Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd
Economy, Infrastructure and Skills Committee - Fifth Senedd
07/06/2018Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
Bethan Sayed | yn dirprwyo ar ran Adam Price |
substitute for Adam Price | |
David J. Rowlands | |
Hefin David | |
Joyce Watson | |
Lee Waters | |
Mark Isherwood | |
Russell George | Cadeirydd y Pwyllgor |
Committee Chair | |
Vikki Howells | |
Y rhai eraill a oedd yn bresennol
Others in Attendance
Dr Rachel Garside-Jones | Is-adran Polisi Sgiliau ac Ymgysylltu Ieuenctid, Llywodraeth Cymru |
Skills Policy and Youth Engagement Division, Welsh Government | |
Eluned Morgan | Gweinidog y Gymraeg a Dysgu Gydol Oes |
Minister for Welsh Language and Lifelong Learning | |
James Davies | Diwydiant Cymru, Llywodraeth Cymru |
Industry Wales, Welsh Government | |
John Lloyd Jones | Yr ymgeisydd a ffefrir ar gyfer Cadeirydd Comisiwn Seilwaith Cenedlaethol Cymru |
Preferred candidate for the Chair of the National Infrastructure Commission for Wales | |
Ken Skates | Ysgrifennydd y Cabinet dros yr Economi a Thrafnidiaeth |
Cabinet Secretary for Economy and Transport | |
Mick McGuire | Cyfarwyddwr, Busnesau a Rhanbarthau, Llywodraeth Cymru |
Director, Business and Regions, Welsh Government |
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
Ben Stokes | Ymchwilydd |
Researcher | |
Gareth Price | Clerc |
Clerk | |
Joe Champion | Ymchwilydd |
Researcher | |
Robert Lloyd-Williams | Dirprwy Glerc |
Deputy Clerk |
Cynnwys
Contents
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Dechreuodd y cyfarfod am 09:17.
The meeting began at 09:17.
Croeso, bawb, i'r Pwyllgor Economi, Seilwaith a Sgiliau.
Welcome, everyone, to the Economy, Infrastructure and Skills Committee.
I'd like to welcome the Minister to the meeting this morning. If I could just go through some items first. Item 1: we have had apologies from Adam Price and our substitute this morning is Bethan Sayed. I'd like to welcome Bethan to committee this morning. And I would like to say that this is the last session, as I move to item—. Are there any declarations of interest? There are none.
I move to item 2 and I'd like to welcome the Minister, Eluned Morgan, with regard to our last session on automation and the Welsh economy. Eluned, I would like to ask you if you would like to introduce your colleague for the public record.
This is Rachel Garside-Jones, who is the director responsible for employability and skills.
Lovely. Have you got any opening comments or thoughts?
Just that I'm really grateful that the committee is taking such an interest in this really important area. I think it is an area that we do need to focus on; it's an area that's moving very, very quickly so that we, in Welsh Government, I think, need to respond very quickly. We are putting some measures in place to deal with that response and I'm sure we can go through some of those in the next hour or so.
Is the Government prepared for the effects of automation on the workforce?
Well, are we prepared? I think it would be fair to say that we're not prepared yet, but there are measures being put in place to prepare for those changes. So, I think we need to understand, first of all, the scale of the issue and the problem and I think that, to begin with, is quite difficult to quantify. You've got some estimates by people like Mark Carney in the Bank of England suggesting that maybe even about 700,000 jobs in Wales could be impacted, but then that's certainly not the kind of estimate that somebody like Professor Phil Brown, who is, of course, leading for us on this automation agenda, would subscribe to. So, there's a range of views in terms of how broad the impact will be. What we're trying to do is to understand the pace and scale of change, and I think part of that will be about when employers determine when and how and if they are going to adopt these new technologies, and that obviously will make an impact on how sudden those changes are. The key thing in relation to skills and employability is that you've got to get the timing right, and so we do need to get some measures in place to make sure that we are reforming aspects of the curriculum, that we are preparing people for the jobs, but I think there needs to be an understanding—I think there's an increasing understanding—that when people in future will probably have to change jobs up to 12 times in their lifetime, there will be a need to have much more lifelong learning. I think that's a growing recognition now within Government.
Thank you, Minister. Are you happy, also, because we've got limited time this morning, if Members think they're not quite getting to the point, to be interrupted?
Yes, sure.
Thank you very much. We'll come to Lee Waters and then to Joyce Watson.
Can I just clarify: did I hear you say that Professor Phillip Brown doesn't agree with Mark Carney about the impact? Because you're right, there is a range, but there's a fair degree of consistency on the impacts being around the 30 per cent mark of all jobs, so does Phil Brown not think that?
Well, I think it's because it's not a hard figure—. Because there will be examples where, for example, and I've been speaking to some of the big companies in Wales about how this will impact on them, and they're telling me—. For example, you've heard about this Google Voice and the way that people can adapt to—it's unbelievable now, it sounds like somebody is answering the phone and it's actually a machine that's speaking to you. What's interesting is that anywhere where you have a consistent change and you have a repetitive process is easier to be automated, but what will happen—what's more likely to happen and what is happening in some companies is that, actually, those people who were previously doing those jobs are being upskilled and upgraded, and they're doing different jobs. So, those jobs are not necessarily going, but they are doing more sophisticated jobs that need more skill and more upskilling. So—
Well, up to a point. That is happening in some cases and it's not happening in some cases—you know, the Tesco call centre going from Cardiff, arguably, Virgin too, because those jobs are just disappearing—
Absolutely, so the scale is—
You're right that it's about rules, and you're right that there's a range, but I think you'd be wrong to—. Sorry, I took from your earlier remarks that Phil Brown—there's some contention within the academic community around it. There's a consensus that the destructive effect is going to be colossal, but, clearly, in granular terms, there's going to be a different picture and nuance to it, but in terms of the macro look at this, the Welsh Government does think that this is a game changer.
I think the Welsh Government is very aware that it's a game changer. It's a question of how we prepare to upskill and upgrade the workforce so that we can dissipate the changes where possible, but there will be vast examples of where jobs will go, without question.
Okay, thank you.
Joyce Watson.
Good morning, Minister. You've already identified that there is a need for continuous education provision for mature students, and we've had the Learning and Work Institute telling us that, due to the cuts that we previously made, we are going to struggle and perhaps be five years behind that curve. So, therefore, are you confident that we're now going to be able to play catch-up pretty quickly in order that the people who are currently in the workforce who will need new skills will be able to stay in the workforce?
Well, I think we've got to put our hands up and admit that austerity has meant that we've had to focus our attention within adult education on key skills, on basic skills, on digital skills as well. But I do think that there is still space for us to look at how we can make sure that people who are in jobs who need to be upskilled, who need to be prepared to perhaps change jobs—that there are opportunities to do that. One of the recommendations in the employability plan is the introduction of individual learning accounts. So, the plan is to look at where the gaps in the market are. We will then—and we're working this up with the Learning and Work Institute—look at how we can give individual credits to people so that they can upskill while in work and prepare for those changes in the jobs market as adults.
There was Government co-investment on skills implementation in previous papers, and the recognition that both parts have to contribute—the employer, who's implementing change, and the Government, who want to secure employment. How is that working out now in your opinion?
I think what's been really interesting in the past few years is that a lot of the funding we've had through the European social fund has underpinned and paid for a lot of that upskilling for employers. So, there's a dependency that has developed, I think, amongst some companies, where there's an expectation that, effectively, Government funding will be responsible for that upskilling within the workplace. We're going to have to wean companies off that understanding as Brexit kicks in.
So, if you look at just the scale of that, the European social fund has paid for over 240,000 people to be retrained in Wales. That's a huge number of people. That's equivalent to the population of Cardiff, practically. So, we simply won't have that kind of funding in future. So, there is a funding issue that we're going to have to contend with, and I do think that what we made clear again in the employability plan was that, actually, this has got to be about a partnership and understanding that, actually, employers have to sit up and also have to take their responsibilities in terms of training their own workforce seriously as well.
I agree, but if we look at the fact that it's going to be the major supermarkets that are going to lose maybe 30 per cent of their workforce through automation in the first tranche, and we've also got the apprenticeship levy available, how are we going to persuade those people who are clearly driving forward automation to their own benefit and that of their shareholder to invest in the staff that they intend to lose?
