Pwyllgor yr Economi, Seilwaith a Sgiliau - Y Bumed Senedd
Economy, Infrastructure and Skills Committee - Fifth Senedd16/09/2020
Aelodau'r Pwyllgor a oedd yn bresennol
Committee Members in Attendance
|Helen Mary Jones MS|
|Joyce Watson MS|
|Russell George MS||Cadeirydd y Pwyllgor|
|Suzy Davies MS|
|Vikki Howells MS|
Y rhai eraill a oedd yn bresennol
Others in Attendance
|David Hagendyk||Cyfarwyddwr Cymru, Y Sefydliad Dysgu a Gwaith|
|Director for Wales, Learning and Work Institute|
|Helen Cunningham||Sefydliad Bevan|
|Professor Andrew Henley||Cyfarwyddwr Ymgysylltu ag Ymchwil ac Effaith Ymchwil, Prifysgol Caerdydd|
|Director of Research Engagement and Impact, Cardiff University|
|Professor Dylan Jones-Evans||Dirprwy Is-ganghellor Cynorthwyol, Prifysgol De Cymru|
|Assistant Pro Vice Chancellor, University of South Wales|
|Professor Gillian Bristow||Athro mewn Daearyddiaeth Economaidd, Prifysgol Caerdydd|
|Professor in Economic Geography, Cardiff University|
Swyddogion y Senedd a oedd yn bresennol
Senedd Officials in Attendance
|Lara Date||Ail Glerc|
|Robert Lloyd-Williams||Dirprwy Glerc|
Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.
The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.
Cyfarfu'r pwyllgor drwy gynhadledd fideo.
Dechreuodd y cyfarfod am 09:48.
The committee met by video-conference.
The meeting began at 09:48.
Bore da, a chroeso, pawb.
Good morning and welcome, everyone.
I'd like to welcome you to the meeting of the Economy, Infrastructure and Skills Committee. This is the first meeting of the new term, so I'd like to welcome Members and stakeholders watching in back to committee. In accordance with Standing Order 34.19, I have determined that the public are excluded from the committee in order to protect public health, but this meeting is of course broadcast live on Senedd.tv and a transcript of proceedings will be available in the normal way.
We have previously agreed that, should there be any issues with technology and I disappear, and my connection breaks, then Joyce Watson will stand in as the temporary chair until matters are resolved. I'm not aware of any apologies or substitutions—sorry, I am aware of an apology. There is an apology from Hefin David, who is unfortunately unable to be with us this morning, so apologies from Hefin. Other than that, no other apologies or substitutions.
At this point I'd like to give a very warm welcome to Suzy Davies, who was elected to be part of this committee back at the beginning of August. So, welcome, Suzy, to our meeting this morning.
Thank you. Diolch.
There we are. You join us at a timely point, because we're just about to start a new, significant piece of work. So, if Members have got any declarations of interest, say now.
In that case, I move to item 2. We have a number of papers to note. The first paper is from the Minister for the Economy, Transport and North Wales with regard to the Bus Services (Wales) Bill, which is significant for, of course, the industry and indeed our committee. This letter is formally telling us that the Bill is, sadly, being withdrawn.
There is a letter from the Finance Committee regarding the draft budget, and there are three letters from the Minister, Ken Skates, with regard to various issues that the committee have raised. There's no need to respond particularly to any of these letters; they are there for information. So, are Members happy to note those? Thank you.
In that case, we move to item 3, and this is in regard to COVID-19 recovery. This is the first session of our new inquiry into COVID-19 recovery in regards to the economy, transport and skills. It does follow on from an earlier piece of work before the summer in regards to the impact and response from Government in terms of the pandemic, but, of course, the committee agreed before the summer that we are moving on from that phase of the initial response to a recovery point—or at least that's what we would hope.
I'll say to our witnesses today thank you for joining us, and perhaps I'll ask you to introduce yourselves, just so we can test the audio as well. You're the first person on my screen, Dylan; do you want to introduce yourself, please?
Yes. Am I on?
Good. Excellent. My name is Dylan Jones-Evans. I'm assistant pro-vice chancellor at the University of South Wales and professor of entrepreneurship at the business school.
I'm Andrew Henley, I'm professor of entrepreneurship and economics and the director of research, engagement and impact in Cardiff Business School at Cardiff University.
Hi, I'm Gill Bristow. I'm professor of economic geography at the school of geography and planning, Cardiff University. I'm also the dean of research for our college of arts, humanities and social sciences.
