Y Pwyllgor Cyllid - Y Bumed Senedd

Finance Committee - Fifth Senedd

15/01/2021

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Alun Davies MS
Llyr Gruffydd MS Cadeirydd y Pwyllgor
Committee Chair
Mark Reckless MS
Mike Hedges MS
Nick Ramsay MS
Rhianon Passmore MS
Sian Gwenllian MS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Andrew Campbell Cadeirydd, Cynghrair Twristiaeth Cymru
Chair, Wales Tourism Alliance
Dr Llŷr ap Gareth Uwch Gynghorydd Polisi, Ffederasiwn Busnesau Bach yng Nghymru
Senior Policy Advisor, Federation of Small Businesses in Wales
Dr Steffan Evans Swyddog Polisi ac Ymchwil, Sefydliad Bevan
Policy and Research Officer, Bevan Foundation
Gemma Schwendel Uwch Ddadansoddwr, Sefydliad Joseph Rowntree
Senior Analyst, Joseph Rowntree Foundation
Ian Price Cyfarwyddwr, Cydffederasiwn Diwydiant Prydain yng Nghymru
Director, Confederation of British Industry in Wales

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Bethan Davies Clerc
Clerk
Georgina Owen Ail Glerc
Second Clerk
Leanne Hatcher Ail Glerc
Second Clerk
Mike Lewis Dirprwy Glerc
Deputy Clerk

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 09:31.

The committee met by video-conference.

The meeting began at 09:31.

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

Bore da ichi i gyd, a chroeso i gyfarfod Pwyllgor Cyllid Senedd Cymru. Yn unol â Rheol Sefydlog 34.19, dwi wedi penderfynu gwahardd y cyhoedd o gyfarfod y pwyllgor er mwyn diogelu iechyd y cyhoedd. Yn unol â Rheol Sefydlog 34.21, cafodd rhybudd o'r penderfyniad hwn ei nodi yn yr agenda ar gyfer y cyfarfod. Mae'r cyfarfod, wrth gwrs, yn cael ei ddarlledu'n fyw ar Senedd.tv, a bydd Cofnod o'r Trafodion yn cael ei gyhoeddi yn ôl yr arfer. Ac ar wahân i'r addasiad gweithdrefnol sy'n ymwneud â chynnal trafodion o bell, mae holl ofynion eraill y Rheolau Sefydlog ar gyfer y pwyllgor yma yn parhau.

Gaf i ofyn, i gychwyn, a oes gan unrhyw Aelodau fuddiannau i'w datgan? Nac oes. Diolch yn fawr. Gaf i hefyd nodi, er gwybodaeth, os byddaf i'n colli cysylltiad am unrhyw reswm â'r cyfarfod, fod y pwyllgor wedi cytuno'n flaenorol yn unol â Rheol Sefydlog 17.22 mai Siân Gwenllian fydd yn cadeirio dros dro wrth i mi geisio ailymuno â'r pwyllgor? 

Good morning to you all, and welcome to this meeting of the Senedd Finance Committee. In accordance with Standing Order 34.19, I've 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. This meeting is being broadcast live on Senedd.tv, and the Record of Proceedings will be published as usual. Aside from the procedural adaptation relating to conducting proceedings remotely, all other Standing Order requirements for committees remain in place.

Could I ask, at the outset, whether Members have any interests to declare? No. Thank you very much. Could I also note for the record that if, for any reason, I lose connection, the committee has previously agreed in accordance with Standing Order 17.22 that Siân Gwenllian will temporarily chair while I try to rejoin?

2. Papurau i’w nodi
2. Papers to note

Mae yna ddau bapur i'w nodi yn yr ail eitem ar yr agenda. Yn gyntaf, llythyr gan y Gweinidog Addysg yn ymateb i adroddiad y pwyllgor ar y Bil Cwricwlwm ac Asesu (Cymru). Yr ail bapur yw llythyr gan y Gweinidog Cyllid ynglŷn â Gorchymyn Ardrethu Annomestig (Lluosydd) (Cymru) 2021. Ydy Aelodau'n hapus i nodi'r rheini? Iawn. Diolch yn fawr iawn i chi.

There are two papers to note in the second item on the agenda. The first is the letter from the Minister for Education responding to the committee's report on the Curriculum and Assessment (Wales) Bill. The second paper is a letter from the Minister for Finance on the Non-Domestic Rating (Multiplier) (Wales) Order 2021. Are Members happy to note those papers? Okay. Thank you very much.

3. Craffu ar gyllideb ddrafft Llywodraeth Cymru 2021-22: Sesiwn dystiolaeth 5
3. Scrutiny of the Welsh Government's Draft budget 2021-22: Evidence session 5

Ymlaen â ni, felly, at yr eitem nesaf, sef i barhau gyda'n gwaith ni o graffu ar gyllideb ddrafft Llywodraeth Cymru ar gyfer 2021-22. Yn ymuno â ni ar gyfer y sesiwn dystiolaeth yma am yr awr nesaf mae Steffan Evans, sy'n swyddog polisi ac ymchwil gyda Sefydliad Bevan, a Gemma Schwendel, sy'n uwch-ddadansoddwr gyda Sefydliad Joseph Rowntree. Croeso mawr i'r ddau ohonoch chi. Mae yna awr gennym ni, felly fe awn ni'n syth i mewn i gwestiynau. Fe wnaf i gychwyn drwy, yn syml iawn, ofyn i chi a fydd cyllideb ddrafft Llywodraeth Cymru yn cyflawni camau gweithredu sy'n help i fynd i'r afael â phryderon tlodi ac anghydraddoldeb yng Nghymru. Efallai y gallwch chi ddweud hefyd pa fath o gamau fyddech chi'n disgwyl i'r gyllideb eu cynnwys, a pha rai, efallai, sydd yna ond rydych chi'n teimlo y gallen nhw fod yn mynd tipyn ymhellach. Pwy sydd eisiau mynd yn gyntaf ar hwn? Gemma, fe wnawn ni gychwyn efo chi.

We move on, therefore, to the next item, which is to continue with our scrutiny of the Welsh Government's draft budget for 2021-22. Joining us for this evidence session for the next hour are Steffan Evans, who is a policy and research officer with the Bevan Foundation, and Gemma Schwendel, who is a senior analyst with the Joseph Rowntree Foundation. A warm welcome to the both of you. We have an hour, so we'll go straight into questions. I'll start by asking you whether the draft budget of the Welsh Government will deliver actions that will help to address concerns around poverty and inequality in Wales. Maybe you could also say what kind of actions you would expect the budget to include, and which actions are there, but you think could go further. Who wants to start? Gemma, we'll start with you.

Thank you. I'd like to thank you for inviting JRF to give evidence today. In response to the question, JRF are calling on the Welsh Government to use this budget as an opportunity to address poverty in Wales within the COVID-19 context, which, as we know, is highlighting and exacerbating existing inequalities. However, the limits placed on the budget planning as a result of the annual spending review on 25 November mean that, for us, many of the spending measures that have been put in place are short term, designed to mitigate the immediate impact of COVID-19 on those living in poverty and the wider inequalities that may arise. Further, we recognise that there are gaps in the budget that have been deliberately left due to the nature of the uncertainty surrounding both COVID-19 and Brexit. Whilst this is understandable, the short-term nature of the budget and its inherent uncertainty mean that there is a lack of medium and long-term spending decisions that would address the systemic root causes of poverty. Whilst additional spending in some policy areas is welcome, they don't really represent any real uplift on previous budgets.

The analysis recently published by the Wales Fiscal Analysis unit at Cardiff University revealed a significant pot of money that could be spent to help families living in poverty. Whilst we recognise that some gaps are needed to be left to embed that degree of flexibility into the budget, JRF would argue that those unallocated funds represent a missed opportunity to fund a number of initiatives that would support those living in poverty. We recognise that there are specific spending allocations set out in the budget that will go some way to addressing poverty and inequality—so, for example, the social housing grants, fuel poverty, employment support and mentoring, and personal learning accounts. However, the spending that has now been allocated here, we feel, is insufficient to fully address those systemic root causes of poverty that require a long-term economic plan.

09:35

Okay. Thank you, Gemma. Steffan, would you agree it's a missed opportunity? 

Rwy'n cytuno. O ran ein safbwynt ni, beth ddylai'r gyllideb fod yn trio ei wneud, rwy'n credu, o ran y limitations sydd trwy ddatganoli, yw sicrhau bod yna lawr does neb yn syrthio oddi tano, bod y gwasanaethau mae pobl sydd yn byw mewn tlodi yn eu cael a bod y lefel o incwm mae pobl ei gael—mae yna ddigon, rwy'n credu, trwy'r gyllideb i sicrhau bod yna lawr bod neb yn syrthio oddi tano, a hefyd ein bod ni'n defnyddio'r gyllideb i fuddsoddi mewn datrysiadau i dlodi yn y tymor hir. Mae Gemma wedi sôn am y pethau yma'n barod.

Mae yna ryw bedwar peth yn dod i'm meddwl i ar ôl mynd trwy'r gyllideb yma. Yn gyntaf, fel gwnaeth Gemma sôn, mae yna bot sylweddol o arian sydd ar ôl i'w wario cyn diwedd y flwyddyn ariannol yma. Fe wnaethom ni ddanfon llythyr at y Prif Weinidog nôl ym mis Rhagfyr yn codi rhai enghreifftiau o beth gallai hynny gael ei wario arno. Un enghraifft byddai buddsoddi mewn laptops sydd gyda data i blant sy'n derbyn prydau ysgol am ddim. Nid yn unig y byddai hwnna'n helpu plant nawr yn y tymor byr wrth ein bod ni'n delio â'r pandemig gydag ysgolion ar gau, ond hefyd mae yna fuddiannau fanna—felly, rhieni'n gallu cael gafael ar fudd-daliadau, er enghraifft, a'i fod yn haws i gael gwasanaethau y gallan nhw elwa arnynt yn y tymor hir hefyd o ran tlodi.

Yn ail, mae yna arian ychwanegol wedi cael ei wario yn y flwyddyn ariannol ddiwethaf, sy'n sicr i'w groesawu—so, pethau fel cinio ysgol am ddim dros y gwyliau ysgol. Mae hwnna'n sicr wedi bod yn gam positif iawn rydym ni wedi ei weld gan Lywodraeth Cymru, ac mae'n grêt i weld bod yna ymrwymiad i hwnna am flwyddyn arall yn y gyllideb ddrafft. So, mae hwnna'n rhywbeth positif iawn, ond byddem ni'n dadlau bod yna gyfle nawr i wir ystyried beth ŷn ni'n moyn ei wneud gyda pheth o'r arian ychwanegol. Fel ŷch chi'n gwybod, rydym ni wedi bod yn galw ar Lywodraeth Cymru i sefydlu system fudd-daliadau Cymreig, ac rwy'n credu bod yr arian ychwanegol rŷn ni wedi bod yn gwario ar y pethau yma yn rhoi cyfle inni efallai i ailystyried o ran y cyd-destun yna.

Yn drydydd, o ran yr arian ychwanegol sydd wedi cael ei wario, yn sicr rŷn ni'n cefnogi hwnna o ran y gyllideb ddrafft, ond fel gwnaeth Gemma sôn, does yna ddim gwir gynnydd mawr o ran y blynyddoedd blaenorol mewn gwariant mewn rhai meysydd. So, er bod mwy o arian yn cael ei roi i'r social housing grant, dyw e ddim yn fwy na beth rydym ni wedi bod yn ei wario yn y ddwy flynedd diwethaf. Mae'n bositif bod mwy o arian, ond dyw e ddim wir yn mynd i newid y raddfa o beth ŷn ni'n siarad amdano.

Yn olaf, rwy'n credu bod un neu ddau wendid yna o ran beth sydd ddim yn cael ei fuddsoddi ynddo yn y cyd-destun ŷn ni'n sôn amdano. Un peth wnaeth fy nharo i, er enghraifft, oedd does yna ddim ymrwymiad i fwy o arian i gymorth gyrfâu na hyfforddiant sgiliau. Yn y cyd-destun rŷn ni ynddo—y sefyllfa swyddi anodd—mae honna'n enghraifft efallai o ble byddem ni'n gallu rhoi mwy o gefnogaeth i'n pobl ifanc ni i sicrhau bod gyda nhw fwy o ddealltwriaeth a mwy o sgiliau i fynd i mewn i'r byd gwaith, sydd yn mynd i fod yn farchnad anodd iawn, byddwn i'n dychmygu, am gwpwl o flynyddau, o leiaf.