Well, I think what's interesting is that we are having quite an active and interesting discussion in particular with supermarkets, for example, where they are trying to push us constantly into helping to train people for the shop floor. We're actually trying to discourage them to an extent on some of these matters, because one of our key requirements now within Welsh Government is that we have to push up to those higher levels. So, they're looking for level 2 apprenticeship level support, and we're saying, 'No, we need to be pushing towards level 3, 4 and 5, which is where our skills gap is.' So, we are pushing people in that direction, so rather than just say, 'Actually, we are going to support you to help people on the shop floor', it's, 'We would like you, if you are going to come to us for funding, to make sure that you are upskilling them to do managerial work or whatever else', so that there are opportunities there. But sometimes I think what may happen in future is we're going to have to actually redirect people into different work opportunities, and that's something we're going to have to come to terms with.
Thank you, Minister. I'll come to Bethan Sayed and then I'll come to Vikki Howells. Bethan.
I just want to ask, because I'm new to this committee—I'm just wondering whether it is inevitable, and whether you've made any analysis as to whether it's something that has to happen, or is it something that you can take a more pragmatic view about, especially in relation to the sector Joyce is talking about? I read an article recently that the new—not that they're new anymore—the way that you pay for your shopping in many of our stores now without the cashiers there are easier ways to take advantage of the system and to potentially not pay for some of the goods that you have bought, because of the fact that there isn't that human element there. Then they're losing money by virtue of having that automation, so I'm just wondering whether you've made an assessment as to—yes, we need to do it in some areas, especially in the high-end areas, but in retail and such, is there that move to discuss whether, actually, that is really what we need?
Well, I think part of the idea of establishing this board to look at and to advise us on the impact of automation is that they will be looking into exactly where those vulnerable areas are. I think what's important is that we understand that there are opportunities for us to understand that we're not going to be able to stop this—things are going to change—but the question is: how can we prepare that population for the change? But also what's really key, and I know something that Phil Brown is anxious to look at, is how we don't just focus on the supply side and the people side of how we respond, but also on the demand side: how do we interact with business in terms of what that might look like in future as well?
Vikki Howells.
Thank you, Chair. I'd like to bring a focus on the here and now, really, because we know that Wales has already been affected by automation. Are you confident that an adult working in a job at high risk of being automated now and who wants to retrain would have the support needed to do so?
I think this is where the dialogue has to be with the employer to begin with. We have to look at to what extent it's possible to redefine that job and to upskill that job within the current workforce. But there will be examples where that is simply not possible and the job will be eliminated, and therefore there is scope for us to maybe redirect people. I think part of the first phase will be, and we've had examples in retail, for example—. We know that we have a shortage of care workers, so it may make sense for us, then, to redirect people into care work. We do know that we've got apprenticeships in those areas and that there are mechanisms to progress within those areas. That's why what's key for us is that when we are redirecting people, we have to redirect them into jobs where there is an opportunity for them to progress. Have you got anything to add, Rachel, on this?
I think in terms of apprenticeship framework, it's important that we've got that continuum, both so that they can get into work at the lower levels, but also, as you said, build up at the higher levels and provide those pathways, and that's what we're focusing on. And in terms of the review of automation, helping us really in different sectors to map some of that out—that could be really key.
So, our all-age apprenticeship offer would be a part of that, then.
It's a fundamental part of it, and, as I say, we're really pushing on this agenda of really trying to encourage those work-based learning opportunities to focus on level 3 and above. That's the key for us.
When we look at the Welsh Government's adult learning strategy, it seems to focus very heavily on basic skills and English for speakers of other languages provision. Do you think that's appropriate now, given the skills challenge caused by automation?
I think we've got to be clear that we have seen some big cuts in that area. We've had to focus our funding and we've focused it on basic skills, but digital skills are still a part of that offer as well. So, I regret the fact that we've had to make those very austere cuts in that area, but I think what's important now is that we review the situation and that we have an understanding that, actually, we will have to relook at the opportunities for lifelong learning. Part of the idea of the individual learning account is to just test the concept of whether that is possible in those areas.
And you talk about review there, and indeed the economic action plan commits to reviewing the adult learning policy and adapting the funding formula for further education as well. Would you be able to provide us with any more detail on this, for example whether you're considering investing more money into the system and what the principles behind that review are?
So, on FE in particular, I think one of the things that I've been very keen to do is to make sure that our FE sector is being much more responsive to the employment needs of various regions. So, the requirement now is that—I've set up a new, £10 million fund where we are asking further education colleges to—. They won't get access to that fund unless they are responding to the requirements of the regional skills partnerships. So, that's the first step. So, they're getting into the idea that, actually, you have to be responsive to what the needs are. The question then is to what extent we will push that further. That review is being undertaken now. I'm hoping that, by the end of the summer, we will be looking at a new funding formula that is more responsive to the requirements and needs of our economy.
Lee Waters.
In terms of the regional skills partnerships, do you feel that they have got a grasp on this agenda?
Well, I think they are still relatively in their infancy—so, we're only on about the third year of the regional skills partnerships. We are looking at—. We've had a review of the governance of the regional skills partnerships.
I think that what's been interesting with these is that, hitherto, what has happened is that we've gathered all this information and actually not much has happened as a result of them, because they were quite new. Now that we've got a funding pot that is responsive and we have indicated that—not just with this, but with work-based learning providers as well—there will be an expectation for them to respond, people are piling in to those regional skills partnerships in a way that they hadn't engaged before. They understand that there is—
Have you set an expectation on them to think about the impact of automation specifically?
I haven’t yet. I haven't yet. But I think that part of the review of the governance system is to look at that. Now, I understand that, I think, only one of the regional skills partnerships referred specifically to automation, and I think—
Does that trouble you?
Yes, I think that does trouble me. But there were different aspects. I think they all drew attention to the fact that we need to improve digital learning skills, for example, which I would include as a part of the response to automation. So, I don't think it was a void, so I don't think we should get hung up on 'the word "automation" should be in there'; I think 'digital' actually addresses some of those issues. Rachel, have you got anything to add on that?
I think you're right in terms of Cardiff capital region was the one that most specifically said, in terms of automation, digitalisation, it's going to have a huge impact, but all three of them, in terms of advanced manufacturing, outlined that unless they embrace new technologies then we won't be able to compete in future. But it was the most specific in the south-east.
I think that, through the review of automation now, over the next year, we can set the more specific objectives relating to what the review finds.
Okay. I'm not sure I wouldn't characterise that as a void, if they're only thinking about it—there's only one of them thinking about it, and thinking in terms of manufacturing. That leaves a massive gap in terms of the other things. Because, if you take this in context, in terms of the well-being reports that local authorities were required to submit under the Well-being of Future Generations (Wales) Act 2015, of the 19 reports submitted to the future generations commissioner, none identified automation as a risk or a tool for future success. So, taken together, I think there is a void, and, rather than seeing this simply in terms of governance reviews, surely the Welsh Government should be more proactively asking them to get their act together on this.
I think the labour market intelligence should be providing a base for them to work from. What's surprising to me is that it's not coming through the kind of labour market intelligence broader information that they should be working from. So, it is surprising to me that that hasn't been picked up through that broader work on which I would assume that they would base some of their work.
Therefore, left to their own devices, they're not going to grapple with this, and the Welsh Government needs to step in.
Well, I think that's certainly something that is worth pointing out to them, and I—
I'd say. Can I ask you about the employability action plan you submitted and why there wasn't anything more specific in that? Because you set five targets as part of the employability action plan. They're not SMART targets—the three of them that are specific are quite broad, so they wouldn't conform with what is normally thought of as SMART—and two of the five are simply asking people to set another set of targets. So, there are only three specific targets in there, and none of them really is related to this area. In your opening remarks, you said you don't think the Welsh Government is reacting fast enough, which I agree with. So, given the discussion we've just had about the void that there is and the inadequacy of the current labour market intelligence approach in addressing the emerging trends, why doesn't the economic action plan be more specific in trying to marshal some kind of response to this?