Okay. Well, can I thank you all for being with us this morning and for your time? It's much appreciated. I know previously you've been asked just to give a brief overview or summary of your views, if you like, so I invite you to do that, but if you could expand that and, if you're not otherwise planning to say so, identify what you think are the challenges particularly for the Welsh economy. So, is there any one of the three of you who would particularly like to go first? Dylan, you've indicated.
Yes, we'll go in order. Okay. Yes, well, first of all, we know there's a range of challenges in the short term, which obviously we're here to discuss as part of this inquiry. But I think the overall challenge for the Welsh economy is exactly the same as we had when devolution began back in 1999, which is about closing that economic gap with the rest of the UK. And I think what the COVID pandemic has highlighted is that that gap could potentially grow as a result of what's happened over the past six months and what will happen subsequently over the next 18 to 24 months.
In relation to that, I think there are four key factors, and I'll go very briefly into these, because there's obviously a whole range of these, but I think these are quite important because they're the ones that I've been focusing on and I know others have been focusing on. The first one, of course, as you'd expect me to say, given my specialism, is low levels of entrepreneurship. So, if you look at where we are at the moment, the latest data showed that, basically, formation rates of new start-ups were about 55 per cent for Wales as a proportion of the UK. So, we were just over, in terms of new businesses, half of what the UK produces as a whole, in terms of proportional representation.
But, if we look at COVID, this is where it gets really interesting, because what's happened over the period of March to June is that we saw there was a decline in the number of start-ups, as you'd expect, in March, in April and in May, but, in June, when the economy opened again, there was this release of entrepreneurial intention across the UK. There was a decline, but it went up by 47 per cent in June, as compared to the previous year. That's an amazing result. But that's for the UK as a whole. So, if you take that period of COVID, can you imagine that, despite everybody saying the economy was tanking, the number of start-ups we had over that period, March to June, was only 3 per cent down on the previous year, across the UK? The issue is, of course, that for the devolved nations it was worse. For Scotland and Northern Ireland it was 20 per cent down, for Wales it was 11 per cent down. So, again, we're seeing that gap grow. So, again, where is the challenge? The challenge there is very much in closing that gap—we're talking about the economy gap, but also that entrepreneurial gap. And, again, we need to have a focus on that, as I'm sure we'll discuss later.
The second one is in terms of innovation—low levels of funding for innovation. So, again, COVID-19 may have given a pause to think how we want our economy to develop over the next few years. Think about this fact: Wales has 5 per cent of the population. It only receives 2 per cent of all research and development expenditure, and that's a situation that's been largely unchanged since devolution. What we've seen is that, obviously, there is a move now to level up across the UK, but even now there's about £10.4 billion being spent in this year on research and development across the UK and Wales should be getting about £520 million of that. We won't. We never do. So, in terms of if that was Barnett-ised, that's what we should be getting.
So, again, this is a real challenge for the Welsh Government, the Senedd, businesses, the university sector. Perhaps it's now time for us to say, 'Well, if you want us to become a competitive, innovative economy, then you must give us the fiscal tools to be able to do that.' And I know, obviously, the Northern Powerhouse feels the same about this, and the Midlands Engine. Most of the research funding still goes to the south-east of England, to London and the east of England. So, again, maybe it would gain traction if the Welsh Government co-operated with those other areas and looked to some of this levelling up, which seems to, shall we say, resonate with some of the advisers within 10 Downing Street at the moment.
The third issue is low productivity. I'm sure Professor Henley will talk more about this later, but it is fascinating that, for the last 21 years, when we've looked at an economic strategy for Wales, productivity hasn't been at the heart of that, despite the UK being lower in terms of productivity compared to competitors and Wales being one of the lowest, if not the lowest, in terms of productivity in the UK. And so we need to look at that, I think, as a particular challenge.
Finally, I'll talk a bit more about digital skills later, I hope, but I think there's been a lack of focus on higher level skills. Academic studies show time and time again that there's a direct link between management skills and productivity. There's been very little focus on this by successive Welsh Governments. Only last month, the UK Government came up with £20 million to help small businesses in terms of leadership problem-solving skills in the wake of the COVID-19 pandemic. You don't need an academic study to tell you that better CEOs, better managers, lead to better businesses. As I say, the UK Government in England are doing this; we haven't had any real focus on developing management skills. Ironically perhaps, Academi Wales is a body that helps to make public sector managers better managers; we don't have the equivalent here in Wales for the private sector. As I say, digital skills is a key area, and I might cover that later.
