National Assembly for Wales

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. The meeting is being held bilingually, headsets are providing simultaneous translation on channel 1 and sound amplification on channel 2. Those joining online can access by clicking on the globe icon on Zoom. No apologies have been received for absence. I thank all Members for being present. Do Members have any declarations of registrable interest they wish to declare? Thank you, Mike Hedges.

I represent the Welsh Government on the Wales programme monitoring committee, which I chair.

Thank you very much indeed. That is relevant to some of the questions we'll be highlighting later.

We have some papers to note. The first being from Tim Moss, the director general and chief operating officer at Welsh Government, sent to myself as Chair regarding the Welsh public sector board and audit committee meetings. In its report, 'Scrutiny of Accounts 2018-19: Welsh Government', published in May 2020, our predecessor committee made a recommendation to the Welsh Government to work with its sponsored bodies to review what information they make publicly available about their board and audit committee meetings to ensure a consistent minimum standard and to allow the public to see how decisions are made.

The Welsh Government’s director general and chief operating officer has written to us to explain that work to implement this recommendation was delayed by the pandemic. Nonetheless, following a discussion at the May 2024 meeting of the public leaders forum—a working group with input from chairs, chief executives and audit committee members—the group produced a set of principles for the publication of Welsh public sector board and audit committee meetings. The principles for the publication of minutes are not mandatory but are intended to enable flexibility. For example, when commercially sensitive, security or pay negotiations are discussed. The principles also draw attention to data protection implications and provide a contact point for further advice on this point. It should be noted that the principles state, quote:

'There should be a default position that information will be shared with the public unless there are reasons why the information shouldn’t be in the public domain.'

So, Members do you have any comments on the letter or do you just simply wish to note? Rhianon.

Thank you, Chair. It’s just a comment, really, in terms of—. That’s absolutely fine, in terms of the communication to us, but my comment back would be, 'How would that be monitored in the future?' Is there a mechanism in terms of being able to assess, perhaps after six months or 12 months, who has published et cetera, et cetera?

Thank you. That's, I think, a point we might wish to capture. Do other Members have any thoughts? Similarly, I would hope that that monitoring could capture any reasons why information or data is being withheld. Far be it for me to suggest that it could be used as a reason to withhold information they do not wish to share, but it would be nice to have the assurance with a little bit more information about not specifically what's been held, but the general areas that have been withheld, and why. Otherwise I'm content to note the letter. Thank you.

We have another paper to note regarding covering teachers' absence. The Welsh Government has responded to our report on supply and demand covering teachers' absence, accepting in principle or accepting in part all the recommendations. It's of course encouraging to have broad acceptance of our recommendations, but some of the responses are a cause of concern, not least their response to recommendation 7. It should be noted that many of the timescales for action remain unclear, with several of the actions identified associated with the new strategic education workforce plan recently announced by the Cabinet Secretary for Education. Before we move to Members, Auditor General, do you have any comments on the response we've received?

No, I think you've touched on the main point, really, Mark. I think the committee may want to just clarify or follow up on the status of some of those recommendations, in particular the one you mentioned around the national supply pool and booking platform, and just generally press for a little more clarity and precision about delivery dates and timescales, given that it's now a year or so on since the evidence session with the committee.

Thank you. Members, do you have any comments? Are you content with the action proposed by the Auditor General? In which case, we can otherwise note and proceed on that basis, please. Thank you.

The next paper to note relates to scrutiny of Welsh Government accounts for 2022-23. The Welsh Government has responded to our report on this, and Members will have the opportunity this morning, as you know, to pick up any matters with the Permanent Secretary, when we scrutinise the Welsh Government's 2023-24 accounts. However, it should be noted that the Welsh Government has accepted all recommendations, except recommendation 9. This requested that the Welsh Government provide us with its detailed plans and objectives for how they propose to take forward the concept of a one public service for Wales, and the initiatives they have in place to develop and share expertise across Welsh public services. The Welsh Government rejects this on the grounds that, quote:

'the concept of one Welsh Public Service sits at the heart of the wellbeing and future generations act sustainability principle and the ways of working of collaboration and involvement. It also is'—

they say—

'the embodiment of the Welsh Government Partnership value.'

However, they do provide information about the key ways in which this will be taken forward. Members, do you have any comments on that correspondence?

Just one comment, Chair. They have a lot of words there, which is always something that worries me—when somebody gives me a lot of words. They reject it, and they seem to give the impression, or attempt to give the impression, that they're actually doing it. They're involving Academi Wales, and everything is going well. If everything's going well, why have they rejected it? Can we ask them that question? 

I would have thought so, yes.

But put it more subtly than I did there. What don't they like about that recommendation? 

If I may, the legislation they refer to is general rather than specific. So, when it comes to specific matters, under the overall umbrella of the general legislation, what are they doing? Any other thoughts? Adam.

It's just very depressing, isn't it? Well, we'll have an opportunity to return to this, but we just had a former Minister, Lee Waters, hold back the curtains, really—I don't know if they have curtains on the fifth floor, but metaphorically speaking—and the picture that was painted was not a positive one. I think that the issue of One Wales public service was one of the themes of the civil service episodes. But this is an idea that has been around for 20 years, and yet the idea, the words, have been around, but we're still discussing it. I don't really see any real sense that this has actually been delivered, and I think that's reflected in the response. At this rate, we'll still be discussing it in 20 years' time, and that's not good enough.

I have to say, whenever I have a meeting, usually with constituents or relevant bodies, with officials in local government, for example, and refer to the Well-being of Future Generations (Wales) Act 2015 or the Social Services and Well-being (Wales) Act 2014, and issues around collaboration and involvement, they immediately start talking about the consultation only—in other words, after the decision has been reached. So, by design or accident, the message doesn't seem to have trickled down to the ways of working that the Act supposedly requires.

So, any further thoughts, or are Members otherwise content to note and proceed on the basis of the comments made by Members? You don't have any thoughts you wish to add now? Okay, thank you. We'll move forward on that basis.

In which case, if we can break for four minutes until 9.30 a.m. Thank you.

Croeso. Welcome—or, in many cases, welcome back—to our witnesses this morning. I'd be grateful if you could state your names and roles for the record.

Bore da, pawb. Good morning. My name's Dean Medcraft, director of finance, Welsh Government.

Bore da, pawb. Tim Moss, director general and chief operating officer.

The director of people and places.

Diolch yn fawr. As convention has it, I'll start the questioning. As you'll appreciate, we have many questions, and, as always, I'd be grateful if both yourselves in your answers and Members in their questions could be as succinct as possible, so that we can get through as wide a range of these as we can. As you know, I'll start the questions, and then bring in colleagues to take up further questions on this subject.

To start with, what were your objectives in changing the format, structure and content of the performance section of the 2023-24 accounts, which must have taken a fair amount of work? What, if any, plans do you have for further improvements?

Diolch yn fawr. We've been working through the annual report and our way of presenting the annual accounts over recent years. We've been reflecting on our own experiences, of course, as I've outlined in previous attendances. We take very seriously the reflections of the committee and Members here, and we've just been trying to make sure that, every time we produce the annual accounts, we're able to improve. We know that some of the underlying messages have been about clarity, not just from a technical perspective, but, actually, more in the public domain, not just to help Members through that process, of course, but to make sure that there is an appropriate understanding of the way in which Welsh Government, not least as an organisation, runs its operations. I hope that you can see in the format and the template of the report that we've been able to, I think, make another step forward over this last 12 months. We think that there's been good feedback on it; obviously we'll be interested in your own views as well, and we'll continue to see that as an iterative process.

I think we also need to recognise that, whilst there is a fixed element of the format that is used, there is a way in which we can bring some of that more common language, and, hopefully, even over the last couple of years, some of the examples that we've chosen to use that maybe bring to life a little bit of how the civil service supports the Government workings also helps, Chair.

Okay. Thank you. No further comments on this matter? In which case—. Oh, Tim. Tim Moss.

I mean, building on what Andrew's just said, this is a constant process that we iterate, both in terms of the look-back that goes into the annual accounts around our performance during the year, but also then how we're using performance frameworks going forward. And, as we've mentioned before, the use of the balanced scorecard is something that we're developing and are now using as an organisation, to help drive performance in year, and we'll then look at how we can reflect that in future accounts in terms of the in-year progress as well as that look-back on our overall performance.

Thank you. Yes, please.

Thank you. Being the new finance director this is probably the first time I've really gone through this, because, from my other role, I was involved in preparation of the financial statements but not of the overall account. Reflecting on previous comments by the committee about the story this tells, I think it actually tells a good story. I think it flows through; I think the use of infographics is really good in it, and it really brings to life the figures. Because it can be dull, you know, even though I sometimes get excited, it is a dull set of accounts, really, but the infographics, the way it's set out, I think, is really good. I'm proud of what the team have done here.

Thank you. Well, you mention you're the new finance director; I think you've been in post since last summer, if I remember correctly. What are your priorities for the preparation of accounts going forward?