Because I think the first step is to make sure that we have the correct kind of information and that we do an intelligent analysis, which is why we set up the review with Professor Brown. So, I think we've got to get our ducks in line first. To start asking for something without having clarity in terms of where we want to get to, I think would have been a mistake.
But the trouble is, as you said at the beginning, this is a field that is moving very fast. We can get our ducks in line, which can take—. Phil Brown's report isn't due until January, and I dare say that'll call for more research, inevitably, as academics tend to do. So, if we're going to wait for us to have the perfect sight of what's going on, we're going to be waiting a very long time. Meanwhile, the world's going to be changing around us.
Which is why we are not waiting, which is why we have set up the individual learning accounts to respond to some of this already. So, we're preparing the way for that change, and we're preparing for a time when we think that that'll be the direction of travel. We think that there will be a need to have people retrain in adult life, but we are preparing the way for that through doing these pilot projects.
Okay, thank you.
If you want to ask the question you want and then come on to your section, David Rowlands.
Very quickly, you've mentioned the fact that obviously it's very hard to quantify the actual job losses, Eluned, and we understand that, but it's likely to be at least 10 per cent. But the 10 per cent is very likely to be in those levels around about the level 2 skills, and very many of those with regard to women, if we can talk about that. How are you going to—? Do you have any plans as to how you can get that level 2 up to level 4 or 5, which is where I suppose the other jobs will be, particularly with the restraints that some women have with their time, et cetera, for the extra learning in their adult life?
I think you're absolutely right, which is why, when we will be asking people to retrain, it will be with a view to starting out on a pathway where there is a clear line of career progression available to them. But I think you're right, we need to really build some flexibility into the system, in particular for women with childcare responsibilities, and I think we have to consider things like transport issues and how difficult it is for people to get to workplaces and how we can get those jobs that are closer to home, for some of those women in particular.
Okay, fine. I'm now moving on to an entirely different area with my questions, and it's with regard to connected automated vehicles as such. Now, I'm a little sceptical that these will come on board as quickly as they're saying, because there's huge public scepticism with regard to these vehicles at the moment. What assessment has the Welsh Government made of the impact of panel of experts on CAV on employment in sectors such as freight and public transport? Obviously, if they have automated vehicles, drivers and that are going to lose their jobs. So, is there a need to prepare reskilling and redeployment for that particular sector?
I think this touches a little bit on Ken Skates's area in relation to transport itself, but I do take the point on board that, if we go in this direction, then we do need to think about the impact on skills. I think one of the things that we're doing is to look at the apprenticeship frameworks and the transferability of the pathways within those frameworks, so there's an opportunity for us to redirect those apprenticeships without creating brand new electric vehicle apprenticeships or whatever. So, I think that's an area. Is there anything you'd like to add to that, Rachel?
No, only our direct working with employers. I think the timing's key for trying to map out what are the skills needs and getting to that proof of concept and then working directly with those employers in terms of their readiness. That's our key next step.
Do you think there are enough skills within the Welsh sector to encompass the changes that are going to come about?
Well, it's quite interesting, I've visited a lot of further education colleges in the past few months, and they always take me to show me where cars are refurbished and whatever, and I look at these cars and think, 'You're not going to be working on cars like this in 10 years' time'. It's very interesting. I always ask, 'Right, where is your EV car? What does this look like? Are you preparing people for the change that's coming?' Now, let's not forget that there will be the kind of combustion engines that we are all using now on the market for a long time. We're all going to have to get them fixed, so that's where the bulk of the work will be for a long time. But—. So, that question is a question that is being answered. So, in Gwent College, for example, on Monday—. They are working now on electric vehicle models, so that preparation is starting to happen.
But I think that there are broader issues around this. Certainly, when I was doing work in trying to develop a rural development plan, I really got into this area of: are there opportunities for electric vehicles, particularly in rural areas, where public transport is difficult and expensive? Are there opportunities for us to use a more flexible form of transport? I spoke to Tesla on quite a few occasions and tried to get them to put in charging posts around rural Wales, for example. What was interesting, speaking to them, was, you know—. They were saying, for example, that one of the things you need with autonomous vehicles is that you need white lines at the side of the roads—and, actually, you don't have those a lot in rural areas—because they need to be reading the roads. So, if we are going to go down this route, we need to make sure that local authorities have the budgets available to make sure, in those rural areas, that those white lines are painted, for example. So, there are a lot of things that we perhaps haven't thought about but that we need to be thinking about as well, in terms of how these vehicles work in practice and what you need to put in place to make them effective.
You spoke earlier on about weaning the bigger businesses off funding from the Welsh Government in order to upskill their workforce, and I perfectly agree with you on that. It's time that they took a part of that. But do you have a strategy for making sure that these companies now that are in the automotive business are ready to upskill, to make sure that the skills are there for this new technology?
So, I've started now on a round of discussions, starting with some of the anchor companies, with the broader employability agenda in mind, just asking them, 'Look, what can you do for us in relation, for example, to helping getting disabled people into work? What can you do for us in terms of helping to get the economically inactive into work?' So, those conversations are quite interesting, but they also are aware, and that's an issue that I discussed with them—'How are you preparing your workforce for the future?' That's why—you know, some of the conversations I've had have been quite interesting and not as negative as I expected. They are not looking to lay off people in some call centres, for example, as I was concerned that they might, because what their plan is is to upskill those people so that they can take more sophisticated, complex phone calls. It's a different world from the basic skills that you would expect, that perhaps have been the case in some of the call centres in the past.
Minister, what action has the Welsh Government taken to upskill the farming sector? I'm particularly thinking about precision agriculture.
Well, I think there's probably a lot of work to do in relation to precision agriculture. I've asked my officials to look at what specifically we can be doing in relation to rural skills, and I am hoping that we're going to come up with a proposal in the next few weeks on that area.
Is that something that you have discussed with the Cabinet Secretary for Energy and Rural Affairs?
Not in detail, but that discussion is something that, in the next few weeks—. As I say, we've got a plan to come up with some proposals for rural skills development.
Lee Waters on this point.
Can I say that I think that the key point here is not just in terms of the application in rural areas on farms, which is the response we've had from the Welsh Government—traditionally, officials want to think about this as a farm technique—it's also about how we can develop skills to develop the software, develop the robots ourselves, so we create the industry here rather than importing it from China and America? And that's where the Welsh Government seems to be blind on this.
I'll take that on board. Thank you for that; I think that's really useful. One of the biggest problems that I think we have in relation to that is making sure that, for all of these things in rural areas, what you need in relation to digital technology is you need some good coverage, in terms of 5G and in terms of broadband technology, and then I think we've got to appreciate that there are still gaps in some areas. So, that is a problem that we have to address as well. We're on it, but it takes time.
Bethan Sayed.
What I found quite worrying to read was about the policy statement on skills from 2014 and the fact that this was supposed to be a 10-year strategy. But the plan expired in 2017 and has been removed from the Welsh Government website. There was supposed to be some sort of review and evaluation to be conducted in October 2017, but as far as we understand, that hasn't been publicised anywhere. I'm just wondering if you can shed some light on this and what's happened to it, and whether you can tell us whether the employability plan actually supersedes it. It seems odd to me that you'd have a 10-year plan on one thing and then introduce something else with another 10-year plan without finalising the first 10-year plan. So, I just wanted to understand where you were coming from.
If you look at some of the points that were in that plan, they have actually been implemented, they've been delivered. So, a move towards more regional skills, the need for more intelligence in relation to what the regional demand is, so we set up the regional skills partnerships. So, a lot of the work has been implemented and has been superseded. I think, if I'd have come here and said, 'We're just going to carry that plan on', then you'd have said, 'Well, hang on, what about digital? What about automation?', so we have had to update the plan.
But the fact is, you haven't given us any evaluation. You've said you've done some of those things, but we've not seen an evaluation of any of that work.
A lot of the schemes involved in that were funded by European social fund work, and those are available. So, the assessments of a lot of those schemes are available and I can make sure that you get a view of those schemes, if that would be useful to you.
But can you just tell us whether that's defunct now and whether the employability plan is the new skills policy agenda? Because, of course, we don't want to pursue one line of questioning if that doesn't prove to be worth while.