I agree. In terms of our perspective, what the budget should be trying to do is, in terms of limitations through devolution, to ensure that there is a floor that no one falls below, that the services that people living in poverty get and that the income that people get—there is enough in the budget, I think, to ensure that there is a floor that people don't fall below, and that we use the budget to invest in solutions to poverty in the long term. Gemma has mentioned these things already.

There are some four things that come to mind after going through this budget. First, as Gemma mentioned, there is a significant pot of money to be spent before the end of the financial year. We sent a letter to the First Minister back in December raising some examples that could be spent. One could be investing in laptops that have data for children who receive free school meals. That wouldn't just help children now in the short term as we deal with the pandemic and while schools are closed, but also parents could get hold of benefits and find it easier to access services, so they can benefit from them in the long term in terms of poverty.

Secondly, there is additional funding that's been spent in this last financial year that is to be welcomed—so, things like free school meals over the school holidays. That's certainly been a very positive step from the Welsh Government, and it's great to see that there is a commitment to that for another year in the draft budget. So, that's very positive, but I would argue that there is an opportunity now to genuinely consider what we want to do with the additional funding. As you know, we've been calling on the Welsh Government to establish a Welsh benefits system, and I think that the additional funding that we've been spending on these things will give us an opportunity to reconsider in that context.

Thirdly, in terms of the additional funding that's been spent, certainly, we support that in the draft budget, but, as Gemma mentioned, there is no real great increase on the previous years in terms of spending in some areas. So, even though some money is given to the social housing grant, that's not more than what we've been spending in the last two years. It's positive that there is more money, but it's not going to change the scale of what we're talking about.

And finally, I think that there are some weaknesses in terms of what's not being invested in in that context. One example was that there is no commitment to more funding for career support or skills training. In the context of the very tough job situation, that's an example of where we could give more support for our young people to ensure that they have more understanding and more skills to take into the world of work, which is going to be a very difficult market, I would imagine, for a couple of years to come.

Dwi'n gweld bod Gemma eisiau dod i mewn, ond dwi'n ymwybodol bod Aelodau unigol eisiau mynd ar ôl rhai o'r pethau penodol yma, so efallai y cawn ni gyfle i bigo i fyny ar hynny wrth inni fynd yn ein blaenau. Roeddwn i jest eisiau holi yn fyr iawn hefyd, cyn symud ymlaen at Rhianon—. Un o nodau Llywodraeth Cymru yn y cynllun gwella'r gyllideb yw ymgysylltu a chydweithredu yn well gyda rhanddeiliaid yn y broses yma; faint o ymgysylltu sydd wedi bod gyda chi, er enghraifft, yn y broses yma? Ydych chi'n teimlo bod rhai o'r pethau ŷch chi wedi bod yn galw amdanyn nhw yn cael eu gweld yn glir yn y gyllideb?

I see that Gemma wants to come in, but I am aware that individual Members want to pursue some of those specific issues, so we may have time to pick up on those as we proceed. But I just want to ask very briefly, before moving on to Rhianon—. One of the aims of the Welsh Government in the budget improvement plan is to engage and collaborate better with stakeholders in this process; how much engagement has there been with you, for example, in this process? Do you feel that some of the things that you've been calling for are being seen clearly in this budget?

Fe af fi yn gyntaf ar hwnna, efallai. Rwyf i ond yn gallu siarad o'n profiad ni, yn amlwg, yn Sefydliad Bevan. Mae eleni wedi bod yn flwyddyn ryfedd, mewn ffordd, ble rŷn ni'n teimlo ein bod ni wedi bod yn siarad yn gyson gyda Llywodraeth Cymru ac awdurdodau lleol, sy'n beth positif, wrth ein bod ni'n symud trwy wahanol stages o'r pandemig a meddwl am yr hyn sydd angen ei wneud. Mae yna gysylltiadau wedi bod yn gyson rhwng gwahanol adrannau o fewn Llywodraeth Cymru. Dwi'n credu bod yna bethau positif yn y gyllideb, sy'n dangos bod yna beth gwrando wedi bod o ran darparu arian yn lle cinio ysgol am ddim, yn lle'r vouchers neu'r hampers, yn y rhan fwyaf o'r awdurdodau lleol. Mae hwnna'n enghraifft o le mae Llywodraeth Cymru wedi gwrando ar y dystiolaeth. So, mae yna enghreifftiau positif, ond wrth gwrs fyddech chi ddim yn synnu imi ddweud byddem ni wrth gwrs yn dwli gweld rhagor yn cael ei wneud.

I'll start on that, perhaps. I can only speak from our experience in the Bevan Foundation. This has been a very strange year, because we've been speaking consistently with the Welsh Government and local authorities, which is a positive thing, as we go through the different stages of the pandemic and think about the things that we need to do. There have been consistent communications with different departments in the Welsh Government. I think there are positive things in the budget that show that there has been that engagement in terms of providing money for free school meals, instead of vouchers or hampers, in most local authorities. That's a good example of where the Welsh Government has listened to the evidence. So, there are positive examples, but of course you won't be surprised to hear that we would like to see more being done.

09:40

No, I think Steffan has pretty much covered what we want to say around that, around stakeholder involvement.

Iawn, ocê. Diolch yn fawr. Ymlaen at Rhianon, felly. Rhianon.

Fine, okay. Thank you very much. We move on to Rhianon, therefore. 

Thank you. I would agree that we would all like to do more. I'm not going to talk to specific points, but I would just ask for your consideration around the single-year settlement, and the lack of comprehensive spending review in terms of the long-term systemic change that has been mentioned, and, if there's a chance to pick that up later, I'd be grateful.

In your view, both of you, does the strategic impact assessment published with the draft budget provide enough context about why particular spending or policy decisions have been taken by the Welsh Government? Is it sufficient?

Yes. I think it's welcomed by us and it does explain the rationale behind some of the decisions. I think two things I think we'd like to see in that strategic impact assessment going forward are: first, I don't think there's much discussion there about what causes poverty, and therefore how do the decisions made reflect and impact on the causes of poverty—so, looking at work, social security and costs around housing. I don't think that comes out as clearly as maybe it could, if we were looking to improve it in future. I think the second thing as well that might be worth trying to unpack a bit more in future is the impact on different groups of people within society. So, we know that poverty doesn't impact everybody equally. Nearly half of people living in poverty in Wales have someone with a disability in their family. Gemma has been doing a lot of work with JRF with the poverty monitor, and there's a load of information in there about how it's impacting different groups of people differently, so I think it would be great to see some of that reflected more clearly in it going forward.

In terms of gender-sensitive budgeting, in terms of those impacts, would you be supportive of that work stream in future for Welsh Government?

I think anything that, yes, can bring out the impact on different groups and thinking about that, absolutely, will be positive, yes.

Okay. I don't know whether Joseph Rowntree has any comment in terms of, in particular, talking about disproportionately impacting on certain socioeconomic and other groups. We know, in terms of the position of women, they're more likely to be in low pay, pensioner poverty, in terms of part-time working. So, obviously, in terms of those areas, it hits quite a few of those, and then if we then look at how that then pushes into disability and other diversity issues, there is a sound argument to be able to take that forward. I don't know whether Gemma's got any comment on that, in terms of the other nations that are doing that.

Yes, it has done, yes. Apologies. JRF have a strong position that, when we're considering poverty, it's really vital that we consider the disproportionate effects on certain groups, so we would welcome work being done to look at the impact on other groups, so certainly if we look at the work that's being done in Scotland at the moment around disability benefits, there is a strong focus on groups that are disproportionately affected, and we'd welcome that sort of work being extended across into Wales as well.

And in regard to the context matter, I don't know if you've got any comments around the strategic impact assessment. What more information can be provided, if any, to aid understanding about how certain decisions have been taken? Would you point that back to those disproportionate groups in terms of that? 

Yes, absolutely. So, it's clear from the data that certain groups are disproportionately affected by poverty within Wales, if you think about workless households, certain BAME groups, and women as well, so it's vital that thought and consideration at a strategic level are given to those groups to ensure that any policies that are implemented will have a specific impact on those groups.

And so, in terms of the current strategic impact assessments, would you say that they are sufficient?

I think we would agree with the Bevan Foundation that there is a lack of discussion around the causes of poverty and how those causes interact to affect those particular groups.

09:45

Okay, thank you. And finally from myself, in terms of the discussion and debate for a Welsh benefits system, what do you think this might achieve? Obviously, we know that social security and welfare are not devolved, and are there any concerns that, in terms of taking on new functionality in this way, it could actually disproportionately make people worse off? 

JRF are aligned very closely with the Bevan Foundation's call for a united Welsh benefits system. So, at the moment, the devolved powers through—. The series of grants announced is very welcome, and we've seen in the COVID outbreak in 2020-21 that the funding is available and has been made available, and was very welcome. Our concerns around those powers are their fragmented nature and perhaps a lack of awareness from people about what is potentially available to them. And there's a lot of form filling—

Sorry, are you talking about recipients of benefits there?

Yes, sorry, recipients, yes. So, we would welcome the development of a coherent, joined-up benefits system, where all these grants are pulled together into one place so that there's no wrong door of strategy that's actually not needed, with—. A coherent system that works well and is less complex in its nature would go a long way to supporting those that need it. 

Okay. I don't think anybody would disagree in principle with that. Are there any concerns, however, in terms of missing finances coming to Wales in that regard? Has there been any discussion at your organisation level that there would be concerns around that, and therefore leaving Wales worse off and with the responsibility around that? Because the vision is great, but the reality and practicality, as we know, in terms of getting funding—promised funding, pledged funding—from the Treasury is extremely difficult and does not always happen. So, has there been any further debate from your organisation in regard to those types of concerns, which are real issues? 

I think it's—. If I can come in there, because we've been doing quite a bit of work on this ourselves, I think the important point to make is that these are things that are already happening in Wales that are devolved, so it's not calling necessarily for further devolution of powers—these are things that are already devolved and already happening in Wales. 

Okay. So, you are talking of—. So, for instance, universal credit. 

So, that's a conversation that could be had down the line if we wanted to, and then—

So, I'm talking about that type of wider leverage, because, otherwise, you're still going to have a fragmented issue. 

Right. So, just to come on to that in a minute, I think it's important not to dismiss how significant these are. So, the Welsh Government's budget in 2019-20 spent as much on all these different pots of money—free school meals, council tax reduction schemes, all of those different pots—as the total universal credit and jobseeker's allowance spend in Wales by the Department for Work and Pensions. So, it's a huge amount of money that Welsh Government is spending on these schemes, which are not being used as effectively as they probably could be at the moment. And whilst I agree with you that those by themselves would not necessarily end poverty in Wales, they could have a real, real impact in terms of providing that floor that no-one in Wales is falling under, and would also reduce some people living in poverty. So, I think that's a really important thing to set out, firstly. 

I think then, in terms of your second point, absolutely, in terms of further devolution of stuff, from our work there are one or two areas at the moment that you might well want to explore in terms of just—. So, around discretionary housing payments is an obvious one, where there are issues—we found, from our research in the system, that the lack of certainty that local authorities have in terms of how much money they're getting from DWP each year means that they have to change who's eligible for DHPs every year, which means decisions don't necessarily get made in the way that would be best from an efficiency perspective, in terms of the way that that money is spent, but also in terms of the person receiving it. So, I think there are some conversations around specific ones about that, and then I think there is a broader conversation, then, that we haven't really done that much work on recently. We have in the past. And I think you would need that broader conversation around some of those powers, as you mentioned, like they've got in Scotland. There is a case for looking at that, but you'd need a bit more work, I think, before going down that route and saying, 'Yes, absolutely, we should be doing this', or 'no'.

09:50

Thank you. Yes, there's a whole inquiry there, I think, isn't there, in terms of the work that needs to be done in that respect. Mark Reckless next.

[Inaudible.]—with the measures set out in the Welsh Government's child poverty income maximisation action plan for 2020-21, and to what extent do you think it will achieve its objective to help maximise the incomes of families living in poverty in Wales and support them to build financial resilience?