Thank you, Professor Dylan; that's very succinct and helpful. Professor Andrew.
Dylan's made my job easier, because he's actually highlighted a lot of the things I would want to say, and I don't disagree with—. I agree with pretty much all of that, actually. One of the things I, first of all, want to say is that the evidence base is still slowly emerging. I think the Office for National Statistics and a number of the universities and independent research organisations have moved very quickly to produce unusually rapid sets of data, for example, the business impact of coronavirus surveys, which have allowed us to see what's going on. But we still, really, have quite a limited understanding as to how the economy is recovering, because even data that's a month or so out of date is out of date.
I think that's particularly true of Wales. If you take the ONS surveys, for example, those surveys can be cut by sector, they can be cut by region, but they can't be cut by sector and region because the samples are just too small. So, we need to understand a lot more, and we need to understand specifically a lot more about the Welsh context. So, if we look at the current recovery, one might be optimistic and say that UK gross domestic product has recovered half of its initial losses in the last couple of months—well, up to July—but I would be very cautious about wanting to make a prediction about whether it will recover the other 50 per cent in the next two quarters. It could still be very much a kind of Nike swoosh recovery rather than a v shape. We just don't know. And it would be desirable to have a lot more timely data. We know that GDP data, for example, for Wales, takes really quite—. It only appears with a considerable lag.
In terms of specific areas, I think business development support is a critical area of Welsh Government spending. This has always been a challenge, because it's, in a sense, a discretionary activity when set against other priorities like health and education. And, of course, over the past two decades, it's been heavily supported by European structural funds. Small business growth, particularly productivity growth, is typically stimulated by innovation activity. I'm particularly concerned about productivity, as Professor Jones-Evans has alluded to. I've been part of a UK project called the Productivity Insights Network, and I'm now actually the Wales lead on the UK's new Productivity Institute. And these challenges are really wicked and stubborn. The UK's low productivity problem, internationally, is a problem, but, of course, Wales's productivity is even more of a problem set in the UK context. In the Welsh context, we've kind of adopted almost an approach of saying, 'Well, productivity has just been too difficult a challenge to address, so we'll address a wider set of indicators.' Now, there's nothing wrong with that, those wider set of indicators, as expressed in the Well-being of Future Generations (Wales) Act 2015, for example, but, actually, in the long-run, productivity is really important, and so we have to look at how we're going to address this challenge. So, I'm particularly interested in microbusinesses, and microbusiness productivity tends to be largely stimulated by innovation activity, and innovation activity itself also tends to be particularly stimulated by the desire to win export markets. So, there are areas there where business support can help the smallest of businesses.
But, in terms of broader themes around productivity, skills and employee well-being are very important. Engaged, effective, well-skilled employees will deliver productivity. Professor Jones-Evans has already alluded to management and leadership quality, an area which I've been involved in in the past and continue to regard as incredibly important. And, at the smallest level of businesses, I think this is about mindsets and about an overall sense of leadership. It is not about ticking boxes around saying, 'Yes, we've got one of those policies, and, yes, we've got a strategy for that.' Transport infrastructure and connectedness—these are all priorities, I would suggest.
On skills specifically, I would say that we need to give particular attention at the moment to what we might call 'the coronavirus generation'—those whose education has been potentially disrupted, or whose job prospects on graduation have been severely impacted. And so we might need to look, for example, at things like the return of something like the GO Wales programme, in its former form, where it provided, supported, SMEs to take up graduates. And in terms of small business growth and leadership development, I think this is really important. Professor Jones-Evans has alluded to some of the areas where Wales is behind on this, but, to give you another specific example, it concerns me at the moment that, at present, Wales is not participating in the small business leadership programme that's recently been rolled out by leading Small Business Charter business schools in England. Wales is not participating in that programme, which is a disappointment, I think.
So, there's a whole area of priorities, it seems to me, going forward. But we have to set that in the context at the moment. Where we sit right now, we are still extremely uncertain as to what the future looks like, and so one is really going to have to tailor what one does first in the context of how this pandemic is going to continue to emerge over the next few months, and whether we are going to end up having a further significant increase in the health consequences of the pandemic, or whether we're going to be able to turn around more quickly this current blip.
So, I think there may be other things that will come up in the further discussion, but I think I'll leave it at that.
Thank you, Professor Andrew. And, sorry, it's more difficult for you, Professor Gill, going last, but do you want to give your summary as well, please?