I think, in developing the new employability plan, we took account of what was in that skills programme before, took up the bits that, perhaps, hadn't been implemented to the extent that they should have been, and drove them forward, but added the fact that, actually, we need to adapt to what you have recognised is a very, very fast-changing environment.
I don't want to probe it too much, but I think it is worrying if you make these announcements and then nothing seems to follow through. There's an expectation that there would be an evaluation, there's an expectation that there would be follow through. You mention that there is individual analysis, but that's not what you committed to in 2014. So, if you could send us more information on that, it would be helpful, because if we're going to have trust in a new employability plan, what's to say that, in another three years, you won't decide to scrap this employability plan and start something new, and then say to us, 'Well, we decided we needed to do that'? We've got to be able to see the data and the analysis to know why you've done that, and at the moment I don't feel qualified to be able to—.
Okay. Well, do you want to—?
Yes. I'm happy to pull that together, because all the individual employability and skills programmes outlined in that will have evaluations. So, if we can pull some of that together and show you that they have been evaluated. I think the key four themes in the policy statement—on jobs and growth, local needs, skills that employers need, skills for employment—have all been continued as key themes in the employability plan. But as the Minister said, the key things, the big challenges that weren't there at the time, in terms of Brexit, automation and decarbonisation, we've had to flex and look at that in order to adapt some of that so the key themes are continued. But in terms of evaluations of different programmes, we can pull some of that together to show you how they have been evaluated.
Okay, thanks.
I've got two Members with two quick questions. Lee Waters.
Just in terms of the higher skills, the chief economist at PricewaterhouseCoopers made the argument, which was endorsed by the vice-chancellor of Swansea University in his evidence, that we should also be looking at the postdoctoral level and the doctoral level, because there aren't enough PhDs in machine learning and in automation being funded. There is a huge skills gap at the top end, and that supply just simply isn't coming through. So, I'm not sure if you've looked at that, but I think there's a strong case in looking at that to see if we can tie in some reciprocal agreement that, in return for funding, those people stay within the Welsh public sector or within Wales, because there's a huge international market for these people; they could easily be snapped up by overseas. There's a real opportunity for the Welsh higher education sector to be involved here. I'm not sure if you've thought of that, but if you haven't, would you?
I haven't thought about that, and I think it's a really good point, and maybe we could look into that. Is that okay?
Thank you.
David Rowlands.
I just want to return to Bethan's question. It does seem as if that statement has fallen into a black hole, and then you've picked another one up and taken off with it. I'm absolutely certain, as you said, Eluned, that there were many things achieved under that. Wouldn't it be just a good idea to round it all up and let us know exactly where you feel that ended and the achievements in it? And then, obviously, you're absolutely right; you had to move on and things have changed. But just to give us a round-up of where you feel that you've achieved things—or maybe not achieved them.
No, I think that's fair enough, David, and there are things where we haven't achieved, which is why we've rolled them into the next programme. So, we will get something to you on that.
Okay, thank you.
Minister, can I thank you for your time this morning, and Rachel? We're very grateful. Thank you very much.
Diolch.
Whilst we're just waiting for the Cabinet Secretary, can I just—? We may as well just move to item 4, and there are a number of papers to note. There's one that does need an action; we've got a letter from the Petitions Committee, who've written to us. The Chair of the committee, David Rowlands, has written to me and the committee and asked about action in regard to Carno station. Can I suggest that I write to the Cabinet Secretary and ask about how the new franchise enables campaigners to campaign for new stations? Is the committee happy and content with that?
I think the point they're making, Chair, is that overall they've taken away funding for stations out of the budget, and that therefore means that the Carno station is not going to go forward. I think that's the whole—. They wanted to know whether we could have them in and ask exactly what's happening to the funding for stations. I think that Ken, in all fairness, has covered that to a certain extent with regard to the franchise and that, but I think Carno lies outside that, so—.
Okay, well, we'll write to—. Thank you for your letter to me, and I will now write to the Cabinet Secretary. Or we could just have a conversation between the three of us now. [Laughter.]
Far too efficient.
Is there anything I can answer now, if that would save paper?
We could do. We could save a few trees there, couldn't we? Right.
Okay. We move to our next item in regard to our final session in regard to automation and the effects on the Welsh economy, and I'd like to welcome the Cabinet Secretary, Ken Skates. I would be grateful if you could just introduce your colleagues, or ask them to introduce themselves for the Record.
Sure. It's great to be here this morning. I'll ask James and Mick to introduce themselves.
Good morning. James Davies. I'm the executive chair for Industry Wales, which is the voice for manufacturing at the Welsh Government, responsible for aerospace, automotive, electronics and software. I'm 32 years automotive, truth be told, starting in south Wales. I stayed with the same company under Rover Group, Llanelli Radiators, Calsonic Kansei. I looked after their European operations, and then I moved to Japan, with most of the last seven years in their corporate activities, looking after one of their product divisions.
Thank you, James. Thank you.
I'm Mick McGuire. I have been the director for sectors and business, and I'm now the director for business and regions in the new economic action plan department.
Great. We've got a limited time this morning, so I hope you don't mind, Cabinet Secretary, if Members interrupt if you're not quite getting to the point. If I could ask you initially, in bullet-point form if you like, what's your list? What are the biggest threats and the biggest opportunities with regard to automation and artificial intelligence, in a brief summary, if you like, of a list?
I think, first of all, people talk too often about the threats, and there are figures that are bandied about in an alarmist way, for example 700,000 jobs at risk of being lost, without actually looking at the huge opportunities that could come from automation. The big challenge for the economy of Wales has been, and will continue to be, the relatively poor rate of productivity that we have. Automation can actually contribute to us improving—massively contribute to us improving—our productivity rates. I see that as a central benefit of the move toward automation.
In terms of threats, it's been found recently—I'm sure that Members have the report themselves—by the Organisation for Economic Co-operation and Development just in March of this year that, actually, it's only 14 per cent of jobs that will be lost through automation—that are likely to be lost through automation. A further 32 per cent will change. So, the figure is not as drastic as some have led us to believe, and, indeed, when you look at the 14 per cent, that is actually a manageable number of people. What we are going to see, and what we need to make sure we're doing—this is the reason why we've got the change in direction through EAP—is we need to make sure that we move people from transactional activities to service-based activities. So, for example, we know through the ageing population demographic change there's going to be more opportunities in the field of health and care and leisure, so we need to make sure that people are re-equipped with the right skills within certain foundation sectors to ensure that we have that transition of employment that's as smooth as possible. And at the same time—sorry, Chair—at the same time, my keen interest is in ensuring that we capture and exploit new and emerging digital technology as fast as possible in order to drive productivity change.
And in terms of that transition you're talking about in terms of employment, what are the timescales, then? When's it going to happen?
Well, it's already happening. And this is another thing that alarmists sometimes wilfully ignore, that, actually, we've been living in an age of automation for some time. What's changing now is the pace and the scale of the change and how obvious it is. In many respects, automation now is far sexier than it was in the past. In the past, it might have involved the move from human cashiers to humanless cash systems in supermarkets. Actually, in the future, what it's going to involve is a move from driving our own vehicles to being present in mobile work and leisure pods, so it's actually more obvious, it's far more like sci-fi becoming reality now. So, that's the difference.
And in terms of the scale, and in terms of the pace of change, well, it will depend by sector. All of the evidence points to the more immediate change happening in areas where there is a high prevalence of low-skilled employment rather than in manufacturing where the change will come later, and the reason the change will come later is because of the cost of implementing automation changes and because of the relative complexity of implementing the change that's required.
In terms of those low-skilled areas of activity—and I know Members have met with certain experts from within the retail sector—actually, we stand ready to capture a lot of reshoring of employment opportunities, because within the call centre industry, for example, it's going to be that lowest level of skilled employment that will see the greatest loss of jobs, whereas actually, above that, we're going to see an increase in the number of jobs that are created within the call centre industry as people wish to communicate more with human beings. And it's at that tier—the top two tiers, actually—where Wales is an exemplar on the global stage in terms of companies like Admiral, like Moneypenny. These all have growth forecasts that will see further employment opportunities created. Why? Because they're at the upper end of the employment hierarchy when it comes to financial, professional and secretarial services.