Thank you for the question. First of all, I'm just recognising these consolidated accounts for 2023 are a true and fair view, and the regularity opinion given by the auditor general, I think, is excellent. This is £23 billion-worth of money going through here; seventeen bodies, two groups have been consolidated into this. What I'm looking at is, 'Can we make the accounts process quicker?' However, what I would say is that there's a tremendous amount of work with the teams internally, about those other bodies, to get to this position, and with the auditor general, his team, to get us here. I think we produced the accounts and had them audited and laid before the Senedd four months before the deadline. I would be worried if we could push staff even more, so there's a health and well-being issue that I'm looking at across my part of the organisation. But also there are the complexities that I know will be in place in 2024-25, when I look at different accounting regimes and new things coming into the accounts. So, what I'm trying to do is work with my team, work with Audit Wales, because we have regular meetings on this, to see whether we could make this a faster process. But, at the moment, I'm probably saying that the 29 November deadline, which we did for this set of accounts, is a tremendous result, and to give a set of accounts that look as good as this as well, and, as I said, an unqualified set of accounts as well.

I think, Chair, as we look forward, it's to not forget the core purpose or objective. What, of course, we hope that we can retain is our ability to break even on that significant budget. Sometimes that's taken for granted a little bit, in terms of the scale of the budgets that we're overseeing, with all that complexity that Dean is describing. And, hopefully, as we look at the annual accounts for the current financial year, we can do so with, I hope, some confidence that, again, we should be steering the organisation to a break-even position again.

Okay. Thank you. Why, given that officials told us last year that you are discussing with Audit Wales a plan to bring forward the accounts sign-off, does your response to our report on the scrutiny of the 2022-23 accounts say that you don't have a formal plan?

As Dean has just been outlining, the changes that have happened around the annual accounts process over recent years, irrespective of the particular difficulties that we worked through when we were accommodating the pandemic environment, of course, means that this is a very different set of annual accounts than we were dealing with back in 2017-18; so, the range of organisations that's involved and the new accounting standards. And actually, the fact that we are submitting this four months early on the statutory deadline, I think, of itself, is a good sign. We know that the committee are really keen to see whether it is possible to bring things forward. Some of that has been affected by other bodies over the last couple of years or so. And certainly, some of the issues associated with the NHS accounts and the complexity of those has been a factor that has affected some of the timing.

I think we will continue to work with Audit Wales on the timetable that we can generate. I think, actually, it's a pretty hard ask to deliver to the current timetable that we're delivering. And over the last three years, as you know, we have managed to restore the compliance with the timetable to make sure that that is done by the end of November for sign-off with Audit Wales as well.

The plan that you referred to is something that we develop alongside Audit Wales. There are never complete guarantees about it. It will always depend on the areas that are highlighted within the audit process itself. And I think as we look into this year, just still repeating, again, that cycle of getting it in by the end of the November, of itself, I think, will be a good outcome at this stage. We're happy to keep trying to see whether there are some opportunities to bring things forward a little bit. I think in the current financial year, we're looking to see whether the NHS accounts can be brought forward a little earlier, but I still don't think that's materially going to change the end of November timetable that we are working to. But it is a reciprocal timetable; it's something that reflects both the auditors' pressures and the issues that need to be worked through, as well as something that is pragmatic for us to work through with the limited team that we have in the centre of Welsh Government as well.

So, I have been talking with, you know, Audit Wales and the team there about what we can and can't do or whatever. I think it will be really difficult, for the issues I already outlined. However, I am looking further afield. We're working with the Scottish Government to see what they are doing as well, and we're working with the Government finance function at a UK Government level as well. Also, I think that transforming corporate services and the digital agenda that we are going on will improve this going forward, but we're not there with that yet as well. I'm also reviewing the finance function, because I have got a very small, dedicated and skilled team, but it is a very small team, to do this work. So, those issues are preventing me pushing even more—and I am worried and concerned about the staff who deliver this who work long weekends and into the evenings—but it is a great result and to push it even more at this stage, I can't give any guarantees. I am working with Audit Wales; we've had a meeting in the last couple of weeks, we've got a further meeting in the next month and then I'll go through it with our audit risk assurance committee as well.

Will there eventually be a formal plan?

I think there will be a plan and a deadline for next year; I can't, at this stage, guarantee a three-year plan.

Okay. Thank you. Again, referring to your response to our report on the scrutiny of the 2022-23 accounts, you note that the executive committee has approved a strategic outline business case for the new finance system. In that context, what are the next steps in the approval process and what plans do you have to implement a new system before the suppliers of your current system will force an upgrade or withdraw support for it?

Tim, do you want to start? Dean, you might still want to help out with some of the technicalities. Thank you.

Yes. We approved the strategic outline business case in August. There are plans to develop that into the outline business case and the final business case through 2025. Although, what we've also done in looking at the corporate systems—and we were focusing mainly on finance, HR and the grants systems that support those—is we're doing a piece of work to look at a range of other corporate systems, so we can develop a comprehensive corporate systems road map, so that we can then plan forward over the next few years in terms of the investment that's required to develop those systems. So, as I said, the business case will be developed further over this coming year with the aim to have, then, investment proposals ready for the next Senedd.

You know, this will be a key programme into 2026-30. But it's not just about systems; underpinning this are the corporate processes and the ways of working. We are doing a lot of work at the moment to look through the implications of following those UK Government functional standards around HR, finance, grants and various other processes, because for any investment in new systems, having standardised processes and common ways of working is absolutely key. And so it's very much a business transformation as well as a systems transformation. So, that's why we've taken a slight pause at the moment while we're developing that information, and we'll put that into the outline and final business case during the next year.

Chair, we also need to make our own case against some of the other decisions that I've been making across the organisation as well. This has been a very tough couple of years, financially, as will all public services, dealing with inflationary pressures, recognising the way in which we've been affected by global events. So, some of the underlying flexibility of our budgets, where we would have handled some of these types of choices, have not been there in the same way. So, we really need to be making this case alongside other choices that I'm going to be making, within and across Welsh Government. And, obviously, there are many expectations, but what we do need to make sure is that our core corporate systems are able to be fit for purpose, can be there to be delivered, and help us to transform our approaches and our methodology across the organisation as well.

It's anecdotal, but, presumably, when there is a new finance system, it will be financially beneficial on an operational basis also.

Yes, absolutely. Dean, you may want to continue.

Yes, thank you. Coming into the role, one of the first things I looked at was where we were going on transforming corporate services and the finance system that we were looking to bring in. I've got to be honest, I spent four meetings a day going through this stuff with various consultants and looking at the overall road map of where we were going. I think, in some ways, what we've actually done since then is look at: how can we be more efficient with the resources we've got? How can we perform in Government financial standards, basically? Because what I don't think the organisation needs to do is come up with a bespoke system. So, that's why it's linking in the finance system, the HR system, the grants management system, and looking at how we take that forward.

But we didn't understand the landscape, and so what we've actually done in the last few months is understand the total landscape of the IT infrastructure of Welsh Government, to make sure that there are no hidden things coming through. That's why it's taking a little bit longer, but I think we're in such a good position now, understanding the landscape, that we can really push forward on this.

But, as the Permanent Secretary said, we have to put up a business case. We've done the SOC; we've got to do the OBC and the FBC. That will be a considerable amount of money on a capital basis. However, as you said, Chair, that will deliver revenue benefits as well, because it should streamline the system and it will affect the accounts. It will make it easier to do the accounts because we've got a significant manual system to do these accounts. So, there are so many benefits. We're on a journey, but I think we're in a better position today than we were this time last year.

Tim Moss.

Just to say, we're in discussions with our colleagues in Scottish Government who have just gone through this stage. There're a couple of years ahead of us, so getting the learning points from them and looking at what needs to develop in terms of the systems going forward.

You mentioned about the time frame. The current systems we've got have updates going out certainly to 2028, but there's also information that we've picked up more recently that says, actually, you can extend the life of those further. So, again, that's why we're making sure we're getting the business case right, engaging with the Scottish Government and other partners who've gone through this journey, to make sure that we prepare in the right way.

Thank you. Mike Hedges.

Did I mishear then, Mr Medcraft? You said you've got considerable manual systems. It's the twenty-first century, not the end of the twentieth century. You must be one of very few large organisations that have large manual systems. One of the things I nag the Welsh Government about is the lack of use of artificial intelligence. You haven't even got to the last industrial revolution, where IT came in and we had a system where accounts were amongst the first to be fully automated.

Sorry, wrong choice of words. My 'manual systems' are spreadsheets, and spreadsheets—. I've got a significant SAP system, I've got a grant e-payment system, and it's linking those things up that does take some manual intervention. So, we have IT systems that do this stuff for us, but there is some manual intervention there, which there shouldn't be. So, matching up my payroll with my domestic reverse charge positions, with workforce planning, that needs some manual intervention there. I should be able to press a button and I should get that information. I am not in that position yet.

I agree with you, you should be able to do that. One of the things that we ought to be looking into is further automation, use of artificial intelligence, and reduce costs. I use words that seem to be an anathema to the Welsh Government: productivity and efficiency. But these are things that using IT can achieve.

I agree totally, and one of the things we've introduced at Welsh Government is Microsoft Copilot, and we are funding that across the organisation because that will bring down administration costs.

Thank you.

Okay. Thank you. Well, moving on, in addition to bringing forward sign-off, which we’ve already covered, what has your review of the processes and procedures of your current systems shown in terms of how you can improve the efficiency and manage the increasing complexity of the accounts preparation process with your current finance system?

