this year, and then review against the delivery. We're really encouraged by the local authorities' willingness to consider factory-built homes as a default, because they're, obviously, high-energy efficiency and ultra-low waste—speed of build and so on. And we've been working with a number of local authorities who are really keen to get moving, and are doing pretty exemplary stuff in this space. So, I don't think there's a single one of the stock-holding authorities that isn't really keen to get going, actually.

I'll just ask, in terms of factory-built housing, I wonder if you could confirm—I hope you will—that you're prioritising those factory-built units being developed within Wales. I think of the factory on Anglesey, for example. And also, more broadly, how will you ensure that the funding that is available for this is only used directly by councils to build the council housing if that's proven to be more economical, more efficient and produce greater volume of quality housing than if they park them with an RSL?

So, we've got a range of schemes across Wales. We're, obviously, very keen on Welsh supply chains where at all possible, and, obviously, there's a piece of work going on with myself, my colleagues, the Minister for Economy, Transport and North Wales and the Minister for Education, in a piece of work that builds the houses, but also stimulates the economy and provides the skills. So, it's just trying to get all three of the pieces that you get for local factories, such as the one you mentioned, Mark, and a number of others across Wales, who use locally sourced supplies, where at all possible, and employ local people in the building. So, you know, it's a kind of win-win-win situation, and we're very keen on encouraging that.

And then we've got a range of things going on with the councils. Some of them are doing both: some of them are developing the housing themselves but also working with RSLs; some of them only work with RSLs. There's a whole range of things, and, again, Ian and his team have been working very hard with the councils across Wales to understand what that looks like and to assist them in developing those partnerships as appropriate, depending on the local circumstances. 

Will the new system of social housing grants be evaluated, and if so, on what timescale? And then, moving on, what impact do you believe that the £60 million of financial transactions funding for social housing grants has had in the current financial year, and what impact will it have as we go forward into the next financial year?

Chair, I'm going to ask one of my officials to explain the new framework for the social housing grant, because, frankly, it's incredibly complicated, and I don't want to get it round my elbow. But, effectively, what we're looking at is changing the rate of intervention so that we get the maximum for our money, but I don't know if it's Ian or Emma, Ian probably, who can explain exactly what it is we're looking at.

14:45

Thanks for the question, Mr Isherwood. As you probably know, we've been paying a fixed rate of 58 per cent as an intervention rate for new social house building for many, many years. I think people have almost forgotten why 58 per cent was this magic number. You may need 80 per cent in certain places, and you may need 25 per cent in others. It's almost economic illiteracy to just have a standard number. The new standard viability model will effectively allow people to get what they need. Sometimes that will be lower, and sometimes it'll be higher than 58 per cent, but it will, in theory—and in this small pilot that we've run this year, it proves the fact that it works far more sensibly, and it is just better economics to do it. You are paying for what you need, rather than just some arbitrary number. That's the essence of it. It feels, philosophically, anyway, to be a far better system.

We will have to review constantly to make sure that we don't set the parameters too tight, because, obviously, we want value for money. We don't want to be paying for inefficient borrowing or treasury management, if someone's got themselves into a fixed deal of 8 per cent or something like that, well, quite frankly, that's for their board to be looking at becoming more efficient as an RSL. If their management costs are very high, then they're going to find it difficult to work within the new standard viability model, but, slowly, I think we should be moving towards the top quartile in our parameters. The public purse shouldn't be paying for inefficiency, I know you'd agree with that.

Yes. To assist the work of the successor to this committee in the new Parliament, what timescales should they be looking to for evaluation, so they can look at scrutinising that?

On that, we're obviously going to look at it on an annual basis as it rolls out, but the formal evaluation of the new system will be done once it's been running for three years minimum, because, otherwise you're basically busy weighing the pig before you've fed it, so we'll obviously keep an eye on it on an annual basis, but the formal evaluation will be after the first three years' roll-out.

And finally, if I may, just going back to Help to Buy, and by all means, drop me a note about that, I don't unfortunately have magic hotlines to Westminster as some seem to think I might have—I'll do my best. How will eligibility criteria for phase 3 differ from phase 2, and what proportion of the homes purchased under this scheme do you anticipate being built by small and medium enterprises?

So, what we'd like to do with phase 3 of the Help to Buy is influence the market to build the kinds of houses that we want to build in return, if you like, for the Government's subsidy that they get to sell the house. So, we're very keen that we get as much FTC as possible to put into that scheme to get the incentive to change the behaviour of the builders, and the whole purpose of that, Mark, is to get the small and medium enterprise ones sucked into the scheme so that they get the benefit of, if you like, slightly de-risking because of the Government money put into it as they change their models. So, what we'd like to see them—. We're very keen on small and medium firms in particular doing that, and we've also been telling them, quite frankly, that if they build their own schemes to social house standards, then we will enable councils and RSLs to buy them off plan, which will help them through cash-flow problems and so on, and will assist with our social housing stock.

So, again, a win-win all round, and part of the liaison committee that I go to very regularly that I spoke about earlier is about persuading them to do just that, and, actually, we've had a very good conversation with them, and I know Ian and his officials have had in-depth discussions with them along those lines. So, I think that's great, but the more FTCs we can put into that system, the more of those builders that we can assist to use the Help to Buy system to de-risk their products in that way.

Will it be restricted to first-time buyers in phase 3?

We're looking at that, and, again, it depends how much, in the end, we have. At the moment, we don't really have enough FTCs to do anything as substantial as we'd like, but we live in hope.