We missed the first couple of words. I think it was: 'Do you agree with'. Yes. Okay. Who wants to take that? Steffan, and then we'll come to Gemma.

I think there are some really welcome steps in that income maximisation plan. There's some stuff that we've been calling for there, and actually it links in to some of the stuff around what we were talking about just now about the Welsh benefits stuff as well. One of the big issues we encountered was that your experiences in terms of how you apply for this support vary massively from local authority to local authority. So, there are some local authorities in Wales where, if you receive the council tax reduction scheme, you will automatically get free school meals and you will automatically get pupil development grant and access to the school uniform grant. There are other local authorities in Wales where you have to apply separately for each of them and, in some circumstances, send in receipts of everything that you've bought under the school uniform grant. So, that is a huge variation there in terms of your experience, and also in terms, then, of people's experience of how much money they get. Some of the action around that, for example, is very welcome.

I guess the one thing that we think we're facing is maybe around the urgency around some of it. The crisis we're facing is now. This winter is the really challenging winter. Obviously, poverty was here before and it's going to be here after this crisis, but there's a real crisis now. So, there's stuff in there around pilots, around benefits advice and that sort of stuff, which are great, but, given that we've got this unallocated budget spend that needs to be used this year anyway, and that we're facing real pressing circumstances, is there a case to be made there for maybe spending more money now to make sure that that advice goes through the door, and then maybe we do a review at the end of the process so that, then, when maybe money gets a bit tighter the next year or the year after, we can then review and decide which ones we prioritise, rather than running small-scale pilots now and then we won't have the money to scale them up in a year or two if budgets are cut back again due to the spend that's been made because of the pandemic? So, that's, yes, one area or example where it could be improved, potentially.

Sorry, Mark. Did Gemma want to come in on that before we move on?

Yes. Absolutely, we would completely agree with that position. So, many of the objectives that are set out in the child poverty income maximisation plan will go some way to reducing child poverty, which is still at an unacceptable three in 10 children, provided that sufficient budget is allocated to fund those initiatives. What we feel is missing from the draft budget at the moment is some specific spending allocations that will facilitate some of those objectives. So, the commitment to extending free school meal provision is extremely welcome, particularly as we're still experiencing really high COVID infection rates and school closures et cetera. As an example, the £1.1 million that's been allocated to support advice services is unlikely to be sufficient still, with the increased demands that we're seeing for those services at the moment, and again we would argue that the development of a single Welsh benefits system would go a long way to increasing coherence and consistency across the local authorities that Steffan is referring to. Yes, absolutely, we'd agree that there is a distinct lack of urgency around that development plan. You're looking at plans into 2021-22 and beyond, but the problems are here and now and they need addressing now. You could argue that those pilots need to be extended into real support services on the ground as soon as possible.

Thank you. Can I ask what your assessment is of the impact of the draft budget overall on child poverty, and do you expect the allocations to build on the Welsh Government's child poverty action plan for 2020-21?

09:55

I'm happy to continue my previous point that, whilst the allocations are welcome, we feel that they are not sufficient to really deal with those systemic root causes of poverty, as I alluded to earlier. It feels very much that this draft budget is responsive and it is reacting to current circumstances, and again, that's within the context of having allocated spending for only one year, which doesn't permit long-term, medium plans on a wider scale that will really address those systemic causes. So, whilst the spending is welcome, we feel that it is not sufficient to fundamentally address those root causes of child poverty and reduce it permanently.

I'd agree with that. And just to provide another example, maybe, of where we'd like to see more finance being allocated, the extra finance towards free school meals over the holidays is great, but we know that there are tens of thousands of children in Wales who are living in poverty who are not eligible for free school meals. So, that's just another example there, maybe, where, if we're serious about ending child poverty, these are—. Of course they're difficult decisions about how you manage your budget, but if that's our priority, then that's another example there of where we might want to see some money moved about.

So, where would you want to put the cut-off for free school meals in that context?

Well, I think as a starting point, certainly, eligibility for universal credit. Firstly, that would pretty much factor all children living in poverty would be receiving free school meals. There are some variations around that, but, broadly speaking, you would. And also, I think there is a point around if the family has been deemed to be in need of support by the state, why are we therefore putting extra barriers on them receiving that support? I think that's a really important question for us to be thinking about. I think then there is a case, potentially, longer term, to look at providing universally, around stigma issues and also in terms of economies of scale, maybe, but certainly as a starting point that's something that I think we should definitely be aiming for.

And do you consider that the COVID measures that we've seen from Welsh Government take appropriate account of poverty and inequality, and are any of those measures that you'd particularly welcome in terms of their impact in that area?

Yes. There's certainly plenty of action that we welcome—so, the extra investment into the discretionary assistance fund, the extra money for free school meals. These are all really good investments that we welcome and that are providing absolutely vital support for families. Of course there's more that we want to see done and we've mentioned some of them already. One other example might be around the tenancy saver loan scheme. So, Welsh Government would provide a loan to tenants who have fallen into arrears on their rent and then they'd pay back Welsh Government over five years. That's great in theory, but what that ends up doing—. The tenant's debt doesn't go away, so you're moving the eviction problem for now, but you're not doing anything for the underlying problem that they've got, which is the debt. And then they're still in that debt for five years, paying back Welsh Government. So, actually, if someone's on a low income and having to pay Welsh Government off for that debt, that's money that's going out and that's not going to be in their pockets to lift them out of poverty. So, that's just another example there, where we'd like to see that money removed from—. You know, write off those loans and move them onto a grant basis, because that, then, probably provides you with a longer term basis from which people can recover from the pandemic.

Okay, diolch yn fawr, We'll move to Alun Davies, then. Alun.

Thank you very much. Following on from that question from Mark Reckless, do you think that the draft budget does address recovery from COVID, not just the amelioration of the impact of COVID as it is today, but also, then, through the next financial year? I'm particularly taken, Steffan, by a line in your evidence—I think it's from October—where you talk about delivery and good intentions undermined by lack of scale and bureaucracy and inconsistency. That's quite a line, and I'm not entirely unconvinced that you're not right, in fact. But, in thinking about that, does the draft budget address those issues and actually address the issue of delivery, not just good intentions?

10:00

I'll come in first, then. Yes, I think that you're right in raising that. That's partly because of the lateness in terms of when that financial statement was made. Westminster, of course, might play a part in that. But, yes, absolutely. So, the social housing grant, I think, is an obvious example where the ambition is there to build more social housing, but the money isn't really keeping up with that supply. You could ask questions about why we are still spending £70 million a year on Help to Buy, when that has—. There's limited evidence of the success of that scheme in terms of reducing poverty, whereas we know that building social housing can have an impact. So, that's one example where, if you want to invest more at scale—.

Another one that I was thinking of in this context is the extra investment in the school holiday enrichment programme. That's a really excellent scheme. It works really well and, actually, in terms of a recovery phase, could be particularly important in terms of giving the poorest children a chance to catch up on the education that they have lost, and giving them opportunities. But, even allowing for that doubling of the budget, in 2019, there were 3,500 children who got access to the school holiday enrichment programme. So, I think that the budget would be about four times higher. But, even allowing for that, you are probably talking about fewer than 20,000 actually being able to get access to SHEP this summer. So, while the scheme is great, if we really want to invest at scale, and if we want to roll that out, I think that about 85,000-90,000 children receive free school meals in Wales, so it's not even a quarter of those children who are receiving free school meals who would be getting access to SHEP. So, that's another example of a really good programme that could play a role in the recovery, giving children a chance to catch up on the education that they have lost. But, the scale of the investment is going to inherently limit how effective that scheme is, in terms of giving the maximum number of children the chance to catch up there. So, that's just one example.    

Gemma, and Rhianon wants to come in as well afterwards.

So, the COVID-19 coronavirus pandemic has been all about the impact that there has been on jobs. Sectors, particularly accommodation, hospitality and retail sectors, have been profoundly affected by the COVID-19 outbreak. JRF would argue that recovery from the outbreak will be based on the development and support of good jobs, of employment recovery and coming out of this outbreak. So, what we would maintain at the moment is that there is perhaps a lack of attention on the development of good jobs in the current draft budget. While we recognise that there is some attention given to retraining, that is arguably going to be insufficient to provide for those who have lost their jobs as a result of the outbreak, or for young people entering the job market at a particularly difficult time, to retrain and gain the skills that they need to improve their employment prospects and get themselves out of poverty through good jobs and good work.

Yes, it's just a brief point. I'm just considering some of the points that James has made in terms of the different financial envelopes that we have been talking about. In regard, for instance, to universal credit and the numbers involved, have there been any costings done, James, in that regard, in terms of the £7,500 cut-off? Obviously, under the old system, they were eligible for free school meals. It's the additionality and the accumulation of all of these funding pots, which I totally agree in principle would totally look at some of the underlying issues around systemic poverty. So, have you got any costings there, or are we just talking in generalities?

Okay. Steffan, can you address that point, then, please?

That's all right. The child poverty action group have obviously done the most recent work on that. I can't remember the number off the top of my head. The number '£60 million' rings a bell. I think it's something like that it would be to get every child receiving universal credit, but they've obviously published quite a bit on that in terms of costings. Obviously, all of these things cost, but we would argue, from our perspective, if ending poverty is the priority, then there are, obviously, difficult discussions. But as I mentioned, is spending £70 million on Help to Buy a solid investment if ending poverty is what we want to be doing? Or could we be putting that into social housing, to build more units and also maybe have an impact on rent. So, that's just one example then, maybe, of where that question arises.

10:05

Very, very briefly from Mike then, and we're back to Alun then.

My understanding is that their calculation is based on the 38-week school term, not the 52-week current provision, and can I just say, and I hope you would agree, that the 52-week provision for the poorest people in society is the most important?

Yes, absolutely, and that's why we've said, in our case as well, starting with the universal credit thing as well, rather than going straight to universal, because if you can scale up the investment—. Yes, absolutely, I agree with that. I think we need to increase the number, but, yes, I agree with your principle.

Yes, absolutely.

Okay. Thank you for that. In terms of where we are, then, what you're saying is that the Government is pointing in the right direction, is saying the right things, but the money isn't doing the talking, essentially—that there isn't sufficient thump there in the budget to deliver on the scale of the ambitions that the Minister has set out for that budget. Is that a fair analysis? I don't want to put words into your mouths, though.

Don't worry, I think I agree. I think there has been progress. It's fair to give Welsh Government credit for the progress we have seen in the recent budget on this one, but I agree that the fundamental point is right—unless we put the money in behind these schemes, they are not going to achieve the transformational goals that lie behind them.

Okay, fine. So, you've outlined those areas, in terms of analysing the budget as it is, which is all fair and good. So, where are the gaps? We understand that one gap is sufficient funding in these particular areas. We accept that, and we've dealt with that. So, are there other gaps? Because I was interested, Gemma, in your answer to the previous question—you focused on worklessness to some extent and the need to find good-value jobs and the rest of it. That indicates to me that your concern is that there isn't a sufficient focus in this budget on job creation, essentially.

Yes, absolutely. So, I'll pre-empt that by saying there is just so much uncertainty still around the impact that COVID-19 is going to have on the job market. We haven't hit the peak of unemployment yet. That much is clear, and we know that particular sectors have been affected more disproportionately than other sectors—so, as I referenced earlier, the accommodation sector, hospitality and retail. What's of concern is that these sectors are ones where poverty rates are higher. These are sectors that are typically underpaid, arguably lower skilled, although perhaps are seen as high value, and often these jobs are populated by women. Women are more highly represented in these sectors, and certain ethnic groups as well. So, when we talked earlier about thinking about poverty among specific groups that are at high risk, there was a clear link here with work, and these are sectors where we are going to see big job losses. So, what we are concerned about with this draft budget at the moment is perhaps a lack of attention on what can be done to address those job losses and those sectors that are going to be hit. Arguably, tourism and hospitality are key sectors amongst rural parts of Wales, so these are areas that do see higher levels of poverty and they areas that are going to be particularly hit. So, we'd want to see much more focus on what can be done to create good jobs and think about reskilling and upskilling people employed within those sectors, or who have lost their jobs as a result of the outbreak, so that they can find a route out of poverty through improved employment prospects.