So, I'm optimistic about the future, but we can't be complacent, and that's why we've developed a new economic strategy that's designed to supercharge those industries of tomorrow, but also futureproof areas of the economy that need to transition in the age of automation. I don't know whether James or Mick would like to contribute at all.
Just very briefly, I was going to comment on big data. So, one of the things that drives this change is the access to big data. In manufacturing, automation has been going for about 60 to 70 years, and in a lot of areas, in banking, it's been going for 40 to 50 years. But big data is the thing that is absolutely accelerating the pace at which it happens. And big data, for example, simply, if it can be understood and analysed, will accelerate innovation. Areas like precision medicine or precision agriculture are crying out for—. The information is already there, what causes the problem is already there, but we don't know how to analyse it, understand it and then decide what to do about it. So, the companies and countries that understand the big data and use it better will succeed and see it as an opportunity, and countries that don't will fall behind and be less successful.
I'll just bring, if you don't mind, Lee Waters in in a moment for some more detailed questions and then bring you in, James. Can I just ask, though, another very brief question overall, really? Is the Government prepared for the speed of automation?
Yes.
Okay, right. Lee Waters.
I share your optimism, Cabinet Secretary, but I'm not sure I'm quite as optimistic as you are. You quoted the OECD figure of only 14 per cent of jobs being displaced, but when we look at the Welsh economy a lot of those jobs are here. The Confederation of British Industry Wales pointed out to us that the three largest employers in Wales are Asda, Sainsbury's and Tesco, and retail is going to be hit in the first waves of this. Also, back-office functions are going to be hit and, as you said, call centre roles. So, amongst the—
But—
Can I just finish my point? So, amongst the first wave of impacts, it is going to be hitting areas where we are vulnerable—
Not necessarily.
Well, that's the evidence we've had, and that's what a lot of the academic evidence shows too. That's certainly what PricewaterhouseCoopers' report—. Clearly, none of us knows any of this for certain, none of us knows, but we do know that there are vulnerabilities in areas where we are likely to be susceptible to this.
Just in terms of Mick McGuire's point on big data, which I think is a crucial point, in terms of the economic action plan, there are criteria there for support being predicated on a range of options, one of which is automation, which is welcome, but in terms of the practical help that manufacturing in particular but others need to develop the capability to install sensors to gather the big data and then to interpret them, what practical help are we making available to employers and industry in Wales to be able to capitalise on those big data changes that Mick McGuire rightly identified?
Well, that's already been happening. We can provide a raft of examples of companies that we've supported in that regard, but the EAP is designed to not only encourage businesses to invest in the right areas but also to encourage businesses to come to us with challenges that we can then fund collectively for those businesses and then use the calls to action as the vehicle by which to draw down the big pots of money that come from the Grand Challenges at a UK Government level. Can I just introduce James?
Obviously, I come from an automotive background, coming back to Wales in this particular area for sustainable employment in Wales, and I regard these as things that are, of course, threats until we turn them into opportunities. So, we need to develop excellence in these areas, there's no doubt about it. Collaborating our academia and local businesses, particularly the small and medium-sized enterprises in this area is very important, but I already see significant programmes on my return here that are just doing that—the SMART activities and the ASTUTE activities are actually bringing some of the academics and data scientists into the real world in small operations up to Tata as well. They are actively progressing, seeking the data, farming the data, analysing the data and driving it through to real opportunity. Of course, we want to maintain that momentum on it, and we want to reward and acknowledge that collaboration between business and academia to ensure that we are embedding that in the improvement for it. But I do see evidence of that continuing, and to me the EAP has left it open enough with the priority areas and the calls for action to ensure that we can reward and support where it is necessary in those particular areas.
And in terms of the support that we are offering at the moment and in terms of how we are capturing opportunities that come from the UK industrial strategy, Mick can run through the Life Sciences Hub Wales and compound semiconductors, but I think we are incredibly well positioned, especially relative to other parts of the United Kingdom, in terms of being able to get further support from the Grand Challenges and from other elements of the UK industrial strategy. It's worth saying that the EAP was specifically designed to dovetail with the UK industrial strategy, and I had many, many discussions with Greg Clark during the development of the UK industrial strategy in an attempt to make sure that that was shaped in a way that would contribute to further economic growth in Wales. But, Mick, if you would—
Specifically on the big data point, which was the nub of the question, I spent an hour this morning working in the building next door here, which used to be called the life sciences hub, which Members will know has been repurposed as a care and health hub. Two of the biggest care companies in the world have said they believe Wales, through that care hub—these are Johnson & Johnson and Pfizer—offers the best opportunity for research and development, in their opinion, in Europe, and both of them are coming here to work to develop and expose that. And why have they said Wales is better than anywhere else in the world? For a number of reasons, all connected to big data. The Welsh genome project is something that they're interested in, but primarily it's the willingness of the national health service in Wales to share and explore its issues with industry and academia to accelerate, using the big data—the patient data—better patient outcomes and more cost-effective healthcare solutions.
Thank you. I'd better come on to some other Members as well. Joyce Watson.
You've answered quite a lot of what I was going to ask, but I'd like some detail about the scale of support that's available from your department from the economy futures fund to support automation. So, we've talked about the fact that it's there, but what is the scale?
Automation runs across everything that happens in the economy, and therefore the scale of support will run across everything that's available from not just the economy futures fund but across all funds that are administered by the department.
Okay. That's really good. And will there be any specific support for sectors where we've heard already that some, if not all, of those jobs might find themselves fully automated in the near or not-so-near future?
Well, this is interesting. Yes, absolutely. That's why we're developing the enabling plans for those foundation sectors, particularly with regard to retail and care. In care, we believe there will be a significant growth opportunity. With retail, it's closely linked to place building and the future nature of the high street. We don't know, and nobody can second-guess what new products and services will emerge that will enable us to redeploy people, particularly people who have relatively low levels of skills. That's why we're now focused very strongly on the foundation sectors. But it's not just about discrete support for those sectors that may face the biggest change. What we're also looking at doing is supporting businesses themselves individually and collectively as groups that face major challenges, but which still have a sustainable future if they're able to embrace automation.
If I can, Chair—if we talk about innovation as well as artificial intelligence, I think that is critically important as well.
Yes.
We don't seem to have mentioned innovation yet, but probably one sector that's experiencing large-scale innovation is the construction industry. So, is that identified within your thinking?
It is. Construction offers an opportunity again for growth in terms of employment numbers. What I should say about innovation is that we do have that national campaign now—Be The Spark—which is designed to plant innovation-driven entrepreneurship at the heart of everything we do, bringing together the key stakeholders, the key partners, to ensure that Wales is a more innovative creative place. I do believe that innovation and automation are inextricably linked insofar as innovation will drive the practices that will lead us to further automate systems and procedures.
Thank you.
And specifically on building the innovation, which clearly has a huge impact on all of our lives and on decarbonisation and the environment, officials have been working very closely with the Department for Business, Energy and Industrial Strategy on industrial challenge funding opportunity to bring an advanced building centre to Wales, which would embrace the office of the future, the factory of the future, and the houses of the future, as an innovative, fast-learning and developing continuous improvement in construction projects.
This is another example of how we're trying to take advantage of UK industrial strategy opportunities. I think somebody gave evidence to suggest that we were not as well placed as Scotland. That is not the case. We are well advanced, in our view, of other parts of the UK in terms of already having recorded major successes, in terms of UK industrial strategy opportunities, and in terms of automation and advanced manufacturing.
Could we ask for a paper on that?
It would be useful if you could provide us with a note on that.
Yes, absolutely, with pleasure.
Thank you, Cabinet Secretary. Thank you, Joyce. David Rowlands.
Just briefly—you've touched on it, actually, Ken, that the advantage of automation is that, to a certain extent, it can negate the factor of cheap labour, which has obviously been enjoyed by the far eastern countries. So, are there any discussions going on with companies that may have located to those areas in order to bring them back here, then, from the point of view that we are open for automation?
Absolutely right, yes. The reshoring opportunities are considerable, particularly in terms of customer service and finance. We're actively engaged in discussions with a number of businesses with a view of bringing back jobs, and in doing so raising the quality of employment as well. That's why fair work is so important and integral to the economic action plan.