14:50

Thank you, Chair, and good afternoon, Minister. I wonder if I could turn to the issues of building safety and funds for building safety, and not least, of course, the still very much in people's minds issue of high-rise residential buildings and making good those buildings—those ones that have had inappropriate cladding and so on. So, could I first ask you: the £32 million that's been allocated for building safety in the year ahead, how is that going to be used? And in terms of the high-rise buildings, are you confident that there are sufficient funds within that amount to address the outstanding remedial work, which is quite substantial itself?

No, I'm not confident, but at the moment, we're not confident we can deliver a fund at all, so you don't want to tie—. What we'll have to do is we'll have to make sure that we get all the right legal advice in place about what is possible. I know that people don't like me saying that this is very complex, but the fact that you've been saying it's very complex for a while doesn't take away the complexity. So, it is a very complex area. You'll know that although housing is devolved to Wales, land law is not devolved to Wales, and there's a really ragged edge to devolution around leaseholders and so on. So, we've got a really complex set of requests for legal advice out at the moment about what it is possible to do in Wales without UK Government intervention. We've also been working with our MPs to try to put some pressure on the UK Government in its building safety Bill to actually change the contractual periods currently existing for having built properties. So, a very large number of the properties that have got this problem were built more than 12 years ago, and so the contractual liability has lapsed. So you can't go back and sue the builders, because they're out of liability. So, the UK Government could change that; we cannot. So, there's a complex web of things that could be done here.

In terms of the actual remediation, what we want to do is put a fund in place that remediates all of the problems in the building. The UK Government's fund remediates the cladding only, but it's not—. The cladding has been a problem, but actually, it's quite often the stuff holding the cladding onto the building that's just as much of a problem, or the compartmentalisation—that's very hard to say—the thing that compartmentalises the building so that you're safe in various bits of it. And even just down to the firebreaks in the walls and so on have not been correctly installed in a large number of buildings. So, it needs quite a lot of intrusive investigation for each building and then there will be a range of things that need to be done. There's no point in fixing the cladding if all the rest of it is still problematic.

So, yes, it's really complicated, so what we've got is an initial fund that we're prepared to put in place, but we're not yet even sure we've got any way for people to access that. The UK Government fund has not been well accessed or spent, and I've asked a number of colleagues to find out for me, and if anybody on this call can do that, how that's going, then we'd be really grateful. We haven't been able to get much feedback from officials in the UK Government on that, because this is such a complex area.

And then the last thing I want to say—and this isn't about budget scrutiny, but it's worth saying—is that, at the moment, the way the law is, the leaseholders end up picking up the tab for this, and they're the ones who are least responsible for it. I can't change that law, unfortunately, so we have to find a way to structure a fund that allows the building to be remediated without taking away the whole of the equity of every leaseholder in the building, and that is very easy to say but very hard to do. So we're working with the UK Government as much as we can, and I've written out to all the developers and contractors and so on to talk to them about it, and there's a big issue around insurance companies and lenders and so on. So, it's hugely problematic, Huw. So, the answer is: no, £32 million is unlikely to be enough to remediate every building in Wales, but it's enough to test the fund, which is where we are at the moment.

Well, that's helpful and very, very honest and frank, I have to say as well. And I think it probably stands you in good stead that you've got quite a legal background behind you as well as a policy development background, and deciding where the financial priorities should be. But from what you're saying, Minister, we can well anticipate that this fund may allow us to explore both how we can get the funding to the right people in the right places and how far it'll go, but that we could well be in the situation of trying to unravel this and get some genuine justice for the people in these properties for the next two or three years and more, and probably until some of these big contractual issues are fixed and funding issues at a UK level as well. 

14:55

Yes, absolutely. So, the estimate that I've seen for across the UK remediation is £20 billion, just to put it in context. So, this is a big problem for the UK Government as well as for us. This is a very personal point of view, Chair, I'll just emphasise that—it's not the Government's view—but my own personal view is that, unless the UK Government puts a windfall tax on the developers, they will never have a fund big enough to sort this out. We're not in a position to be able to do that, unfortunately, so the Government will have to come up with that money from somewhere, and it seems to me that that's the obvious place to go, but that's a political decision for the UK Government and not for us.

In the meantime, we are very keen to ensure that people are safe in their beds, so the buildings are not going to burn down with loss of life. I can't emphasise enough how closely we've worked with our fire and rescue service colleagues. My colleague Hannah Blythyn takes a lead on that, but we've worked very hard with them to make sure that people are safe. But your heart goes out to people who are having to pay an enormous amount of money for waking fire watches and other things that do keep them safe, and nothing about this situation is fair. But unfortunately, much as people would like us to do things, I cannot do things that are beyond the power of the Welsh Government, and much of this is beyond our devolved competence. 

That's a very useful context, Minister, but I want to turn back to the practicalities you touched on then moved on quite quickly. The fund that is available, how will people access that? On what terms and criteria will it be accessed; what will it be used for? So, that limited fund that you have that will test this, how's it going to be deployed? 

We're still out to legal advice on that, but what we've asked for legal advice on is who can apply for the loan because, again, it depends who is—. Even worse, each building has a different set of structures associated with it. So, I've been meeting with individual leaseholder and residential groups in each individual building, and the legal structure for each building is different. So, some of them own the freehold, some of them don't; some of them have partial ownership, some of them don't; some of them are all individual leaseholders, some of them have corporate leaseholders—just a really complicated series of different situations. And so what we want to do is establish a fund that's flexible enough to be able to fit the various myriad of different arrangements in place in each building, and get the money to the people who need it.

What I don't want to do is correct the deficient investment of a loan company or a freehold company that, actually, doesn't really have any interest in the building other than financial at the taxpayers' expense. So, it is a really complicated problem; whether people like it or not, it's a complicated problem. And so we'll structure it so that it's a combination of loans, grants, hybrids of those, in order to try and get the best arrangement for each building in the end.

