Y Pwyllgor Cyfrifon Cyhoeddus a Gweinyddiaeth Gyhoeddus

Public Accounts and Public Administration Committee


Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Mabon ap Gwynfor MS
Mark Isherwood MS
Mike Hedges MS
Natasha Asghar MS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Ann-Marie Harkin Archwilio Cymru
Audit Wales
Dr Andrew Goodall Llywodraeth Cymru
Welsh Government
Gawain Evans Llywodraeth Cymru
Welsh Government
Matthew Mortlock Archwilio Cymru
Audit Wales
Richard Harries Archwilio Cymru
Audit Wales
Sally-Ann Efstathiou Llywodraeth Cymru
Welsh Government
Tim Moss Llywodraeth Cymru
Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Enrico Carpanini Cynghorydd Cyfreithiol
Legal Adviser
Fay Bowen Clerc
Joanne McCarthy Ymchwilydd
Lisa Hatcher 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 yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 9:41.

The committee met in the Senedd and by video-conference.

The meeting began at 9:41.

1. Cyflwyniad, ymddiheuriadau a dirprwyon
1. Introductions, apologies and substitutions

Bore da, croeso. Good morning and welcome to this morning's meeting of the Public Accounts and Public Administration Committee in the Senedd, the Welsh Parliament. We have apologies, I believe, from one member of the committee, Rhianon Passmore, but all other Members are either already with us or attending shortly. We're meeting in hybrid form, with some Members physically in the room, including our witnesses, and some attending remotely. 

2. Craffu ar Adroddiad Blynyddol a Chyfrifon Llywodraeth Cymru 2021-22 - Sesiwn dystiolaeth - rhan 1
2. Scrutiny of the Welsh Governments Annual Report and Accounts 2021-22 - Evidence Session - part 1

Our first item is to take evidence on scrutiny of the Welsh Government's annual report and accounts 2020-21. I welcome Dr Andrew Goodall and his officials to the meeting. I'd be grateful if you could state your names and roles for the record. 

Bore da, Gadeirydd. Andrew Goodall ydw i, Ysgrifennydd Parhaol Llywodraeth Cymru. 

Good morning, Chair. I'm Dr Andrew Goodall, Permanent Secretary of the Welsh Government. 

Bore da. Gawain Evans, finance director.

Bore da. Tim Moss, chief operating officer. 

Bore da. Sally-Ann Efstathiou, deputy director for human resources, planning and delivery. 

Diolch, bawb. Thanks, everybody, and again, thanks for being with us today. I remind everybody that simultaneous translation is available using the headsets. Select channel 1 for translation and channel 2 for sound amplification. Please ensure that any electronic devices and phones you have are switched to silent. In the event of a fire alarm or emergency, follow the directions that will be given to us by the ushers. 

We have a number of questions. I'd be grateful if both Members and witnesses could be as succinct as possible to enable us to get through these, and cover the wide range of topics generated by this item. It falls to me as Chair to begin with those questions. What do you consider were the main challenges in finalising your 2020-21 accounts, and did you present the draft accounts for audit in line with the timetable agreed with the Auditor General for Wales? 

Diolch, Gadeirydd. Chair, just to reflect on the timetable, and if I could make a couple of general comments on the accounts process as well, we did submit and produce in line with the statutory timetable that is set for us. I will ask Gawain maybe to talk through some of the complexities around the accounts that would have delayed from previous years' experiences, but made sure, actually, that we were consistent with our statutory guidance.

As a general point from myself, the accounts just get much more complex every year, and I think there is a unique configuration of the accounts that are overseen by the Welsh Government perhaps in contrast to UK Government departments. But equally, we are continually including a range of other organisations who are overseen in Wales, and there are changes of standards also happening. 

I would just wish to make the point at the outset, though, that in submitting the accounts we did actually manage within our resources and budget, and I think sometimes within all of the complexity that we're handling, we often don't call out that simple premise that we did manage within our resources. I do think that the annual accounts do show the significant breadth of Welsh Government responsibilities in a wide variety of areas, both in delivery terms as well as the more traditional civil service. But the annual accounts were still being undertaken on the back of a really exceptional year of context. We were still—despite it feeling as if it’s a more distant memory, and working in a more normal manner now—coming out of the COVID mechanism. The last six months of the annual accounts was in the period that was associated with the omicron variant, for example, and that re-establishment of controls, and there were many other things starting through that period of time, from public inquiries, the aftermath of EU exit as well, that affected it.

But on the timetable side, we did negotiate through the year with Audit Wales about changes that we needed to do. There was much stronger oversight from our risk committee through the chair there, who set a timetable as well, but I think that, whilst we have recovered from the experience of the previous year—and I did commit, Chair, that we would look to comply with the statutory timetables—I think some of the complexities in the accounts are going to still be there for subsequent years, and probably with other organisations being added to it as well. So, I just wonder if Gawain could give you a technical answer on a couple of those early areas, Chair, and then I’m happy to continue to explore it. Gawain.


Thank you. In terms of challenges for last year, as Andrew said, a number of these will probably be challenges going forward. I think the first thing to mention, really, is the fact that the 2021 accounts were delayed quite significantly, as the committee is aware, and so, that did impact preparatory work. I’m sure that it impacted preparatory work for our audit colleagues as well. Just as an example of that, the 2021 accounts were signed on 8 August, and we actually started handing over information for audit to audit colleagues on 15 August. So, they were almost running simultaneously at one point.

And Andrew mentioned the fact that, certainly the scope of the complexity in the accounts is growing every year, and just a couple of examples of that, if that’s okay. So, the number of organisations that are now consolidating is increasing, almost year on year. So, in the last five years, for example, we’ve taken on three NHS trusts in Wales, two special health bodies, Transport for Wales, a subsidiary for Transport for Wales, and the full scope of the development bank. So the number of organisations, as I say, is increasing. And with that, there’s a complexity in terms of the range of activities that we need to account for and the inter-group transfers that we have to identify and then eliminate, which have to go through that process when you’re consolidating. And as I say, in terms of the range of activities, we’re now an organisation—we have railways, we have roads, we have a bank—they are quite complex organisations to deal with. The organisations themselves as they become part of the Welsh Government accounts, obviously have to adapt as well. There’s more information that they have to provide. They have to comply with the financial reporting manual, which they might not have done before. They have to have their accounts audited to time in order to submit to us, so, again, quite a challenge there. I hope Audit Wales colleagues don’t mind me saying, but it becomes more complex as an audit process as well. So, the timescales—a few years ago, audit was about seven weeks and now, it’s about 12 weeks in the period, so we have to build that into the timetable as well.

The other one I was just going to mention in terms of last year, which I think had quite a significant impact, is the balance between remote working and face-to-face engagement. I think that’s certainly complicated and had a disruptor effect in terms of the way that we were able to communicate with not just audit colleagues, but colleagues across the public sector. It was one of the things that we were discussing the other day with audit colleagues, in terms of trying to bring more face-to-face engagement in for this year, and I think that will have a significant effect in terms of the way that we work with people, and the understanding that everyone has then about the accounts.

So, Chair, we submitted within the statutory deadlines; we brought it forward from the difficult year that we’d had beforehand. I think, as I was attending as a witness, I committed to making sure that we would recover that, and irrespective of other conversations about memorandums of understanding, I think we’ve managed to recover our track record of actually delivering the statutory accounts on time.

Okay. Why did you not publish information about the timetable for these accounts on your website, despite the Welsh Government having agreed to do so with our predecessor Public Accounts Committee?

I think, for last year, the timetables were genuinely altering as we were accommodating things. As Gawain said, we were still dealing with some of the delays caused by the previous year’s annual accounts. I think the principle is sound. There were a number of adjustments that were made; to reassure you, we had a clear timetable that was jointly agreed and was being overseen by our risk committee, with a particular interest from the chair because of the problems for the previous year. But, I think it's absolutely right that that should be in the public domain, and we'll make sure that that is published, not least, of course, for the 2022-23 process, Chair.


Okay, thanks. Well, in these in accounts, you refer to the Shaping Wales' Future programme developments with the national indicators and the chief statistician's 'Wellbeing of Wales: 2021' report. To what extent does this change the approach when considering the performance of the Welsh Government since the fifth Senedd's Public Accounts Committee was told that these were matters for Welsh Ministers? 

Yes. I don't think that there is a change of approach. I'm aware of what the former Permanent Secretary had outlined to the committee about the intentions of how we report our performance through the lens of the annual accounts. I think it's really important to make sure that we do capture the organisational performance elements; that is the particular focus and the intention. The reference to those other indicators is just to show that if people have a broader interest, including the outcomes of some of the Welsh Government policy areas, which are in the ministerial field, there are a range of reports that help them to do that.

So, I think that if you take a pack of our annual accounts process, which gives a feel for the organisational performance, you use the future trends report, you use the well-being indicators and you take the Welsh Government's annual report, which is the outcomes on the programme for government, as a package, I think it tells you lots of different things. But it's really important to make sure that we are not diverting, I think, from the ministerial priorities. Obviously, there are other mechanisms for scrutiny of those issues, including other subject committees as well. So, I just think that it allows us to really try to understand what the organisation is about.   

Just to say, Chair, I did welcome the last session we had, because of the opportunity to talk through the workforce arenas, the workforce planning, at a level of detail, which I also think underpins a lot of the annual report. It really did feel that we were able to talk about the organisational performance.

Okay. What, if any, additional information do you intend to include about the national indicators and performance against these in your accounts in future in order to complete the picture?

Well, I think we're intending to maintain the reference points to them, so that we're able to at least describe that more rounded environment, which I think does allow us to respond to some of the concerns of previous committees. Clearly, if we're able to find better ways of demonstrating the organisational performance, we'll continue to do that.

If I give you one example based on the well-being responsibilities, it's really important that we can actually show that the Welsh Government, as an organisation itself, is an exemplar in respect of the well-being of future generations Act. So, we've just had a section 20 review from the commissioner. We've responded to that with an action plan, but, actually, we're really pleased that, even within our performance framework, we're able to show that, actually, the awareness of the sustainable principles—there is a much greater use and awareness within the Welsh Government because of the five ways of working, for example. So, we are trying to track some of those components in future.

But, we will continue to just make sure that we try to set the context for what our report is trying to do, which is about having an understanding about the role and functions of the Welsh Government as an organisation. 

Okay. How do you determine the appropriate level of information to include in the accounts to meet the needs of the Senedd as a primary user of them? 

I've had experiences of annual account mechanisms both in the Welsh Government, in my roles as both director general and Permanent Secretary, and, of course, as a chief executive in the health sector as well. I have to say that a lot of the requirements that we comply with are set out in great technical detail through the financial reporting manual, so whilst there is obviously some flexibility, certainly for part 1, parts 2 and 3 are very, very specific about the technical accounting treatments as well. Gawain, I just wonder whether you want to give a reflection on that.

Okay, thank you. Yes, as the Permanent Secretary was saying, sections 2 and 3 are, effectively, mandated by the financial reporting manual. Obviously, we're audited on compliance with that. Part 1—what we try to do with part 1 is provide a summary of the services and the activities delivered by the Welsh Government and the civil service. I think, over the last few years, we have tried to take account of feedback from the committee and from other sources.

Just as a couple of examples of that, we've introduced case studies over the last few years. We've been presenting more information as infographics, which people say is a more useful mechanism for us to use, rather than just pages and pages of words. We also try to focus on, perhaps, key elements that impact the people of Wales at that particular point—things like the pandemic and, obviously, EU transition. Although parts 2 and 3 are mandated, to a certain extent, with some helpful support from Audit Wales, we have been trying to improve the accessibility of perhaps some of that information, by looking at the notes, and the way that we prepare the notes and the language that we use in the notes. So, I wouldn't say that parts 2 and 3 are essentially fixed, as I say, particularly with feedback. During the audit, for example, and the audit wash-up, we look at the notes with Audit Wales, and we try and determine perhaps what we can change, but also some of the information we might be able to add to those areas.