But we're also looking at how we can support businesses in the transition from low-level skilled employment to higher level skills. I was recently at DMM in Snowdonia national park. They produce climbing equipment—they're one of the world's best companies—and it's a remarkable sight, it's well worth the committee taking a look, if you have time, because it demonstrates how automation can contribute not just to improve productivity and the quality of products, but also how it can contribute to employment growth. Essentially, what we're going to be seeing at DMM, and many other companies like it: the removal of people from heavy presses—not particularly attractive employment, where you're pressing a button, and a whopping great press falls down on a chunk of metal—and instead, they're going to go move from automation through to actually making sure that the machines are operating correctly, and maintaining machines, analysing the product, and taking part in continuous product improvement mechanisms as well. So, actually, employment numbers there are set to increase, and not just increase, but improve in terms of quality.
Thank you. Mark Isherwood.
Thank you. Good morning. Witnesses have made a series of proposed recommendations to us that we might make to Welsh Government. If I could just test your views on a few of those.
Sure.
Firstly, how do you feel about the proposal that the Welsh Government should develop asset maps to understand the private and public sector strengths in Wales and identify key influences within businesses in Wales and outside?
I think the key there is outside. Asset maps that would only consider Wales would not consider some of the major developments that can contribute to our growth that are outside of Wales. I'll give you one example: Deloitte's office of the future is based not just outside of Wales but outside of the UK, but it's helping to inform the company here in Wales about working and the future of work, automation—. I believe it's based in the Netherlands.
It is.
It is, yes. Creating asset maps may not be necessary, given that we're already creating the regional plans that will identify strengths on a regional basis, and also those areas of economic activity that require further attention—the businesses that contribute to our strengths and businesses that are looking relatively weak at the moment. So, to some degree, that's already happening, but it's through the lens of the regional place-based economic development that we now wish to see take place.
If I could just add specifically on the question of the asset maps—they were carried out five or six years ago by the sector panels, but they were very much sector, not regional driven, and your question was a spatial question as well. So, actually, what we now need to do is to take those sector maps, which are sectoral, and then turn them into asset maps that are regional. And that's what we've charged chief regional officers with doing—to develop that asset map into one that works regionally.
And I think the point of your question is well made, because it is regionally that clever clusters of companies talk together and work together and generate the innovation that we were talking about. Because, actually, at its heart, this is all about innovation. Whoever uses artificial intelligence and the big data and technology to inform better ways of doing it tomorrow will win, and those who don't will lose. And your point is absolutely right: it will happen regionally, not necessarily because there are various assets widely dispersed.
Clearly, there are cross-cutting issues between regions as well. And in utilising asset maps, once you have the understanding and the data, how do you avoid the tank traps of corporatism and ensure you're doing this with business and communities?
That's all about engagement, not just engagement between Welsh Government and business; it's about engagement on a regional level as well, making sure that we've got the right regional economic development vehicles in place to ensure that (a) we're diffusing innovation, (b) we're sharing best practice and (c) we're ensuring that the support available not just from Welsh Government, but also from local government and other parties such as the development bank, is easily accessible and understood as well.
I'm glad you added the second one there, because, when we look at these things, assets are one thing that may hold us back from a disruptive approach. The thing that is really required is a collaborative approach on this, so we use the assets that are possibly going to be very valuable in the future, starting with our skills and also the raw materials that we have within those bases, rather than just something that we've had there for a very long time. It's a very disruptive world, and I think the strength of the chief regional officers will be that they start to bring these stakeholders together and, potentially, with stakeholders who are outside, to challenge the view that's been there before. Precision is required in this area.
I think you also emphasised there the importance of human capital within this.
Yes.
The second related question: how do you respond to the recommendation made to us that the Welsh Government should look at the start-up community and also existing businesses and identify barriers to adoption where industry 4.0—the fourth industrial revolution—doesn't challenge businesses but challenges business models?
Absolutely. Couldn't agree more. We're doing that partly through the Be the Spark initiative, but also through the development of the tech and enterprise hubs that we're funding that I announced recently that will be positioned strategically across Wales and also through the work of the development bank and, of course, Business Wales, and Business Wales working more closely with the development bank.
But in terms of working practices, and leadership practices as well, the economic contract is designed to improve leadership within the workplace, designed to make sure that business leaders are futureproofing their own enterprises, and designed to make sure that they are carrying out practices that contribute to higher levels of not just workplace health and well-being, but work-based placed skills as well, making sure that there is a focus on skills levels and re-equipping people with the right skills for the future. James.
The issue for us here is that we have this excellence here of start-up—there's no doubt to me on that—and, as a large corporate guy, I'm really always amazed at the enthusiasm and passion for them to start up.
It is the growth model for me that we continue to use the economic action plan on to ensure that the level of development of the owners and the leaders of our organisations can see how they go from micro to small and small to medium, and this is, I think, the ability of the EAP. Occasionally, that means we need to be outside Wales to bring in, when you talk about the disruptive business models, new stakeholders and new primes, which, traditionally, have not been there to ensure that those start-up or growth companies can engage with people who have real access to the market and that's above and beyond Wales itself. That will drive excellence. Wales has been very top, very good.
Thank you. Bethan Sayed.
I just wanted to ask, on the start-ups, just as we had a session on skills earlier with Eluned Morgan and saying how you identify skills so that you can transfer them into different sectors, how you are identifying potential ideas for start-ups that would benefit the Welsh economy. On another committee that we've been on, people are sometimes forced into starting a small business, because they've lost their job due to various reasons, or that is the only alternative and they may start a business that might not fit—well, there's no harm in it, I guess—but not fit the idea that we want to shape for the future. So, I'm just wondering how you're dealing with that, giving them new ideas that perhaps they hadn't thought of but they would be capable of doing.
I'll take that. Yes, largely through—. Particularly business start-up leaders, they benefit from collaboration, they benefit from co-location with other entrepreneurs and that's why we're creating the hubs—to make sure that they're able to work together to identify new opportunities and—
But you tried that before with the techniums and some of them failed, so I just would want to be sure that they were different enough.
These are very different.
Right.
Yes, these are very different. These have a focus on business development and exploiting tech in particular. So, we're doing it through that, in part, but also I'm not entirely convinced that it's for Government to identify and then to feed people ideas. The best business ideas come from entrepreneurs themselves, and so the key for us is in creating an environment in which would-be entrepreneurs have the support, the motivation, the encouragement and the opportunities, the facilities—such as hubs, such as space within higher and further education institutions—to be able to take their ideas into development and make sure that they can exploit them. So, it's all about—
But I was just wondering, if it was identifying growth markets in a specific area, it would make sense to try not to make them start a business in something—I wasn't saying that—but to steer them in the direction of that area.
This happens also with Business Wales, and, actually, it will happen more so with the closer working that's going to be taking place with Careers Wales, but Business Wales are able to provide to possible start-up companies information and intelligence on where market trends are going. So, whilst we wouldn't plant an idea in a businessperson's mind, what we will do is provide the intelligence that can inform them of whether their idea is going to be something that could be successful.
Have you finished, Mark, with your questions?
No, I've still got a couple suggested here, but—
That's fine. We're a little pushed for time, so I'll come to you and then Lee straight after. Mark.
How do you respond to the recommendation made to us that the Welsh Government should pressure test what a productive community, rural or otherwise, might look like in 2050?
It would be incredibly costly. We're already modelling, and I think the difference between pressure testing and modelling is not as great as some might believe it is, because we're already modelling the office of the future, the building of the future. There's a lot of development taking place with the advanced manufacturing research institute that will test certain elements of what's being proposed, but I'm not entirely convinced that the cost of pressure testing what a community might look like would actually reap the sort of benefits that some believe it would.
And we get help from industry. So, industry would model it with sophisticated models that might be 55 per cent, 75 per cent accurate and, slowly and surely, as they improve the accuracy, they would then actually prototype, and the cost of prototyping a community, as the Cabinet Secretary says, is enormous. So, industry would absolutely be modelling this, improving the model to better understand the issues and then developing buildings in line with that. So, I think it's something that will come, but it will be a long time before it's cost justified.
It's interesting that all our youngsters these days are really using game theory. The automotive industry is using game theory with simulation models for safety right now, and this is a perfect example of trying to simulate a model of a proactive community. Using something like game theory would be very interesting for the academics and the start-up companies to get involved in. It seems to be a very successful commercial model as well, if they do it online.