Okay. Some people have remarked—and I guess from your answer, you'd say this is too simple a way forward—that when in the draft budget narrative the Welsh Government referred to the moral obligations of developers to remediate the buildings, some people have interpreted that as saying that if there's a moral obligation, then those developers should simply pay for it. From what you're saying, it's not workable, it's not practicable—there has to be a more complex approach to a complex situation.

Well, unfortunately, Huw, the developers have not seen fit to step up to what's obviously their moral obligation, and in ordinary times you'd expect the hit on their company's reputation to be such that they'd want to put it right, but that hasn't turned out to be the case. The companies seem quite happy to have that hit on their reputation. There is no legal way to enforce that. That's the problem. So if they're not going to do it because they ought to, then you have to have a legal way to enforce that, and no such route exists. 

Now, again, that's very simplistic because for some people in some buildings, there may be a route—it depends how long ago the building was built and what the structure of the company that built it was, and so on—but many of these buildings are built by special purpose vehicles formed just to build the building that then disappear, and they may have a famous name attached to them but the actual holding company is not in the frame legally. So, there are really complicated things to work through here. 

There are other instances, one in my own constituency, where most of the original leaseholders have been bought out by an investor buying at rock bottom who is now looking to the taxpayer to make that investment good. I, personally, don't think that's a good use of taxpayers' money. There are complex issues here that just have to be unravelled. But, in the end, the UK Government has a number of macro levers that we simply do not have. In the end, they will have to use those macro levers, or we will have this problem for the next 40 years.

15:00

Okay, thank you, Minister. I know I've taken you further along than the budget allocation itself, but that context around how we resolve this issue, through funding or other means, I think, is very important. Anybody listening in to this, an individual leaseholder listening in, will want to understand that there's a determination to resolve this one way or the other. Thank you.

Can I turn to the issue of health in terms of housing, and, in particular, the number of funds that are available to modify and make more appropriate homes for a range of abilities and disabilities? One thing the committee has taken up before is the effectiveness of the Enable programme, specifically, and whether that programme is delivering value for money and improved outcomes. Could you give us an update on that? What is your assessment as to how effective it is and the outcomes being delivered?

We continually monitor the value for money for the Enable programme. The evidence we have so far suggests that large numbers of mostly older people are unable to get home adaptations without being subject to a means test, which has been a big issue in previous iterations of the same programme. The latest data we've got is for 2018-19, which shows that local authorities made over 5,300 adaptations using the Enable grant. The average cost of the work was £745, and the average time from first contact to completion was less than 25 days, and 86 per cent of the beneficiaries were aged 65 or over. The 2019-20 data is available within the next three months. The data collection has been delayed due to COVID-19, because statistics colleagues have been deployed elsewhere during the COVID-19 pandemic. So, we would ordinarily have had it faster than that, but it will be available shortly. It appears to be doing what it was intended to do, but we'll see when we get this year's figures what that's panning out like.

In scrutiny of budgets as they go through, committees are always interested in learning how the data that's coming forward and the evidence actually changes the way in which budget allocations and priorities happen. So, can you be specific in terms of what you've learnt through the Enable programme so far that has delivered changes to those budget allocations or priorities?

We're in the middle of doing a piece of work on that. We've got the Wales Centre for Public Policy, who have nearly done a report for us into the implications of removing a means test, and what the implications for the way local authorities have administered the grant are. Most local authorities manage the grant directly, but around half of them have direct partnerships with care and repair agencies as well. We've got a piece of work going on to evaluate that, Huw, and then when we've got that we'll be able to look at whether that's the best way of funding it or whether there are better or more direct ways of funding it.

You've given us something for a future iteration of this committee to come back and look at now. Thank you. Thanks, Minister. Chair, back to you.

Okay, thanks, Huw. Some final questions, then, from me, Ministers. Firstly, on financial inclusion and advice services, we spoke earlier about the unequal impact of the pandemic. Have there been any changes to budget allocations to ensure that advice services are available to the groups that need them most?

I was just going to say, Hannah Blythyn's going to—. There we go. We're talking across—.

Diving in quickly there. Yes, thank you, Chair. Thanks for that. Responsibility for advice services lies with the Deputy Minister and Chief Whip, who I believe you're seeing a bit later on this afternoon. We do expect that the combined impacts of COVID and the European transition will obviously continue to increase demands on such services. It's more than ever that we're able to increase the help and support for people to access those services. In respect of the discretionary assistance fund, the area that we work on within this MEG within this department, obviously, we've already introduced some flexibilities and additional funding for the discretionary assistance fund and the emergency assistance fund element of that—so, increasing and extending those flexibilities to up to five claims within a rolling 12-month period and repeat claims within a 28-day period, really in recognition of the increased demand, because of more people, perhaps as an impact of COVID or other related circumstances, needing to perhaps claim universal credit for the first time. Those flexibilities help over the five-week wait that people may have. Just in terms of where we are in terms of further consideration of that with the Minister for Finance and Trefnydd, we're currently in discussions and working very closely considering the additional demand on the fund—because we know it's a demand-responsive fund—in respect of any allocations that could be made, perhaps, at final budget stage.

15:05

Okay. If we move on, then, to the discretionary assistance fund, the Welsh Government's written evidence notes that this will be considered as part of the allocations made at the final budget in terms of the COVID-19 reserve. Could you tell us what assessment has been made of the likely demand on that fund for 2021-22, given what we currently know about the ongoing impact of COVID-19?