10:10

Can I come back to you on that, Gemma? You mention hospitality and tourism—that's fine, I've got no issue with that—but for me, if I look at my own constituency, the area that's suffered probably the greatest number of losses at the moment has been retail, honestly. Retail has had a real thump during this last year, and whilst you can see the terms and the circumstances in which tourism and hospitality can bounce back, if you like, when there's a level of normality in the economy, it's difficult to make the same argument for retail. And my concern—and this plays into some of the stuff that the Bevan Foundation's been saying recently, about places like the Heads of the Valleys, for example—is that you need to not only look at the country as a whole, in terms of some of these sectors, but actually then, some of the places within that country where there is a specific need, either because of scale or because of depth of poverty and the rest of it, or because of a particular hit from a particular industry. And from where I'm sitting, I'm looking at retail as a sector that is neglected, which is where many women have lost jobs, which is neglected, and where those jobs are not going to be replaced elsewhere in the economy in the future. And I was just wondering, Steffan, do you think—the Bevan Foundation has spoken a number of times about the Heads of the Valleys and specific issues there—do you think that the Welsh Government, in this budget, is delivering sufficient resource to invest in the growth of those economies?

So, very briefly, if you would, Steffan, because I have—

I know, yes, but the other Members are hoping to have their opportunity as well.

No, I think that's a concern, and some of my colleagues are currently working on some ideas around what investment we need in the economy to recover. So, watch this space in terms of stuff that might be coming out soon, but some of the ideas we're talking about is: do we need to create economic action zones where there are parts of Wales where we decide the hit has been so significant and the problems have been so long-term that even extra additional investment needs to be made in those parts? So, yes, I'd agree with that.

Yes, interesting. Okay, diolch yn fawr. Siân Gwenllian.

Diolch, Gadeirydd. Jest efallai mynd tipyn bach yn fwy manwl yn rhai o'r meysydd yma rydych chi wedi trafod yn barod. A ydych chi'n credu, yn y maes addysg, fod y cydbwysedd cywir yn cael ei daro yn y gyllideb ddrafft rhwng addysg a sgiliau i blant oed ysgol ac addysg oedolion, o feddwl bod y pwyslais ar addysg oedolion yn y gyllideb ddrafft o ran gwariant newydd?

Thank you, Chair. Perhaps exploring some of these details in more detail. Do you believe, in the area of education, that the right balance has been struck in terms of the draft budget between education and skills for school-age children and adult education, given that the emphasis is on adult education in the draft budget in terms of new spending?

Yn sicr, dwi'n credu bod addysg bellach wedi cael prinder arian am gyfnod nawr, a dwi'n credu bod e'n bositif bod yna fwy o bwyslais ar hwnna. Dwi'n credu bod y toriadau sydd wedi bod dros y blynyddoedd yn meddwl bod angen hyd yn oed mynd yn bellach fanna, byddwn i'n dadlau. So, yn edrych ar yr education maintenance allowance, er enghraifft, y cymorth mae pobl ifanc yn ei gael i barhau mewn addysg bellach, mae fe'n £30 yr wythnos—mae wedi bod yn £30 yr wythnos ers 2004-05—sydd, mewn termau real, byddai fe'n £45 yr wythnos nawr. So, mae hwnna'n un enghraifft fanna o'r toriadau mawr sydd wedi bod i'r cymorth i bobl ifanc i allu aros mewn addysg.

A buaswn i'n dadlau, o ran y sefyllfa waith ar y foment, mae'n bwysig bod yna fuddsoddiad yn yr addysg sydd ar gael i bobl ifanc wedi 16 i aros mewn addysg, achos mewn addysg bellach, mae cyfran y plant sy'n byw mewn tlodi lot yn uwch na sydd yn ein prifysgolion ni. Ond hefyd, mae yna angen ystyried pa gymorth ariannol rŷn ni'n ei roi i bobl ifanc i barhau mewn addysg, achos mae'n grêt i fuddsoddi mewn colegau newydd, ysgolion newydd, staff newydd, ond os nad ydy'r bobl ifanc yn gallu fforddio mynd i'r llefydd yma ac yn gorfod mynd i'r gwaith, wedyn dydy'r buddsoddiad ddim yn mynd i gael yr un effaith a beth fyddai'n gallu ei gael os ydyn ni'n gallu rhoi cymorth i bobl aros a chymryd mantais o'r cyfleoedd yma.

Certainly, I think that further education has had a shortage of funding for a period now, and I think that it is positive that there is more emphasis on that. I think that cuts over the years have meant that we need to go further there, perhaps. So, looking at the education maintenance allowance, for example, the support that young people receive to continue in FE, it's £30 per week—it's been £30 a week since 2004-05—which, in real terms, would be £45 a week now. So, that's one example of the cuts that have been made to the support of young children wanting to stay in education.

And I would argue, in terms of the current employment situation, it's important that there is investment in post-16 education so that young people stay in education, because, in the FE sector, the number of children living in poverty is far greater than in our universities. But we need to consider what financial support we give young people to continue in education, because it's great to invest in new colleges, new schools and new staff, but if young people can't afford to go to these places and have to work instead, then the investment is not going to have the same impact as if you could give people support to take advantage of these educational opportunities.

10:15

Ond dydy'r gyllideb ddrafft ddim yn mynd i'r afael â hynny o gwbl?

But the draft budget doesn't tackle that at all?

Na, dim i'r hyn y byddem ni'n licio gweld. Ac mae hwnna'n un o'r pethau wnaethon ni godi hefyd o ran y gyllideb sydd ar ôl i'w gwario eleni. Fe allen ni greu pot argyfwng i fyfyrwyr ôl-16—mae lot ohonyn nhw wedi gorfod mynd i ddysgu o gartref, ac mae trafnidiaeth gyhoeddus wedi lleihau yn sylweddol—so'r rheini sy'n dal yn gorfod mynd i mewn i gyrsiau lle chi'n gorfod bod yna'n bersonol. So, rŷch chi'n gwybod, mae'r gost o fynd i'r coleg yn gallu bod yn broblem i bobl. So, os nad ydyn nhw'n gallu dal bws achos dyw'r bws ddim yna, mae'n rhaid cael tacsi neu mae'n rhaid gyrru. So, mae hwnna'n enghraifft o rywbeth y gallen ni ddefnyddio'r pot yna o arian sydd ar ôl i'w wario eleni ar ei gyfer, jest i roi cymorth i'r bobl yna i barhau gyda'u haddysg. Achos os ydyn nhw'n colli mas ar yr oedran yna, gallai hwnna gael effaith hirdymor—dim jest ar bobl ifanc, ond ar ein heconomi ni lot yn ehangach hefyd.

No, not to the extent that I'd like to see. And that's one of the things that we raised in terms of the budget that remains to be spent this year. We could create a crisis pot for post-16 students—a lot of them have to learn from home, and public transport has reduced significantly. So, for those who have courses where you still have to attend the estate personally, the cost of going to college can be a problem. So, if they can't catch a bus because there isn't one, they then have to take a taxi. So, that's an example of how we could use that pot of funding left to be spent this year: to support children to carry on with their education. Because if they miss out at that age, that's going to have a long-term impact, not just on young people but also on the economy more broadly. 

O ran y lwfans addysgol, faint o bot o bres ychwanegol sydd angen?

In terms of the education allowance, how much of an additional pot of funding is needed?

Dwi ddim yn cofio hwnna off top fy mhen, mae'n ddrwg gyda fi—[Torri ar draws.] Yn sicr byddwn i'n dadlau bod angen codi fe lan i £45 yr wythnos i wneud yn siŵr ei fod e'n gyfartal â beth oedd e nôl ar y cychwyn. Mae hwnna'n ddechrau, so mae hwnna'n 50 y cant yn fwy, byddwn i'n dweud, i ddechrau. Ac wedyn mae yna drafodaeth ehangach wedyn o ran y cymorth rŷn ni'n ei ddarparu ac, wrth gwrs, y cymorth mae pobl ôl-18 yn ei dderbyn hefyd—mae hwnna'n dal yn £1,500. Roedd hwnna'n £1,500 hefyd yn ôl yn 2004-05. So, mae hwnna'n enghraifft arall lle, yn sicr, byddwn i'n licio gweld lot mwy o arian yn cael ei roi mewn i'r cynlluniau yna.

Sorry, I don't remember that off the top of my head—[Interruption.] But I would certainly argue that we need to raise it to £45 per week, just to ensure that it matches what it's been. That's just the start. That's 50 per cent more to start. And then there is a broader discussion, then, around the longer term. And I think that post-18 education—that's still £1,500. It was £1,500 back in 2004-05. So, that's another example where we would like to see more funding being provided into those plans. 

A fuasech chi, felly, yn tynnu'r gwariant newydd o'r sector addysg oedolion ac yn ei gyfeirio fo tuag at yr adran yna?

And would you, therefore, withdraw the new spending from the education for adults sector, and then redirect it towards that area?

Byddwn i'n dadlau, o ran—. Mae hwn yn gwestiwn ehangach o ran—. Ac eto, mae'n dod yn ôl i beth rŷn ni wedi bod yn ei drafod o ran ble ydyn ni'n blaenoriaethu o fewn y gyllideb. So, fyddwn i ddim yn dweud—. O achos y broblem rydyn ni'n mynd i'w hwynebu, byddwn i'n ofidus o ran torri'r gyllideb addysg i oedolion hefyd achos rŷn ni'n gwybod ein bod ni'n mynd i orfod ailhyfforddi lot o bobl. Ond, o feddwl o ran ein heconomi ni, mae buddsoddi mewn twf yn yr economi, mae'r arian rŷn ni'n buddsoddi yn hwnna—. Os nad ydyn ni'n rhoi sgiliau i'n pobl ifanc ni i barhau mewn addysg, rydyn ni'n—. Does dim pwynt creu swyddi os nad oes gyda ni'r bobl gyda'r sgiliau i wneud y swyddi yna. So, mae'n rhywbeth gweithredol. So, rŷn ni angen meddwl yn holistic am gyllideb Llywodraeth Cymru, dim jest symud arian o un pot o'r adran addysg i bot arall o fewn yr adran addysg.

Well, I would argue that, in terms—. Well, this is a broader question, and it comes back to what we've discussed previously about where we prioritise within the budget. So, I wouldn't say that—. Because of the problem we're going to face, I would be concerned about cutting the education for adults budget too, because we know we're going to have to retrain a lot of people. But, in terms of our economy and investing in economic growth, the money we invest in that—. If we don't provide the skills for young people to continue in education—. There's no point creating jobs if the people don't have the skills to do those jobs. So, it's a practical issue. We need to think holistically about the Welsh Government budget, rather than just take money from one pot within the education budget and give it to another.

Diolch. Dwi'n meddwl ein bod ni wedi trafod y diwydiannau lletygarwch, ond beth am y diwydiannau celfyddydau? Ydych chi'n credu bod yna gefnogaeth ddigonol—efallai wnaiff Gemma ateb hwn—yn y gyllideb ar gyfer y swyddi yn y sector yna sydd mewn perygl oherwydd sefyllfa COVID?

And I think we've discussed the hospitality industries, but what about the arts industries? Do you think that there is adequate support—maybe Gemma can answer this—in the budget for jobs in the arts sector that are at risk because of COVID?

We would argue that there is insufficient budget allocation for any of the at-risk sectors—arts being one of them; retail, as Alun was referring to earlier. There is a profound need for a recovery programme to address these at-risk sectors, and at the moment, we can't see any specific allocation or thoughts within the budget, although I would caveat that with the argument that any recovery programme needs to be longer than a year. So, it's really difficult to put together a cohesive economic plan that thinks about recovery for these at-risk sectors within such a short time frame, so there is a—

Ie, derbyn hynny, ond a fyddech chi wedi disgwyl gweld cychwyn ar y daith yna—cychwyn ar rai o'r cynlluniau adfer yma—yn y gyllideb ddrafft bresennol, er mwyn datblygu ar rheini yn y cyllidebau sydd i ddod? Rydych chi'n sôn am swyddi; oes yna sectorau eraill neu themâu eraill o ran recovery sydd ddim yn cael digon o sylw cychwynnol yn y gyllideb ddrafft?