I was reflecting back probably about eight years now with the accounts, and I think, hopefully, if we look back at accounts from about eight years ago between the accounts we're preparing now, I think you will see a difference, and, hopefully, a difference for the better, in terms of the information and the way that we present that. 


Thank you. In his previous response, Dr Goodall referred to the well-being Act and the five ways of working. How do you embrace the five ways of working in order to identify the needs of the Senedd—the Welsh Parliament—as a primary user of these accounts?

I think, where we have an understanding of the broader reports, we certainly use those, but in part, some of the working arrangements in place on the future generations Act are to make sure that we can actually look forward. I think the annual accounts from the last two years inevitably are a response to a very significant pandemic environment, and I think that has turned a lot of the feel of the things that we do in Welsh Government to reactive, maybe rather than into the longer term. I think certainly trying to use the cycle of the annual accounts over the next couple of years to perhaps point forward more—. Inevitably, they're always a reflection of the year, but I don't think that prevents us from actually looking into the future as well. And, actually, part of the future generations Act's expectations is about working with stakeholders and collaborating, and my view is that, based on Senedd Members' views, certainly of committee's views, we look to reflect on those and we look to try and improve the report. If you put alongside the reports from the Welsh Government annual accounts from 10 years ago with now, I think, you would probably see quite a stark difference between the two things. So, very happy to take further feedback from the committee on both this year's and future years' reports. 

Thank you. I was going to ask a follow-on, I won't now. I'm glad that you mentioned committees in that, because I'd hope that the work of this committee in particular and others might be acknowledged in the role of the Parliament in identifying its needs with you, rather than to you, in accordance with the five ways of working.  

Indeed, very happy to support that, Chair, and that's the style of, certainly, the contact I've had with public accounts committees over many years now, so, thank you. 

Okay, thank you. Well, as well as demonstrating accountability for the use of public funds, how do you use the accounts and financial statements to drive improved financial performance of the Welsh Government, and more effective management of assets and liabilities? 

I think we need to recognise that the delivery of the annual accounts in itself is a function and is a timetable that we need to work towards. I think there is a danger of it being seen to be the only mechanism that we use. It's got a very important visible public use, but, of course, we are using all of our mechanisms within the organisation throughout the year in different committees, in performance reporting terms, to make sure that we're building up to the annual accounts. So, I think, whilst, of course, there is always a pause and a bit of a breath at the end of a financial accounts period, and to make sure that we can adapt and learn, I think, Gawain, to be honest, the use of our sub-committees, the way in which we use a range of the data, the way the finances are reported through the risk committee, are just part of the day-to-day working of the organisation as well. So, I think, we do try to build it in as an improvement philosophy throughout the year as well as use the annual accounts themselves. Gawain. 

Actually, perhaps I could start with saying 'Yes, we do put a lot of resource and effort into this', but it's not just about preparing a set of accounts. The accounts team work throughout the year with policy officials and different elements of Welsh Government, because the accounts are an ongoing thing. Accounting standards change every year, and we have to adapt to that, so it's certainly an all-round activity for the team. For me, looking at it in terms of a timetable, the accounts sit at the very end of our financial cycle almost. So, the cycle starts almost two years before that when we start doing the preparatory work on the budget, and that then feeds through to the final budget, to in-year management, and, then, finally we get the accounts. So, the accounts themselves is a document of almost a historic record of what's happened in the previous years and the work prior to that.

I think, certainly, in terms of financial performance, a lot of the work does go on in year, prior to producing the accounts. So, we have a mechanism internally for reviewing our financial information, it goes to executive committee, it's shared with Ministers, it's discussed at Cabinet, and so, as I say, it's an all-round activity, really. But I think, for me, in preparing the accounts, it does bring a discipline with it, and it does support the scrutiny of our finances and of the governance in the Welsh Government. So, we have the audit and risk committee and the executive committee, for example, who will scrutinise and challenge the information within the accounts as we're preparing that, because, obviously, we prepare draft accounts and we submit those to the various groups internally.

When we review issues such as losses and special payments, that's really to ensure that we comply with the relevant policies and delegations, and that's a check that's built in there as well. The internal control questionnaire process that we go through just ensures that the principal accounting officer and additional accounting officers obtain the assurances that we actually have the controls in place to manage the business.


I think it does allow us to adapt new policies and procedures on a range of areas and, hopefully, align them with the financial year in question, as well. Tim, you've obviously arrived in the organisation recently.

Thank you. Yes, I'll just maybe give you an example in terms of my role now as chair of the finance and corporate services sub-committee. In the six months that I've been here, every single month, we've been doing a detailed analysis of the monthly financial position, and that's part of that end-to-end process that Gawain has just alluded to, starting with the budget, right the way through to then the signing of the accounts and the in-year reporting around it. So, it's quite in-depth, and that's something we're absolutely going to be continuing going into next year on a regular basis, reviewing the monthly position and the forecast then to year end, as part of that process.

How resource intensive is this, and to what extent can that be seen as an invest-to-save operation, rather than simply meeting statutory requirements?

Yes, we do have an accounts team. As I say, their role isn't just about preparing the accounts on an annual basis, there's so much more work that they do just supporting the business more generally. So, as I said earlier, I wouldn't want you to think it's just a one-off activity that we bring people in to do it there. The team are also supporting on governance issues through the year as well. The accounts preparation is obviously a statutory requirement, but I think the accounts team themselves are, effectively, an integral part of the work that we do within the organisation, particularly within the finance directorate.

Chair, you may recall, in the last session on workforce planning, that we did talk about the Welsh Government 2025 change programme. What we're trying to do in there in particular is to allow ourselves to draw out a number of expectations, particularly around efficiency, but continuous improvement as well. So, I just think your point generally about the invest to save is a culture that we're trying to establish in a different way at the moment, and I think, despite it being a function, as Gawain says, obviously, there are spin-off benefits to us, absolutely, in the organisation.

Okay, thank you. Looking to the future, what deadline have you agreed with the auditor general for the 2022-23 accounts, and will you commit to publishing the timetable?

Certainly on the publication, I'm happy to ensure that that is re-established in the way that I just shared earlier in my response to you. If I could just say in a process comment that we are continuing to be overseen by the audit and risk committee, particularly through the role and function of the chair of that committee, to make sure that whatever's happened—and a timetable is there in agreement. I think it's important that we collaborate with Audit Wales, so that we have an understanding of that together, but perhaps to call out some of the particular dates, Gawain.

Certainly, yes, and as has already been said, we've met with audit colleagues a couple of times already this year to discuss the timetable. In terms of specific dates, we're looking to deliver the draft consolidated account for audit by the end of August. The final audit is going to start then on 1 September. We will be delivering the summary of resource outturn, which is probably the most complex element, by the end of September, and we'll be signing off accounts at the end of November. So, we'll actually be aiming to sign the accounts off in the same timescales as the statutory deadline actually requires us to produce the draft for audit, so we are well in advance of that deadline.

If I could just mention the audit and risk committee, the chair of the audit and risk committee has taken a significant interest in the timetable. I think it's really helpful, but it almost holds my team and, I think, to the same extent, the audit team to account in terms of actually achieving those deadlines. It's not just achieving deadlines, but having a well-thought-out plan upfront that we can then achieve within the timescales set.


I think, Chair, it's really important that whatever the deadline is, it's not just certain dates where we're providing a whole package of information; I think as information becomes available, we try to agree to just to send it over. It gives some extra flexibility in time, I think, for the audit teams, and really important to allow for that. So, sometimes these dates are seen to be the whole of the annual accounts as for today, but we are able to compartmentalise it and submit in different ways.

Okay. And at this point, you're confident that you can meet those timetables.

Yes. Again, the year where we failed to discharge the timetable was an exceptional year, based on the 20-plus years of the way in which Welsh Government has pulled together its accounts. I'm glad that we re-established it last year. I think that probably gives us confidence from a Welsh Government and from an Audit Wales perspective, I would hope as well.

There are always issues that can arise that can add some delay along the way—they can be technical issues; they can be the need to look at an individual case, et cetera—but we will make sure that the timetable is published, and of course, if there are any material changes to it, I'm sure that we will just communicate that in a very open fashion as well. But I feel more confident, because I think we were able to kind of re-establish the ground rules and our tradition of always making sure that we met the statutory deadlines.

Thank you. As you've indicated, the pandemic and the qualification issues and other matters have delayed the availability of your accounts over recent years, and in consequence have also delayed this committee's scrutiny of those accounts, and therefore the extent to which you can take account of the committee’s recommendations themselves. To what extent have you reflected this in the timetable you've just referred to that you've agreed with the auditor general?

Gawain, do you want to reply? Thank you.

I think the key thing for me this year with the timetable is just being realistic about what we can achieve, and that's why we've been working very closely with audit to make sure we really look at the needs of both teams in that. So, what we're trying to do is have a lessons-learnt exercise this year that allows us to build into the timetable, as I say, that realism, but also giving us time to consider the ways of working with audit colleagues, and also, as you've said, Chair, to give us an opportunity to look at the recommendations of committee, perhaps some of the previous recommendations that we might not have picked up, and actually try and build that into the 2022-23 accounts.

How do you track your implementation of this committee's recommendations?

So, we have mechanisms that operate at the audit and risk committee level, so at the corporate level, and we also have recommendations from PAPAC and other committees that operate at the group level as well, and I think we need to allow there to be an understanding that we are working our way through both of those as a general statement.

On the annual accounts side, I would expect those to be tracked on the corporate audit risk committee. I think that perhaps some of the discipline of that during the pandemic response, where we were diverting, probably slipped a little bit, Chair, but I think we just need to re-establish that now within the spirit of the annual accounts process, and make sure that we're able to discharge that. But there are mechanisms in place; we do track them, we do look at those that are outstanding, and of course, as Government terms come to an end, there are some opportunities for some of those areas to be tidied up and understood. But I think some of the long-standing historical issues, certainly recommendations over years, do still apply to good accounts management as well. But we do have corporate and group-based processes in place.

In your response, you said, 'We will need to restore that', but will you restore that?

Yes, we will. Absolutely, yes. [Laughter.] So, I think we are already doing that anyway, and certainly, the way in which we brought together some of the conversations at the audit and risk committee. I think one other opportunity for us at this stage is to be clearer, because as we outlined to you as a committee, the group structure changes that we put in place, the arrival of Tim in his director general chief operating officer role, just allows us to have that kind of better oversight through a director general of the corporate functions and responsibilities in the system. So, I think that's also going to help me to discharge my principal accounting officer role.

Before 2019-20, as you'll be aware, the Welsh Government finalised its accounts in August or September of each year. Do you have a plan, or will you be having a plan, to return to those timescales to bring forward your accounts? And what do you consider to be the main challenges to achieving that?

I think that's going to be a difficult ask to recover to those kinds of levels, although I think we should always try and focus on how we can bring it forward, certainly from the end of November position, as much as possible. I think, as I was reflecting earlier, the complexity and the range of additional organisations being included kind of year on year does affect some of that outlook, as well as how more time is being taken on the overall process. But, Gawain, you probably have a professional view on what's possible.


Funnily enough, in the conversations we've been having with Audit Wales, we've agreed—it's ambitious, but we've agreed a three-year plan for trying to bring the sign-off back to September. As has been said, there will be some complications around that, but that's what we've agreed we will try and do, and in our planning each year with Audit Wales, we will work towards that goal now.

It's probably worth sharing, just as a bit of a comparison, what normally happens in other organisations. So, I think the pandemic context, even, for 2021-22 would have still led to some issues around how UK Government departments declare their own approaches. So, I know the Department of Health and Social Care, because it was very affected, of course, by the pandemic, and we oversee the same responsibilities in Wales, it wasn't until January 2023 that they were able to produce their accounts. The Scottish Government tends to produce theirs around November/December as well, if you look at their pattern over the last three or four years. But, as Gawain says, I think it's really important that we focus on ambitions to recover that and do whatever we can to discharge it as quickly as possible. 