Chair, we may have started to touch on some of this, but, Dean, do you want to take us through some of the processes, as you see them, through the finance director role? Thank you.

So, again, for me, it was understanding the various teams that I’ve got, the various relationships between the policy areas, which have got their own finance governance teams, and how that feeds into the finance, and bringing this forward, basically. I think there’s a skill level that I’m looking at across the Welsh Government as well, on the finance side and on the governance side. There’s too much expectation on certain individuals. So, that’s the area that I’m looking at, looking at the finance profession, the standards that they’ve got, et cetera, and skill level, so doing all those things to make it a more streamlined service within the Welsh Government, and making the right decisions in the right places. There is too much expectation on too few people, basically, in my view.

I think, also, we’re very reliant on the structures that we’ve got in place. So, we deliberately split up the organisation into group structures, just to make sure that I’m able to discharge an accountable officer role, by working with my directors general. It does mean that we’re able to pull together the general operations, and, of course, we have the responsibility to monitor the spend on the ministerial portfolios and those budgets, as well, in the overall Welsh Government annual accounts. So, I think the group structures also play a part in that. So, yes, we’re reliant on the expertise of the central team, but also making sure that those are discharged by director general-level decision making as well.

Thank you. You referred to budgets recently as being tight, and, of course, technology has been evolving quickly during the 26 years of devolution, and ever more quickly over recent years. You say in the accounts that, across the Welsh Government, you depend heavily on ageing IT systems, which don’t give you the depth and breadth of reliable management information that you need. So, why has the organisation not invested sufficiently in this area up to this point?

Well, over recent years, there would have been tensions with the way in which we were landing our budgets. Obviously, we have got a whole series of IT infrastructure in place, and we’ve got a chief digital officer. We have workforce systems and we have finance systems. We’re reliant on IT on a daily basis to run the organisation model, to operate our oversight of grants mechanisms, and to make sure that we are, of course, communicating with each other as well.

All IT systems, though, have a shelf life, and, of course, technology is moving on at pace, as the Member was reflecting as well. We are plugging ourselves into the developments at a UK civil service level, about the use of AI and technology, working our way through some of those options and choices from a Welsh Government board level, and with our executive committee as well. Tim, do you want to give a feel for that? You oversee the chief digital officer in the organisation.

Yes, every year, we’re looking to make the best use of the funds we’ve got in terms of what we can do in terms of changing our systems for the future, but also making sure that the systems we’ve currently got have resilience, that we’ve got the right investment in things like cyber security, to ensure that we can carry on running and do that. But I go back to the point I made earlier around the piece of work that we’re doing now around the corporate services road map for the future, being really clear about what all the critical corporate systems we’ve got are, what does that sort of life cycle management look like, and what’s the level of investment we need, going forward. So, for example, one of the key things we’re looking to do this year is linked to a number of CRM systems that we have, and how they migrate through to Microsoft and the cloud. And 365 and the cloud is a critical infrastructure change that needs to happen. But a lot of these upgrades that we need to do then come at the expense of maybe developing some of the newer systems we need. But we do need to make sure we get the basics right, so that we can then build on top of that some of the things like the advantages that AI and other things can bring in the future. But it’s about having that clear investment road map for the future, which ties into the work that we’re doing and the transforming corporate services programme.

So, how concerned should we be about your statement that the current systems don’t give you the, quote,

'depth and breadth of reliable'

information that you need?

I think the reality is that the systems that enable us to run the organisation run effectively, but the things that we want to do for the future to become more effective, more efficient, drive up productivity, require further investment in developing the systems. And that’s part of building that clear plan and building the business cases to ensure that we can do that. So, we’ve maintained the resilience of the organisation and the operation, but there's more investment we would like to do for the future, but it's building the right business cases. 

Thank you. My final question in this section: what, if any, action have you taken to identify any ageing key or corporate IT systems that pose either a significant risk or are particularly archaic? And if you have, do you have—I think you've partially answered this—at the current time, sufficient resources to address the short-term risks, and can investment in these systems wait until the seventh Senedd, when you plan to build the forward investment plans into budgets, having completed a road map and business case for them?

The investment that I just referred to around things like the CRM systems is part of that critical infrastructure and making sure that we're prioritising the investment in those areas first. So, that's exactly what we're doing. But also it ties into that work around having that very clear corporate road map. One of the things that we're doing is making sure that we've got that view across all of the corporate systems. We're very clear and understand the risks that any of those run in terms of their life-cycle, which ones are maybe coming out of support and so require investment ahead of others, which is why we're prioritising that work at the moment ahead of the outline and full business case, so that we can have that complete plan, going forward, of what are the things we need to do over this year, next year and then right the way through into the next Senedd term. So, we've got a comprehensive road map for our corporate systems and the investment required. 

So, currently, do you have sufficient resources now to address the short-term risks?

I think, in this area, there are never enough resources to do all of the things that you want to do, but we prioritise very effectively the funds and the resources that we have. We've been able, with the draft budget settlement, to do some planning into next year to put some more resources into this critical area to ensure that we can do more with the resources that we have and develop those resources further.

I think I can read from that that, perhaps, although you're planning for the future, you may not have sufficient resources to address the short-term risks facing you currently.

We are addressing the highest risks. Again, it's all about prioritisation and addressing the most significant risk first. But, as I said, I think the team does a fantastic job in terms of maintaining the resilience of our current systems, but what we want to do is really have a much clearer plan around the investment required so that we can develop the system and, as I said, take advantage of some of the things that the committee has already highlighted today.

Okay. Thank you. Can I bring in Rhianon Passmore, please?

Thank you very much, Chair. I'm going to move on to your responses to our report on the scrutiny of the 2022-23 accounts, which set out the information about work streams under the refocused Welsh Government 2025 programme, but your response didn't explain exactly what you'd originally planned to do that you've omitted, that you're no longer doing. So, could you briefly explain to the committee the consequences of the missing middle of this for the organisational changes and improvements needed to the organisation?

Yes, the intention of the change programme is to focus on the way in which we could change our ways of working across the organisations, but some of those are longer term. You are dealing with people in an organisation. We're trying to demonstrate a way forward, and what we want to do is to be able give permission, that staff feel that they can introduce changes in their own areas across the organisation. Not everything is led by the centre. There are choices where people can have the skills, if I could put it in that way, to translate.

I think the thing that absolutely got in the way of year 2 of Welsh Government 2025, though, in a salutary way, was just the changed outlook on budgets, which affected the Welsh Government in its own operations as well as, of course, affecting Wales as a whole in terms of the budget process that was occurring. Therefore, I think that some of our intentions couldn't be worked through. We had to pivot the arrangements to look at a different approach to what the size of the organisation would look like. We had to be really clear of the need to drive efficiencies around our estate choices and the way in which we oversee some of our estates infrastructure. And we just had to keep some of the more underpinning ways of working in the organisation, perhaps those that were a bit more cultural about the way in which people were supported, and their learning and development just had to be paused a bit more. We've reset that into the current financial year, just to be clearer about what we want to technically take forward. But, Tim, I just wonder if you want to outline a couple of the areas where we still made progress but, perhaps, to answer the Member's question about any of our concerns about things that just went a little bit missing.

Certainly. The refocusing of the programme into the three work streams of resize, respace and reshape, as I said, was there to meet the needs of the environment that we're operating within. Within that, we ran some really clear change programmes around the size of the organisation, in terms of how we look at recruitment, looking at temporary workforce, temporary promotions, but also ran a voluntary exit scheme to ensure that we were at the right size as an organisation. We did a lot around our estate, looking to build much more of a public sector estate, so, taking on a number of tenants from across the public sector, but also looking at reducing our costs in terms of the way that we operate, and did that very successfully. And then, also, looking at the shape of the organisation and how we can most effectively meet the needs of ministerial priorities and priorities for the organisation, and make sure that we've got resources in the right place. And in doing some of those, it did mean that, yes, some of the things that we started in phase 1, some of the things we couldn't carry on in quite the same way—some of the things that we would want to do maybe around skills and resources and increasing certain areas—because of the requirement to make sure that they were the right size for the budget environment, some of those were put on hold.

But, underpinning this, we were able to continue with a lot of the work that we were doing on values and behaviours. The health, safety and well-being strategy, which we started in phase 1, we looked to develop further into phase 2. And now, having gone through that and being in a position where we can plan for a more sustainable budget position into next year, we're looking to rephase the programme again in a new area, and there are six key areas that we want to address, going forward.

And I think with any change programme, and I've been involved in a number in the past, they need to be done and, I reckon, they need to reflect that changing environment that we operate within. So, on some of the things that we wanted to deliver this year, the first priority for the organisation has to be around preparing for the impact of Senedd reform and what that will mean for us as an organisation in terms of our processes and ways of working, but also the shape of the organisation and the resources we need to put into the right areas. But we're then able to also go back to some of the key things that we want to do around our systems and our processes and our data.

And then some of the other areas that we're looking to really drive forward would be around, again, our values and behaviours, ensuring that we are really driving forward and continuing the really good work we've done around eliminating inequalities in the organisation. And then, as the Permanent Secretary just referred to, there's this whole culture around how we create the right organisation that can change and improve, and so there's a real focus around continuous improvement.