I accept that, but would you have expected to see the start of that journey—the start of some of those recovery plans—in this current draft budget, in order to develop or build on those in the budgets to come? You're talking about jobs; well, are there other sectors or other themes in terms of recovery that aren't being addressed properly in the draft budget?

'Yes', is the short answer. We would have expected some reference to planning for recovery and economic bounce-back, with allusion to longer term plans within this one-year plan, so there was quite a degree of surprise that, actually, there's very little in the budget around that.

10:20

Rydyn ni wedi trafod rhywfaint ar dai cymdeithasol, a dydych chi ddim yn teimlo chwaith bod yr ymrwymiadau gwariant yn y gyllideb ddrafft yn mynd yn ddigon pell i fynd i'r afael â'r diffyg eiddo addas sydd ar gael i rentwyr cymdeithasol. Beth arall allai gael ei wneud i helpu rhentwyr cymdeithasol mewn gwaith sy'n dioddef o dlodi yn y tymor byr, sef sector sydd wedi cael ei daro'n arbennig? Gemma.

We've discussed social housing already, and you don't feel that the spending commitments in the budget go far enough to address the shortfall of suitable properties for social renters. So, what else could be done to help social renters who are in work and who are suffering from poverty in the short term, a sector that's been struck particularly hard? Gemma.

So, one of the points that JRF would like to make at this point is that what we have seen over recent years is an increase in social rents in Wales, which hasn't been seen in other parts of the UK, so in the short term, control over those rising social rents would go a long way to assisting those social renters who are in poverty at the moment. So, that would be our first ask, alongside—we've already talked about a higher degree of building or creation of social housing.

Bydd yn rhaid inni symud ymlaen, sori, Steffan. Gwnawn ni fynd nesaf at Mike Hedges.

We'll have to move on now, sorry, Steffan. We'll go next to Mike Hedges.

Diolch, Gadeirydd. One comment or question: is it not true that social rents in Wales are still lower than they are in England? This question I've got is: the Bevan Foundation, you talk about 20,000 additional houses within the social rent sector. Do you mean council and housing association, and if you do, how do you see the split? But, again, my experience is housing rents tend to be lower.

Firstly, to pick up the point about rents, as Gemma said, rents in Wales have been rising incredibly quickly, and I think the latest JRF poverty monitor showed that there are 40,000 people living in poverty in Wales now that would not be living in poverty if social rents had not been increasing at the rate that they had been increasing. So, I think, even if we are lower than some parts of the UK in some contexts, that's a concern and something we need to be aware of.

Secondly, then, in terms of the 20,000 social homes, yes, we are talking about both tenures. I think it's an achievable target, because if you think about Welsh Government having a 20,000 affordable homes target for this current term, it's actually broadly in line to hit it, but the problem, we'd argue, is that stuff like Help to Buy counts as affordable, so the capacity is there to build these homes, it's whether we're prioritising the right types of homes to be built.

In terms of the split, then, we haven't broken it down that way, so that's something, I'm sure, people with a bit more experience around that work would be able to look into. I presume that the bulk of it to start with probably would come from housing associations, because they've got more experience of building at the moment, but, absolutely, I think it's crucial that councils—and it's good that councils are now starting to build, and it's vital that they continue to do so and at greater scale, as well.

Thank you. My final question is about taxation. The committee have heard me wax lyrically and at length about the council tax and needing additional bands. Do you agree with that? And just a question that I don't expect you to answer now, but perhaps you could send a note to the committee, you've talked about a lot of areas where you wish to see an increase in expenditure—I have no problem with those at all—would you like to give us headline figures for each of the main expenditure blocks to show where their additional money is going to come from?

I'll take you on the point about council tax. Absolutely, council tax is something that absolutely needs reform. We have done quite a bit of work recently—last year, we did a bit of work with Neath Port Talbot County Borough Council, and one of the things that came through there—we did some surveys with people about some of their internal strategies about poverty. One of the things that came through there, speaking with people, is that council tax was coming through over and over again as the cost that people in work were complaining most about, because they were earning too much to get the council tax reduction scheme, but not enough to be able to afford it, and, obviously, in our poorer parts—in parts of Wales where house prices are lower, council tax is a higher proportion of that, so it's a higher proportion of their bills as well. So, it is having a real impact. So, I agree with you, council tax definitely needs to be reformed. More bands is a starting point, I think. The Wales Governance Centre, the Wales fiscal analysis unit, did some work last year showing that you could arguably raise income tax by 1 per cent and freeze council tax, which would raise the same amount of money, but in a more progressive way. So, there's some work to be explored around that as well. But, no, I agree, and I think it's something that needs broader reform. But, as a starting point, I think that certainly makes sense. 

10:25

Thank you. I just don't trust anything that comes out of the Wales Governance Centre and we know that income tax towards the top end is easily avoided.

Gemma, did you want to respond to those initial points?

No. It's not—

Okay. That's fine, because time is against us. Rhianon, I'm sorry, I'm not going to allow you to come in either, because it's on to Nick now, who has been very patient, fair play. 

Diolch, Cadeirydd. Patience is my middle name. [Laughter.] 

This is for the Bevan Foundation. Morning. In the 'Transforming Wales' report, you said 

'We have seen too many good intentions undermined by lack of scale, bureaucracy and inconsistency.'

I wondered if you could expand on that.

Yes. That touches on some of the stuff Alun asked about earlier. So, the school holiday enrichment programme is a good example of that, as I raised earlier. That's a really good scheme. We know it helps families more broadly, not just the children who go to those schemes, but the number of children benefiting from it is really, really small. So, that's just one example there where, if we want these schemes to achieve the really good intentions behind them, then the money needs to be in there behind them for them to work at the scale that's required. And around the kind of bureaucracy side of stuff, as I mentioned as well, we've seen some local authorities who have far more bureaucratic processes in terms of applying for support than others. And actually from our research and talking to those staff in local authorities, some of that could easily be remedied by just clearer guidance from Welsh Government, telling them, 'You don't need receipts.' If that message came through clearly, the message we got from local authorities would be, 'Well of course we wouldn't be, but we're a bit afraid that we might get taken to task at audit around it.' So, that's just another example where just clearer lines and messages from Welsh Government could just improve stuff without costing more money and would have a real impact in terms of the process and how people experience it.

So, cutting through some of the red tape and simplifying some of the structures.

Yes, absolutely. 

Okay, thanks. And what role do you see the voluntary and third sectors playing in the COVID-19 economic recovery, and how could the budget be improved to better reflect that?

I guess that one concern we have is that a lot of third sector organisations, charities, have seen a real hit to their income. This is obviously not the universal experience, but they've seen a hit to their income at a time when demand has increased and is likely to continue to increase. So, I think that is a real concern about how we think about the recovery and the here and now: what do we do around capacity in that sector to support people? I think there's something there about the budget, about is there even—? I know Welsh Government has already provided some support, but do we need to consider even more support around those circumstances? I know we've done some work, my colleagues have done some work, around the role of social entrepreneurs and social businesses; I think they can play a really important role as well in the recovery, in terms of trying to create job opportunities, but also by having that social purpose and a far clearer focus on the communities that they're operating in as well. So, that might be something to explore as well, supporting those businesses.

Are these sectors in a financial position to implement the changes you'd like to see in providing essential services to the public?

As I mentioned, I think some of them are. The increased number of food banks we've got, that isn't a positive thing. We shouldn't be having food banks, but there is quite a bit of robustness, I think, in that sector, because people have been giving and donating—rightly so. People have been wanting to support them. But there may be some other charities where they've been less in the headlines, they're less fashionable causes, such as support around asylum seekers and those sorts of areas, where maybe the financial support that's going into those charities isn't what it used to be because they can't do their fundraising activities, and therefore the capacity isn't there, maybe. And there are various areas. Also, there are really small hyperlocal charities as well, who play really, like, a role in their communities; I think there is a bit of concern about whether there is capacity there to do the great work that they had been doing, helping people in their communities.

10:30

Iawn. Ocê. Wel, dwi'n ofni ein bod ni wedi dod i ddiwedd ein hamser, felly a gaf i ddiolch i Gemma a Steffan am eich tystiolaeth? Maen nhw wedi bod yn gyfraniadau pwysig iawn, ac mi fyddwn ni'n amlwg yn tynnu ar y dystiolaeth yna yn sylweddol, dwi'n siŵr, wrth i ni ystyried y ddrafft gyllideb yma, felly diolch o galon i chi. Mi fyddwch chi yn derbyn copi drafft o'r trawsgrifiad i wneud yn siŵr ei fod e'n gywir. Felly, gyda hynny, diolch i'r ddau ohonoch chi am eich presenoldeb bore yma.

Mi fydd y pwyllgor yn awr yn torri. Mi fyddwn ni'n cael toriad technegol am 10 munud er mwyn paratoi ar gyfer y sesiwn dystiolaeth nesaf, felly a gaf i ofyn i Aelodau fod yn ôl fan hyn ychydig funudau cyn 10:40? Diolch yn fawr.

Okay. Well, I'm afraid we've come to the end of our time for that session, so may I thank Gemma and Steffan for your evidence? They've been very important contributions, and we'll be drawing upon that evidence significantly, I'm sure, as we consider the draft budget, so thank you very much to both of you. You will be receiving a copy of the draft transcript to ensure that it's accurate. So, with that, thank you both for your attendance this morning.

The committee will now take a break—a technical break—for 10 minutes in order to prepare for the next evidence session, so could I ask Members to be back just before 10:40? Thank you very much.

Gohiriwyd y cyfarfod rhwng 10:30 a 10:40.

The meeting adjourned between 10:30 and 10:40.

10:40
4. Craffu ar gyllideb ddrafft Llywodraeth Cymru 2021-22: Sesiwn dystiolaeth 6
4. Scrutiny of the Welsh Government's Draft budget 2021-22: Evidence session 6

Croeso nôl i Bwyllgor Cyllid Senedd Cymru ar gyfer pedwaredd eitem y bore yma sef, wrth gwrs, i barhau â chraffu ar gyllideb ddrafft Llywodraeth Cymru ar gyfer 2021-22. Ac yn ymuno â ni ar gyfer y sesiwn yma mae Andrew Campbell, sy'n gadeirydd Cynghrair Twristiaeth Cymru, a Dr Llŷr ap Gareth sy'n uwch gynghorydd polisi gyda'r Ffederasiwn Busnesau Bach yng Nghymru. Croeso i'r ddau ohonoch chi. Mi fydd Ian Price, sy'n gyfarwyddwr gyda Chydffederasiwn Diwydiant Prydain yng Nghymru, hefyd yn ymuno â ni yn ystod y sesiwn yma, gobeithio, felly fe wnaf i ei groesawu e hefyd ond mi fydd e'n ymddangos ar ein sgriniau ni, gobeithio, yn ystod yr awr nesaf yma.

Mae gennym ni, wrth gwrs, gwestiynau ar eich cyfer chi felly fe wnaf i gychwyn efallai jest gyda chwestiwn cyffredinol, i bob pwrpas, yn gofyn a ydych chi'n teimlo bod y dyraniadau sydd wedi cael eu gwneud yn y gyllideb ddrafft yma yn darparu dull cydlynol o gynorthwyo busnesau drwy'r pandemig, ac a ydynt yn hwyluso cyflwyno strategaeth hyfyw ar gyfer adferiad economaidd. So, dwi ddim yn gwybod pwy sydd eisiau ymateb gyntaf—Llŷr, efallai, ie?

Welcome back to the Senedd Finance Committee for the fourth item this morning, which is to continue with our scrutiny of the Welsh Government's draft budget for 2021-22. And joining us for this session is Andrew Campbell, chairman of the Wales Tourism Alliance, and Dr Llŷr ap Gareth who is a senior policy adviser with the Federation of Small Businesses Wales. Welcome to both of you. Ian Price, director of Confederation for British Industry Wales, will be joining us during this session as well, hopefully, so I'll welcome him but he will appear on our screens during the next hour. 

We do have questions for you, of course, so I'll start maybe just with a general question, asking you whether you feel that the allocations made in the draft budget provide a coherent approach to supporting businesses through the pandemic, and whether they present a viable strategy for economic recovery. So, I don't know who wants to respond first—maybe Llŷr.