I said before, for the 2020-21 accounts, that I regretted that it took away some of the opportunity for the committee to properly scrutinise the annual accounts, and the more time we're able to give on landing the submissions, the more time I know the committee can take to actually oversee it and provide its scrutiny as well.

Just carrying on from this point, would you accept local government having the same leeway as you?

Well, we all have different timetables that we have to deliver, but obviously, from a Welsh Government perspective, it's the aggregated accounts.

Yes, but local government is not part of your aggregated accounts, as far as I'm aware—

—although you have to include the part that you pay into local government through the aggregated external funding. No, local government is under very strict instructions that these things have to be produced by a certain date. If you're saying, for all sorts of good reasons and problems, you have difficulties in meeting it, wouldn't it be fair that you, as the Welsh Government civil service, said to local authorities, 'We understand why you've got a problem as well', rather than saying, 'You must do it by a certain date, even if we can't'?

Well, we also have the statutory deadline ourselves, and we met it this year. As I said, the previous year was exceptional. I'm happy to have an understanding about the pressures that are there. Some of the other account mechanisms on the NHS side of things have slipped back from previous years from some of those targets as well. So, I think having an understanding of it is fine. I think we all have our statutory deadlines, and we've managed to recover to ours, for 2021-22 at least. But, if there are concerns from local government, we're very open to talking to them about that. 

No, it's just that something I feel quite strongly about is that the Welsh Government—perhaps I'll phrase it slightly differently to the way I was going to—plays along with rules that can be extended and changed when it affects them, but incredibly strict to other bodies, such as local government, which have the same problems and have to work to a similar set of rules.

But I think, during the pandemic, we were very flexible for a whole range of different reasons, and for 2020-21 and 2021-22, I think we did work closely with all stakeholders on those areas. But, of course, there are things that we need to land on our own reporting, whether it's on the business grants reporting, for example, where we're reliant on the local authority submissions and the fraud checks as well. But I take the point that, if there's a principle of acting as an exemplar, as an example to Wales, we need to make sure that we say things and that we comply with it ourselves. 

Thank you. That was the point I was getting to. Perhaps I should have asked that question in the beginning. [Laughter.]

Okay. Thank you. Can I bring Natasha Asghar in, please?

Thank you so much, Chair, and good morning, everybody. I know that there is one matter in relation to the accounts previously that has certainly perplexed me and members of the committee as well, and that's the payment to the former Permanent Secretary, and also issues about the overall governance framework for senior civil servants' pay. So, my question to start with is: in your governance statement, you actually set out the key areas of planned improvement for the framework of delegations for salary-related decisions for the civil service. So, can you provide me, and members of the committee as well, with an update on the progress in implementing these and when do you expect to complete the actions that have not been taken as yet?

Again, I acknowledge the seriousness of the issues and the discussions that we had around the committee table, and it has been really important for us to make sure that actions committed were followed through. And perhaps, just as an aside, Chair, it was one of the reasons why I did send the draft version of the terms and conditions framework to the committee, as I'd committed to that in one of our previous attendances as well. But, yes, there are broader principles on other senior civil service roles, even if we're also looking at the way in which we engage with all of our staff. Sally-Ann, I just wonder whether you want to give an overview of our response on those areas. Thank you.

Yes, of course. As Andrew said, we took the discussion very seriously, and picked up the issues and broader issues that Audit Wales had highlighted, but we also looked at continuous improvement that we wanted to make more generally. So, we focused on three key areas, which is implementing the lessons learnt for our SCS processes, making improvements for our remuneration committee, and ongoing work to clarify the roles and responsibilities between Welsh Government and Cabinet Office, which had come up quite considerably in the discussions. 

One of the key areas within that, as Andrew mentioned, was the terms and conditions framework, which has been quite important to implement over the last year. We signed that off in September, jointly with Cabinet Office, and we've been implementing that since. That builds in a series of checkpoints that go to our remuneration committee. We've got a review point now in April, and there will be an annual report on that to the remuneration committee at the April meeting. So, everyone with a role to play within that framework is aware of their role. We did a lessons-learnt session with our HR colleagues last month, so that was one of the areas we touched on last time, but obviously it's much broader than that. We've looked at all of our SCS policies and also the policies that perhaps weren't clear whether they related to SCS members or not, and we've got an action plan in place to work through those. As you would expect, we focused on the key areas. So, on partial retirement, we've implemented a specific policy for our SCS, which was signed off in December via remuneration committee. It builds in the process of a business case to remuneration committee. So, there is a lot more governance and transparency around the arrangements, which I think was one of the key things that I'd certainly picked up from the discussion.

We will work through all of our policies. We've got remuneration committee tomorrow, so we've got a policy and a process going on temporary promotion arrangements. So, we focused on the key areas, but we've got a plan to go through each of those, and we regularly review all of our policies on a quarterly basis, and we will pick that up as we move through that process. The framework has proved really successful in terms of clarity on what's expected by everyone, and we're going through a similar process to develop that for the whole of the SCS. Obviously, that will take us a little bit of time, because it aligns to all of the work on the policies. And, on remuneration committee, we've got a lot clearer on our business cases—so, what we're requesting and the decision that is being made—so it gives us a really good audit trail of the things that are going through our remuneration committee and the decisions that are taken.


Just building on Sally's answer, it's probably just worth registering—which I think we did cover in detail as well, but, again, you'll see that as a feature of the terms and conditions framework—just still the balance of where UK civil service mechanisms and oversight and the Cabinet Office responsibilities link with us in Welsh Government, and obviously the senior civil service mechanisms and the frameworks are all owned at the UK civil service level. So, the criteria—you know, the director-level appointments, the director-general level—are overseen by civil service commissioner arrangements as well. So, whilst I know that is unusual on the one hand, that's been an important part to get the clarity that I think committee members were looking for when we were giving evidence before.

Thank you so much, and I do appreciate your answer. It does sound like you are embarking upon a lot of different ways to try and make things as seamless as possible, going forward, but I have a few more questions, if that's okay.

So, His Majesty's Treasury financial reporting manual says that information should be included in the remuneration and staff report in all but exceptional cases. However, one senior official withheld consent. What actions and advice did you seek around this, and how have you assured yourself and those going forward that the rights and freedoms of the senior official override the need for transparency and accountability, going forward?

Do you want to outline maybe the sort of argument and the criteria that we have to pass in order to get to that more unusual point?

In terms of the technical compliance, we looked at the financial reporting manual, and one of the aspects in the financial reporting manual is that we are required to, obviously, inform individuals, and it does cover their right to object under certain circumstances. We then looked at the GDPR rules, and article 21 covers the individual's right to object and how you can take that forward. We obviously spoke to the individual about their concerns. We consulted a data protection officer for the Welsh Government. We spoke to the senior case officer dealing with FOIs. We consulted legal services. At the end of all of that, we actually produced a detailed note, which we shared with audit colleagues, covering the issues that were raised. Now, there weren't any suggested amendments in terms of what we were presenting coming back from that report. So, I think, if I was to sum it up, we did our homework, and then we had our homework checked. The one thing we did do on the back of that, though, was that the FReM is very clear about the fact that if you're not going to disclose, then you do need to put certain facts in the remuneration report, and again we followed that as well.


Chair, I would just add, in responding, as well, it may be important that, in respect of the disclosure, it doesn't relate to any amounts that were payable by Welsh Government to the particular official in-year. So, that might just help some of the understanding about that, and why we've ended up making sure that we met those particular criteria.

Thank you for that. Now, the Welsh Government did not actually report any of the changes to the former Permanent Secretary's working arrangements from 1 April 2018 to 1 April 2019 in its accounts for 2018-19 and 2019-20 respectively. So, going forward now, what assurance can you give me and the entire committee about the governance of the remuneration and of the transactions that have not been reported in the remuneration staff report for 2021-22, and will the omission continue in your subsequent accounts now as well?

I think, as a general principle, the areas that Sally-Ann has outlined and the improvements on the corporate oversight, the governance and making sure that we have a level of technical detail lined up should help us in all of that. I mean, there are no other omissions for the year in question, and none that we expect at this stage, otherwise they would be called out within the annual accounts process. I think what I would say is that, inevitably, it's a case-by-case and an individual aspect. It's going to be quite a rare and exceptional event for those sorts of requests to emerge. So, I think we just need to deal with each one based on the individual circumstances. There's a clear process in place that Gawain has outlined for it. The director who the criteria was applied to this year, if they are part of next year's annual accounts, we may end up going through the same process again, for example. So, I wouldn't want to suddenly divert attention from that at the moment, because that's very likely to be repeated to some extent. But, if there were to be any other omissions, we would just expect it to work through exactly the same process, and I think that did work well this year, albeit on a very exceptional issue.

Dr Goodall, roughly how many individuals are there on this level or band that could be part of this particular equation, going forward?

Any of the directors who are in the remuneration report could be subject to that sort of process. So, as you work your way through the annual accounts in respect of supporting information, it could be any who are in that who are part of the declaration process. So, that's obviously not hundreds of people in the organisation; it's a small subset of the individuals who are associated with needing to be reported within the remuneration report.

Yes, it would be under those types of numbers. I think, probably on the principle, we may extend some of these issues to senior civil service more generally, and that will be a cohort of about 180 people maximum. But, I would see the focus more about those who are actually directly reported within the remuneration report, which is a much smaller number.

Okay. Thank you for answering the question. Moving forward, the Welsh Government's director of propriety and ethics partially retired from 1 September 2021. I'd like to know what processes you followed for this decision and how the approach is different following the changes you've made subsequent to the Auditor General for Wales's public interest report on the payment to the former Permanent Secretary, which was published in September 2022.

Sally-Ann, in answering, mentioned the endorsement of the part-time policy for senior civil servants, albeit, on its principles, in alignment with staff in general in the organisation. But, Sally-Ann, maybe you could outline changes there that will help the process, and I know, as we go through future remuneration committee, should there be, again, these small numbers of cases, we will be using the remuneration committee absolutely to receive those, I know. Sally-Ann.

Certainly. So, the defined process prior to the changes we've made was based on line manager endorsement and completing the declaration for the pension service. So, it was a two-stage approach. So, we've worked through that in a lot of detail and we've made it a six-stage approach. So, what will differ from December onwards will be the six stages. So, it's based on an individual making a formal request in writing to their line manager, and a conversation about the request that's then documented. We've built in a stage where the manager would seek HR advice so that we can identify any potential issues that we need to be aware of, and then a business case would go to remuneration committee. There would be a discussion about the potential impact of that request on not just the individual, but the whole organisation, and then the outcome of that would be relayed to the manager, the employee would be notified, and then they would fill out the forms, as they would have done previously. So, it's just increasing the steps that we—. We can't change the process, because, essentially, it's not our process, but we've added extra steps to ensure good governance and transparency. And, as I said previously, it will be then recorded by the remuneration committee, so we'll have a full log of any of the requests that go through, and even those that perhaps we may not be able to accommodate, because, obviously, it's always based on business need as well as the individual requests as well. But requests at this stage are very small. We want to ensure that we maintain flexibility for all of our staff, whatever level they are. So, as flexible working increases, as we hope it does in many ways, this just gives us the assurance that we've got the right steps in place for the future.


Thank you, Sally-Ann. I'm about to say something that might be misconstrued in a number of ways, but I like to have lots of dates in place. You have not yet published your pay policy statement for 2022, so I'd like to know why this is the case and, coming back to my desire for dates, when you are likely to publish it now.

So, just to say, I have cleared the pay statement; it's actually just simply awaiting the Welsh translation, and that will very shortly published. I will absolutely drop a note back to the Chair just to confirm when that it is in the public domain, as intended. There is a translation of some of the broader complexity around annual accounts that affects this, but there were a couple of areas in particular that maybe were different in their nature and we just wanted to make sure were accurate. Because, as a positive improvement, we were starting to focus on some sort of pay disparity issues, but, Sally-Ann, do you just want to outline those changes?