And then, of the final two areas that we're looking at this year, one is around efficiency, governance and empowerment. Again, some of that is cultural, but also getting the right focus in those areas. And the final area is to carry on the work that we're doing to optimise our estate, building on the good work we've done through both phase 1 and phase 2. So, it's changed, as it should do, to reflect the environment we're in, but I think it puts us in a good position, going forward, and a lot of those things are also preparing us very much for the next Senedd term as well and what we need to do on our change agenda from 2026 to 2030.

Okay. Thank you very much for that. You've mentioned the reshape work stream. Briefly, in practice, what does that mean? And then you note that 91 staff left the organisation under the voluntary exit scheme last year. We were told that around 150 staff may leave under that scheme. So, what does it mean for the resized work stream and, really, the organisation's ability to deliver an affordable and effective workforce plan?

Well, it's really important. Of course, we're here with annual accounts scrutiny and we have to demonstrate that we can work within the budget that is set for us, and we have been able to do that.

Just to reflect on our staff numbers at the moment, in March of 2024, the number of staff that we had was 200 less by the time we got to January 2025. And that does reflect some of the decisions that needed to be taken in the financial year that we’re scrutinising today and are linked to the voluntary exit scheme arrangements as well. So, I just wonder, Dom, if you just wanted to update on those figures and some of the actions that we've taken in the organisation, and perhaps we can then come back to the reshape understanding as well.

Yes, absolutely. Thank you, Andrew. So, the voluntary exit scheme was put in place as a result of us understanding that we had a circa £28 million gap in the central services administration budget. At the time, we anticipated that we would need circa 150 colleagues to exit in order to help fill the gap. We undertook a voluntary exit scheme. The scheme opened on 18 March and it closed on 15 April. We had 393 applications, as we've confirmed to the committee previously.

Through the process that we engaged, through looking at the scoring criteria, it included looking at: key skills—could we afford these skills to leave the business; business continuity—what would be the risk to services continuing if these individuals were to exit and were we at risk of losing any single points of failure or single points of success; and replaceability—would we need to replace that role in some guise, not necessarily directly, but also through other means and would we need to amalgamate duties, for example, elsewhere? Through looking at those three criteria and through having directors and directors general review the scoring, and by having a considered process that included a corporate panel chaired by one of our non-executive directors, including trade union observers, et cetera, we were able to quickly ascertain that there were 95 applications that we could support that wouldn't impact the skills or the business continuity of the organisation, and we wouldn't need to replace those roles. Four individuals subsequently dropped out. We've been able to redeploy them to other roles within the organisation. So, we ended up exiting 91 people in August, with an in-year saving of around about £3.5 million, with a full year saving this year of around about £6 million.

So, upon balance, even though we received 393 applications, we were able to let 91 colleagues exit with a high degree of assurance that it was unlikely to impact our business operations, and highly unlikely to impact the skills that we require within the organisation. Of course, when we're looking at the overall gap in the budget, as Tim and others have alluded to, the resized work stream wasn't just the voluntary exit scheme—we also looked at implementing the external-by-exception recruitment measures, which meant that we looked to deploy staff internally first before we brought in external colleagues. We looked to streamline the use of agency and temporary contract. When I say 'agency', I mean short-term placements of around about 12 weeks through contracts on one of the Crown Commercial Services frameworks. And we looked at reducing the temporary promotion assignments—the use of TPAs, as we call them—within the organisation. And over the period, we reduced the number of TPAs from 494 to 106, so we saw a 388 reduction overall in the use of temporary promotion assignments.

So, the resize work complemented, I suppose, each of those factors, to make sure that we were living within our means and that we had an affordable workforce plan. As a result of that, we've been able to land an affordable workforce plan for the financial year. And, of course, there are other measures, including reshape and some of the savings under the respace work stream that will have contributed to that significantly as well.

Okay. Thank you. And finally, in regard to the Welsh Government 2025 plan, are you on course to achieve that by December 2025? You've also said in the foreword to the accounts that you've had to make very difficult decisions, and you've gone through those in some detail already this morning, and made significant cost savings to be able to operate within the reduced budget. What were the most difficult decisions, and why?

Yes. Just starting with the timetable, we wanted to set in train the first three years of a change programme, so doing things and having an impact in 2025, of course, are really important on that. Year 2 did affect some of the areas that we would like to work through, although, as Tim was describing, we've not lost the focus on values and some of the internal focus on areas that we know are giving staff the skills for change. Having said that, whatever change programme is in place is going to need to represent an ongoing change programme that will take us well into the seventh Senedd term, and supporting a new Welsh Government as well. So, this is always something that happens over the time, and we work with colleagues across the UK civil service and with the Scottish Government just to make sure we align that. I think that the—

Sorry to interrupt, I realise it's an iterative process, but I mean, in regard to the original timescale, is it still on course for December 2025, or—?

Yes, we're still intending to deliver by 2025, and the six areas that Tim was outlining all are in line with those objectives as well.

So, in respect of the hardest decisions to take on this, I think needing to revert to just the budgetary impact on the organisation, as, of course, was the experience of other public service organisations, was very significant. We have a responsibility to manage within our budgets, but you don't lightly make decisions about reducing your workforce and staff in the manner that we did, and I think we did that in a very open and transparent way. We did it in social partnership with our unions. We did it in a very respectful way with our staff, and we were able to bring about change, I think, that worked for the organisation. One of the reasons, as Dom said, that we were able to reduce that number to 91 rather than 150 was knowing that we were going to be able to manage within the budget without having to push those numbers harder than we really needed to as well. So, I would say that that was probably the hardest decision, because it has that very personal impact.

I still think, on an ongoing basis, that being very clear about the size, the skills that are required and the functions of Welsh Government is going to be really important. As Tim highlighted, we know that one of the biggest sets of changes that we're going to need to respond to is going to be the way in which the Welsh Government operates around the Senedd reform process and that change that is happening more politically. So, we recognise that that is a significant moment and probably generational in terms of some of the changes that we may need to bring to bear within the Welsh Government itself.

So, can I just briefly ask, because I've finished my line of questioning officially, in terms of the size of the voluntary exit, what impact has that in terms of capacity to deliver within the organisation?

It's not prevented us from still being flexible about where we've needed to build up capacity and make choices. So, for example, despite those numbers, we've been able to put more capacity in place in relation to the legislative programme over the last 18 months or so. Of course, we have needed, even during the current year, to align to the First Minister's priorities in a really different way.

I think the criteria that Dom was outlining earlier were very clear about wanting to know that we could switch off work, if we were letting a member of staff go. So, I think that was an important exercise. If we had been going above those numbers, I think one of our worries would have been that we would have been probably placing more workload pressures on our staff, and that's why we made that judgment to go with that first band of staff going. But, Dom, I think that was the whole basis of why it was only 91 in the end and not the higher numbers.

Yes, absolutely, Andrew. We were incredibly conscious of ensuring that, in those areas where work was stopping, we were clear that work was stopping, and that's been placed into the budget process for the coming financial year to make sure that the savings that we've identified will be continued savings, and that we're not accidentally, or through other means, replacing those areas of work that we have said could stop as a result of those 91 colleagues exiting.

Okay. Thank you very much, Chair.

Mr Moss.

Just to say, part of it was the work that could stop, but there were also, I know, a couple of things in my area where we then looked at how we could do the work differently and become more efficient in the way that we were doing it, which enabled us to release those staff. So, it's not reduced our capacity, but we have also done things in a more efficient, effective way in many areas.

And Mr Medcraft.

Thank you, Chair. Just to say that there was a significant financial challenge to this as well; it wasn't the only driver, but there was a challenge. Like I said, we had an 8 per cent reduction in the budget. I'm pleased to say that Welsh Government 2025 actually delivered those financial challenges. I reported this month that the month 10 position actually shows that I am forecasting a balanced position for the central services and administration main expenditure group, which is the running of the organisation. So, we've actually delivered financially, as well.

And just for clarity, 91 people left the organisation. What's the net staffing complement overall, including new arrivals? Is it flat, up or down?

Well, if we take the current year we're in, so, between March 2024 and January 2025, there's been a reduction beyond just the 91. So, those numbers are currently about 200 less than they were.

Okay. Thank you. Adam Price, please.

Bore da.

In terms of our location within the UK civil service, staffing is a matter for the Permanent Secretary of each of the departments, so it retains, of course, a matter in terms of the operations of the organisation. I think there's a danger of that feeling as though Ministers are disinterested in that. Of course, they want to know that they have the capacity available to discharge and deliver their priorities. In a very blunt way, Ministers do have oversight of our staffing arrangements in the sense that they, through the annual budget process, set the budget that we operate within and we have to cut our cloth accordingly and make sure that we're able to sponsor that.

There are ways in which, in an appropriate manner, Ministers will be involved in some staffing decisions that are taken. So, I know from personal experience in Permanent Secretary appointments, but certainly in director general appointments as well, Ministers have an involvement—appropriately so—under the Civil Service Commission arrangements, to be part of that process, but they don't ultimately make the decisions about those staffing arrangements as well. So, it would be a very significant change in the way in which we work, but certainly, in the context of how we work as part of the UK civil service, that wouldn't be something that is a decision that can be made here by us, currently, in the Welsh Government, if we are within those arrangements at this stage. But I think that we are intimately involved with Ministers, of course—policy officials support them on a day-to-day basis on a range of areas and Ministers are very interested in teams that they would describe as their teams, because that's the way in which we've established our group structures as well.