Yes, no problem. Thank you. Dylan and Andrew have obviously done a great job, and, again, I echo very much their comments. I think the key theme I wanted to emphasise was the major challenge that this pandemic has highlighted is the importance of economic resilience and how we build to resilience to shocks and change. I think, again, the pandemic has really illustrated the global turbulence that we're currently experiencing and will continue to experience. And we can expect those kinds of shocks and change to continue. And whilst we couldn't really have, probably, necessarily anticipated the precise nature of the pandemic, it's becoming clear that we need to continuously plan for economic turbulence and change.
I think that, if we think of things in terms of resilience and a systems approach, there are three key things that we can draw from that that I think are helpful in terms of us thinking about recovery and our response to the pandemic. The first is, as I've already said, really, that we need to build into our economic policy and planning the continuous understanding that we need to plan for regular shocks and change. That's got to be a fundamental principle.
I think the second thing is that we need to recognise that our economic fortunes are very much linked into the vitality of our health and social systems, and of course the importance of nature and the environment. So, seeing all of those systems as linked, I think, is key. And then, thirdly, if we take a resilience perspective, I think we need to understand that we not only need to focus on how we recover from shocks like the pandemic but also what actions we take now that help build our adaptability to future shocks and change. And so a key theme that I would be keen to emphasise is how important it is that we shape our economic responses in a manner that helps build our adaptability to key changes like climate change. So, tying economic responses to the challenge of low carbon, of building greater sustainability and building better well-being for future generations is a critical feature of our thinking, really, and should be an imperative for our thinking going forward. I think a key, broader principle that that suggests, and which is important as well, is long-term approaches to economic policy making. I think both Dylan and Andy have emphasised the fundamental and long-term nature, the enduring nature, of the challenges that have been facing the Welsh economy, like low productivity and so on. And I think, again, tailoring our response to this pandemic, whilst thinking of what we can do now to build longer term adaptability is really important. So, I think I'd emphasise that in particular.
And just a final point by way of context. I think we can't fully understand the nature of the current shock, as Andy has said, really—we're still living through it, we're still understanding the impact that it's had. But I think we know that it's a unique shock in terms of it being a demand shock, a supply shock and a financial shock all at the same time. So, I think we can't underestimate the long-term impact that this shock is going to have on our local economies, because of the nature, the type of the shock it's inflicted in that sense. So, lots for us to understand and analyse, but the severity of the shock, I think, is certainly something that we can't underestimate.
Okay. Thank you, Professor Gill, and thank you, all, for your opening overviews. We're going to go into some specific questions now, but please don't all three of you feel that you have to address every point; indeed, we probably haven't got time to do that, so one of you could perhaps indicate who you think is perhaps the most appropriate to answer. I'll come to Joyce Watson.
Good morning, all. Can you hear me all okay?
Yes, we can.
My question, really, is about skills. It's about going forward. We've seen when we've had shocks to the economy in the past that what came out the other side was that we'd lost some skills, and the need to keep those going, to keep them ready if you like, so that, when we do have a recovery, we have a skill set ready and able to take us forward. And, again, coming back to what Gill has just said, what is that going to look like, what skills do we need, and how are we going to ensure that we have them?
So, that might be one for Professor Dylan, perhaps.
I think Gill will probably want to say something. I'll just say something quickly, because I said I'd talk about digital skills and I think this is really important. I saw a question on Twitter the other day going out to businesses that actually asked them, 'Who had actually led your firm's digital transformation? Was it (a) the chief executive officer, (b) the chief technology officer or (c) COVID-19?' That sounds flippant, but it is actually true. And what's happened is there hasn't been, by many businesses, this positive aspect about looking very carefully for the skills required in the economy going forward and it's only because of this crisis now—. I mean, look at us today—how many of us would have used Zoom in the way that we have six or seven months ago, and other digital tools?
And what I think is important here is that we've seen Welsh Government begin to make strides in this in the public sector arena, but I'm seriously worried that the private sector in Wales is being left behind again, and I can't see anything of note actually happening. And we've seen this—the World Economic Forum said two or three years ago that a third of all jobs now, and that was two or three years ago, would need to have new skills, particularly digital skills. And it's not about tech—digital skills are in construction, they're in law, they're in manufacturing. So, it's about how digital is affecting all of our lives.