Like I say, this is a demand-responsive fund. The DAF itself continues to be monitored on a daily basis with the forecast demand and spend regularly reviewed, but I think anybody could, perhaps, take into account the current circumstances and make a safe assumption that we would anticipate increased demand on that service, especially as we continue to be in the midst of a pandemic. Based on the current trend of COVID-19 demand, plus the consideration that I've already referenced in terms of flexibilities around the rules, the forecast spend for 2021-22 is likely to be in the range of £27 million to £29 million, and that includes the cost of the delivery of the fund as well as the payments itself. We're really very much aware and mindful of the incredible uncertainty regarding demand due to the impacts of the pandemic. So, like I say, we're currently working on a range of options for the DAF fund for 2021-22. Ultimately, it's demand driven, so it will vary accordingly, but it's certainly something that's very high on our agenda, and those discussions continue in the pandemic, but also as we head towards any decisions around the final budget. We're obviously happy to share any further information as and when we can with this committee.

Okay. We'd be very grateful for that, Minister. We have a final question or two from Delyth Jewell on regeneration and communities. Delyth Jewell.

Diolch, Gadeirydd. Turning to regeneration, could you tell us what steps you've taken, please, to focus on this when determining the allocations?

This is me again. I wait all session for a question and a couple come along at once. Thank you for the question, Delyth. One of the things I've been reflecting on recently is that I think it's almost exactly a year ago that I was in Rhyl launching our transforming towns agenda and support package, and I think very much the ambition and action that was central to that agenda remains relevant today. It remains perhaps all the more prescient as we look to recovery and reconstruction from the pandemic, because I think many of the challenges we'd already identified were there, particularly within the centres of communities and towns, have been brought into sharper focus and perhaps are somewhat accelerated by the pandemic.

I think things we are doing around the support for—. So, our town centre loans fund and things like that actually help repurpose empty properties, or breathe new life into properties, to find a new use for them, to help sustain and drive communities and towns into the future. But also things around the green infrastructure schemes, which are worth £9 million, right across Wales to make towns greener and more attractive and to increase that kind of sense of pride in place and to give people more reasons to want to go into towns and spend time there. I think that green infrastructure element has become more and more, like I said, into focus as a consequence of the pandemic, as more people are spending more time at home and making more of what's on their doorsteps. So, those well-connected green spaces are all the more important.

We've also been working with local authorities to see how we can boost town centres, both during COVID and post COVID, where we're looking at, actually, how we can help them increase their digital offer and footprint. You probably know anecdotally about places near to you where, perhaps, small independent businesses or town councils have worked to actually help them diversify to cope with the current crisis, but we're perhaps offering a more sustainable model going forward for them. So, we've been working around things like revenue funding, supporting things like 'shop local' campaigns and, like I say, helping them embrace digital and marketing opportunities.

Specifically in terms of the response to COVID-19, the Welsh Government were able to find £9 million-worth of support for town centres during the pandemic. So, £5.3 million-worth of that was to support adaptations to enable safe and viable reopening, and then there was an extra £3.7 million, which was specific funding for Valleys towns. That is in addition to the £90 million transforming towns package that I announced in January last year.

Perhaps if I may put a bit of colour into what that means in practice, rather than what it says on paper, it's allowed things like the provision of outdoor seating, greening and safe spacing in a way that actually looks nice. So, I think with all of these schemes, what we've been keen to work on with local authority partners and town and community councils is actually doing things that respond to the current crisis and the current circumstances, and that those short-term interventions could actually have a medium to long-term impact in terms of enhancing the overall look and feel of the town.

Like I said, we're more than happy to share some examples with the committee to give a bit more colour and visibility to that, and other things that we're working on in the round, like how we're working on a new placemaking grant. That will actually look more at how we can recognise the need for ongoing support, as we continue and look to recover from the pandemic, to help local authorities, the private sector, the third sector and town and community councils to look at ways they can focus on our town centres, perhaps look at better use of space, reuse space and take on empty properties.

Just one final point, if I may. I recognise that this scrutiny session today is focused on the housing and local government MEG, but I think the transforming towns agenda and commitment is a cross-Government one. So, it's not just the funding within this portfolio that very much aligns itself to recovery and reconstruction from the pandemic, but things like how active travel can focus on town centres and the £13.2 million announced by the Minister for Environment, Energy and Rural Affairs to actually bring more repair and reuse initiatives into town centres. There'll also be within the economy and transport MEG a £3 million town centre fund. So, it's actually about how we bring that all together across the Government to align with those priorities in terms of regenerating our towns and communities, but actually to shape the recovery as well.

15:10

Thank you, Minister. I was going to ask you about work to prioritise tackling empty properties, and you've actually already touched on that. So, instead, as a final question—. I think this is slightly outside the scope, strictly, of this session, but a lot of praise has been given to local authorities in Wales for how they, working with the Welsh Government, have been able to deal with the free school meals situation. I know, Chair, this is not strictly in the scope of this, but looking at local supply chains between local authorities and local producers, are there either provisions or considerations that you've made within these allocations in order to help make it easier for local authorities to fund those provisions, working with local providers again? Forgive me for being slightly outside the scope.

I think there are various aspects to it. I think one of the things that we're keen to—it's not exactly what you're asking, but one of the things we're very keen to do, recognising how we can achieve things working at that local level and in collaboration, is look at how we introduce flexibility and enable the forum for not just local authorities but for town and community councils to be involved with this work and for the community to have more of a say and stake in the regeneration of their communities. Because we know that it works better when it comes from the people who live and work in those communities and know them best, in terms of what works. So, within our regeneration work, we're looking at more flexibility within the placemaking grant that I talked about, because before maybe a local authority would focus on a particular town or a particular theme. So, this recognises, actually, how you can take into account those unique factors of a town and of a community, and do things that work for them.