Yes, we have performance management arrangements in place. There are always opportunities to improve that. Again, that performance management context is set by working across the UK civil service, and I think we do use those arrangements. We have moderation arrangements in place, so it's not just simply about a single conversation between a line manager and their own staff, so we try and make sure that we sponsor that as well. And we do call out difficulties around performance in the organisation. We have feedback from our staff about how that feels on the other side, through the staff survey. And speaking openly about what that represents, it tells us that we do have performance management systems in place. The general experience of staff will be that that is appropriate and supportive, but there are areas within the organisation where performance management is not working as we would wish and, therefore, we are focused on those processes as well. So, I wouldn't want to give the impression that we don't have performance management in place, but one of the areas that we're looking to further improve and transform, under the Welsh Government 2025 aspect, is actually to make sure that our performance management approach feels more robust and appropriate, again.

Dom, do you want to pick up some general reflections on the staff survey results, for example, which do give us variation across the organisation? And what we try to do is make sure that we're focused on those areas to support managers when they need support, but also to make sure that we're putting in additional corporate support, where needed.

Yes. There are a number of different lenses through which we can look at performance management. On the base level, which is an individual having objectives with their line manager and having those conversations, we've seen improvement in our people survey scores in the way that colleagues have clear objectives, have the skills to do the job, and feel valued and have those conversations. So, each of those areas have seen increases of between 2 and 3 per cent over the last year.

One of the areas that we're focusing on as part of Welsh Government 2025, going forward, however, is to review the performance framework and to make sure that colleagues can have better quality conversations. I’m not in a position today to say, because I don’t believe this is the fact, that there is a single area that is an outlier. As with all organisations, performance management often depends on the capability and capacity of line managers, and that’s an area that we’ll focus on. However, if we’re also looking at dealing with performance, and I use that in its grandest sense, there are other measures that we’ve introduced over the last year, including our corporate scorecard, which looks at a range of effective measures of how well we’re delivering, particularly on the people and places front, as well as our wider framework approach as well.

So, at a micro level, in terms of an individual and a line manager, my focus over the next 12 months will be supporting and encouraging better quality conversations, which is a bit of a cliché but actually works, to make sure that all colleagues have clear objectives and we are able to tackle areas of underperformance where there are areas of underperformance.

I’m happy to pick up the question. The culture division report is from, I believe, 2022 or 2023, so it was before my time. But, again, where we have pockets of practice across the organisation where there are a multitude of issues happening—whether it’s individual line managers being unable to have conversations or whether, for example, and our anti-racism plan makes it clear, we still have variances in staff experience across the organisation—we may use measures like a neutral assessment to understand in more detail what’s happening. So, yes, there was a report commissioned, I believe, by my predecessor in conjunction with the business area to look at the very specifics of what was happening. Since then, there has been a number of measures put in place and we’ve seen improvements in the people survey score, for example, in that particular area this year. I myself speak with our social partners, trade unions, about those pockets as and when they arise to make sure there are timely interventions.

I’m certainly, Chair, happy to consider that. However, if I could just be open with the committee members, when these reports are commissioned, they’re done so in an anonymous manner in order to protect the confidentiality of staff members who are participating in that process. That gives them protection to, if needed, speak out. I’m just a little concerned about committing to that today without being able to check back on those principles of it. Our main concern about that is if these reports end up not being anonymous or confidential reports, it means that, in future, when there are issues, we’re not going to have staff who are willing to participate in those arrangements as well. But, because of the seriousness of the issue and the way in which the Member has asked, if I could just go away and look at what our process may be perhaps to give some assurances and highlight some of the areas as a minimum. But I would really like to be able to protect that staff in future can approach us in a confidential manner.

Can I just interject, if I may? I understand that a leaked Welsh Government internal report setting out the results of the survey that Adam Price refers to in the culture division noted, and I quote, staff condemnation of the alleged lack of

‘real performance management taking place’

within the Government, meaning that

‘managers who may not wish to have difficult conversations can avoid them and therefore staff who are not performing "get away" with it’.

Staff apparently also felt

‘there was no sense of strategic long term planning’,

and there was

‘a widely held view that ministers’ expectations are not being managed’.

How do you respond to that?

We take very seriously the views of staff in any individual areas, and we had a process in place to respond to that and handle it accordingly as well. As Dom has outlined, irrespective of the confidential nature of this area, when there is a need for us to go into individual areas—. We employ about 6,000 members of staff, we’re a large organisation, and there inevitably will be areas that we need to approach, but we do try to do so openly and we try to do it in social partnership with our unions as well. So, as Dom has said, what is at least pleasing in respect of the latest staff survey results, and we received them in autumn 2024, is an improvement not least in that particular area that is reflecting that staff are feeling supported.

What was the response rate?

The response rate for the whole—?

To the survey.

For the survey, for the whole organisation, I think this year it was in the 60 per cent—

Sixty-nine per cent, I believe, so, over 4,000 responses. And our people survey score for this year is amongst the highest that we've received. So, yet again, it went up to 67 per cent. Across all of the survey scores, we saw a positive increase in 93 per cent of the areas, and of the areas in which we didn't see an increase, either they remained flatlined or the lowest decrease we received was 2 per cent. So, there are some positive indicators that we're on the right path, through Welsh Government 2025, through looking at our values and through looking at our HR and other arrangements, et cetera. But, as I outlined earlier, one of the key areas that we want to focus on in the next iteration of Welsh Government 2025 is our performance management approach, and making sure that we go back to basics around having quality conversations with objectives across the organisation. Our framework already allows us to do that. 

Can I just clarify, then, obviously, an appraisal is meant to be a snapshot at a particular point in time, so to what extent is the performance management process you either have already, or you're anticipating streamlining into the system, part of a process rather than an event?

So, our current process is to encourage individuals, or to require individuals, to have regular check-in sessions and to agree what the objectives or the aims are over whatever period is required for that particular role. I think, if I'm absolutely frank with the committee, one of the things that, maybe, we've lost sight of perhaps is the quality of data that we can get out of the system to make sure that those conversations are happening. So, there is something around going back to basics, around making sure that we are recording, monitoring and understanding the quality of conversations that are happening across the organisation, but our current framework does encourage individuals—does require individuals—to have regular ongoing discussions, and not to leave it as a momentous one-year event, or twice-yearly event, where you sit down and suddenly talk about the last six months. It's supposed to be an iterative discussion that happens as and when things occur.

Again, in the people survey score, there were some positive signs that, actually, management is helping colleagues to understand how they contribute to the organisation's effectiveness and objectives, and that performance is being evaluated fairly. However, if you were to look at the civil service average, these are areas that I think all Government departments typically struggle with, and so there is more that we need to do, which is why we recognise, I recognise, that it's a core part of our work, going forward.

I'm glad you're getting there. I was doing that with my staff 30 years ago. Adam Price.

The report said that the division is consistently described as in chaos and survival mode. I appreciate that this was commissioned, and this situation described in the report was before you joined the organisation in your current role, Mr Houlihan, but the question to you, Permanent Secretary, is: how did it get this bad without senior leaders within the civil service knowing about it?

We use the staff survey information when we are seeing it through both data and through experience—that's when we step in. Back in 2021, which was when, as I recall, it happened, there were steps that were taken at that time, recognising that there were some concerns happening in there. We also try to make sure that we are reviewing, in overall terms, the staff survey across time, to know what are the changes that were put in place in the organisation, and we also use other information within the organisation that allows us to spot problems as well. So, we are working with our unions on the one hand, and we have network arrangements in place with our staff networks, which are also another avenue as well.

So, we did step in to support that in a very different way, and, hopefully, have come out with improvements, but, in general terms, we do try to use the staff survey to demonstrate that there are improvements. Even from the UK civil service side, we are, at the moment, seen as one of the better departments, where we're performing well against a number of categories as well. But, if you're going to perform better, you need to follow through on the concerns that inevitably will exist in a large organisation, and step in as well to support that.

It says that the overwhelming view expressed was that both training and development are not priorities for the Welsh Government. That's a failing not just within this division, surely. That's a failing right across the whole of Government, if that view expressed overwhelmingly was a correct one.

It may well be a general failing. We track our learning and development feedback from our staff in the organisation as part of the staff surveys. Actually, that's an area that has improved over the last 10 years, and we currently have got our highest level that we've achieved in that time. We're currently, in learning and development terms, ranked as the third out of 20 UK civil service departments as well. Again, that's not to introduce any kind of complacency about this. I think there's much more that we can do. But, from a more general position, we've really targeted learning and development as part of the staff survey work over the last three years in particular, and I think we are seeing a response and a reward from that from the way in which our staff are responding as well. So, I'm happy to outline some of the measures that we've taken. But it's a very active area for us to continue to support the learning and development of the organisation as well.