Ie, dwi'n hapus i fynd gyntaf. Dwi'n meddwl ei bod hi'n bwysig nodi ar y cychwyn—mae'n siŵr y byddwch chi wedi clywed hyn ac yn gwybod hyn—fod y draft budget yma ychydig bach yn fwy o ddrafft nag ydyn ni wedi arfer efo fo. Mae yna fwy o gaps yna. I ryw raddau, lot o'r ochr gefnogaeth i fusnes ydy, fwy na thebyg, rhai o'r darnau sydd efallai lle dydy hi ddim yn glir iawn lle fydd y potiau o bres yn dod, pryd fyddan nhw'n dod. Mae yna fwy o ansicrwydd yn fanna nag yn nunlle, mae'n siŵr. Felly, i ryw raddau, mae'r dystiolaeth rydyn ni wedi ysgrifennu i chi yn cymryd i ystyriaeth hynny, ac mae'n bwysig nodi felly ei bod hi'n gwneud synnwyr ac rydyn ni wedi cytuno ei bod hi—beth ydy'r gair Cymraeg, dwi ddim yn siŵr—yn prudent i fod yn gadael dipyn o le i fedru newid pethau at fis Mawrth yn fan hyn.

Serch hynny, mae'n bwysig nodi dwi'n meddwl er bod yna ansicrwydd, dydy hynna ddim yn meddwl bod hynna'n rheswm i gael rhyw inertia dros y misoedd nesaf. Mae hi wir yn fwy pwysig, os rhywbeth, i drio rheoli yr ansicrwydd yna, ceisio cael ychydig o senarios mewn lle, efallai, i fusnesau dros y mis neu ddau nesaf, achos fel rydyn ni'n sôn yn lot o bethau ac ar draws bob mathau o bynciau, dwi'n meddwl, mae lead-in eithaf da yn hollbwysig i fusnesau bach yn benodol.

Rŵan, os ydych chi'n meddwl am ailagor, mi fydd angen i fusnesau ddechrau meddwl ynglŷn â phryd maen nhw'n gwneud. Maen nhw angen amser fel rhyw fath o warm-up i gyrraedd y gallu i gymryd mantais o unrhyw ailagor. Maen nhw'n mynd i orfod gwybod y senarios o beth fydd yn digwydd ym mha senario efo'u busnes nhw yn y sefyllfa yna. Yn aml, rŵan fuasai pobl yn ceisio cynllunio, wrth gwrs, ar gyfer y Pasg; dydy o ddim yn hawdd iawn gwneud hynny ar hyn o bryd, ac mae hynny yn hollol ddealladwy. Ond mi fuasai pobl angen meddwl am eu stoc a'u supply chain, mi fuasen nhw angen meddwl am weithwyr—sut i recriwtio, ac yn y blaen—ac mae'n bwysig nodi mai un esiampl yn fanna, efallai, fuasai os ydy ffyrlo yn dod i ben diwedd Ebrill, bydd pobl yn mynd i orfod meddwl am redundancies hefyd yn y mis a hanner cyn hynny. So, rydyn ni'n sbïo ar ganol mis Mawrth yn fanna i bobl fedru 'plan-io'.

Felly, hwnna ydy'r mater sydd o dan sylw i ni, ac rydyn ni'n dallt fod yna ansicrwydd yn fanna. Yn amlwg, mae yna ansicrwydd am faint o bres fydd actually yn dod i Lywodraeth Cymru yn y flwyddyn nesaf. O dan hynny, mae o'n fwy ansicr fyth pryd fydd cefnogaeth i fusnes yn dod, faint fydd o, achos, wrth gwrs, mae'n ddibynnol ar beth sy'n digwydd yn Lloegr. Felly, rydyn ni'n dallt hynny ond mae'n bwysig, serch hynny, i geisio cynllunio cyn gynted a chyn gymaint â phosibl er mwyn galluogi busnesau i wneud eu cynlluniau hwy i agor i fyny a cheisio cymryd mantais o unrhyw fowns fydd yn digwydd wrth i ni fedru agor i fyny ychydig. 

Yes, I'm happy to go first. I think that it's important to note at the outset—you will have heard this before, I'm sure, and know this—that this draft budget is a little more of a draft than we're used to seeing. There are more gaps in it. To a certain extent, a lot of the support for business is some of the parts where it's not very clear where the pots of funding will come and when they will come. There's more uncertainty there than anywhere else. So, to a certain extent, the evidence that we've presented to you takes that into consideration, and it's important to note therefore that it does make sense and we agree—I'm not sure what the Welsh word for 'prudent' is—that it is prudent to leave some scope to be able to change things until March in this context.

However, it's important to note that even though there is uncertainty, that doesn't mean that that's a reason to have some kind of inertia over the coming months. It's more important, if anything, to try and manage that uncertainty and try to have some scenarios in place, perhaps, for businesses over the next couple of months, because as we mention in relation to a lot of things across a range of subjects, a good lead-in is very important for small businesses in particular. 

Now, if you're thinking about reopening, businesses will have to start thinking about when they do that. They need some kind of warm-up period to have the ability to take advantage of any reopening. They need to know the scenarios and what will happen in each scenario with their business in that situation. Very often, people would now be trying to plan for the Easter period; it's not very easy to do that at present, and that's very understandable. But people would need to think about their stock and their supply chains, and they'd need to think about their staff—how to recruit, and so forth—and it's important to note that one example there would be if furlough comes to an end at the end of April, people are going to have to think about redundancies as well a month and a half before that. So, we're talking about mid March there, so that people can plan accordingly. 

So, that's the issue that we're focusing on, and we understand that there is uncertainty in that context. Certainly, there is uncertainty about how much funding will come to the Welsh Government next year. Under that, it's more uncertain still when the business support will come and how much it'll be, because it does depend, of course, on what happens in England. So, we do understand that but it is important, however, to try to plan as soon and as much as possible in order to allow businesses to make their own plans to reopen, and to take advantage of any bounce that will happen as we're able to open up a little.

Ie, ocê. Diolch.

Okay, thank you.

Andrew, is there anything here that you see that gives you confidence that the draft budget will deliver a viable strategy for economic recovery?

Sorry, I just missed the beginning of that.

I was wondering whether there's enough in this budget for you to have confidence that there is a viable strategy for economic recovery.

10:45

Yes. I'd probably like to see more about tourism within the budget, but it's nice that it's been flagged up on page 39, and the industry is very grateful that you've acknowledged the fact that the sector has been hardest hit. It's a very important economic sector in Wales. It generates £6.2 billion in visitor spend, provides jobs for 130,000 people, and it's a very bleak time for the industry. We're currently in a deep freeze. We're in the third winter of a five-winter scenario. We thought it would only be a three-winter scenario, and it's just not turned out that way. I think it's really important in the budget that it has to be flexible, because there has been uncertainty and twists and turns at every juncture, and it's just so difficult to get that planning in [correction: difficult to accommodate that]. In many ways, it's probably good that you're not being so static within the budget, because that really probably allows a lot of room to manoeuvre. The support packages that have been put in place have to acknowledge the generosity of the Welsh Government. When we look around the four nations, the support packages in comparison with England, Scotland and Northern Ireland have been the most generous, and that's good. It hasn't covered absolutely everyone, but, on an average, it has been generous and we've been very grateful for that and grateful for the furlough and the VAT reduction et cetera. But we are possibly looking at a bit of a car crash going down the line a little bit [correction: end of March 2021], because all the bills have got to be paid, and so it really is important that we continue to push for that 5 per cent VAT to continue, that we do push for rates relief running through, that we do look for possible deferment on the loans and mortgage repayments and other things. That's a bit of a shopping list. I don't know whether I've answered your question, but there's an awful lot of uncertainty, so it is very difficult to encapsulate that within your budget.

Indeed, and that is understandable, and I know individual Members will want to pursue different aspects in any case, so I'm sure we'll pick up on some of that. Can I now welcome Ian, as well, who's joined us this morning? Croeso, Ian.

No problem at all. You're here now; that's the important thing.

I'll move on to Mike Hedges for his questioning. Thank you.

Diolch, Cadeirydd. A question that I think is probably aimed mainly at the FSB: how effective have the business support packages implemented by the Welsh Government been in supporting Welsh businesses during the pandemic, and what companies have missed out? I know of a company that has had no rates support because it paid rent and rates to an organisation that itself has had no rate relief because of the size of it. These sorts of unintended consequences—are you aware of how many there are, and have you made representations to the Welsh Government on it?

On the last one, yes, we've made representations to the Welsh Government. We've made representations to UK Government across the piece on a lot of these things. We've been in constant engagement around where these gaps are during the course of the last year, and there are times when we've been able to successfully push for those gaps to be filled. There have been times when it's been based on discretionary payments at local level, so sometimes the responses have been patchy. We know of many businesses who are very frustrated around exactly the issues that you discuss, Mike, but as to the number of them, it's a little tricky to say, because, of course, in a way, the whole problem is that they are, in some respects, outside the system on that front.

Now, we've pushed some particular areas that we would want to see. Going forward, we would like to revisit the start-up grant. That was last seen in June, I think. That's really been important for trust going forward, and confidence for businesses to start getting into business again, and that will also be important because, while we don't know what the employment impacts will be, we do know that, following 2008, a lot of employees moved to become self-employed, and having support and assistance in that in the future would also be useful. The key parts that we've been pushing over and over is on company directors, and we're looking also to extend the self-employed income support scheme to renew that, so that the people who have now been in self-employment for two years are able to access that easily. But those are probably matters for UK Government rather than Welsh Government.

In many ways, we're hoping that the next package will be making continued discussions with the Welsh Government on filling the gaps, as it were, over the next period as well, including businesses that perhaps missed out on not just the support that is vitally needed for their survival, but also those that perhaps missed out on the business development grants in November, where that was first come, first served, and thrown in in 48 hours. While the survival aspect and the immediate support is important, I think that support over the coming—. We're hoping for the next iteration of that to come in the next month or so, and it's important to learn lessons from that and that we look at how that support is targeted and how it is done on merit, if you like, and how we make sure that as many businesses are able to put plans in place for the next few years, hopefully to enhance business growth as well.

But in answer to your question, yes, we have been engaged constantly with Welsh Government on this. We are trying to find ways to shape the support packages to bring in more. We acknowledge that it's difficult because there is always a balance between getting the money out to as many as possible and some of the risks involved in that. There are bound to be areas where people fall through the cracks, but, I guess, trying to enhance, getting to as many people as possible and bringing in intelligence to Welsh Government is what we've been doing where we've seen those gaps appear.

10:50

Yes. I think Llŷr has covered the points regarding self-employment and I think that is probably more around the FSB membership. And apologies if I'm repeating anything anybody has said already by being late, but huge credit to both Governments, in actual fact, for getting money out the door at the speed they have. I think both of them have done that really well and I think, particularly for the bulk of our members, a lot of the transformational stuff comes from UK Government, because the job retention scheme has been the key to preserving a lot of businesses, and it's probably been the biggest influence on all that.

The advantage we have in Wales, which maybe not everybody realises, is that the Development Bank of Wales has been a real bonus in all this. It has enabled us to get money out the door in a far quicker fashion in some respects than maybe other parts of the UK, and maybe that hasn't been picked up enough—huge credit to the Development Bank of Wales. There's potential for them to be even more involved, going forward, and possibly directing some of the money through the Development Bank of Wales rather than through local government and possibly Welsh Government may mean that the money gets to businesses quicker than it has been doing. Because the biggest complaint we've had in respect of how it's worked is the speed on occasion. And Llŷr's point about what happened with phase 3 as well, that wasn't helpful. I think the fact that they ran out of money as quickly as they did caused a fair level of consternation as well. But, yes, the biggest challenge has been the speed, but I wouldn't want to be churlish—it's been a hugely challenging time.

Okay. Mark wants to come in briefly on this, then Llŷr and then we'll come back to Mike, and Andrew, I'm sure, can respond to the next question. Mark.

I just wanted to ask what it was about the bank that made it faster dispersing funds and more effective in that than local government or potentially Welsh Government in this context.

Probably they weren't confined by the restrictions that civil servants were confined by, to be perfectly honest with you. That's probably the main reason for that.

It doesn't need to be more complicated than that—absolutely. Llŷr wanted to come in as well on this.