I think in terms of looking at local supply chains, absolutely; how do you explore how we can actually look, through the work of our ministerial town centre action group, which we've set up, not just in response to this crisis—? Actually, it's been very much helping us look at some of these issues that you're raising, in terms of how we can use the leverage of Government to help, perhaps, those small business within a town to come together, either through business improvement districts or some other vehicle, to actually create those local supply chains. I think there's also plenty of scope, in terms of cross-Government, for how we work in terms of the circular economy, about creating those supply chains. It's very much something that has, like many things, been brought to the fore by the pandemic, but it's definitely something that's on the agenda, and I'm happy, like I say, to keep the committee updated as we take that work forward.

15:15

Okay, Delyth? Okay. Well, thank you very much, Ministers and officials for joining us today for quite an extensive scrutiny session. You will, in the usual way, be sent a transcript of this evidence session to check for factual accuracy. Diolch yn fawr. Thank you very much. Committee, we'll break until 15:30.

Gohiriwyd y cyfarfod rhwng 15:16 a 15:32.

The meeting adjourned between 15:16 and 15:32.

15:30
3. Craffu ar Gyllideb Ddrafft Llywodraeth Cymru ar gyfer 2021-22 - sesiwn dystiolaeth 3
3. Scrutiny of the Welsh Government Draft Budget 2021-22 - evidence session 3

Welcome back, everyone, to this meeting of the Equality, Local Government and Communities Committee. We come on to item 3 on our agenda today, which is our third evidence session with regard to the Welsh Government's draft budget for 2021-22. I'm very pleased to welcome Jane Hutt MS, Deputy Minister and Chief Whip, along with her officials, Alyson Francis, deputy director of communities division, and Sian Gill, head of financial reporting. So, welcome to you all. Perhaps I might begin with some initial questions on the budget impact assessment process, and firstly, the reduction of inequalities is a priority for post-COVID reconstruction. We, as a committee, identified last year, with the equality data collection, that there are persistent concerns with the impact assessment of the budget. So, I wonder how will the achievement of this aim be measured.

Well, thank you very much, Chair, and thank you very much for inviting me to give evidence on the budget. And you're absolutely right, the reduction of inequalities has been a priority for the post-COVID reconstruction, and can I thank you again for the report that you did, the inquiry you took, identifying the stark inequalities that have been exposed or deepened by the pandemic over the past year? But it is true, as you said, that last year, before the pandemic, before this all came about with COVID-19, these issues about data were important questions in terms of our budget. And I think, in tackling and reducing inequalities, as a result of what we've been doing in this financial year, with funding to address COVID-19, it's been very much focusing on tackling inequalities, and we can, I'm sure, go into that in greater detail in terms of all the groups that have been particularly disproportionately impacted.

It's been vital that we've had to be able to call on good equality data, but very much calling on that as evidence, to ensure that we get it right in terms of policy decisions and funding arrangements. So, a lot of very good evidence has emerged during the year; some of this has emerged from other organisations, institutes like the Institute for Fiscal Studies, for example. I remember, back in April, when it produced an interesting report on the circumstances of key workers, for example, responding to the pandemic, and how it exposed that the most vulnerable and disadvantaged key workers were actually in the service sectors—catering. And also recognising that 84 per cent in the care sector were women. So, it was beginning to actually identify really important evidence about the disproportionate impacts on specific groups of people—crucial. And that's why this has been a key factor in terms of looking at how we respond.

Now, one interesting point I'd just say is that we—to ensure we had this evidence and we were using the data coming out of it—have been undertaking a COVID-19 equalities impacts repository. Officials have created this across the Welsh Government, because, obviously, these inequalities affected every aspect of life. Because we've had a legal duty to carry out equality impacts assessments, as you know, when developing policy, and, indeed, in the decisions we've been making in terms of restrictions and response to COVID-19. So, our officials have collated and also analysed as much of the information that they can in this repository of information to see the impact of COVID-19 on protected characteristics. This is a live document, which—. I think it's something that we could, perhaps, find ways of sharing that more publicly to see how we're collecting all of this information.

But also, we've got to recognise that data collection can be improved within the Welsh Government, so I've been seeking a way forward for that to improve our evidence gathering. And you will know that Professor Emmanuel Ogbonna called for a race disparity unit to be established within the Welsh Government, and we've accepted the recommendations of his report. So, we are looking to scope a race disparity unit, but also ensuring that there's an equality data unit collection repository for all of the rest of the information. So, hopefully that gives you some examples of how we are trying to improve and address and bring together all the data, which actually informs us on the data collection that we need.

Of course we also, always—and you will be aware of this—provide information and data, measuring the extent to which inequalities are reduced in Wales in our 'Wellbeing of Wales' publications that we publish. And we need to ensure that that 'Wellbeing of Wales' publication is understood and also widely shared so that people can see how we're addressing inequalities.

15:35

Okay. Thank you for that, Minister. Any further information you might be able to provide on the repository and what it's unearthed thus far would be very useful, together with the race disparity unit in terms of timescale and remits—any more detail would be very useful. Could I just go on to ask a question on the improvements for the budget impact assessment, which I understand are due to be implemented in 2024, and to ask, really, why it's 2024 rather than sooner, given the high priority on reducing inequality, particularly during the recovery as we go through and hopefully beyond COVID-19?