Yes, certainly. So, we've always included our gender pay gap, as is expected and required, but this year, for the first time, we will be reporting on our disability pay gap and our ethnicity pay gap. So, we see this as a really important step forward in being able to look at those pay gaps in more detail. That will be shared, then, across relevant departments in the organisation and will be a really important step in us being able to make positive changes for the future. So, we see it as a really important step in the right direction.

Can I ask a question to the board and audit and assurance committee? The first question is—and I'm quite happy to be corrected—our review last week, and a lot can happen in a week, shows the latest board papers available on the Welsh Government website are those from its meeting on 17 December 2021. Is that still the case?

Our next board meeting is actually on Friday this week—the Welsh Government board, that is. As part of my preparation for today, I have to say, Chair, I was remembering the public bodies' attendance that I had, when it was clear that we hadn't put some issues onto the website in the normal way. I do think that some of our corporate reporting through the pandemic probably just slipped, I'm afraid, which I apologise for. But I can confirm that the board minutes and the papers, and those appropriate papers aren't in the public domain. But, in my preparation, I've already made sure that they will be, that they will go on, they will also be translated and, although they will go on in sequence, we'll make sure that all of those are done by the end of May, including the 2023 board reports as well.

Can I say I think it's really important that these papers go on? As a general comment, I think your website is opaque, and I think that—. It's nothing to do with the public accounts committee, but, for the general public, being able to go in there and find things quickly and easily is not something you would say about the Welsh Government website, and whether some work can be done—whilst it's probably outside our remit—whether some work could be done to make it easier for people to find their way around it, I think, would be incredibly helpful, to probably our researcher, probably those of us who wish to go and check things. So, if some work could be done on that.

No, your point on openness and transparency is absolutely well made. I know it's not necessarily everybody who goes looking for these types of reports, but it's really important that they're there when they do. And I do take your point—I don't think that needs to be any formal recommendation from the committee. I'll absolutely look at the website access, try and make lives more broadly easier, and I think it is part of just trying to make sure that we're able to communicate the things that we are trying to do on behalf of the citizens of Wales. So, I accept that.

And moving on to the agendas and summary of issues from the audit and risk assurance committee, are those going to be on that website as well, and easy to find?

I think the audit and risk committee context, for me, is a bit different from the Welsh Government board. You know, there are some quite sensitive and difficult areas that are dealt with in there, not least through a risk lens, and I'm probably a bit more concerned about the nature of those being in the public domain, because, actually, there needs to be a really open discussion in order to sort out things and make sure that things are addressed along the way. 

I've been having a conversation with our chair of the audit and risk committee about this. I know that he is concerned about making sure that whatever we do, we respect the sensitivity of some particular issues and items in there. I do think that having some awareness of the issues that are, in very broad terms, under consideration probably helps. I'm actually on the risk committee because I've been part of the arrangements, obviously, particularly in the Perm Sec role over the last year and a half, and I've just been checking out with other colleagues as well, and I haven't yet found one single Government department that goes down to the level of publishing its audit and risk committees. So, I'm talking about national Government arrangements here. So, having gone through a whole series of departments, everybody seems to be taking a level of criteria that there are some more difficult things that are covered in that. 

But I think the spirit of the committee's focus does seem to be about where it's possible to put information in the public domain that just gives a steer on the areas. Things can be described in a diplomatic manner that's still appropriate, and I'd be very happy to continue to explore that, despite those concerns.  


I can give you one now. You think it's a high risk, but you hope it's not going to occur, of actually being a denial-of-service attack, for example. That would bring the whole organisation to a halt, wouldn't it, but you hope that it's not going to happen, so it's high risk, but you'd probably run it as a low probability, and the risk committee has probably got a whole range of those. I don't think we necessarily need to see everything that's there, but I think what would be helpful is if we had the Government response to some of the risks that were being identified, and what you were doing in order to ensure that everything was kept safe. I know the only way to keep things safe is to pull the plug out. [Laughter.] Sorry, I used to make my students laugh when I said that as well. It's the only way to be absolutely safe. But just whether you could, give reassurance, not for us as a committee, but for those people who are interested in it outside, that you are taking risk seriously and that you're doing what you can to mitigate it. 

Yes. Just to reassure the committee, we have very clear and significant risk arrangements in place, and the process that we go through. But you are right—there are examples from cyber security, for example, that we need to handle. Perhaps if I could just take that away and I'll talk to our chair of the audit committee, because I think there is a way of giving confidence about the things that we're addressing without really revealing all of the detail. And if that's your push on behalf of citizens, I completely understand that. So, I will look to work on something on that. 

I think it's probably on behalf of citizens who are interested citizens, and probably more for journalists and academic researchers rather than Mr and Mrs Joe Bloggs.

But the final question from me is: in the 2021-22 accounts, you note that Jeff Farrar, one of your four non-executive directors, left his role in August 2021. I've been unable to find whether you've actually filled that post, or whether you intend to fill that post. 

Yes. As I recall, Jeff left in August 2021. We had a process for an additional non-executive director to be appointed, and in March 2022, we actually appointed Reverend Aled Edwards just for reasons of discharging other roles. He wasn't able to start until the summer, but he is now in post. But, yes, we have four non-executive directors in place, so that is Meena Upadhyaya, Ellen Donovan, Gareth Lynn and then also Aled Edwards who's joined us. And actually, just to learn from that process, what I've been able to do, because one of our non-executive directors is actually leaving this week after a four-year term, is that we were also able to appoint ahead for a new non-executive director. So, Carys Williams has joined us, and she has actually been able to have a transition period with the board, so she has liaised with other non-executive directors. And so, for a very short period of time, in effect, we've had five non-executive directors, but only four on a proper basis, because I thought, actually, that transition was quite useful for colleagues to see how the Welsh Government board worked as well. So, yes, we've covered off Jeff, but I think we've also improved the outlook of the board as well.  

[Inaudible.]—in terms of the audit and risk assurance committee meetings, in response to a recommendation by our predecessor committee, the Welsh Government accepted a recommendation to publish meeting agendas and a summary of issues arising from those meetings. Are you doing that?


In part, Chair, that was partly a reflection I was having with a Member about confirming that we had not put information from the audit and risk committee into the public domain, but just trying to find the right way of at least highlighting areas of interest. So, as I committed, I will talk to the chair of our risk and governance committee and just see whether there is some way to meet what still is an outstanding Public Accounts Committee recommendation from the predecessor committee, and just see if there is a way of steering that in a different way—as long as I can, with Members here, recognise that there clearly are some issues of sensitivity. But I think the agenda, for example, is able to be properly put into the public domain in quite a straightforward manner, so I will take that up, as I was saying to the Member, in our conversation. 

Because I think that related just to the agenda and a summary of issues arising, which would allow you to ensure the sensitivity you identify, but nonetheless a summary of issues arising would tick that box. 

Yes indeed, we could do that, even as we did some of our own research around trying to understand that recommendation, but we could only find two Government departments that simply produce terms of reference for the committees, and that was it as well. So, as I said, I'd want to say that it's not unusual for us to be in this position, but that doesn't stop us actually from looking at it proactively ourselves. 

Okay. I suggest that we take a nine-minute coffee break and if we could return at 10:45, please. So, we'll go into closed session.

Gohiriwyd y cyfarfod rhwng 10:36 a 10:46.

The meeting adjourned between 10:36 and 10:46.

3. Craffu ar Adroddiad Blynyddol a Chyfrifon Llywodraeth Cymru 2021-22 - Sesiwn dystiolaeth - rhan 2
3. Scrutiny of the Welsh Governments Annual Report and Accounts 2021-22 - Evidence Session - part 2

Croeso. Welcome back to this morning's meeting of the Public Accounts and Public Administration Committee in the Senedd for our second evidence session with Dr Andrew Goodall, Permanent Secretary, Welsh Government, and his officials, in terms of the Welsh Government's annual report and accounts for 2021-22. I invite committee member Mabon ap Gwynfor to take up the questions.

Diolch yn fawr iawn, Gadeirydd, a diolch i chi am fynychu'r bore yma. Ymddiheuriadau rhag blaen rhag ofn fod yna drafferthion technegol. Dwi am gychwyn drwy ystyried gwrthdaro buddiannau, os gwelwch yn dda. Beth oedd prif ganfyddiadau'r adolygiad archwilio mewnol o'r polisi a'r gweithdrefnau gwrthdaro buddiannau? Pa newidiadau sydd gennych chi yn yr arfaeth i'ch polisi a'ch gweithdrefnau o ganlyniad i hyn a pha risgiau penodol y bydd y rhain yn eu lliniaru?

Thank you very much, Chair, and thank you for coming in this morning. Apologies beforehand that there may be some technical difficulties. I'm going to look at the consideration of conflicts of interest, if that's possible. What were the main findings of the internal audit review of the conflicts of interest policy and procedures? What changes are you planning to your policy and procedures as a result of this and what specific risks will these mitigate?

Diolch. Tim.

Thank you, Andrew. I think the main findings of the review were a need to really review the policy and a robust review around that to take account of other changes that had gone in place, especially around the wider civil service; definitely to update the guidance and information for staff to make it easier to understand the requirements around that and make it clearer, giving examples of what this means in practice; and also to look at better ways to help staff to comply with the requirements there, especially around, maybe, a digital tool to help with it. So, they were the main things that the review asked us to look at.

In terms of progress and things we've done on the back of that, the policy has been thoroughly reviewed. A lot of that involves quite significant consultation with our trade union colleagues and partnership with groups, and also to take account of wider changes in civil service policy in this area as well; we're aware of things that have happened in this space.

Also, a change in emphasis in terms of rather than having a conflicts of interest policy, it's around declaration and management of interests, with the emphasis on, actually, it being around how we declare and how we then look at and manage those things; I think it's an important shift in emphasis for the policy. So, the changes around that will include that all staff need to do a declaration, even if that's a nil return, to ensure that, actually, we can look at that, and very much to look at the improved guidance, especially around examples around how you manage and look at maybe, sometimes, mitigating factors for these things, and make sure that everyone understands the things that are going on and the requirements around that.

Also, we're looking to do pre-employment checks. In fact, one of the things I was asked to do as part of my employment was to fill in a form before I joined, and that's now part of the way we do things. So, in all of that, it's looking to make sure that we get a much more consistent approach across the organisation, but also we're looking to make sure that people understand the requirements and the importance of this. Also, importantly, I think, once we've moved forward with a digital tool, which is currently in development, that will help us to get much better management information and, also, look at ensuring that we are being consistent across the organisation. So, a lot of progress in this place, and the aim is that the new policy will be implemented in the first quarter of the next financial year. 

Diolch, ond pa risgiau fydd y rhain, felly, yn eu lliniaru, o ganlyniad i'r gwaith yma?

Thank you, but what risks will you, therefore, mitigate as a result of this work?


The risk that you're mitigating is the risk around inconsistency in terms of understanding of conflicts of interest and what needs to be declared, and I think, if we've got much better at managing information, we'll be able to see what that looks like across the organisation and, hopefully, be able to understand where the potential issues may arise. So, I think, better information and a better understanding of that will help us to ensure that we're managing the issues where potential conflicts could arise and minimise any risks associated with that. 

Diolch yn fawr iawn. Ddaru chi sôn yn eich ateb am ddatganiad o fuddiant, wel, cafodd y gofrestr buddiannau ar gyfer uwch-swyddogion, sydd ar gael ar wefan Llywodraeth Cymru, ei diweddaru ddiwethaf yn ôl ym mis Hydref 2021. Pam hynny, a pham mae’r datganiadau o fuddiant yn wahanol
yn achos rhai uwch-swyddogion sydd ar y gofrestr hon ac ar gofrestr y gwasanaeth sifil?