Yes. Perhaps I didn't make this clear in my section there, but I'd like to say the same as Ian there that, clearly, the support has been excellent and has been the vital part in ensuring that—. Many businesses wouldn't be here now if we hadn't had that support, so I do want to make sure that I'm not sounding, as Ian said—. It's a matter of constructive criticism where that sits, really. So, I think it's important to note that and that it's clearly been vital to our sector over the past year.

I would note quickly, following on on Business Wales, I think Ian's point is completely correct that Business Wales has been a boon for us here. It's meant that people have had a one-stop shop to go for advice and support as well as the rest of it. And I think it's important to note that that business infrastructure is going to be vitally important over the next Senedd period. I would note, in the budget, that it's quite possible to over analyse this part, I guess, but the budget's allocation for Business Wales is made up in the end by the reserves. Now, whether that's a signal of anything is, obviously, possible to over-interpretate, but we do know that in the process of the EU funding coming to an end and the role of a shared prosperity fund, the role of Business Wales and the funding of Business Wales is something that we're worried about, particularly from 2022-23, so I would like to just note that.

On the development bank, our surveys from November noted the difference between the British Business Bank—. In Britain as a whole, the people who had heard of it were 17 per cent of small firms, and in Wales, for the Development Bank of Wales, it was 42 per cent. So, I think that's an indication of how much that business infrastructure in Wales is now a part of the furniture, almost, for a lot of small firms, and that's a thing that is important to tap into and to take advantage of as we move to recovery.

10:55

We've got two economic resilience funds, which are targeted at hospitality, tourism and leisure. Are these the right place to be targeting it? If we have additional money, should that also be targeted at those sectors? And should more money be being targeted at those who support those sectors, for example small breweries, which are not tourism, hospitality or leisure but actually provide services to them?

Yes. Just going back to your earlier question, Mike, if I can just quickly say something, we do meet on a weekly basis with Lord Dafydd Elis-Thomas, every Friday. So, we do feed in all of that information to try and influence the situation, just to give you an update on that.

Well, obviously, I'm going to say 'yes' with regard to your question—the more support we can get for our particular sector, that's good. It's important to note, though, that it does include the supply chains, from my understanding, that many of the businesses involve. So, it's not specifically for leisure and tourism—there are many associated businesses who are benefiting from that ERF funding.

Okay. Thank you. Ian wanted to come in as well on that, I think.

Yes. Andrew's stolen my thunder—I was going to say, 'Don't forget the supply chains'. Castell Howell is quite a large member of ours and has been severely impacted, and they are accessing this next phase as well. So, yes, the supply chains are being looked after. But I think the smaller the business, the harder it is to access the money, because they haven't got the expertise in the organisation on occasion, so there's a case there for simplification, going forward, I think.

Just to reinforce what Ian said there, if we're looking at winners and losers here, the small operator, the sole trader, who really makes up the sense of place in Wales in the context of tourism, have not been disadvantaged, but the freelancers have not been able to access the money that other sectors have. So, that's been a continual battle to try and get money through. So, that's a point worth making.

I'd also like to have it recorded about the fine work that the local authorities have done. It's really gratifying to see the good relationship between Welsh Government and local authorities. They've got £1 billion out of the door, and they've done that from a standing start. They're not really geared up to actually get money out, and they've really responded and risen to the challenge. So, even though there have been some teething problems, I think they deserve credit for trying to respond in the way that they have done.

There we are. Thank you. Okay, we'll move on to Nick Ramsay, then. Diolch.

Diolch, Cadeirydd. CBI Wales have previously mentioned the importance of the UK and Welsh Governments working closely together with each other and with business in partnership, and that's particularly important during the pandemic. How effective do you think that joint working has been over the last few months, and are there any aspects of the budget that could be improved to make sure that there's better working in future or that opportunities are made the most of?

Yes. I would suggest it's been patchy at times. I'm pleased to comment at the moment that it's probably better than it's been for quite some time, and there are some good signs that there is some cross-Government working. The complexity of the whole situation's been challenging for businesses throughout. I think, on occasions, the different approaches from the different Governments have really not been helpful here, and it's just added to the levels of complexity. And, going back to the previous conversation, where we're getting people accessing funds and suchlike, it's a minefield anyway, and then, if you layer on another element of complexity, it makes it really tough for people.

I think we're in a better place now than we were. I think, if you look at parts of Wales, it's critical that there's as little divergence as possible. I was late because I was on a call with north Wales members. North-east Wales, a lot of people in north-east Wales don't even know if they're in Wales or England a lot of the time, unfortunately, because of the nature of the border; it's porous. You've got employers there where half the workforce lives in England, half the workforce lives in Wales, and, when you've got slightly different approaches to things, it causes challenges. And it erodes people's confidence as well. So, I think it's important. In some areas—I know Alun's disagreeing there—

11:00

[Laughter.] I'm not applying to all parts of working life, but—.

It's quite clear that most people know which country they live in.

Yes, I know. I'm being flippant there. I'm saying that, quite often, when you're driving from north Wales to south Wales, you're weaving across that border. But, if you're Welsh, you know you're Welsh; if you're English, you know you're English. But I was asked the question around understanding the rules, and I think it does add a level of complexity in a pandemic that you could do without. But I think there are signs, there are really positive signs, at the moment that both Governments are working quite closely together. I know we're not here to discuss the B word, but there are some positive signs around Brexit where the two Governments are trying to navigate that as well. So, yes, we're in a better place than we were a month or so ago, certainly.

Yes, okay.

Yn fyr iawn, Llŷr, rwyt ti eisiau dod mewn ar hwn.

Briefly, Llŷr, you want to come in on this.

Yes. I'd reinforce what Ian said in terms of complexity. One of the things is—and this is the side effect of having such different support over the course of a long time—that a lot of our operators are struggling to navigate the landscape. And there's an element there, possibly. And I think it's happened a little bit on the Business Wales website now, where it's just cleaned it up a little bit to understand what's happening. But that's an ongoing process and challenge, I think, in terms of communications on that front.

I'd just like to quickly say, on the engagement front, Ian's point is what we've found as well—it's been patchy. I think it's important to note that, when there are political arguments, it's not really a zero-sum game in terms of one side wins, another side loses; often, the problem is it can erode a bit of confidence and trust amongst the populace. So, I think that's where clarity around process and what's happening when and planning can help with that. But it doesn't look great to our members. [Inaudible.]—political animals day to day.

No prob. During its inquiry into the impact of COVID-19 on the Welsh economy by the Economy, Infrastructure and Skills Committee, they were particularly concerned about the impact of the pandemic and lockdowns on self-employed people. They've clearly been particularly hard hit. Do you think that this current draft budget before us provides enough support to that sector of the workforce?

In a word, at the moment, it's not really there to the extent that we would want. Again, I have to put in the proviso that, obviously, there are a lot of gaps in there, and, as I've mentioned, business support is one of the most volatile of those gaps and where the pots of funding are coming into. So, while it's not there at the moment, I think it is important that, when we look at the reconstruction and recovery plan, we start looking as well at the economic development side of it a little, have a little more focus on that, because, as we come out of the pandemic, those are going to become more and more important to us as we go on. And I think the role of the self-employed in that respect is going to be important. The role of pushing entrepreneurship is going to be vitally important. So, I think that side of things needs to be addressed more clearly between now and March.

11:05

Thank you. I'm terribly sorry; I would have liked to have made a comment on your last question, Nick, which I thought was particularly good, about working across—

You can still make a comment, if you like, if you want to go back to that one.

Yes, I will do, if you don't mind. Thanks very much.

Eighty per cent of—. There is an 80 per cent dependency on people across the border coming to tourism [correction: coming on tourism trips] in Wales, so that is a real concern to members. We had a WTA members meeting yesterday. There's nothing political in it—tourism businesses in Wales would really like to work much closer on a UK basis, because of all the confusion over the tiers and the problems and constraints that that causes. So, that would be a bit of a wish list for many Welsh tourism businesses. I sit on a UK tourism group, so I am able to influence things to a small extent. Dafydd Elis-Thomas meets regularly with Nigel Huddleston, and the four tourism Ministers in the UK do meet [correction: also meet]. And again, it's lobbying and influence through that thing—through that as well. I think some confusion happens because a lot of people follow the 'English' news, in inverted commas, so when Rishi [correction: Rishi Sunak] says there's going to be £9,000 for businesses, we get a flood of phone calls going, 'Where's the £9,000?'—you know, there is this confusion. So, messaging, as we all know, has been a bit of an issue all the way through this, and that causes a little bit of a tension. And, of course, we would like Welsh Government to lobby as hard as they can for increasing furlough, for all the different packages with VAT—extension of 5 per cent et cetera. So, the more that you can do to help our tourism businesses, all well and good. 

Going on to your second question, Nick, very, very briefly, I think undoubtedly the self-employed, particularly those who have really started up over the last couple of years, they've found it very, very difficult, because there is this, 'You have to provide your accounts from 2018.' That has precluded quite a number of new entrants into the market [correction: of applications]. A lot of entrepreneurs, a lot of self-employed people, they have a number of different jobs. If I can take the guides, for example, they don't depend on guiding for their total livelihood, they've got a number of other jobs. So, again, when it comes to the criteria—and it has been so difficult to actually set this criteria—then there are winners and losers. But I think the self-employed haven't done as well—if I can put it in that way—as some of the other businesses and types [correction: and organisations].

Thank you, Andrew. Yes, that's an important point. Diolch yn fawr. Thank you, Nick. We'll move on to Alun Davies.

Thank you. It's very easy in this conversation to stray into policy, rather than to talk about the budget. I'll try to return to the budget in terms of the debate that we are having. One of the conversations we keep having—. I was interested, Mr Campbell, to hear you say that you were very pleased at the overall level of support that tourism businesses had received over the last year, in comparative terms. I'm interested to understand whether the three of you think that the level of support that is predictable within this budget—and I accept there are issues around that—is sufficient to achieve the ambitions of Government and (2) delivers on the aspirations of the people you represent? I know there's always—. You can always say that you want more; let's live in the real world.

Well, I don't think that there is the detail in the budget that specifies that amount to give you an exact answer. I think the aspiration and the messaging within that budget, without putting actual figures on it, actually gives me a degree of reassurance that the Welsh Government will respond to that. I can see Ian waving his hands, so—

—I give way to you.

I just wanted to make the point that it's hugely challenging at the moment. Because so many businesses are dormant—I hate using that expression, but there are a lot of businesses, clearly, not trading. Until they start coming out of that and trading, there almost needs to be a level of flexibility in what's required, simply to allow people to support those businesses, because the challenge is high numbers of their staff are on furlough, how quickly is business confidence going to return—you know, putting figures on things at the moment might be fairly difficult, because you don't know what sort of shape some of those businesses are in. I've seen some fairly horrendous statistics suggesting how many of these businesses may not trade out of this at the end of this as well, so we almost need—. There needs to be a figure, but, rather than pinpointing it in particular areas, it almost needs to be flexible to be able to react to what sort of shape the business is in after the pandemic, because we simply don't know at the moment, unfortunately.

11:10

There's a point to be developed there around the flexibility, though, I think, and to bring it back to, basically, the budgetary process, I think this crisis has shown, again, some of what happens practically in terms of having a budgetary process in Wales that is actually quite narrow and inflexible. We've called for quite a while now for more borrowing powers, more ability to borrow. You'll note that in the budget the reserves are taken up to the maximum and the borrowing capacity as much as possible, but there is no—. So, in a way, you would like to have the rhetoric possible to say that 'We want to provide the economic stimulus to get ourselves out of the recession and towards a recovery', and, of course, that's a level that is possible at UK Government level, but will not be possible in Wales, whatever the system, in a way, but having a greater ability to borrow and possibly to spend would allow for perhaps that certainty I think you're aiming for there, which is, basically—

No, I'm not looking for certainty, I'm looking for your view. With all due respect, it's easy to say—I don't disagree with you, by the way, about the issue on borrowing. It's all very easy to say that we need flexibility, we need all these things, which I accept, but the fact is that we've got a budget. At the end of the day, members of the committee have got to vote on that budget, and I'm interested in understanding the views of your members in terms of what is in that budget today. Now, anybody who's watched the committee's work over the last five years will know the committee is highly dissatisfied with various aspects of the fiscal structures of the United Kingdom, the powers available in Cardiff and the rest of it. That's all fine. But we've still got to vote on the budget in February, so, given where we are, is there sufficient firepower in this budget to meet the needs of your members is the key question.