I know you've begun this inquiry now, but, in the words of the Prime Minister, we actually have an oven-ready solution. The brilliant work that Professor Phil Brown has done at Cardiff University—Phil has already written a digital strategy that has been sitting, gathering dust on a shelf for about a year. That could be implemented now and have a serious, serious impact on the efficiency and effectiveness of the Welsh economy to take up the digital challenge, in the same way that Professor Simon Gibson of the Alacrity Foundation has been looking at the issue of digital skills, particularly for young people and how that fits in with the challenges of the digital age. So, you may want to question them more about that in future sessions. But the thing is, I do really believe that we could be the best in class at this. And, as I said, the public sector now is taking this forward. The Welsh Government is really serious about addressing digital skills in a public sector capacity. We also need the private sector to take that equally seriously.
Thank you, Dylan. Professor Gill.
Yes, I very much echo what Dylan has said. I think I'd make two general points, really: the first is the importance of high-level skills to resilience. Research that we did at Cardiff a few years ago that looked at the economic resilience of different regions and local economies across Europe in the context of the 2008 financial shock very strongly showed that regions and localities that invested in high-level skills development were more resilient to the shock. So, I think there's very strong evidence that skills are vital.
And secondly, yes, digital skills—we can clearly see, through the pandemic, how those businesses, for example, that were ready and equipped to shift to online provision of goods and services were the ones that were most resilient and able to thrive and prosper. So, I very much echo the importance of Phil Brown's work and the digital skills initiative, as Dylan has said.
Thank you, Gill. Joyce, do you have further questions? If not, I can come back to you, Joyce.
No, I think that they've answered fairly well, but you kept mentioning that the public sector's been geared up with support from the Welsh Government and that you were very afraid of the private sector being left behind. So, have you got anything that you can suggest that we look at, particularly in terms of helping that private sector, because most jobs are in the private sector anyway and the public sector is shrinking? So, it's pretty critical that we understand what your thoughts are on where Government fits in and drives that change.
Professor Andrew, and then I'll come back to you, Dylan.
So, I think, in answer to that question, one other piece of work that I'd point you towards is the work that my colleague Professor Max Munday is doing in Cardiff Business School. He's the research lead on the Wales European Funding Office-funded superfast broadband project, which is addressing exactly that question around trying to gain as much information about the extent to which the private sector, and small businesses particularly, are improving their digital maturity. I hesitate to summarise his work, but the obvious point to make is that wiring up businesses is no guarantee that they can actually use that technology really effectively. And we've done a lot of work in wiring up, although there are still some gaps, but, of course, what is really crucial is actually supporting businesses to make the best use of that technology. And what we've seen in the first six months of this crisis is that those small businesses that have proved resilient have been able to adapt their business models. Other ones have found it most easy to get online, and start selling stuff and start changing the way that they do their business in order to build new revenue streams or to try and keep cash coming into the business, whereas those that have not have been the ones that have tended then to rely on furloughing and business support grants and cash just to remain hibernated.
Thank you. Dylan, you wanted to come in.
No, I just thought that Joyce was addressing the point I made. But just to pick up on Andrew's—[Inaudible.] He's absolutely right, we're spending a fortune on infrastructure, but I suppose it's the equivalent of buying a Lamborghini for a 17-year-old without giving them driving lessons. So, it's really important that we actually gear up the digital skills, and that also includes within our further and higher education sectors to ensure that everybody who comes out has the necessary digital skills as well as the technical skills that are required for whatever degree they actually graduate with.
Thank you. Joyce, if you haven't got any further questions, at this point—no—I'll come to Suzy Davies.
Just wait for the unmute option. You should be prompted, Suzy, to unmute.
There I am. Okay, thanks. Yes, I suppose the question I want to start with, and it does relate to skills, is what capacity there is in your opinion, at the moment, within Welsh Government and partners in order to distinguish between what's almost an emergency response to the likely consequences of COVID and the longer term strategies that should be facing the challenges that Professor Jones-Evans was talking about earlier on, particularly as they're long-standing problems? I can see that—if I just wrap it up—there's £100 million going from Welsh Government to respond to skills and education and joblessness, for younger people in particular, via three separate announcements, but if you add that up together it still doesn't even cover the research and development gap.
So, I've got two questions there. One is: what should Welsh Government be concentrating on in this short term? And how do they do that without jeopardising any long-term strategic ideas they might be having? And the second question is: even though these sound like quite big chunks of money, are they going to the right places? This more agile and more productive economy—what do they mean by that? And how will this £100 million actually produce targets or evaluateable—if there's such a word—results? Because it's great to talk about lots of money, but if its unclear quite how it should be spent, that's quite difficult for us then, as the Parliament, to scrutinise that work. Is that clear enough?