Thank you very much. You mentioned in your response the declaration of interest. Well, a register of interests for senior officials would be available on the Welsh Government website, and it was last updated in October 2021. Why is that? And do the declared interests differ for some senior officials included on both this and the civil service register?

The registers we have, both the civil service register and the register of interest, serve different processes and there are different timetables associated with that. There are a number of registers—. The register for special advisers was updated in September. The one for senior officials will be updated by the end of the month. It's been slightly delayed in terms of getting it out there, but that's just down to the individual involved and some of the workload issues around that. I think the difference between the registers, both in content and timing—. The civil service register is updated in July, and that one very much focuses on board appointments and panels for all employees, whereas the one for senior officials is a much broader category. The senior officials—it covers company directorships and any other matters of significant interest in that space, and also, not just around things that directly affect the individual, but also maybe wider ones in terms of family and involvement. So, they serve very different purposes, and so, that's where some of the differences can arise in the difference between the registers, but the aim is to get the transparency. I would say, coming into the organisation, in comparison to previous organisations, the level of transparency, certainly on the senior officials register, is much greater than I've seen elsewhere, and so, I think, it demonstrates some of the transparency that goes on within the organisation. 

Before you carry on, Mabon, can I invite Mike Hedges to ask a question on this?

As you know, Chair, we've got 28 days to update ours, in which case, we end up in serious trouble if we don't. I'm not sure why civil servants can't work to the same rules as we do, and ours is much more complicated. I'm not sure anybody really wants to know that I'm president of Ynystawe cricket and football club, or that I'm a chair of the Welsh Fabian Society, but those are matters in there, and I'm sure, Chair, you've got the same long list of 20 or 30 organisations. So, I'm not quite sure why, if we're expected to do it in 28 days with serious repercussions if we don't, senior civil servants don't have the same rules.  

Just to clarify, in our case, we are referred to the police if we fail to ensure that our interests are declared within 28 days. 

I think we should say that, as part of the policy, the aim for everyone is that you declare interests as and when they arise and within the organisation. There's a difference between when we publish it as an organisation and the requirement around that. So, the aim within the policy is if circumstances change, that will be discussed with the line manager, and things will be recorded as and when they arise. Obviously, the publication is a separate issue. 

Sorry, Chair. I'm just telling you things you know, but perhaps others in the room don't. We've got 28 days to declare it. Once we declare it, it will be on the website within 48 hours, normally within 24 hours, and not unusually, within three hours. 

A gaf i gymryd hwnna i fyny, ar y pwynt yna?   

Can I make a further point on this? 

Ydy e'n arferol, felly, i aros blwyddyn a hanner cyn i'r gofrestr gael ei chyhoeddi? A sut ydych chi'n disgwyl i rywun graffu'r gofrestr yna, er mwyn sicrhau bod gan y cyhoedd hyder ynddi, os ydy o'n cymryd blwyddyn a hanner i'w gyhoeddi? 

Is it, therefore usual to wait a year and a half before this register is published? And how do you expect someone to scrutinise that register, to ensure that the public has confidence in it, if it takes so long to be published? 

It's not the usual deadline. We will rectify that. We will ensure that that is kept oversight of, which I know Tim will do in his role, and we'll make sure that that is dealt with. And, also, we will just accommodate how that is updated as well, as Tim says, as individual things, inevitably, change during the course of a year, as appointments take place as well, but I apologise for the delay. That is not the normal process, and we'll make sure that we actually ensure that it's in the public domain, as required.


In terms of the scrutiny element, there are clear responsibilities within the line management chain and with directors and directors general in terms of any potential conflicts that exist within their areas. There is internal scrutiny, and then there is external publication as well. So, just to give you the confidence that, as I said, as part of my pre-employment checks, that was one of the things that I was asked to do straight away. That was part of, then, the process of me joining the organisation to review anything around that. So, there are the internal processes as well as the external ones around scrutiny.

Diolch yn fawr iawn am hynny. Hwyrach y gallwn ni fel pwyllgor ddod nôl er mwyn sicrhau bod y gwaith yna yn cael ei wneud yn gyson ac yn unol â'r hyn sydd ei angen. Ond diolch am yr ateb. Os caf i fynd ymlaen at adroddiadau archwilio mewnol, rydych chi'n nodi bod gwasanaethau archwilio mewnol Llywodraeth Cymru wedi cyhoeddi tri adroddiad sicrwydd cyfyngedig yn ystod 2021-22. Beth oedd rhychwant yr adroddiadau yma a pha sicrwydd y gallwch chi ei roi eich bod wedi mynd i'r afael â'r gwendidau gafodd eu canfod?

Thank you very much. Perhaps the committee can come back to this and ensure that that is done consistently. But thank you for that response. If I may move on to internal audit reports, you note that Welsh Government internal audit services issued three limited assurance reports during 2021-22. To what did the reports relate and what assurance can you give that the weaknesses identified have been addressed?

Yes, there were three areas of limited assurance, as you said. Perhaps, just in context, I could say that that was three of limited assurance out of 44. I would like to ensure that, when we are using our internal audit, they are intending to make sure that they find areas that we need to address as well. I think it's really important, in discharging my principal accounting officer role, to ensure that there are areas that are to be addressed.

One of the three areas was some of the support that was provided to bus companies through the pandemic. I would reflect that a lot of the internal audit areas were simply about the speed of response needed at the time, and that those actions and the response, although they were exceptional in terms, were being addressed, and the actions actually taken forward with the help of the report, if I could put it in that way. In terms of the two other areas, one was on agency workers and another one was on secondment and broader arrangements, which we were touching on in one of our previous committees as well. Sally-Ann, you might just want to outline some of the work that you've led on in those two areas as well.

Yes, of course. As Andrew said, we view the internal audit process as a really important part of our continuous improvement, so the HR team proactively worked with the internal audit team to generate that audit, because we knew that there were likely to be areas that we needed to improve. It was a very proactive approach on our part, as well as being part of their audit schedule as well, so we brought those forward as priorities.

In terms of some of the key areas, again, we focused on the areas that were causing us most concern from the report. For example, on the secondments area, contracts was something that was really important to get right, so we've introduced standard contracts, which just gives us that assurance that they're legally sound, they meet all the GDPR requirements and so on, and a lot of the other improvements fall out of that. Secondments are a really important part of our resourcing approach—it's one of our key tools. We see secondments as an area where we'll increase over the coming year and beyond, particularly around the 'one public sector' ethos. It's really important that we get that right, so we saw it as a really good opportunity. There is good progress across the actions. Our new systems that I've previously updated the committee on will be a really important part of our data improvements. That will come as we move through that work.

Similarly, on agency, I think our concern as a HR community was that they were often looked at as a contractual arrangement. Our agency workers are a really important part of our temporary workforce who are valued, and we need to make sure that they get a good experience, as well as, obviously, good governance. We're working through the improvements there. We've agreed that we will have HR oversight centrally of all our agency workers, because that's something that was quite crucial in the internal audit report. So, we've tackled, or started to tackle, the bigger things, and we're continuing to work through some of the other areas within the reports as well. But that's something that we're keeping a regular oversight of and we'll be reporting on that through our reporting mechanisms internally as well.

We commissioned the internal audit work programme, and I just want to say, maybe just on the governance process as well, irrespective of other responsibilities and where they report in the organisation, our head of audit meets with me routinely, as a minimum on a quarterly basis, through the year, so I have the opportunity for impartial views and advice on the organisation. I'm really pleased with the work that they do, because whilst a lot of reassurances are given through the work, they do help us to address issues across the organisation.

Diolch am yr ateb. Dwi'n cytuno; mae o'n arwydd o lwyddiant bod y drefn archwilio mewnol yna yn gweithio, a phan fod yna wendidau yn ymddangos, bod yr archwilio mewnol yn eu canfod nhw. Felly, mae hynny'n dangos bod y system fewnol yna'n gweithio.

Gaf i jest fynd off piste ychydig, jest o feddwl am yr hyn sy'n digwydd ar hyn o bryd? Rydyn ni'n gwybod am straeon yn The Daily Telegraph efo Matt Hancock. Mae yna elfen wleidyddol i hynny, ond mae o wedi bod yn gwneud negeseuon WhatsApp, cannoedd ohonyn nhw, yn ystod y cyfnod COVID, gyda chytundebau yn cael eu gwneud ac yn y blaen. Fedrwn ni fod yn hyderus yn y fan yma bod yna ddim cytundebau rhwng uwch-swyddogion ac yn y blaen wedi bod yn mynd ymlaen yn ystod cyfnod COVID drwy WhatsApp, a bod pob dim wedi cael ei gofnodi, a’n bod ni'n gwybod yn glir bod y drefn a'r prosesau cywir wedi cael eu dilyn felly? Ydy'r archwilio mewnol yn edrych ar WhatsApp, er enghraifft?

Thank you for that response. I agree; it's a sign of success that the internal audit process does work, and when there are weaknesses, that the internal auditing is finding that. So, that shows that that internal system does work.

If I can just go off piste a bit and think about something else that's happening at the moment, we've seen stories in The Daily Telegraph about Matt Hancock, about how he's been using WhatsApp messages during the COVID pandemic et cetera, with agreements being made. Can we be confident here that agreements between senior officials haven't been done through WhatsApp and that everything is on record, and that we know that the proper process and systems have been followed? Are internal audit looking at WhatsApp, for example?


As a general point, we have actually done some internal audit approaches on our response to the COVID inquiry, and also during the COVID pandemic itself, and they have needed to look at the kind of governance mechanisms and give us assurances as well. Actually, it was a very helpful reflection, and important that they didn't happen at the end.

On our general use of mechanisms, I'm really clear that advice that has been going in to Ministers during the pandemic was driven by the ministerial advice process, which is the standard kind of mechanism. And whilst I know the reporting is talking about WhatsApp approaches, certainly—and I speak from my personal perspective—the decision making was driven by our internal mechanisms; it's really important to do that. There was Cabinet oversight and processes that were in place. Of course, we'll need to respond to the public inquiry itself. We are, of course, going through a range of submissions to the public inquiry at the moment, with statements both at a personal and a corporate level, and I'm sure all of those matters will be handled in that. But what I recognise is the ministerial advice process and the decision making that took place collectively and collegiately across the Welsh Government.

Diolch yn fawr iawn am yr ymateb hwnnw. Ynghyd â'r adroddiadau sicrwydd cyfyngedig rydym ni wedi sôn amdan nhw, fe gyhoeddodd y gwasanaeth archwilio mewnol ddau adroddiad cryno yn 2021-22 hefyd na roddwyd barn sicrwydd ar eu cyfer nhw. Pwy, felly, gomisiynodd y rhain, a beth oedd o dan sylw ynddyn nhw?

Thank you very much for that answer. As well as the limited assurance reports that we've mentioned, the internal audit service issued two summary reports in 2021-22 as well that did not provide an assurance opinion. Who commissioned those, and what did they relate to?

Diolch yn fawr. They were actually related to the matter that we have just touched on. We had executive committee arrangements in place that were targeted towards the pandemic response, ex-COVID. It met on a weekly basis. We wanted to ensure that whilst there were a range of decisions and information exchange overseen through that mechanism, there were various moments where we paused and reflected on our experience. As you'll recall yourself, there were various moments and phases of the pandemic that I just think acted as natural points to sort of ask questions about whether the organisation could do better.

The previous Permanent Secretary commissioned two pieces of advice, not for assurance purposes, but for allowing us to understand the kind of governance implications in the organisations, the first one of which was a review of COVID and lessons learnt and reflections—really important that that was an open reflection across the organisation—and then secondly, an internal audit on COVID-19 governance arrangements, which actually was able to give us, I think, pretty positive reflections on the series of mechanisms that we put in place, from the sort of star-chamber arrangements on financial arrangements, through to generally how decision-making worked in the organisation.