In terms of—. Sorry, Andrew.

Thanks, Llŷr. Alun, I mentioned at the outset there's only half a page with regard to tourism. To have some more detail in there—. One of the key things that came out of the WTA members meeting yesterday—we often talk about destination management, and we're expecting, really, a very, very bleak time at the moment, but we do see an end to this, and we do see a huge COVID-19 bounce. We're suddenly going to go from nothing to an absolutely manic situation, with huge numbers of domestic visitors coming into Wales. These destination management organisations have really stood up to help many of our members, providing a lot of help and reassurance, but I think there's a real job of work there. So, if there could be more investment in destination management organisations to manage the influx of people—and we've seen community pressures, we've seen antipathy against visitors; there's a whole lot of things that could really come out, and I think to have some allocation towards helping destination management organisations would be very useful for our businesses.

That's very helpful, thank you. Ian mentioned in an earlier answer that he didn't want to stray into the dreadful subject of Brexit, well, I'm going to break Ian's heart, probably not for the first time. [Laughter.] We've seen the crisis facing the fishing industry at the moment, which is a direct consequence of decisions of the United Kingdom Government. Do you believe that there is sufficient support in place from the Welsh Government's perspective for the sectors that are at the moment being hit very hard by the reality of isolation, if you like, in terms of Brexit?

11:15

As I mentioned it, I suppose I should respond first. I feel obliged to take that one on the chin. Again—. Sorry, my answers are not very good today, in that the problem is that we're finding unintended consequences on an almost daily basis at the moment, and it's really challenging, as such, then, to suggest that the support is in place. Something that's arisen, which I'll use as an example, is something called 'qualified practitioner', which up until the middle of December I knew absolutely nothing about. It appears that Welsh pharma businesses no longer have qualified practitioner status in Europe and, as such, they can't move drugs in and out of Europe. These were businesses that, up until the middle of December, we had no concern about in respect of wanting to stay in Wales or requiring support, but all of a sudden, once the deal was agreed, the European Medicines Agency has not accepted equivalence for UK pharma companies, so, as such, they can't transport drugs freely into mainland Europe. All of a sudden, these businesses that previously were businesses we considered to be great success stories and we've been holding up as exemplars are now in a difficult position and require that level of support. You've got to keep coming back to this point that there almost has to be a sum of money there that can be allocated in particular ways at relatively short notice. I'm just using that as an example. And this isn't a political point; there may be businesses out there that are finding things a lot easier and, in truth, I've had some positive feedback around some other areas, but this is one area specifically that needs help almost immediately. So, quite how you make that judgment call—

It does take us away from fishing and agriculture as well into a more industrial part of the economy as well, so that's actually quite an interesting example. 

Yes, and the question for us is whether we see that money in the draft budget, isn't it? Andrew, you wanted to come in. 

Yes, just to say, on that European Union question, that many of our tourism projects have been funded by European Union money, the infrastructure projects particularly, which maybe, if they're not specific, do have a real bearing on visitor movements and the ability for destinations to receive visitors. So, we're really quite concerned about that, and that needs to be thought of. 

When we were talking earlier about the flexibility of the budget, when we look at maybe the eight priorities that the Welsh Government have for an economic reconstruction, I fully buy in to those priorities, like climate change, decarbonisation and everything else, but this pandemic has really thrown a spanner in the works in the sense that, if we take transport, for example, it's now the safest way to travel to go in a car [correction: for example, the safest way to travel now is in a car]. So, all the hard work we've done on public transport, to get people on public transport, is now way down the road. We've gone back 10 or 20 years. So, if we're trying to facilitate our industry, maybe—and I am a public transport user and I'm a great believer in sustainable tourism and transport, I really, really am—we may have to look at road building. We may have to look at the relief road, because the M4 artery into Wales is really important. Maybe we have to revisit those sorts of major infrastructure projects that were part funded by the European Union to actually facilitate our industry. So, it is a bit of a strange one that we have that. 

We do have to be more competitive, I think, with regard to the way forward. So, again, a call for the devolution of air passenger duty to come back to Wales—to make that decision would make our airport more competitive to help our international traffic. So, it's throwing up many of those sorts of issues, I think, that are part related to European funding. And I could bang on about the loss of Erasmus and all those sorts of things as well, but I won't—but I could. But it's just something to say.  

Yes. I'm afraid we're going to have to move on, now, because we have three more Members wishing to ask questions and barely 20 minutes left. So, over to Mark Reckless. 

It's suggested in the draft budget narrative that the replacement farm funding from the UK Government is £137 million less than expected for 2021-22. How appropriate is that calculation, and what do you see as the outlook for the agricultural sector and its supply chain?

11:20

Llŷr, wyt ti eisiau cymryd hwnna ar y supply chain?

Llŷr, do you want to take that one on the supply chain?

In terms of an area that's obviously going to need support, the agriculture area is clearly there, and our businesses in the supply chains around food and so on in those areas are clearly important. I have to be honest, I haven't picked up on your point there properly, Mark, so I'd like to come back, if that's okay, on that, rather than—you know.

You may not be the appropriate witness to ask on it. It can be a point I can raise with Ministers as appropriate. I just wondered if you had any—

We have a very close relationship, Mark, with the agricultural sector. There's been lots of diversification with farmers, and that continues to happen, and I think this recent political move has prompted more diversification, so farmers are having to do that because of the loss of income. I think with the demand that we're expecting in Wales, that's going to fulfil a need, which is a positive thing. But I'm not an agricultural expert, so I can't really give that, but I know that they play an important role in tourism delivery here.

Given the importance of exports to businesses and the Welsh economy, do you think that the additional £1.6 million allocated to Welsh Government's new export plan is appropriate in scale to enable the delivery of comprehensive and immediate support to Welsh businesses?

Well, £1.6 million isn't a huge sum of money, to be perfectly honest with you, and if we're encouraging more people to export, logically, there needs to be a larger sum of money involved in that. I think it's interesting to see how many businesses are now looking at export, and weren't previously, so the more we can do to support that, the better. I would suggest that when we're looking at business support, that's one of the areas that probably needs to be beefed up a bit in the next 12 to 18 months. So, that would be my thoughts on that. But again, there isn't a limitless supply of cash, and it's challenging, but certainly, more and more businesses are looking at that as a route to make up for business that they potentially will be losing.

I agree with Ian on that. I do acknowledge that the export plan—this budget line is probably to get it up and running rather than anything else. The point here is also that any export plan, when it comes to gearing businesses who are considering going to exports towards getting the skills and capacity and capabilities to do that—that's going to be somewhat different now than it would have been a year ago. The landscape has changed, and therefore, we need to make sure that Business Wales is in a position to be able to provide the guidance and advice on where's best to go, how the plan works in their situation now, where both COVID and Brexit have changed the landscape quite a lot. Now, that means that there will be new opportunities as well as risks, of course, but nonetheless, it's important that the export plan reflects that properly.

I just wanted to come back on the point that Llŷr has raised around Business Wales. I think Business Wales has been a success story, but I think it needs beefing up, and that's probably one of the areas where it probably hasn't got the levels of expertise it needs at the moment, so that needs to be looked at. But again, I think that's for another day.

Okay. Thank you, Mark. On we go now, then, to Rhianon Passmore.

Thank you, Chair. I note the comments that have been made about Business Wales; that's interesting. Moving on to land transaction tax, the draft budget narrative mentioned that Welsh Government has lifted the starting threshold paid on non-residential property purchases by 50 per cent. How do you think this change will impact on businesses?

I think it's a positive move, Rhianon, in respect of promoting entrepreneurship. I think it's going to encourage a lot of new entrants in, and from a tourism perspective, where we have many micro and small businesses, that can only be a good thing. I think also in conjunction with that, though, we have to look at planning, because it's going to encourage people to come in to invest, which is fabulous, with new thinking, new people, but sometimes the planning constricts people [correction: planning laws constrict people]. Maybe there needs to be some consideration given to loosening planning regulations and laws. I can't give you anything specifically, but I know that during this COVID pandemic, to give you one example about caravan parks that finish at the end of October—they've had that planning restriction moved, so they have been open [correction: so they have been allowed to stay open]. It's about those sorts of things. So, I think the one measure [correction: the land transaction tax proposal] in itself is good, but I think it really should be looked at in the context of maybe looking at planning as well. 

11:25

Okay, thank you for that. Llŷr, did you want to comment?

Just quickly, I'd agree with Andrew that it's probably of benefit to our members and to our sector. And just to expand on the planning side, this is where the vision for the next five-year period—and I acknowledge that part of that is going to come through an election, of course, but there's a whole load of work going on here and over here that need to be tied together, I think. So, for example, Ian and myself gave evidence on remote working a few weeks back, and there is a question there around planning and how do you actually build community hubs, different premises that you would need for localised, remote, decentralised workforces. That kind of discussion needs to happen alongside what happens with remote working, and if that's part of the vision for recovery. So, these ideas need to be brought together—these small things alongside the wider picture, and the wider picture is quite important to us, to have a view for how we're looking at things for the next few years, really.  

I wouldn't have anything to say on the tax because it has not been raised by our members. But again, I agree with Andrew and Llŷr—planning needs to be linked into everything, because it's one of the issues that gets raised more often than anything else with people. So, it is an issue and it is an issue for Wales, particularly. 

Okay. And in regard, then, to the plan for recovery, the budget is what the draft budget is. In itself, it's not a plan for recovery in regard to the twin converged crises that we're dealing with at this moment in time. So, your points in terms of that alignment between planning and this matter are absolutely well made.

I'll go on, then, to the next question. In your collective views from where you all sit, does this draft budget provide support for businesses to adapt to one of the other priorities of Government? I've come to the conclusion that quantitative easing is the way forward, but does this draft budget provide support for businesses to adapt to climate change to protect green jobs, another very key area of Government focus? I don't know who would like to take that. I don't know, Andrew, whether you'd be better, or Llŷr. 

There's a lot around the greening of housing and residential areas. We've called in the past for an Arbed-type scheme that goes to the private sector as well and focuses on landlords. Now, naturally, for many of our members, they rent premises as well, so they can only adapt so much. So, that sort of thing comes into play. I just wanted to note that there's a lot of the decarb stuff in there that we think could be looked further at for the private sector, and look at how we can look at that.

We noted electric vehicles and the differences with the car, needing to use more cars at the moment. Whether that's true in a few years is another question, I guess, but, if we are looking at electric vehicles from 2030, businesses are often on leases for these types of things. We do need lead-in times, so in that sense the vision and the milestones for when things kick in on these things are vitally important for our businesses. Otherwise, you end up with a lead-in time of a year or so to change a car, which isn't going to work for many members with their fleets. That's just an example. 

I think it's really uplifting to see that very strong theme of climate change and greening and decarbonisation, and it's a real strong card that the Welsh Government have, and it's sent out a really strong message to the rest of the United Kingdom, so it's great that it's in there. I just think it has to be tempered, possibly, as I mentioned earlier, with regard to the situation that we now find ourselves in. But, yes, I think, just widening that question out a little bit, it's about trying to raise additional taxes as well, perhaps in order to deliver some of those aspirations, Rhianon. I know we have discussions with members, talking about tax relief schemes or tourism investment projects, that maybe you're going to get tax relief to encourage that growth. Maybe that could be channelled into more greener projects. We need to think outside the box a little bit.

11:30

Rhianon, if I just come in quickly. It's on everybody's agenda, the green recovery. Large businesses, small businesses, everybody's aware of it and everybody sees it as an opportunity, so anything Welsh Government can do to support it is going to be well received. It's something that everybody is talking about, and even mid pandemic we're having conversations about what more can be done, and we've had member conversations around this recently, so it's being talked about. It's one of the few subjects that is being talked about over and above the pandemic anyway.

That's really encouraging. If I can just say, Ian, you've mentioned a few times about Business Wales and the importance of it being positioned in the right place, with the correct capacity and funding behind it. Do you see Business Wales needing support in this particular agenda around the green productivity growth that we could see from Wales post COVID or even during?

I think, yes, without a doubt. Business Wales is very much a generalist at the moment, so it's all things to all men. So, I think as we move forward—

Ian Price 11:32:20