The report referred to burn-out, stress levels among staff, and it specifically referred to a long-hours culture, not helped by back-to-back meetings and excessive screen time. Do you accept that that is a valid criticism? It was also referred to by Owain Lloyd, the former director of education of the Welsh Government who left to go to local government—he said in that podcast that I referred to earlier—that it was partly because of people contacting him. Your Microsoft Teams or whatever you use says you're online, and then people think, ‘Oh, I'll just pop another meeting in.’ Do you accept the criticism that your staff have expressed in this report, and others? And what are you doing about it? 

I absolutely accept the concerns about workload and the pressures that our staff are under in the organisation. The fact that we worked with our unions to produce a health, safety and well-being strategy was absolutely focused on actions that would take place in that.

I think the ‘always on’ culture that is described there emerged for probably different reasons. In the pandemic response, there was, of course, an enormous switch in the way in which staff were working, in terms of remote working on the one hand, but, at the same time, knowing that we were putting in all of the hours that were necessary. And I am concerned that, as we came out of the pandemic response, some of that has become a learnt behaviour for the organisation, and I think we need to help staff to be able to switch that off, appropriately so. You'll have seen in our corporate risk register that we've actually retained our concerns for our well-being of staff as a very high risk for the organisation as well, because we do need to call it out and do something about that as well. And it's why, in terms of right-sizing the organisation, what we're trying to make sure is that we don't just enhance and exacerbate those pressures as well. So, I do accept those concerns, but I also think that we are making progress on what we can do about that, and the manner and the ways in which we work are things that I think are within our gift to change.

Can I just comment? We've only got 33 minutes left and we're barely a third of the way through our anticipated questions, so, please, if everybody could be as concise as possible. 

Difficult issues and complex ones to go over in such a short time. But, look, one of the other issues that was covered extensively, both by Ministers and former civil servants, in the podcast that I referred to was the issue of a need for cultural change and to create a more nimble civil service. There's a sense that was conveyed that the civil service at the moment seems more set up to create reasons and obstacles why you can't do something, rather than finding a way of making them happen. I'm paraphrasing, but I don't think I'm misrepresenting what was said. The National School of Government was meant to be one of the solutions to this, to create a less risk-averse, more entrepreneurial and more nimble civil service, and yet, a bit like One Wales public service, the idea has been there, and the idea has been around for 20 years as well. Where's the progress?

Well, just to comment on the general position of how we are more agile, again, I accept that there is more that we can do to be flexible. I think there is a need for us to genuinely look at whether the things that we're tackling as the Welsh Government are the immediate issues that reflect our functions right now, rather than the whole journey of devolution over 25 years or so. We do need to keep revisiting that.

We've taken on an awful lot more responsibilities, from law making to extra responsibilities after the EU exit, so we have accommodated quite a significant degree of change over that time. But I also think that we have gone through some very extraordinary times, showing the agility of the civil service. Whilst the pandemic goes into the background somewhat, 80 per cent of our staff during the pandemic were actually geared to the pandemic response itself, which is a really significant way of flexing the organisation. We've had examples that we've needed to step into in a very different way. The Ukraine response that we put in required agility, the enhancement of legislation. We accommodated co-operation agreement principles in ways of working that I think showed agility as well. But I think there's a danger of feeling that the civil service remains as fixed points. So, absolutely, we do need to change. I think the Senedd reform happening around us and the way in which the Senedd itself will be composed differently is going to require us to change also, and we do need to step forward, I think, in a different way. Tim.

It was very clearly demonstrated when we had our Welsh Government awards just a few months back the level of things that are delivered and the great creativity and agility that does go on, but at the same time recognition that there is a lot more we can do. And if you look again at the priorities that we've set within Welsh Government for 2025, for this year, they're around improving our processes, our data, our systems. They're also, then, around a culture of continuous improvement, and also looking at things like how we can drive more efficiency, looking at our governance to make sure it's appropriate and risk based, and also, actually, where we can increase empowerment for our leaders and our teams. So, there's more we can do, without a doubt, and that's why they're very much within the priorities that we're setting for this year. But let's not forget there's an awful lot of really great stuff that does get delivered day in, day out.

Dom, do you just want to pick up the decline and why that happened, but perhaps you can also update the Member on where we think our current profiles are within the organisation? Thank you.

Yes. So, moving from one system to another has resulted in data sets not being directly comparable. However, the data set on our new system, as of the year in question, identified that, of our workforce, 60 per cent of our colleagues have some proficiency in reading, between 50 per cent and 60 per cent have an understanding of Welsh, 51 per cent have the ability to speak a degree of Welsh. And when we look at fluency, about 25 per cent of our staff express a degree of fluency in Welsh language skills, so they are comfortable to undertake most if not all of their duties in Welsh. That's approximately 1,480 staff.

We have seen over the last year a significant increase in our Welsh language training ability as well. We've seen a significant uptake in the Welsh language support and development that we've put in place and, indeed, across the senior civil service in Welsh Government we have some very positive numbers there in terms of the individuals undertaking Welsh language lessons. Indeed—

If I could interject, the question was about data, not what the data says, but concern that the new HR system generated a decline in data held. Can you address that? 

Yes. So, the new HR system Pobl data does have the capacity now to hold the data set that we require and the data that I've just provided to the committee is held on Pobl. So, that's live data that we've got on the Pobl system. As we migrated to the new system, there was a challenge in compatibility around data sets in the same way as when we gave evidence to the committee about appointments elsewhere within the public sector. There was a challenge converting to the new recruitment system. Now that we are on a common platform and now that we've got a single system through Cais, which is recruitment, and through Pobl, which is our HR system, we are now able to capture the data in a much cleaner set, which is why I'm able to come to committee today to say, 'These are the data sets that we hold.'

Dom, do you just want to pick up that as well, including the criteria for the role?

Yes. So, my understanding of the role is that it was a 'desirable' criteria. I helped to shortlist that particular role, although I'm not on the final role, because I believe the interviews took place whilst I was elsewhere. There's always a desire to try and balance the market, and where the market is at the moment, with trying to find the key skills and talent that's required. Whenever we come together, including as a panel, to look at the job descriptions, we try to understand how successful are we going to be if we were to seek particular skills in a particular area. I note, for example, a job that went out at the same time—the director of culture—that was a Welsh language essential criteria role. We do make it clear in our adverts, and through the recruitment process, when we look at jobs, what the criteria is. It's always a delicate balance, but, on that occasion, for the director of education role, it was determined that it would be a 'desirable' characteristic, albeit one that, as we were testing the market, we would look to try and see if we were able to secure candidates who had those Welsh language skills. We were also clear, I think, to candidates that there's an expectation that anybody stepping into that role would be required to undertake Welsh language lessons, and to make sure that they can demonstrate some proficiency over a certain period of time.

And also, just on the structures, the structures that we put in place are a decision that we make on the civil service side, to try to align, where possible, to ministerial portfolios and responsibilities. So, that decision to separate off and to ingrain the Welsh language leadership alongside culture—that was a decision that was made about civil service structures, and it ties into the director general arrangements in place. The director general is a first-language Welsh speaker.

We will have to move on, because colleagues have questions themselves. But just one final question in this section: is the director general of health and social services now working part-time? If so, what are the hours, and how was that decision reached?

No. The director general for health and social services, the NHS Wales chief executive, works full-time.

It's just that the pay policy statement for 2024 indicates a part-time salary band for that director general.

Without going into an individual's circumstances, Judith switched over to the civil service from an NHS role to be on the Welsh Government books. So, I think it's just part of that transition. But she works full-time in her role.

On a Welsh Government salary, not an NHS salary.

She's now a Welsh Government civil servant, rather than an NHS secondee. So, she was transferred across to be part of Welsh Government.

Yes, that's spot on. They moved from being a secondee from a health board to a Welsh Government employee, and therefore the accounts would show that they received a Welsh Government salary for a portion of the year, not that they've moved to part-time hours.

And is she now on a civil service band?

Yes.

She's on a civil service band and is a full-time employee.

Okay. Thank you. Mike Hedges.

One comment and one question. The comment, which you may not wish to respond to, is: in the last century, people were able to update information technology systems with the data in the previous system. Do you accept that you've got an ICT problem, having listened to the answers you've given us today on this discussion? It's not difficult. Other organisations, not in the public sector, not just in the private sector, but in the voluntary sector, who have less ICT support than you do, don't seem to have problems with this.

Tim, do you want to comment on that? My experience, certainly of working in the NHS for 30 years, is that there are always transition issues when you are putting in new systems and transferring them across. They were always dealt with as part of the programme arrangements. But, Tim, you might want to comment from a Welsh Government perspective.

Yes. Certainly from my experience in a number of public sector organisations, data migration, data issues, data compatibility is one of the hardest things in terms of system changes and things like that. I think we have an excellent IT team. Going back to some of the discussion earlier, yes, there is always more you want to do, more investment you would like, but that needs to be around making the right business cases for the future. So, I think we do a really good job with the investment that we have. 

Thank you for that viewpoint. Can I just ask a question on the performance framework? What do you identify as the key areas of improvement in the year, and what's going to happen next year?

Tim, do you want to lead on that one? Thank you.