The final recommendation I'm going to sound you out upon is the proposal that the Welsh Government should investigate or trial the introduction of universal basic income.
I love the idea, but there's a big difference between an idea and how it could play out in practice. Numerous reports have now been published that demonstrate, actually, the benefits are not that great. The idea sounds fantastic and it was something that I think was around back in Richard Nixon's day, so I think he tried to pilot it, but, actually, in practice it doesn't produce what you would wish for. The pilot programme in Finland has been brought to an end. The OECD have said that actually it could contribute to widening economic inequalities, rather than closing them, and that it may not reduce poverty rates. The Trades Union Congress-commissioned report demonstrated a whole number of concerns that would have to be addressed and also found that the system is tolerant of long-term joblessness. Now, we don't want people to be out of work on a long-term basis. It's not good for the economy, but, more significantly, it's not good for individuals' emotional well-being. That same report also found that complex means testing would still have to be incorporated into a benefits system, and, actually, what the OECD have found more recently is that the system that the UK Government is seeking to introduce, if it's introduced correctly, with the right degree of support, could actually offer more benefits in the long term than the implementation of a universal basic income.
So, whilst I'm not closed to the idea of it, I would say that the theory is more appealing than what, in practice, we see emerging from this particular intervention.
Right, thank you. We are a bit pushed for time. Is that okay, Mark?
I was just going to—
Very briefly.
I'm glad you mentioned the Finnish experience because, as you say, the test was the extent to which this would incentivise unemployed people to go into work, and, on the basis of their findings, after two years, they're looking at alternative means—incentives, carrots and sticks. A lot of this isn't devolved to Welsh Government, but will you be keeping an eye on the alternatives that might be trialled?
Yes, for sure.
'Yes' is fine. Lee Waters.
I've been caught up in the wave of positivity here. Obviously the response is very encouraging, but can I just give a counter-blast of reality check?
I thought you were more optimistic than me.
Well, optimism needs to be tempered.
So, the public services boards that each local authority has set up have had to submit a well-being report as part of the future generations Act. Not one of the 19 well-being reports submitted by local authorities has identified automation as a risk or as a future tool for success, which I find deeply disturbing. In terms of the opportunities, it seems to me there's a real danger from the fragmented, silo nature of all governments that a lot of opportunities could slip through the gaps here. The UK Government has announced the establishment of an office for artificial intelligence. What can the Welsh Government do internally to marshall the forces to make sure that we are fully seizing the opportunities and there is an engine room within Welsh Government to try and co-ordinate all this and make sure we're seizing the opportunities?
The idea of an engine driving it sounds great, but in practice what you end up with is a silo mentality developing within—
We've got that now.
Well, no, actually. That's the whole point of EAP. That's the whole point of the cross-Government working that's taking place on economic development now. It's moving away from that silo mentality.
But AI isn't just about the economy, is it? It refers to health, education, and Government isn't working like that.
That's exactly why I've got a cross-Government delivery board being established. That's a cross-Government delivery board for EAP, of which automation is a crucial part. I would agree entirely that it's across Government, but what I'd also say is you can't have one silo, one unit responsible for something that covers all parts of Government, because what will happen is it will become a policy board. It would become a policy unit. It would not administer any particular change that we require now. Instead, we should be working horizontally, right across Government, and that's why I'm setting up the cross-Government delivery board for EAP and making sure that automation is at the heart of everything we do across Government.
Okay, that's great. So, what about the other elements of AI, then? How is that going to be co-ordinated?
That's all part of the EAP as well. That's going to be configured into the cross-Government delivery.
Well, let's look at edtech, for example—so, the application of AI to schools. How is that going to be part of the EAP?
That's going to be part of the EAP because we're going to have members from across the Government, every department, on that board, making sure that the delivery of EAP aligns with the delivery of services across all departments, and that includes new technology within the education department.
I'm not convinced that if you had a single unit responsible for AI and automation within Government you would deliver the change that's required, or that you would capture the hearts and minds of all people across Government. You would end up, as I said earlier, with a policy unit. You would not end up necessarily with demonstrable change.
Okay. So, how is this board going to work to make sure, then, that the full opportunities across the piece are going to be harnessed, not just simply in terms of your action plan?
It's going to work because I've got the most senior officials from all departments that are going to be present on that board, making sure that we identify the opportunities and the challenges not just that are captured within the economy, but right across Government, and making sure that calls to action, and the principles that sit behind those calls for action that have led us to develop them, are given due regard by all departments, and that all of us are moving in the same direction in terms of being able to capture the opportunities for automation and AI and, indeed, other areas of activity that we all need to address, such as fair work, such as making sure that we decarbonise. If we had single units that were responsible for, let's say, fair work, decarbonisation, automation, AI, we wouldn't have the sort of horizontal cross-Government working that's required.
Okay. So this board, as you said, is going to be looking at many different aspects. So how do you make sure the AI aspects in particular, given the importance that we've just discussed, are properly harnessed?
In the same way that we'll be making sure that all of the calls to action are properly harnessed. I don't want to give priority to one call for action over another, because they are all contributing factors to our productivity and to making sure that we, as I said earlier, supercharge the industries of tomorrow and that we futureproof all businesses, where possible, and also make sure that we futureproof the public sector. And that's why it's so important that we've got a cross-Government delivery board that is chaired by a Minister, making sure that we get the change that's required right across Government.
A good example, practically, would be the one that you questioned: how do we facilitate edtech? A good example of how that could be facilitated by the board would be that it would be for the education industry to articulate what their ambition was for edtech and it would be for the economy department to bring the innovative SMEs and the clever companies along to try to create and innovate new solutions, and, the more they work together collectively and collaboratively, the faster the pace of innovation, change and improvement will be.
Okay, I understand that, but that's there just for the industrial application of it, isn't it? In terms of the service transformation—so, how do you transform the way we do schools—that wouldn't really fall within the remit, unless there was a business looking to do something. How do we unleash the potential within the public sector of capitalising on the changes AI can bring? That's not going to be done by the policy board.
Okay, so, crucially, it's the economy where automation and AI will be most significantly felt in terms of—
Well, not really, in terms of public service delivery—
Let me finish my point—in terms of the actual contribution to the wealth of the country. However, education, health and other service areas will be major contributors to our long-term wealth and well-being, and, therefore, it's absolutely essential that we have the right people sitting alongside those who lead on economic development to be able to identify and then exploit those emerging technologies and new working practices so that we can ensure that there is reform within the public sector, whether that be in education or whether that be in health. Actually, the life sciences hub is a perfect example of how it's being repositioned, reprofiled, to make sure that we contribute more to new, emerging practices insofar as health is concerned. I think that demonstrates how we are now crossing departmental and subject boundaries.
And education and universities are absolutely closely entwined with that.
We're pushed for time. You have one last question.
Okay, just briefly, I buy that up to a point, but, just for example, the example I quoted to the First Minister the other day, namely the amount of time it takes to recruit a nurse after a nurse hands their notice in—I think, from memory, it's something like 56 days. Through digitisation, it's possible to shave about 20 days off that, saving around £13 million. That kind of change is not going to be driven by industry coming up with an idea—it might be, but it may not be. So, where's the lever going to be for pushing the public sector to explore possibilities for using AI to free up resource? I don't think, from what you've said, it's going to come from that board.
If you could briefly answer that, because we've got to move on to other points.
Okay. I take that that's a specific challenge. That is one that relates to administrative practices within the health system. What I think we can do, though, across the Government delivery board, is test against, and make sure that those who are administering human resources make sure that we test against, their delivery at the moment the opportunities that could come from adopting technological solutions to, at the moment, burdensome, bureaucratic solutions. Granted, we're not setting up a unit, but I think it's more important that we have officials across Government discussing, exploring opportunities that technology provides rather than have, within one unit, if you like, an engine that's operating, but where that engine isn't driving the whole of Government or the whole of public sector reform. Because that's what I'm afraid a single body, a single unit, siloed somewhere—even if it's planted within the First Minister's office—would probably become.