Well, thank you for that, Chair. I hope I've managed to address one of the key issues in terms of tackling inequalities, and how we can form budget priorities by improving our data collection, and learning from our data collection in terms of evidence that Ministers use to develop their draft budgets. Clearly, the budget's impact and improvement plan is the Minister for Finance and Trefnydd's main responsibility, but I work very closely with her as equalities Minister, and as do all the Ministers, to ensure that we can contribute to this to make sure the budget improvement plan is delivering for our key priorities, and tackling inequalities, as you say, is crucial to that. I think she's actually identified—I don't know if she's been in front of your committee, or certainly to the Finance Committee, I'm sure. I think she's already been recognising that there are short, medium and longer term aspects of the budget improvement plan, and she's been explaining that, I know, not just to the Finance Committee, but in terms of questions to the finance Minister in her oral question sessions, but also in her budget statements.

I think it's very important that we look at what we're already doing as part of that budget improvement plan, and gender budgeting, for example, is one aspect of that. The other thing, which I'm sure you're aware of, is the fact that she's now exploring a distributional impact of spending overview to look at the distributional impact of spending on the services that we're responsible for in Wales, the devolved public services. I very much welcome that, because we need to see what impact our spend has on addressing inequalities and how it actually, importantly, reaches the most disadvantaged and vulnerable people in terms of our public services. So, I think that's a new development, it's part of the budget improvement plan.

But she also obviously has been outlining how this will be a five-year plan that will annually reflect the ongoing changes and developments, but it has to be for longer term change. But also, we've got to have transparency around the budget processes so that you are able to test me, as you are today, scrutinising what this actually means. The budget improvement plan is to enable it to be more open, transparent, not short term, but as we move forward with a five-year plan, taking steps like the distributional impact analysis, but also things like gender budgeting.

15:40

Okay, Minister, we'll come on now with questions from other Members to some of the matters you've just mentioned, and we did have the finance Minister in front of us earlier along with Julie James and Hannah Blythyn for local government and finance as well as accounting matters. But, thank you for those answers, Minister. We'll move on to Mark Isherwood.

Thank you. Good afternoon. If I could actually start with a supplementary and then move on to the more formalised questions, clearly, whether it's from disability to gender, age, to black and minority ethnic communities, and more broadly, reduction in equalities is dependent, crucially, on the role played by the third and voluntary sector. How do you respond to the statement by the Wales Council for Voluntary Action that charities in Wales have lost around 24 per cent of their income, or £1.2 billion this year in Wales, and particularly their response to the Welsh Government's draft budget, where it states

'The voluntary sector continues to require greater resource to respond to increasing demand on its services...The sector has many groups and organisations which have developed to redress specific problems or prevent them worsening. But it is also able to bring wider benefits to society through community engagement and make communities feel more empowered and connected'

and that co-production of services must play a key part in this?

Thank you very much indeed, Mark, and you don't have to convince me about the importance of the third sector, the voluntary sector, and, in fact, the ways in which they have responded to the pandemic and the ways in which, of course, we have been able to adjust and repurpose our funding in order to meet the needs of the voluntary sector and to back all the volunteers who have come forward to respond to it. I was just looking at my written evidence to the committee and the fact that in 2020-21 we've provided over £24 million of support for the sector, and that has been—as you know; you've scrutinised me on this emergency plan, this recovery fund, the resilience fund, but, in 2021-22, it is important to say that we are providing £4.915 million core funding to support our third sector infrastructure, and that's an increase of £0.669 million for next year, in addition to providing that additional £3 million of funding in 2021 to enable the sector to continue to support the most vulnerable individuals in our communities.

So, we very much recognise the crucial role of the third sector and engaging with them, but also recognising this in terms of the funding allocations that we've made. I think there are particular issues around volunteering and taking the longer-term needs in mind and the smaller third sector organisations and acknowledging that they have—. Though we've supported them in this way and in the next budget, it's going to be also a partnership approach. I met with the National Lottery fund today, with Sir Adrian Webb, and talked about the vital role and the millions that they have put in, in partnership with Welsh Government, in terms of needs, working closely with the Wales Council for Voluntary Action and third sector partnership council to lever in all of the funding that we can get to the third sector in these very difficult times.

15:45

Thank you. And I'm sure you'd also recognise the massive contribution alongside that army of volunteers of the qualified and dedicated professionals working in the sector alongside them, supporting them—

—and how their role, and the investment in their role, can save multiples of that investment for statutory and emergency services by putting a fence at the top of the cliff, rather than an ambulance at the bottom.

Absolutely—preventative all the way, as well as engaging with the most disadvantaged and vulnerable, as you say, Mark.

Mark—just before you go on, Mark, I just wonder, Minister, whether, in terms of the third sector and allocations made, would the strategic integrated impact assessment, then, have led to those allocations?

I think that would obviously—that would play a part. And I'm just thinking in terms of the strategic integrated assessment and some of the examples in the budget narrative and the case studies, which showed the importance of the third sector underpinning; the importance of the third sector in addressing integrated equality needs. And that's where it's very important to see this in the context of the budget improvement plan.

But I would also say that—and you've heard this from me before—over the last year, we have spent so much time, so much more time than Government probably has spent, actually engaging with those who are at the sharp end of this pandemic. Of course that means Julie James with local government, but myself with the third sector and equality organisations, and we have responded throughout the year, as you know, to try and meet the needs of those organisations, equality organisations and third sector organisations as well, and Disability Wales in terms of the funding that we've given them to respond to the needs of disabled people in terms of inequalities, and also to organisations, black, Asian and minority ethnic organisations, to give you a couple of examples. But, yes, the integrated impact assessment is very important to that, to understanding what the priority should be for the budget.

Thank you. Moving on to some specifics, you committed to doing a gender budgeting pilot as part of the personal learning account programme. What were its findings?