I mean, in terms of the performance framework, a number of the really positive areas that we had last year—again linked to some of the evidence we had through the people survey—some of the work, especially around our values, whether it be overall staff engagement going up again—. And as the Permanent Secretary has mentioned, we're now one of the highest performing civil service departments around the people survey. Some of the other areas around inclusion, creativity, professionalism, staff capability. We mentioned learning and development—that specific question around capability went up four points, which is really a significant increase during the year. And there are also some really important improvements around things like carbon emissions, where, if you look over the last four years, they've come down by 40 per cent,, and, again, on some of the delivery around things like the legislative programme and some of the services that we've done.

And then the second part of your question for next year, as I mentioned earlier, we've now introduced a balanced scorecard; we're now looking at 16 areas across the organisation. We've got 26 measures, we have nine targets and benchmarks, and 22 trend indicators, really looking at our in-year performance, and that's helping us to look at what are the key areas that we need to improve during the year, and then we'll need to see the results of that and how that links into the performance framework that we'll put into the accounts next year. What I would say is that the balanced scorecard is only one of the measures we use, and it's there to complement things like the regular monthly finance reporting, the annual people survey, and other data points that we have. But it's really helping us to drive performance in the organisation, as something that the sub-committee that I chair looks at, and is now doing deep dives into areas where we want to improve performance.

Thank you, Chair.

Okay. Adam Price, can I bring you back in on spending?

Dean, are you be able to pick up the financial aspects of that? I would need to come back on that question, from a personal perspective, in terms of needing to go to the director general who oversees the Development Bank of Wales. But on the financial reasons around it, we can certainly look to try and respond to that.

Very quickly, and I will have to go back into the detail of it as well, I think it was the alignment between the account that the development bank has with us, and then a misalignment. I don't think anything was stopped as a result of it. It's that reason, basically, but I'll have to come back with more detail. Sorry.

Yes, you're right, because it's an iterative process. It may be that we're not able to declare the final aspect, certainly in the 2023 report, and this will still be an ongoing process within the European oversight for audits that will still take place over many years. Maybe just to help, though, for the record, the Welsh European Funding Office has paid now all of the final claims received from beneficiaries, and it was just a week or so ago that it submitted its own final claims to the European Commission. We have claimed all of the funding earmarked for Wales, through WEFO. That means that we think there is more than enough evidence in each programme to draw down all of the funding that has been set aside for Wales in the programme that was agreed with the European Commission. Even if auditors find errors, and even if there are some corrections, we still feel that there is sufficient evidence to, in a flexible way, again ensure that all of that is claimed to date, although that is, of course, subject to the audit process. And there is evidence that WEFO is able to have in place just the wide range of outcomes and outputs that would be expected to be in place.

I think, looking back over the years, this is a huge achievement by everyone involved in the Welsh European programmes—and that's not, of course, just WEFO as part of the Welsh Government or the Welsh Government itself—I mean, for local authorities, private companies, universities and the third sector. And if we just reflect on the recent period of time, in the last 10 years or so, the enormous financial shocks that we have accommodated—the pandemic impact as well—to feel that we are able to still commit to 100 per cent of that funding is, I think, a really positive position. But you're right that the annual accounts' technicalities may not quite convey that, and I'm very happy to find an alternative way of describing that within the annual accounts preparation.

On the overall account, though, what I can say, as the Permanent Secretary just said, is that £4.5 million has been claimed down. So, basically, £2.5 million from Europe and £2 million, basically, from private and public sectors, and the Welsh Government. So, the full five programmes have been utilised to the maximum degree, so everything has been claimed for.

Certainly on the ongoing monitoring around how businesses were supported through COVID, we've not yet completed all of those—that's why it's not reflected in the annual accounts. Certainly, on the tests of concerns of fraud or error rates, they've been maintained at the lowest levels. Just again to say that even whilst we were under scrutiny before, we were reporting levels that were below 1 per cent. Comparatively, England was reporting about an 8 per cent level, and I think Scotland at around 6 per cent, but that was in part because of the way in which we established those schemes in the first place. So, all of the post-completion monitoring is not yet finished, but everything is indicating to us that we've got a similar level of very low error that has been reported as well. I'm happy to provide a note, Chair, as those things are updated, but hopefully, as we come into the next set of accounts, we'll be able to be clearer anyway on it, because it's still been ongoing.

Thank you. If you could also provide a note addressing whether you've carried out any work in that context regarding the business grants—the COVID business grants—regarding the differential way the discretionary local authority powers were exercised. I know, just in my area, some were very permissive, but not fraudulent; others were extremely restrictive and even denied that they had discretionary powers, and that would have been reflected in the numbers of grants, presumably, awarded. So, I don't know if you've done any work on that, but if you have, I'd be grateful if you could address that subsequently.

We certainly can look at that as well. But in our experience, this is a very low level of error and potential fraud being reported, and we've not had to pursue anything, really, of significance in that environment, but, yes, happy to come back with that clarification as well, Chair.

Thank you. Mike Hedges, please.

I'd be happy for these questions to be answered in writing, Chair, if you are. 

Okay, thank you. If there's time at the end, I'll bring you back in. Tom Giffard. 

Thank you very much. In the accounts, you set out an overview of your corporate risk register, which showed seven new risks added in-year.  You explain why one of these has already been removed, but do not explain any narrative to explain the nature of the other six risks, two of which have been classified as very high, critical risks. So, why have you included these new risks and how are you mitigating them?

I hope, as Members look at the way in which this year's annual accounts have changed from previous years, we have tried to help the understanding by putting in more information on the risk side, irrespective of some of the technicalities and the way in which we'll look at it in Welsh Government, just to try to help with some of that understanding. I accept, though, it's still limited in terms of what it's describing, so maybe I'll just run through those areas that were highlighted. We had added in, for example, some concerns about the future of public transport as a risk, which the label may not really reveal what that was all about, but this was a concern about the reduced fare revenues that had happened in having the experience of reduced use of public transport after COVID-19. This had led to additional financial pressures, actually, right across the sector, and there wasn't really a way of mitigating that at this stage. But we removed that one in January of this year because the risk, really, had been mitigated as passenger levels have increased, and have recovered, basically, to that previous position.

So, hopefully it shows that, within the risk register, it is dynamic—it's not just something that's there forever; we actually do work our way through some of these issues. We'd introduced some concerns on health and safety on behalf of the organisation. I think this reflects some of the feelings in the environment in which we had produced the health, safety and well-being strategy for the organisation. I think it also allows us to highlight some of those ongoing concerns about well-being that we've already covered in the earlier part of this session. And I still think we need to, with confidence, show that we can bring down the risk score associated with that. So, that's why that was added.

We had introduced one area around climate change, which was a concern about whether we're going to meet our statutory targets. We're making good progress, I think, on the next set of net-zero carbon expectations. But for us to move to the next stage of net-zero carbon budget 3 targets, it’s going to require another step change in our performance. But as Tim was reporting earlier, even some of our progress internally, as Welsh Government, on our own facilities, we've been able to show a good reduction as well.

Perhaps I don't need to go into all of them, necessarily, but on maybe two of the residual ones, emergency response was added just because of concerns about ongoing resilience responses. If we go back 10 years or so, Welsh Government would be waiting for a major-incident-type response on a very rare basis, and we would know the specific number of days that our co-ordinating centre would be put in place. But whether it's as a result of the pandemic or it's just events that we're responding to, there's just a far higher level of ongoing response around resilience matters from a Welsh Government perspective. And again the concern about whether we've got the capacity and the resilience in place to discharge that.

And the final one was just a concern around constitutional matters, because the process of landing legislative consent motion mechanisms on the floor of the Senedd, albeit steered through Welsh Government mechanisms—a concern that we were just seeing breaches of the Sewel convention, and just that that is a concern about the underpinning constitutional principles as well. And that's why that one was added back in April 2023.

I think, traditionally, Chair, we have reported quite a summarised list, but this time we were deliberately trying to show where the new areas had been dropped in, just so that it would give a bit more colour to Members as they were reading the document.

Thank you. You mentioned at the beginning that you felt there's improvement in these accounta, but there were areas, perhaps, where this could be improved. Could I assume that this is an area that could, perhaps, be made clearer in future?

Yes, we'll be interested in the feedback from Members on this, and sometimes it's worth to compare and contrast, because I feel it's a very different report now from five years ago, for example. But this still isn't giving all of the information available. There are still some outstanding limitations. We've tried to put more in, but still retaining some confidentiality around internal audit, for example. That's mainly to protect the purpose of internal audits. There are governing principles around retaining confidentiality, but the reason for us using internal audit is not just to give us a clean bill of health on our corporate systems, for example, but it's actually to go looking for problems that we need to do something about. And what I would say is I hope that you will see that there's been an improvement in the internal audit description. But I think, ultimately, we'd still need to hold back on some of that just to protect some of the confidentiality in the organisation, otherwise it's not discharging its purpose.

And finally, on risk, how has that changed, both in the presentation and implementation of policy around risk as a result of the recommendations of module 1 of the COVID inquiry?