We've got three section areas that we want to cover. I've got David Rowlands leading on one, Hefin on another and Vikki on the last section. So, if you can cover your subject areas within four minutes, I don't think we'll have any more time for supplementaries. David Rowlands.
Okay. We've talked about the level of skills in the workforce in general and their ability to take on board automation. Perhaps we ought to bear down a little bit on the ability of Welsh Government and the staff resources that you have and the financial resources that you have in order that you could take on the task of guiding on this automation sort of thing. First of all, the quality of any ship is its captain, so could you clarify who will lead on automation within the Cabinet?
Automation is something that crosses right across Government, so having a single lead on it makes no sense. In a sense, what we need to do is approach this on a collegiate basis, and that's what we're doing. Of course, that cross-Government delivery board, through the EAP, will contribute to enhancing and amplifying the knowledge and awareness and deployment of that knowledge across Government, but this is something that should be shared by every Government Minister.
Yes, well, I fully appreciate that, but someone has to collate all the information once each of the Ministers has given their part of the information and their input. Someone has to collate it and act on it, don't they?
We have specific leaders within Government, within the civil service, when it comes to discrete subject areas such as, for example, digital, advanced manufacturing and materials, or the automotive sector, for example. So, that's already happening, but, in terms of the broad theme of automation, it's something that should be co-owned by everybody.
Okay. What do you honestly think that your level of expertise and the capacity and awareness of your staff is at this moment to—
It's excellent. It's excellent. I've found that, often, critics outside of Government aren't actually aware of what Government is doing and aren't fully aware of what programmes and projects are operating. It struck me recently when I was asked whether Welsh Government would look at the model of the AMRC in Sheffield and replicate it in Wales. Well, we started doing that two years ago. And that's a perfect example of how, sometimes, Government can face criticism from people who don't actually know what's happening, or are poorly informed or misinformed. The level of expertise is excellent, because it's supported by people like James, and the key is collaboration. It's about Welsh Government working with business, Welsh Government working with academia, Welsh Government working with venture capitalists, working with other stakeholders, on the basis of Be The Spark. That's how we get the best possible expertise emerging.
Okay, so you're confident that you do have the strength and the depth. That's fine.
And the innovative technology solutions will emerge from industry. Government's role is to facilitate and applaud and support and encourage and accelerate.
Yes, absolutely. Okay, I think that—. The next part of my question was about a cross-department basis, but you've obviously covered that and following on from these questions as well. Thank you. So, thank you.
Hefin, we've pulled back a minute, so you've got at least five minutes.
I'd like to use my five minutes to be a bit reflective and—
Sorry, Chair. I need to be at the active travel board before 11 o'clock. Sorry.
I would like to use my minute to be reflective. [Laughter.]
We will certainly be done by 10:50. Are you okay with that, Cabinet Secretary?
Yes, that should be just about okay. I've got to get back up into Tŷ Hywel, and then I've got to get to the active travel board before 11:00. So, I'm against the clock. [Interruption.] I'm walking.
We will be done by 10:50.
A minute's gone already.
This is a minute gone, now, yes. [Laughter.]
You've got four minutes.
With regard to connected and automated vehicles, how do you see the future developing, both in terms of the development of the technology and the development of demand for such technology?
Nobody knows the answer. What I can give you is my impression. I think we're going to see, once the change happens, and the change may take longer than some believe, but, once it happens, it will happen at a great pace, and what we'll see is a move away from car ownership and cars being a form of mobility to cars becoming mobile leisure and work spaces that are operated on a semi or fully autonomous basis. Once that—
And what timescale would you say that would be?
It depends on a number of factors—the regulatory environment in which we can operate. It depends on the willingness of consumers and customers to actually adapt—and we don't know how many people want autonomous vehicles yet. There has been no real empirical evidence provided to show that the vast majority of people—. So, what we need to do first of all is figure out how we deploy autonomous vehicles and connected vehicles, and then ensure that we can meet market demand. I also—
So, has the Welsh Government done any research, or is it planning any research into this?
Well, that's the whole point of the Tech Valleys initiative, working with academia. And it's worth saying that a vast amount of work is already being done by academic institutions, not just in Wales, but further afield. Cardiff Metropolitan University has just announced that it's opening a Cardiff school of technology, which will contribute to this understanding.
I was at the launch, yes.
Yes.
Can I just focus on some of the specific issues that were raised, then? We accept that there's uncertainty, but one of the big issues that was raised in the evidence session we took was that security in this field is a bit iffy and the fact that the technology that is associated with cyber security is not developing at the same pace as this automated vehicle technology. So, there's a risk, and there's a risk of things like cyber terrorism. So, what kind of safeguards are there?
This is why I'm really excited about this particular field of work, because the development of autonomous vehicles is related so closely to an area or a sector that Wales has immense strength in at the moment. So, actually, I think we could be at the forefront of—. We may not be assembling, necessarily, autonomous vehicles, but what we can do is provide the components, and particularly the interiors of autonomous vehicles, where we have huge strength and capabilities, and we can also provide the security systems that can ensure that they can operate smoothly and safely.
So, are you aware of the Sidewalk Toronto project?
Sidewalk Toronto is a great example of how you can test and model things. We're keen to make sure that we use the Tech Valleys initiative, and I've gone on record already as saying I'm keen to look at how we can use newly constructed trunk roads in order to test—
So, might you pick an area of, say, Bargoed, to do a test area?
I think I'm on record already as identifying one particular proposed road, the Flintshire corridor, which could be utilised for testing. I'm open minded at the moment, because I want industry to come to Welsh Government and to identify what is required, rather than for us to build and then hope that they come.
And, finally, if you're going to regulate this effectively and legislate, you're going to have to work with the UK Government. What action has been taken there?
Yes, it's UK Government that takes the lead on this, but we are fully engaged with them on potential legislation. In the first instance, I think it's going to be safe to say that it'll concern autonomous and connected vehicles using high-speed roads and then other areas of activity such as car parks. But we're fully engaged with UK Government both at a ministerial and at an official level as well.
Vikki Howells.
Thank you. Just one question from me, considering the impact of autonomous vehicles on public transport. Some of the evidence that we took last week suggested that they could have a negative impact on that and upon active travel as well. I wondered what your thoughts were around that and what Welsh Government could do to seek to mitigate that.
Okay, sure, it could have an impact on active travel, were it not for the attempt to change behaviours. We're more mobile through vehicles than we ever were in the past, but equally there is now a concerted effort to make sure people are walking and cycling more. The additional £60 million that we've announced for active travel, alongside renewed support for training courses and safety courses, I think will help contribute to behavioural change. But the behavioural change that needs to take place now cannot then be undermined by any attempt by the market to persuade people then to ditch active travel and use leisure and work pods to get from A to B, no matter how long that journey might be.
So, whatever happens in the short term, in the longer term, I think there'll have to be strong focus on ensuring that people identify active travel as something that is good for their health as well as good for the environment. I think there could be an impact on public transport. I'm keen to see the work that's being carried out on the Swansea bay metro consider all forms of transport, including robotic taxis as a form of mobility. We don't yet know the full extent to which public transport is going to be impacted by autonomous vehicles. We don't yet know for sure the full extent to which current manufacturers are going to be impacted by the move to autonomous connected vehicles. But what we can probably safely say is that many businesses within the Welsh supply chain stand in a very strong position to capitalise from autonomous vehicles.
Why? Well, because it's predicted that the roll-out of autonomous vehicles will lead to lower levels of car ownership but higher levels of usage of vehicles. That means that component parts of the interior will wear out faster, because, essentially, you're just going to strip out the interior every five to 10 years and renew it, because cars will also have a greater degree of longevity. We have a number of major businesses in Wales that are particularly strong in terms of supplying components for the interiors of vehicles at the moment, and that's why I think we've got a very strong opportunity, a very good opportunity, to capitalise from autonomous vehicle manufacturing. I don't know, James, do you have something to say?
I have eight seconds but, yes, I do. [Laughter.] Interiors go from the pod to the car to the taxi to the bus to the train to the plane. The personalisation of our interiors, in an informed way—a predictive way and a proactive way—is a perfect one for us to go with. With the fact that it's got an MRO basis with it, it will continually require updating and changing on an ongoing basis. It's a great part of the industry to go for.