I think the fact that we've actually progressed with the gender budgeting pilot has led to some very interesting findings. Of course, what's good about this is it's not just me who can respond to this, because it's very much cross-Government—it involves the education Minister, the Minister for economy and transport and all their officials, as well as me keeping a watchful eye on it as Minister for equality. It was very much a commitment by the Minister for finance that we should have a gender budgeting pilot in this way.

Just in terms of the findings, Mark, it was launched back in September 2019. It was about flexible vocational retraining for people in low-paid and low-skilled work to help them retrain or reshape their careers, enter employment at a higher level in priority sectors where there's a skills shortage. So, it had a very clear focus. Those sectors that they were looking at were engineering, construction, digital, health and financial services.

You have, actually, got a case study in your budget narrative explaining how the monitoring of the pilot has been undertaken, because, obviously, we need to respond not just at the end of it, but as you go through a pilot, to see how you can widen out opportunities. Just so far, I will briefly say that there has been information coming back that showed there was a gender bias seen for the engineering and construction sectors, and 60 per cent of learners taking up ICT courses were female. I also chair the women in STEM board, and there is a great deal of concern about the fact that fewer women—our young women—seem to be going into the ICT sector. It seems to have become a genderised area, which just seems strange and unexplained. So, we have to look at this personal learning account and ways in which we can address that.

But also it's interesting how women are going into accounting qualification sort of areas. I think that's—well, that's over 80 per cent of learners taking up those professional sector courses. But also, interestingly, how many males are going into care-related courses and qualifications. Actually, that is showing more young men or men of any age are going into care-related courses. Obviously, we have had the impact of the pandemic on this, which has made it very difficult in terms of really assessing this in the way that we perhaps had envisaged, because we need to support people who've been furloughed, those at risk of redundancy who've been negatively impacted by COVID. So, we've actually got now new priority sectors that have been included, and an additional £5.4 million in this budget to support this. So, I think that also shows that a pilot doesn't have to be a one-off and wait until the end; it has to actually adapt to what it finds. And so I think the gender-focused approach has been very valuable in terms of this pilot.  

15:50

Okay. Well, the budget advisory group on equality was convened in November 2020. Why wasn't it convened earlier, when, presumably, most budget decisions had already been made by then?

Well, obviously, everything has been affected by COVID, hasn't it, Mark, in terms of plans that we had, certain things that had to be paused as a result of COVID, and also we've also been very much at the mercy of what's happening in terms of the spending review. That was delayed by the UK Government—we only had the settlement announced for Wales at the end of November. So, there has been, as you're fully aware, very little time for our budget planning. Actually, the Minister for finance and I met the budget advisory group for equality on 12 November, and it was before we actually had the settlement, before we were aware of the Wales budget settlement. So, that timing was about how we could take stock of what has been quite a lot of extensive engagement. 

So, although this budget advisory group was meeting in November, throughout the summer, despite the pandemic, there was a lot of engagement going on with equalities stakeholders, some of that by the finance Minister herself; she spent a lot of time in the summer and autumn meeting with not just equality groups—she met, for example, with Professor Ogbonna, to take account of the socioeconomic report, of his report. She met with all the statutory commissioners. And also, interestingly, I think, all feeding into our meeting, when we did come together in November, was the fact that the Counsel General, as you know, was working on the recovery plan, which had equality as one of its key, underlying principles. So, the budget preparations were working alongside the recovery plan as well, and he had a lot of round-table meetings, and, as you will know, he had his portal for getting feedback, and this has all helped to inform the equality budget advisory issues. Many of the same people who Rebecca and I met in November, we'd met at other meetings during the year. The strengthening equality and advancing human rights—I invited Jeremy to come to that, so that he could hear their views about equality and the impact of the pandemic and what this meant for the following year. Now, obviously, you'll also know that I meet regularly with the third sector partnership council as well, and many equality organisations sit on that. So, although we met at that point, it was as a result of a lot of meetings and a difficult timetable in terms of our financial settlements.

15:55

Well, my final question: are local authority and health budget impact assessments brought together to better understand the equality impact of all Welsh Government spending in reducing inequalities during the pandemic and its recovery, and, if so, how does this happen?

I think this is where, in a sense, again, all Ministers have their responsibilities in terms of how they reflect in terms of the strategic integrated assessment—the fact that they have to actually deliver that in terms of the integrated assessment on equalities, that they all have to consider their impacts. For me, I have to consider those impacts because I'm responsible for equalities, but I think it's crucially important to recognise that it's at the heart of all budget preparations, and the impacts of the spending decisions are there in the assessment, and those Ministers for local government and health—you've just had Julie in front of you—will have answered questions on those, I'm sure. Just in terms of my impact assessments, I think, particularly recognising the evidence that we got, it did mean that I was able to maintain into next year, as you saw, another £1.575 million for violence against women, domestic abuse and sexual violence services, £1.4 million for equality [correction: £1.1 million for equality], £1.1 million for advice services, £0.5 million for blueprints, and I've already given the extra uplift for third sector and volunteering.

Okay, Minister. Okay, Mark. We'll move on, then, to Huw Irranca-Davies.

Thank you, Chair. Minister, good afternoon. I wonder if I could turn to the issue of economic inequalities. One of the new innovations you brought in last year was the distributional impact model. You've referred to it a couple of times. Now, we've seen some of the data that's come out of that and some of the analysis of how spending decisions are affecting economic inequality, but did it actually influence budget allocations this year, or was it too recent to influence it? We can just see the data, see what's happening, but it hasn't influenced or shaped decisions yet.