They were both very helpful to us. They didn't just happen at the end of the pandemic; they were during the pandemic, deliberately, so that we could adapt and change around it. And as you would expect, they will also be documents that will be part of submissions that are made to the inquiry, because they are there for a purpose and they certainly helped us as an organisation.

Diolch. Ac felly, o luchio llygaid draw at San Steffan, a'r llanast, neu'r gorllewin gwyllt, yno, efo prynu PPE a hanes Michelle Mone ac yn y blaen, fedrwch chi roi sicrwydd inni nad oes yna sefyllfa debyg wedi bodoli yng Nghymru, ac y gallwn ni fod yn glir ac yn sicr bod y prosesau wedi cael eu dilyn pan ei bod hi'n dod i, er enghraifft, sicrhau prynu PPE a gwario pres cyhoeddus yn ystod y cyfnod COVID?

Thank you. And therefore, in thinking about Westminster, and the mess, or the wild west, there, in terms of purchases of PPE and Michelle Mone and so forth, could you give us an assurance that there isn't a similar situation that existed in Wales, and that we can be clear and certain that the processes were followed when it came to ensuring the purchase of PPE and public expenditure during the COVID period?

I'm sure the inquiry absolutely will discharge its process. We've been liaising on that. It's certainly a reminder to me—and if you'll forgive me for slightly reverting back in my role through the pandemic response as well—that it was really important that we continually kept ourselves under review and scrutiny. We attended a number of committees, both from a Public Accounts Committee perspective, through to health committees, to actually make sure we're able to work through areas.

We were able to access reports that were done independently of us through Audit Wales, which actually looked at reviewing a whole range of areas, from test, trace and protect, vaccination programmes, through to the PPE. We also were able to discharge internal governance through risk committee arrangements, and I know a very strong assurance approach was taken by my group's risk committee at that time. I'm pretty confident that whilst, of course, there were issues about global supplies of PPE, we were able to steer ourselves through the support that was needed through the whole passing of the pandemic and were able to access appropriately PPE at different phases and stages because of the approach that we took through the NHS Wales shared service area.

Colleagues may recall that there were times, even, where we were able—because of shortages elsewhere—to give some of our PPE supplies, because we were able to demonstrate that national approach that was in place for us and liaise on it. I'm sure that there are some predecessor committee reflections that may be helpful to Members, but I certainly remember being under scrutiny myself, including on matters of PPE supplies and availability. 


If I can just intercede at this point, if I may, just on a point of clarity on PPE, as it has been raised. My recollection of that period, in those early months after the initial lockdown, was debates, which I participated in here amongst others, calling on the Governments to fast-track PPE because of the desperate shortages then being encountered, and the Governments agreed to put aside or fast-track normal procurement processes to meet those calls. Although the Welsh Government was accessing some PPE directly, primarily it was receiving UK Government supplies, and then it was responsible for the distribution of those within Wales. 

I think it probably worked a little bit differently for us. So, of course there was liaison, and I think there were some very constructive and good relationships right across the UK with colleagues; it's why some of that reciprocity certainly happened along the way. We had really clear national arrangements in place for our sourcing and the supply of PPE through our NHS shared services. And of course, whilst they would access contractual arrangements, working with colleagues across the border, and there were exceptional moments definitely to ensure that there were supplies available to the UK, I think a lot of the approach that we had was in place because actually we particularly wanted to develop our approach in Wales and we just had long-standing commercial and NHS shared services experiences in place to absorb those contracts. Most of what we were able to supply was because we were able to use our own expertise, if I could put it in that way, because there were long-standing relationships and colleagues across Wales with real skills and expertise in this as well. But, yes, of course we needed to enhance it through those relationships with other organisations across the UK, and work very closely with Northern Ireland, the Scottish Government and also with the UK Government as well. 

And what, if any, temporary changes were introduced to procurement processes to speed up that process?

It was important, on the economy side, that we were able to expedite some of those areas. But certainly, if I look at it through, again, a traditional lens—and I don't want to steer away from the annual accounts process directly in my Permanent Secretary role—yes, we were able to ensure that there was a level of scrutiny that was applied to offers that were made. I think we were able to discharge that really well. We were able to be transparent about those arrangements and put them in the public domain. I think the team clearly leaned into the fact that we were often providing responses in hours and days, rather than maybe the usual contractual process, which would give you months or weeks instead. I'm pretty confident that NHS Wales shared services did a really great job, I would say, from a team perspective, including how they expedited those types of decisions and made judgments. We certainly, as I recall, covered all of the appropriate governance decisions as well, particularly where some of the spend was obviously over local limits and where we needed to give that support on a national basis. I remember giving some of those particular agreements myself in my previous director general role. 

Well, we'll leave that to the COVID inquiry. Perhaps if we can get back to the subject of today's questions. 

Diolch, Gadeirydd, a diolch yn fawr iawn am yr atebion hefyd. O ran risgiau, felly, rydych chi'n disgrifio proffil risg Llywodraeth Cymru fel un helaeth ac amrywiol, ond dim ond gwybodaeth am y pedair risg newydd rydych wedi’u cynnwys ar y gofrestr risgiau corfforaethol yn ystod 2021-22, a’ch cofrestr COVID-19 hefyd. Allwch chi grynhoi’r risgiau ar y gofrestr risgiau corfforaethol sydd fwyaf tebygol a sydd o bosibl â’r effaith fwyaf, a sut y maen nhw wedi newid yn ystod y flwyddyn?

Thank you, Chair, and thank you for the answers as well. In terms of risks, you describe the Welsh Government's risk profile as extensive and varied, but you only include information about four new risks on the corporate risk register during 2021-22, and your COVID-19 register as well. Could you summarise the risks on the corporate risk register that are most likely and have the biggest potential impact and how these risks have changed during the year?


Yes. Just to reflect back on my earlier conversation with one of the Members, the risk register process is really important to us in Welsh Government. We deal with it at different levels, from group to corporate. It guides our agenda. It makes sure that we ensure that we are responding and addressing those areas. There's probably a technical issue about why we have only got those four areas highlighted on the report, because the statutory requirement is only to put the four new risks in, and I think we just need to pause and think about that, about whether there is an improved way in which we can reflect that, again recognising some of the sensitivity but within a risk section.

The main area of concern that was expressed in 2021-22 in respect of the areas, the highest scoring concern, was actually about workforce capacity. That probably isn't a surprise to us all, if you think about what we'd been living through at that time. The last six months of 2021-22 also were dominated by omicron. We even were manoeuvring into the first-step responses on Ukraine. And I think the organisation has gone through a really extraordinary set of changes over the last two years, with lots of agility and lots of flexibility from staff to move to new priorities. And you know, at various points, we probably had four fifths of the organisation simply pointed towards the pandemic response, particularly through 2020 into 2021. But workforce capacity was the highest scoring risk.

If I was looking at the next level of risks, without going through all aspects of the risk register, there would be areas around well-being of staff; some issues around legislation, tied into the workforce capacity, because we actually deferred legislation through the pandemic beyond the Government intentions, because of course we were using all of our legal resource to guide some of the regulations that were in place; the worries about the impact on schemes around inflationary costs in 2021-22; cybersecurity, again going back to one of the earlier, maybe more obvious, risks; preparations for the public inquiry for COVID; and also still recognising, although I think in our last committee meeting we could actually see some progress on equality, diversity and inclusion, but we were still giving that quite a high risk score because of lots of expectations, including some of those that were revealed in intentions for Wales around the 'Anti-racist Wales Action Plan'. The final area that we've highlighted with some more work to do, and I will be utilising, certainly, internal audit in this respect, will be around major projects and programmes as well.

So, just to give you a feel that in a very comprehensive list of different risks, some of which are mitigated and at a very low level of residual risk. They were some of the ones currently that we are handling on our broader risk register.

Diolch. Dwi am ofyn i chi jest ymhelaethu ychydig, os gwelwch yn dda, ar ran o'r ateb yna. Rydych chi'n sôn am eich pryderon chi am lesiant y gweithlu a phwysau gwaith pan fo'n dod i lunio deddfwriaeth. Felly, ydych chi'n meddwl, o'ch barn broffesiynol chi, fod gwaith y Llywodraeth o ran creu deddfwriaeth yn cael ei gyfyngu oherwydd diffyg yn y gweithlu, bod yna dim ddigon o staff yn yr adrannau er mwyn cario allan y dyletswyddau yma a gwneud y gwaith, ac felly mae hyn yn cyfyngu ar waith y Llywodraeth? Ai dyna rydych chi'n ei ddweud?

Thank you. I want to just ask you to expand on part of that answer. You talk about your concerns about well-being in the workforce, and the work pressures when it comes to drawing up legislation. Do you think, in your professional judgment, that the work of the Government in terms of creating legislation is restricted because of a lack of workforce capacity, that you don't have enough staff in those departments to carry out those duties and to do that work, and so that restricts the Government's work? Is that what you're saying?

There will always be some limits on that, and there will always be areas of resource. I was alongside the Counsel General in committee recently, just talking about some of these issues around available capacity. I mean, certainly, it would be true that during the pandemic we diverted so much of the organisation to the more immediate responses, and that was a factor that affected 2021-22. I don't think it's ultimately a constraint about what we want to do. It's really important that we make sure that we discharge good law. I don't think it's just about what Welsh Government does in its organisation. We obviously have to make sure that we're able to link that into the Senedd and the Plenary mechanisms. We need to look at the way in which the scrutiny works. It's a lot of individual work and expectations for Ministers who are leading legislation through, and obviously there are the four stages that have to be accommodated on that. So, I wouldn't put all of those things down to workforce capacity.

I would say that from a programme for government perspective, delivering legislation is actually at the top of the responsibilities and the functions of Welsh Government. That ability to discharge those law-making powers is really important. But I have been able, even in difficult budgetary terms, to put more resource towards our legal areas, whether that is Bill managers, whether it's on the policy side, or indeed whether it's some of our legal teams as well. I've been able to address, maybe, some of the residual concerns around that, but I don't see the capacity issues as a constraint. I still think we are a maturing Government in respect of the legislation and law-making powers, and certainly the real key thing to do is to make sure that we produce good and effective law.

Mabon, have you lost contact? In that case, we'll move on, perhaps, to the next set of questions. Shall I take those up, or would you like to, Mike?


Okey-doke. If Mabon comes back, and he has any further questions on that section, I'll invite him to ask them.

Yes, mine. I said, if you take the questions, it will make it easier to control what's happening. 

That's great. Thank you very much indeed. How are you using the performance framework to improve the organisational effectiveness of the Welsh civil service, and what are the key performance indicators telling you so far about its performance?

I think the performance framework that we introduced, which we have tried to build out from the civil service effectiveness index, I think that allows us to go back to the earlier part of this session when I was talking about being clear on our organisational performance issues. So, just to declare, in my director general role previously, I was part of the development of this alongside other colleagues on the board, when we were taking a different view to performance. I think it does provide us with a really wide range of information to tell us about the characteristics of the organisation. So, from a reporting process, we make sure that it can be looked at at a higher assurance level by the board, from a decision-making perspective, our executive committee, and, if I can put it this way, in the engine room of the organisation in the committee that Tim chairs around our resources—so, really helpful to see it through that sort of area. I mean, I have a particular interest, to be honest, in this arena about organisational performance because I'm a former information manager and a former director of performance and improvement. So, it's inevitably an area of interest. What I really like, though, is when we can move on from just individual years of assessment to actually looking at the longer term trends. I think that allows you to both pause and celebrate some improvements along the way and also to recognise that there are some areas that are going astray and we need to do something about them as well.