Yes, we've introduced a number of changes. Firstly, from an organisational perspective, I have to say we spent an awful lot of time on the risk register over the last couple of years, not just the industry of it, but actually making sure that we are triggering responses and actions and the agenda of Welsh Government itself. So, we use the corporate risk registers as a way of overseeing the performance of the organisation, although it's not necessarily about overseeing areas that Ministers will be responsible for. But we have also introduced a specific area that you might have seen highlighted, which was that we produced a version of a Welsh risk register that's been put into the public domain. It will always have some limitations. There are some areas that will be more confidential, but I think it allows the public to have a wider understanding of the types of pressures that can be faced by Welsh Government, by public services, and actually by communities themselves. So, that is a very significant and visible change as a result of the module 1 recommendations.

Thank you. In the accounts, you mentioned a data breach in the new HR system, Pobl. What happened and what have you learned from it to ensure systems don't go live without appropriate support and understanding of the impact of the customisations that are made during development?

Okay, thank you. Dom, you might want to deal with the specifics of Pobl as the workforce system. But, Tim, you might want to pick that up on, generally, lessons learned. So, Dom first.

Yes, thank you. So, we were migrating to Pobl. We were seeking to adapt the 'select nationality' criteria on the system to enable colleagues to self-identify their nationality. In doing so, we identified that there was an element of adaptation that perhaps our supplier hadn’t foreseen, and, as a result, it created a situation where, unknowingly, some line managers were able to view data that they shouldn’t have been able to view. I’m assured that at no point was data, such as protected characteristics, viewable. However, there would have been elements that should not have been viewable that were viewable.

As a result of that data breach, we undertook an immediate review, led by our chief security officer, who highlighted a number of recommendations on how we could improve the robustness of the system. The core lesson, if I’m absolutely frank with the committee, is one around being clear about adopting, not adapting, systems. And I think there was a lesson for us in seeking to adapt something that perhaps we didn’t need to adapt, albeit we were doing so for good reason and with the cleanest of intent.

Of the recommendations—I think there were 18 recommendations in total—14 have concluded, one is in progress, and three are currently being reviewed at the moment, whilst we look at the level of service supply around that particular system. We’ve recently made a decision to recruit some additional developers to help us with the system build to make sure that we can continue to get Pobl into the space where we’d like it to be, and moving that in-house gives us a greater degree of control over how we can manage some of these situations going forward rather than working in partnership with key partners.

So, it was a data breach. We did report it in the usual way. However, I think we have learnt lessons from that. There is a clear report. We have implemented the report, and are about to finish, as I say, implementing the final recommendations, and I think we’ve learnt some valuable lessons as we move forward and look at what the future holds in terms of our corporate systems as well.

It’s important not to deal with it in isolation, but perhaps Tim can just pick up on the general learning, then, for other systems.

Yes, and, just to be clear, this was not an error that was there when we introduced the system—this is an error that came in through the change that we made to the system, and all the testing that then needs to go on when you do make a change. And what it did reveal was that, actually, some of our change processes weren’t as robust as they need to be. So, we have completely reviewed those. I was chairing weekly meetings to make sure that we resolved the issue.

We’ve now also done some structural change, where we had a separate team dealing with the changes linked to some of the HR systems. We’ve now incorporated that into our core IT team, which gives us greater resilience, but also greater control around the standardisation of processes from the change-control perspective.

So, yes, we took all the right steps. We closed the system down as soon as we knew about the problem. We reported it to the Information Commissioner's Office—they’ve taken no further action, because they were quite happy with the steps that we took. Although there was a risk that people could have seen data they shouldn’t have, there was no release of any personal data, and they were happy with all the steps that were taken, and we’ve now put a much more robust system in place, including structural and team changes.

I’m going to move on to arm’s-length bodies very quickly, and acknowledging that it may be ongoing, what can you tell us about His Majesty's Revenue and Customs's investigations into Natural Resources Wales’s treatment of off-payroll engagements?

Obviously, there have been a couple of public statements that have been made by Ministers on the arrangements here, and it remains a matter, fundamentally, which is between Natural Resources Wales and HMRC. And we just need to respect the confidentiality of those ongoing situations.

Of course we were made aware of the potential for this concern by NRW. And you’ll be aware that, back in March 2024, mainly to ensure that there was going to be budget cover, there were arrangements that were put in place by the Cabinet Secretary at the time, just to allow that to be available whilst negotiations were taking place between NRW and HMRC. So, at the moment, those outcomes are a matter between those two organisations, but the budget provision is there if needed, and we’ll just need to make sure that we track that into the annual accounts, when appropriate, into the future.

Okay. And what lessons have you learnt about how that came about, and what assessment have you made about related risks to other arm’s-length bodies?

We always need to look at these individual issues. Again, if I could just emphasise, in the first part, that it still remains a matter fo the individual organisation, because it’s corporately responsible for its own actions et cetera. It means that we need to ensure that we learn about the oversight mechanisms for a range of different organisations. We have a range of sponsorship arrangements in place, from direct line management of the NHS, for example, right through to areas that are definitely very significantly at arm's length, for deliberate function and purpose, like the Welsh Revenue Authority, for example, which acts more independently of Welsh Government, of course, in terms of its areas. But this was quite a unique set of circumstances around IR35 and tax areas, and, to some extent, most organisations in Wales had already worked through those choices and issues. So, we've made sure we're mindful to keep an eye out for it, but I'd be very surprised if any others emerged at this stage. But I'm not sighted on any concerns, certainly.

Mike Hedges.

But NRW are a wholly owned subsidiary of Welsh Government, aren't they, and if they were fined £1 billion, they would not have the financial resources to fulfil it, and that would then fall on the Welsh Government, and they're part of the Welsh Government's consolidated accounts.

Well, it's true that they're part of the accounts, but they are still a statutory organisation discharging their own responsibilities, and have to be responsible for it. But you're right, if there was an adverse impact, it would need to shuffle into the accounts more generally. I've just said that the Cabinet Secretary had made provision for budget cover, just to allow the organisation to do the right thing in any negotiations, so, I agree that there is obviously a knock-on effect.

Okay. And then finally on Amgueddfa Cymru, during the scrutiny of Amgueddfa Cymru's 2021-22 accounts, the chief executive confirmed that there was a risk of the public being denied access to its buildings, on the grounds of health and safety. We note it closed on 2 February and reopened on 7 February. What can you tell us about this?

I think the Minister put out a public statement, as I recall. It was a 48-hour period where they just had to make sure that some repairs were done to, I think, one of their roof areas. I would obviously understand that there may well have been concerns that this was going to be a protracted issue, because of some of the other experiences that we've had with public buildings, but, actually, within a 48-hour period, it was put right, and the building, I think, opened on the Wednesday of that week, having closed. I'd have to recall the ministerial statement that was made at the time, I'm afraid.

Well, it was a statement to the committee by the chief executive of the museum. Based upon what we were then told, do you believe, therefore, they were correct to flag this up and there's an ongoing risk, or that this should be seen as an isolated incident?

I think, with all of our public bodies and the buildings that they're overseeing, they will all have their own challenges, and there are investments that may need to be made across Wales, through ministerial choices. I think the sponsoring teams are liaising with them. Certainly, the two years that we've been through, where the funding has not been available to do everything that Ministers wanted, has been a problem, but I do think the ongoing conversations mean that we are supporting some of those risk choices that the organisations are taking. I'm probably in great danger of going into an area that I'm probably less sighted on in my day-to-day oversight of the organisation, but if there are any particular questions, I'm happy to come back on it.

Okay, thank you. One final question—and there's a lot more we would have liked to ask you—but, referring, again, to the past, when the then Permanent Secretary told our predecessor committee, in January 2019, that the Welsh Government had guaranteed arrangements in place for three projects, including Aston Martin; the other two being loan guarantees expected to be removed from contingent liabilities no later than July last year. Therefore, is this reflected in the contingent liabilities reported in your 2023-24 accounts?

Maybe if Dean can just pick up on the reporting aspect of where it's located. But just reflecting back on that, I think, as we recall, this may have been a matter that the Permanent Secretary also spoke in private to the committee on or, certainly, came back in more private correspondence. The guarantees will tend to relate to areas of commercial sensitivity, so, if you'll allow me to not go into particular detail on it. But I think the extent of two areas where this would have been used, one of the guarantees has been extinguished within the time frame, so no longer applies, and that might need to translate or not into the annual accounts, therefore. And the second one has been extended. So, actually, I think, at the moment, that extension would run until 2027, so again would just need to continue to feature, I think, in the annual accounts. Whether it's in the contingent liabilities or not would be Dean's area.

All right. So, it's still in the contingent liabilities, as Andrew said—only two, because one of them has come to an end, and there was no call on that guarantee as well.

Thank you. Have you got two minutes for us to go back on the question Mike Hedges missed?

Of course.

Do you want to ask that question?

No. I think it's too long, Chair.

Well, we'll put it in writing.

Put it in writing, it's easier.

Okay. Well, we will write to you with the questions we weren't able to fit in today. Otherwise, I confirm that we've brought the questions for today to a conclusion. Thank you for attending. As you will be aware, a draft of today's proceedings will be sent to you for your consideration before publication. So, thank you for attending, and have a safe journey back to whichever office you may be returning to.

Okay.

So, I propose, Members, that in accordance with Standing Order 17.42(ix), the committee resolves to meet in private for the remainder of today's meeting. Are all Members content?

Content. 

I can see that Members are content. I would be grateful if we could go into private session.