Well, it is, I think, a very important new model that's being introduced by the finance Minister, and of course it is—well, as you said, it's about how do we find out, how do we really test, investigate, who is benefiting from our public spending, whether it's on health, education, social care? It's actually looking at the impact of public spending on households across the income distribution. There are some broad results already emerging, I would say, and it actually has shown where there are strengths and weaknesses in terms of this analysis. So, I think it's very exploratory at this point in time as to what we can do in this area, so it hasn't directly been used to assist, I understand, budget allocations for 2020-21, but it will be very important in terms of implementing future budgets. The finance Minister, again, is taking this forward, but my understanding from discussions with her—and I'm very much welcoming it—is that this is about incorporating a suite of information accompanying future budgets, a bit like the strategic integrated equality assessment, so it can inform us so that we can get this right. But I think it's interesting that, also, we are putting more money into the family household survey. We need to get the data, again, as well as the lived experience and the evidence, in order to make this really powerful as a tool.

16:00

I agree, Minister, and having the data is what can drive good decision making. And, okay, it's new, and as you've said it's exploratory at the moment, so it's probably too early to expect it to have real influence on shaping budget decisions this year, but next year, I think we could probably start to expect it. Now, one of the things we've seen already is that it is broadly, in the criteria it uses looking at health, social care, et cetera, progressive across the various quintiles of the population. But it's not completely progressive, so, whereas it rightly benefits those along the lower parts of the quintiles, the very bottom quintile doesn't benefit quite as much by the spending decisions. So, I just wonder, is that something that Welsh Government will look at in future, to say, 'Well, okay, we can see that it's broadly progressive, but that bottom quintile not quite as progressive for them as for the other two quintiles, the second and third from bottom'?

Well, that's a very important not just observation, but point of guidance from us and through scrutiny, as the way forward and how we can use this tool most effectively. We are committed to considering how we can extend this analysis, and I think you've pointed us very helpfully in that direction, to extend the analysis, which I think is going to be very important in terms of distribution impact, but to extend it to look at different groups of people to cover more areas of public spending, because what the pandemic has done is expose these inequalities—we were aware of them, possibly and we had some data—and which we hadn't actually identified, through their lived experience, what this actually was meaning and how we could address it in terms of a budget.

I think this extra funding that's going into the family resources survey will be very helpful in terms of looking at those quintiles. It is specifically focused on income. So, at this stage, we've got to consider whether, the methodology, we should look at this in terms of other measures, particularly in relation to identifying data sources that would help us with this.  

That's really useful to understand that you're thinking already about making adjustments in the future for the criteria that might be included within this to make it a more nuanced and intelligent set of data that we can work from. But I wonder, Chair, before we pass on to some other questions, the existing analysis we have, which I don't think we have any reason to doubt that it's accurate in what it's saying, does indeed actually show that the budget decisions that are being made are broadly progressive and that the top two quintiles get less benefit out—you know, this is a political philosophical discussion, in some ways—the top two quintiles get less out of budget decisions than the lowest three. But that bottom one, that bottom quintile, purely on the criteria that we're currently using and the public service analysis that we've put into this model, benefits less than the two above it. So, I'm just exploring this with you as to whether, in your discussions with other Ministers on future budget setting, albeit with expanding some of the groups, the criteria and the finessing of this model, would it be the ambition of the Welsh Government to make this entirely progressive across all of those quintiles so that the lowest quintile benefited more than the lowest but one and the lowest but two?

16:05

Well, I certainly think, in terms of the values and objectives of this Welsh Government, that's what we would want to seek—to make this as progressive as possible. For me, I can say that inequality is about redistributing income—basically, that's where we would like to be heading. But, within our budget, these are tough decisions. I always remember being very stung many, many years ago when I invited Peter Townsend to look at our health funding formula. If we were going to make some of the changes, which we did do, it meant taking money out of one area to give to another. 

You need transition and you need to understand how you target resources, because, actually, progressive universalism is the way we can reach everybody, but then you have to have targeted initiatives in order to, within one quantum of a budget that isn't growing—. When you have a growing budget, then you can have your priorities very clearly set out, in terms of the distributional impact model. But, anyway, we could go on, I think, on this. You know where we're leading, but it's very helpful for informing the budget process for next year.

Okay. Sadly, we have reached the stage where we will need more succinct questions and answers, I'm afraid.

Thank you, Chair. My questions will be succinct, but they're on the same theme—the progressive ideas behind budget setting and the progressive decisions that you look to make. Could you tell us how your budget decisions have been made in the spirit of the socioeconomic duty? Have you got any evidence to demonstrate what you've done in that regard?

I'm really pleased, Dawn, to say very succinctly that we're going to get this done. We're going to get this enacted—the socioeconomic duty—before the end of this session. I'm hoping that there'll be widespread, across the Senedd, support for it. We're laying regulations on 5 February [correction: 8 February] and I think we've got a debate in March. It was a key priority, as you'll recall, from the First Minister for the continuity and recovery plan. This is about actually deciding the priorities and considering how those decisions would help reduce the inequalities associated with socioeconomic disadvantage. So, I think even our discussions so far, and, indeed, the strategic integrated assessment, actually do start to look into the socioeconomic issues. I'm very pleased that the report from Professor Emmanuel Ogbonna, which was on the socioeconomic impacts—the disproportionate impact—of COVID-19 on black, Asian and minority ethnic people, is already influencing the budget.

Okay, that's helpful to know—that even though we don't have the duty yet, that's been part of your consideration in budget setting. Now, obviously, the Welsh Government commissioned the Wales Centre for Public Policy report, and that was about reducing inequalities. The report talked about that priority should be given to simplifying and targeting the social safety net in Wales, starting with the existing devolved powers. Can you tell us any more about that and whether any funding has been allocated to allow that to happen?