Maybe my final point, Chair, just on your general question, is to say that it's really important to make sure that beyond the performance framework itself, which we tend to receive twice a year, although some of the measures are on a longer term basis, a lot of the information supporting it is actually driven through other reporting mechanisms. So, as an example, some of the source information in our performance framework is derived from the staff survey, but, in fact, in the Welsh Government board on Friday, we're spending a good amount of time looking at everything about the staff survey, what we need to do, how we respond to staff concerns and views, and how we make ourselves a better organisation as well. So, it's not only driven by those two moments in the calendar year; again, it's to try to make sure that there is genuinely a continuous improvement approach.

Okay. Thank you very much indeed. Before I continue, Mabon ap Gwynfor, you're back with us. Do you have any further questions in the section of questions you were reaching the conclusion of?

Do you wish to continue with the questions in the section I've now begun, or would you like me to continue?

I'm afraid I'm having some difficulties with technology here at the moment, so can you continue for now until this is resolved?

Absolutely, yes. That's fine. Thank you very much indeed. To what extent do you think the information in the 2021-22 accounts communicates any improvements in organisational effectiveness? And what plans, if any, do you have going forward to change the reporting about how the Welsh Government uses the framework?

So, I do think it helps us. It was a really important development. I actually like the way in which we use our knowledge analytical services to produce it independently within the board. So, rather than us feel that we use the data to only present the things that we want to look at, I think just having that kind of level of independence, even within the organisation, helps. I think there were three examples of areas that I think have moved on as a result of it, or maybe three or four.

Firstly, we'd had quite a lot of feedback over the years through the staff survey, and one of the key measures is about employee interaction. In fact, we've been able to get much higher levels achieved on our employee engagement. I think, actually, the pandemic helped in this respect, because we had to revert to different ways of working. So, we have what we call 'let's talk live' mechanisms; it allows us to remotely have a contact with the organisation. I think the highest number of staff we had in an individual session listening to the previous Permanent Secretary or myself is about 2,500—that's about half of our staff able to join because we're using the remote technology. I hope that we'll maintain those high levels, because we're trying to talk very visibly and personally to our staff and to the organisation.

A second area that's been improved and I think comes through the performance framework is actually around technology and the way in which that, again, has been so important in our use over the last two years, but people actually recognising that we have been putting in place actions to underpin that, from smart working through to actually the pieces of kit that we have.

The third area, which we're tracking, is actually around our environmental outlook and our estate, and if you look back over the last three years on the performance framework, we can see that our carbon emissions have reduced by 15 per cent. I think what is more telling, if you actually take the data back 10 years, we've actually reduced by 75 per cent in our carbon emissions across our Welsh Government estates over that period of time, and I think that, again, fits with our outlook as an environmental-supporting organisation as well.

And then the final area, and I think we were able to, I hope, give a bit of confidence on this in our last session, but there's also been progress around equality, diversity and inclusion as well, and having that more detailed opportunity to talk about some of the progress and measures in our last workforce planning session hopefully conveyed to you some of the data that we're actually looking at in terms of the performance report.

I've revealed to you my background, Chair, which means I kind of love data and could talk about it all of the time; there are so many other things that I could mention. It means that we know that 91 per cent of our staff feel that they've got the skills that they need to discharge the role, it means that I know that about 12,000 contacts have been made around individual learning and development activities, which is three times higher than just three years ago, so there's lots of useful information about the things that we're trying to do.


Well, thank you. In that response, and your previous response, you've indicated that the previous Permanent Secretary was right to state, in October 2021, that you would want to consider whether to continue with the performance frameworks she'd started to develop. Beyond the issues you've indicated, because you refer to many matters that had already been going on for two or three years before you were in this role, and some more recent ones also, but are there any other changes to your approach that you've introduced?

Yes. So, it's really important to have a set of measures that are broadly fixed and that we can track them, as I said. The trend, for me, tells as much as an individual in-year performance. But I think there are two things that are important for me to look to capture in, and I'm asking Tim to take a look at that, and I know, Tim, you might want to comment on this in a moment.

The first one is, beyond the equality and diversity measures that we have, there is a significant set of expectations on Welsh Government as an employer in the 'Anti-racist Wales Action Plan', and I think because of that profile and because of our status as an exemplar organisation, I just want to make sure that we're able to translate that particular ask into the performance report, and I think we'll be able to accommodate that.

The second area is an area that I was exploring in previous sessions, where we're using Welsh Government 2025 as our organisation development and change programme, and I think there are some milestones and actions and measures that we're using under that that respond to the question about whether we are changing as an organisation and how would we know. And I just think that there are some useful outcomes that we can draw across to the performance report from that as well. But, Tim, you might particularly want to comment on Welsh Government 2025, of course.

Yes, thank you, Andrew. I think, for me, there's a really good framework in place and, as Andrew said, it's great to have some measures that you can then monitor over time and look at the trends, but, actually, as things change, how do you then continue to develop your key performance indicators and performance monitoring? So, with it being Welsh Government 2025, with the five work streams that we identified and we talked about in the last session we were at, what are the key measures, what are the key deliverables, what are the milestones we're looking to achieve and how are we monitoring performance over time? One of the other examples—again, another piece of work I'm leading on—is around our progress to net zero and, again, as things develop over time, you want to change and look at developing your measures as well, and although the overarching trend in terms of carbon emissions is key, some of the individual measures will need to adapt as we go through. So, I think it's both having those long-term trends, but also then, on a regular basis, updating and making sure your KPIs are relevant to the work you're actually doing.

Okay. Thank you. Well, in order to fit in as much as we can today, if we can write to you with perhaps some further questions on this matter, and I'll move on to inviting Mike Hedges to pick up the questioning on losses, write-offs and special payments.

Yes. On losses and write-offs, I'm going to put this question in two parts. You do have write-offs, how do you ensure that you're aware at the earliest opportunity, and how much do you think is a reasonable amount? I mean, it's easy to have zero write-offs for investment—you don't invest, and you will make mistakes. But if I say Admiral insurance, that's a great example of an investment that paid off manyfold. So, I think that you've got to be prepared to take risks. The problem we have is that if you invest £10 million, make a £100 million success, and it's £1 million lost, we'll have an hour-long debate in the Senedd about that £1 million loss and why did the Government get it wrong. What is your belief in risk, and how do you know when things are going wrong? 


So, just to your risk point—and, Gawain, you might be able to help me technically, because there will be a threshold of some kind that declares these issues financially—but we absolutely raised our risk appetite through the pandemic response—completely necessary. I know we've had to talk through some of the decision making in here that we made—if you think back to the business grants—but these were essential decisions to allow the survival of companies at that time. I think it's really interesting to reflect on what is the risk appetite in more normal times, although I think the definition of 'normal' feels rather different these days. And I'm not sure we've really adjusted to that at this stage.

I do think there is a danger of applying a 100 per cent perfection to judgments that we make, and normal life, normal businesses and normal organisations all have a level of failure, almost, that they would expect in terms of where they look to deploy areas. But there are mechanisms in place to highlight where organisations may be struggling and we may have given them money. So, we have Welsh Government relationship managers who are part of that; they feed in. We've got the economic futures fund with protected mechanisms on it. Going back to the economic resilience fund, which we discussed at a previous committee meeting, we used the post-completion monitoring to throw those areas. But, ultimately, it does convert to a technical assessment as well, Gawain, so any thoughts from you?  

Yes. Apologies, I'll take these off. We don't actually have a de minimis in terms of investment, because, really, what it comes down to is the type of organisation, the type of activity, and then in relation to the due diligence that we undertake. And that's one of the things we've introduced fairly recently, is that we now have a due diligence team to support policy officials so that, when they're looking at organisations, the team produces, effectively, a financial check list. And they also now go beyond that in that, if there are any particular issues that are flagged, they suggest how we could mitigate those risks going forward. 

One of the ways we mitigate those risks is that any organisation that receives grant funding from the Welsh Government—and most of our money goes out through grants—they have to sign up to the terms and conditions of our mandatory award letters. Now, those terms and conditions are put in place to try and protect the public purse and protect the investment. One of those aspects and one of those terms and conditions is notification events, for example. So, the emphasis is on the organisation, so if—. A notification event would include, for example, if they stopped paying debt, if the value of their assets dropped below their liabilities, if they didn't comply with statutory reporting. That all has to be reported through. If it's not, or the notification event is triggered, then that gives the grant manager the opportunity to come back and review that position.  

Can I ask I think an incredibly difficult question, so I accept that you will feel that? How do you balance getting money back for the Welsh public purse with the effect of you having the money and small companies who have done work for that organisation, who may be lower down in the order of being paid, not getting that money, putting many of them also very close to receivership or into receivership? How do you balance that out? Because it's easy to say, 'You should get every penny for the Welsh public purse, because that's what you're there to do' but it can have a very serious effect on a number of small subcontractors who will just be unable to continue afterwards.

I think, Gawain, you'll probably want to talk about the technical aspects and how we test ourselves on these various areas. And as you would expect, we have processes in place. I think if I drive it from your starting point on these questions, how do you decide what the threshold is? Is it a financial one? Is it a percentage time? A 1 per cent error fraud rate—we'd probably all celebrate that as a pretty low rate. It's probably lower than would be expected; it's to be tolerated. If the error rate is on £100 million, it's £1 million. So, it sounds as though it's much more material than probably it does in those percentage terms as well. But we do have processes in place, Gawain, to balance what we do with businesses, I know, so—. 

And where we do look to recover any funding, which I think is your point, we do have a debt team that advises policy officials on that. And the debt team—. One of their responsibilities is to hasten when money is owing to the Welsh Government. In extreme cases, if necessary, we'll take organisations to court. But also the Welsh Government, as you say, could be only one organisation, and sometimes we have to accept that the way that we've contracted with another organisation means that perhaps we're not ahead of some other organisations. We're not always the prime organisation in order to receive the money.


But, even if we are ahead, let's talk about £50,000, which to most of us on this side of the room is quite a large sum of money. To a number of small businesses, £50,000 is a large sum of money. To the Welsh Government, investing, it isn't. If you're ahead of ABC Plumbing, who are owed £50,000 by this contractor, who will then go into administration themselves if they don't get that £50,000 back, whereas it would be annoying and a problem for the Welsh Government, it would not affect your ability, I'm trying to tease out from you how you decide, 'Well, we might be ahead of ABC Plumbing, but, if we do this, there won't be an ABC plumbing next week.' 

I think there's a balanced view that is taken on it, and I do think we don't just pursue a technical expectation—I think we try to base it on the particular circumstances at the time. There's also something on the debt recovery process, where how much time do we end up spending ourselves? I think, as you said, trying to find a way, or what's the magical formula or the answer on it, I'm struggling with a little bit. I'd be really prepared to go away and just think about it and maybe come back to you with a couple of reflections on our processes and how it works, but we try to be quite rounded.

I'd like you to go away and think about it, because it's very easy to be technical and say, 'We are ahead of ABC Plumbing; we should have that £50,000', without giving any thought to the consequences. I think I'd like you to go away and think about the consequences of us ensuring we maximise what we get, and £50,000 takes ABC plumbing and its four employees into redundancy and into closure.

I think there is an outlook—. I'm certainly, Chair, very happy to maybe just outline how we do approach it, because I do think we try and provide some balance in it. I think another example where we try to help is our general approach to making sure that we do pay invoices—again, we're pretty effective, Gawain, aren't we, on our targets there—which also helps the flow of money out to businesses. And maybe the other area that ties with this is some of the work that we've done to allow Welsh companies to be able to access more of the contractual arrangements in place. That's another part of this factor as well, which is a tone issue, about our approach as a Government.

I'll finish on this question. I think the other questions that are down in my list are factual ones that could be answered in writing, if you're happy with that, Chair. The question that probably does need a proper answer is the £9 million write-off relating to the costs for junctions 14 to 16A of the A55. Has that been reported? And have residual benefits come out of it? One of the best things the Welsh Government has done financially is buy that land and housing around Monmouthshire, which will almost certainly have increased in value substantially even though the M4 relief road hasn't been built. Probably, when you go and look at what you can sell some of those properties and some of that land for, it will be substantially more now than you paid for it at the time. So, how do you balance these things off against what you paid and how much that land becomes worth afterwards?

Well, you're right to say that there is an assets approach generally, and Welsh Government will hold a number of assets. Maybe, Gawain, you can help just describe that more broadly. Just on the roads review that you referred to, I'd have to check. I know that, obviously, there was a statement at the time that was made that probably would have described the amount because of the cessation of the scheme. I'm not sure whether technically we did that or not; I think that was probably via the ministerial arrangements, I'd suggest, so I think that is known and around. 

On the benefits side, though, definitely the way in which broader assets are used in the organisation is a factor, and we report it, of course, as part of the annual accounts.

Any of the losses we report are actually the net figure, so, with the example you've given there, even going back to—committee members may recall—the M4 relief road, where we published the loss there, what we need to do at every position is we go through, effectively, the costs that we've incurred, and we will look at those that give residual benefit to the Welsh Government. As you say, land would be an example, property would be an example, and what we then do is we identify those assets, we give those a market value—because, obviously, going forward we might have a different purpose for those particular assets—and then, as I say, we net that off from the total costs we've incurred to give the actual loss figure. 

Sorry, going into the technical level, there are losses and there are losses, aren't there? I mean, £100,000-worth of civil servant time is a loss—it's an opportunity loss, but it hasn't actually cost real, new money. Did you differentiate between buying and selling on the one hand and the use of Government officials doing one thing or not doing another thing? You lose the opportunity cost—that's obvious—but the civil service would have been there, would have been paid and would be doing something. So, although that's a cost and you count it as a cost, it's not a cost that is in addition to what you were going to spend anyway.


We just deal with it in a definitional approach in the annual accounts, so it's just—.

Yes, we would consider the costs that we've incurred outside of the Welsh Government when arriving at that loss figure. As you say, we would incur civil service costs regardless, so this cost would have been money that we've spent, whether it be with design teams or whether it be, as I say, purchasing property or things like that.

Thank you. We have some other questions, Mark, or Chair, but, if you're happy, I think those are questions that could quite easily be answered in writing.

That's fine, I think, yes. Going back to the earlier point about business finance, I wonder if you could clarify—not now, but when you look at this further—how that may differentiate between grants and loans, and the extent to which the obligations imposed by the contractual terms on both parties limit your ability to consider the position of creditors or enable them.

Yes, indeed, we're very happy to outline that in responding—that's fine, Chair.

I should declare that in my previous life I have worked in corporate finance. Right, if we could move on, then—Natasha Asghar, please, to take up the questions.

Thank you so much, Chair. I'd just like to ask our panel today, in relation to core expenditure on grants, which come to the sum of £20.8 billion of the Welsh Government's operating expenditure of £21.4 billion for 2021-22, do you think that this balance is reflected in the accounts, and how do they provide sufficient information about grant expenditure and the expected outcomes and/or what has, indeed, been delivered? 

Yes, grants management and oversight is a really important function of us and we have lots of assurance mechanisms in place around that, and panels et cetera, but, on the specifics, Gawain.

Okay, thank you. Yes, grants, obviously, are a large proportion of our expenditure. Within the grants we have, effectively, two types of grants; we have unhypothecated and hypothecated. The unhypothecated funding will go directly to health bodies and local government, and that's all part of the budget negotiations and, obviously, information around the budget is published in our budget documentation.

On the balance, what we try to do with the—. So, on the hypothecated grant funding, essentially, which is about £6 billion, within part 1 of the accounts we do produce a report around how that money is distributed between different sectors, and then that element of the accounts also goes into how we manage the process and the grants team that we have centrally looking at those policies. Obviously, that has developed over time. If the committee has views about perhaps what more we can share on the way that we manage grants, then we're more than happy to look at that for part 1 of the accounts.

Obviously, when it comes to the performance, particularly performance against the programme for government and the well-being outcomes, that's published separately. In terms of performance there for the Government, that's published separately in the Welsh Government annual report. But, as I say, going back to part 1 of the accounts, where we have that ability, really, to publish what people want to see, then, if there are any recommendations, we're more than happy to take those on board. 

Okay, great. You provide narrative but do not include a breakdown of the Welsh Government’s other financial assets. Can you tell me why that is the case, please?

Yes. I think when it comes to the notes in the accounts, as you will have seen, part 3 of the accounts, which is the financial statements, is quite a hefty document already. So, what we try to do is balance between the streamlining exercise we went through a number of years ago and then providing sufficient information. So, in this particular case, what we look to do is—and I'll have a quick look, because I know it's note 6; it's 6.3—what we've tried to do is add a narrative below that to explain. So, rather than put in extra tables within the note itself, we've added, as I say, note 6.3, which provides that description around what those financial assets would be.

But, again, I mentioned earlier, in terms of working with Audit Wales, when it comes to those specific notes, rather than the actual format of the accounts, then we are able to tailor those. And, again, any recommendations from the committee we can take a look at.

Okay. What is the Welsh Government's policy about the cash and cash-equivalent balance it holds at the end of the financial year? Have you set any particular threshold for this, moving forward, or not?


Right, okay. I wouldn't as much call it a policy; I'd call it goals. And what our goal is that we want to be in the top quartile of the cash management performance league table. There's a league table for devolved governments and Whitehall departments. It's 20 organisations in total, and our goal is to be in the top quartile of that, and so, effectively, the top five. We aim to have a variance on our cash forecasting—and perhaps I can say a little bit more about cash forecasting et cetera—of less than 5 per cent. So, our actual outturn for the cash we use should be within 5 per cent of our forecasts, and, obviously, at the end of the day, we need to make sure we have sufficient cash to meet our obligations.

Perhaps I can just explain that cash forecast and where that comes into it, if that's okay? So, we don't hold significant sums in commercial bank accounts. As a devolved Government, we have to use the government banking service. So, we have to forecast our daily and weekly cash requirements at the start of every month to the Treasury, and that cash is then put in the government banking service. It's ring-fenced for Welsh Government use only, but it's put in the government banking service. Now, I mentioned this league table. So, what the Treasury does is it takes all those forecasts, it compares that to the cash we actually draw, and it produces this league table of how well devolved governments and departments have performed during the year. And, given what I've said about our goals, it was really pleasing that, for 2021-22, we were, indeed, fifth in that league table. So, we just made our top quartile, but I think what really shows the effort that we put into the cash management, particularly in 2021-22, was the fact our variance, between what we were forecasting our cash requirement would be and the actual sums used, was only 1.5 per cent as an average for the year, which I think was a tremendous result for the Welsh Government. 

Okay, thank you. You mentioned the league table—and congratulations on making it to the fifth on there—and pardon me if I didn't hear you earlier, but how many organisations are particularly in this league table that you came fifth out of?  

Twenty. There are the devolved governments—so, Scotland, Northern Ireland and Wales—and then it's made up predominantly of Whitehall departments and the Treasury itself.  

Okay, thank you very much for that. I'll move on to my next question. With an increase in the provisions for NHS clinical negligence and personal injury claims, which I understand are taking money from other Welsh Government priorities and public services, what are you specifically all going to be doing to limit the growth of these liabilities? 

I'll pick this up in part again, just with an interest in the past on this, but also because I was part of the arrangements looking to limit clinical negligence when we did the Evans review back in 2014, and there is a framework in place for the NHS, which is called Putting Things Right. So, we've always been mindful over the years that it looks as though the level of clinical negligence feels like it will just continue to increase, and there were a number of actions that we took, basically to allow more flexibility for resolution with complainants, with patients, who may have had adverse experiences, in order to, hopefully, start to limit perhaps those that emerge more on a national basis, where we start to make provision for it. Actually, when you look at the case numbers involved, I think we actually already have signs from events that were happening a number of years ago that started to show that case numbers are dropping. So, we were at 514 cases, compared with 549 the year before. So, I think that shows a stabilisation of the actual case numbers. 

One of the problems we have, though, is that some of the costs around both provisions and the way in which we account for these things are actually changing for different reasons. So, there is, inevitably, going to be an impact on the way in which future accounts reflect inflation, because these are judgments and financial calculations that take place over many years and with lots of technical formulae in place, and inflation is going to be a driver of extra costs. The cost of an average case to settle is already twice what it was, going back a number of years or so a go. So, actually, the more complex cases that are emerging at this stage also lead to some of those areas. But what is quite interesting, though, is that, actually, the amount that is paid out in revenue terms for clinical negligence claims, despite the provision that is made available, stays quite static. It's usually somewhere between about £100 million and £120 million a year. So, I actually think we've now got some evidence showing that some of the actions that the system took to try to mitigate on a local basis some of the cases that would emerge into the Welsh risk pool mean that the numbers are actually not just stabilising, but have actually reduced between the two annual accounts periods as well. But I do worry that this still remains a really significant resource, but it's not money that is generally available for us to deploy for other purposes. There are some specific accounting mechanisms around clinical negligence that mean that it's like a draw-down. It is what it is in a year, and you just make the money; you can't suddenly decide to spend it somewhere else, and it's actually drawn through a very particular technique—a particular technical accounting treatment, I should say, sorry.


Dr Goodall, just following up on that—pardon me, because the signal went slightly; technical issues, I should say—with regard to what you said when you just draw down for that specific purpose, that money that's not used, for example, from this particular pot that you say is for clinical negligence, it can't be used anywhere else in the Welsh Government, I take it, for any other accounting purposes.

It's from our AME budget, which Gawain will explain, which is contained, so, yes.

With the risk pool, as I said, the change was about £300 million. When you create, increase or reduce a provision, it actually scores at that point to a budget called annually managed expenditure, or AME, and so, where we have these increases in something like the risk pool, that doesn't reduce our spending power on revenue or capital. That's partly because of the way that we have to produce these estimates, because they are, at this stage, only estimates. Our provision is simply—. We know there's a future liability, but there's some uncertainty over the risk or the timing of that, and that's why the increases or decreases report to or fall to annually managed expenditure. As the Permanent Secretary was saying, in terms of the actual cost to the Welsh Government, that's only realised at the point that you actually pay out, if you have to pay out on a particular claim, and that has been fairly steady over the last few years at about £100 million.

Okay. Thank you very much. I only have two more questions to go, Chair. I promise I'll be quick. You've actually said, and I quote,

'In special circumstances, the Welsh Government acts as guarantor for its sponsored bodies or in relation to public infrastructure works. None of these guarantees are material.'

So, I'd like to know in what circumstances have you provided guarantees. Personally, I'm quite suspicious of anyone giving guarantees, because they can go very badly when things do go very badly. How many has the Welsh Government provided and what is the aggregate value of them all combined together?

Gawain, do you want to pick up the guarantor response?

Okay, yes. There are three, two of which are, actually, historic, and the Welsh Government has effectively inherited them. They were guarantees given by the National Assembly for Wales for the national museum pension scheme and the National Library of Wales pension scheme. So, in effect, as I said, we inherited those, and potentially they're £57 million and £32 million, but we do treat these as, effectively, remote, so the chances that we'll have to pay out on these we consider to be remote.

The third one is a strange one. It's actually with Dŵr Cymru and local authorities. It was all to do with the fact—sorry, I don't know much about house building—but it's all to do with the fact of the timing of when you're designing and building a property and when Dŵr Cymru and the local authority take on responsibility for the sewers, the drains and the roads. What we found was there was this period that, effectively, was holding up the development of social housing because no-one would actually provide a guarantee about that time period if something was to happen. Now, again, we've never paid out on that, but it was just a guarantee that we felt was important to put in place. It is only for registered social landlords; we don't provide that guarantee for private developers. The estimate on that could be up to £40 million depending on the value of, obviously, the schemes that are going on, but, again, we've never paid out on any of those.

And can I ask when this Welsh Water and local authorities guarantee began, please—this guarantor—when it was signed or sealed? I know you said you inherited two of them, but this one clearly was under your discretion, I believe.