Yes, the question was clear. Which of the three professors would like to address that point? Professor Andrew.
One observation here is around the ability of businesses to absorb highly skilled labour and a perennial problem, particularly with smaller businesses, is the ability to absorb highly trained graduates. Now, what I mean by 'absorb' is take those workers on and make the best use of the skills that they might have acquired through formal education and continue to develop them in their careers in order to build innovation and productivity within those businesses. And that's quite a big challenge, and that's partly why I was suggesting that one potential way forward would be to return to the kind of publicly supported, Welsh Government supported graduate internship-type scheme, which would encourage firms to take on graduates, and often actually to discover that graduates have got a big contribution to play.
The other observation I'd make is that it's very tempting to try and identify those firms on the basis of sector or on the basis of some other characteristics that you might want to specifically invest in. But, of course, it's dangerous to try and pick winners, and there's always a tendency to try and divert policy towards picking those businesses that civil servants think are better than others. And you need to have that fleet-footedness and discretion to be able to let businesses themselves identify where success is, rather than to try and steer too much. So, I'm getting nervous of specific targeting of particular sectors or 'let's have more of this', because often the kind of sectors that are on the list tend to be the same sectors that every other regional government or national government are trying to pursue, and you just end up chasing the same business, if you like.
Suzy, do you want to come back, and then I can ask the others if they want to pick up on your first question as well? Suzy.
Yes, if that's okay. So, what would your advice be, then, to further education and higher education institutions, and actually schools as well—if we're serious about businesses having more visibility, shall we say, to schools—about what they should be doing in the short to medium term with the type of courses that they're offering? Because, again, my worry is that a big chunk of money's going to be thrown at the problems of the pandemic, which is 'get everybody into some sort of activity', without the space to try and align that with any strategic priorities.
Yes. So, there's a perennial problem of trying to articulate and then match skills demands with skills supply. Sometimes businesses are not necessarily in the best position to clearly articulate the skills they need, or, if they do articulate those skills, they're very, very specific and precise. 'I make jewellery—I need trained jewellery makers', to give you an example I've come across in the past. Well, there are only two colleges in Britain that do that—it's very niche. But at the same time, of course, there's a tendency on the part of FE and HE to say, 'Well, this is what we can supply because this is what we have the expertise in.' So, we need to redouble our efforts to try and solve that matching problem, whereby firms struggle to articulate what they might want two, three, four, five years down the line, and FE and HE say, 'Well, we've got all of these lecturers who can do this, so can you give us funding to train students that they can teach?' There is an ongoing disconnect, and somehow we need to crack that thing.
Okay, that's interesting.
I'll ask others to come in, but have you got any other questions, Suzy, sorry?
I did have one, but I'm conscious of not stealing time, so—
Okay. Before I ask Professor Gill or Dylan to come in, I've got a question of my own, so perhaps I can ask this to save time and you can loop in any response to Suzy's questions as well. We've talked about skills and digital—are there any other particular areas of assistance that you think business need or workers need from the Welsh Government? And should that support be provided on a sector basis or a size-of-a-business basis as well? So, if you can perhaps address any of Suzy's points and that question as well. Gill or Dylan, I'm looking at who might want to start. Professor Gill.
Shall I make some general points? I think, going back to whether we should target sectors or not, I would go back to the resilience issue and the long-term-ism and adaptation, and I think, rather than necessarily say which particular sectors or size of business we should be targeting or supporting, we should be looking to support businesses that have the capacity to link in to support the wider health of our environment, our health systems, our social systems and so on. So, that's a very broad principle, but I think that's something that we could bear in mind. And a second, perhaps, principle is targeting support at businesses with the capacity to add value locally. That could be another key founding principle for any targeted support to businesses. But I'm sure Dylan can add to that.
Yes, very briefly. I think what's been fascinating about the last six months—and I'm sure there will be business schools all over the country getting a very large amount of research grants and studying the effects of COVID-19 on the business community over the next three to five years, or maybe ad infinitum, but what's fascinating is that obviously Government had to respond quickly. We're talking about UK Government, Welsh Government. This had never happened before. It's easy for us standing on the outside to be critical of what they did, but it had to be a broad approach, it had to cover as many as possible.
I was very disappointed that start-up firms, new firms, didn't get the support they wanted, but that was it. But now, I think, we've gone through this—it's the same as when planning for the health issues and coming up to the second wave: there's really no excuse now for Government not to at least try and get it right. And I think what happened to an extent is that there were constant complaints from the business community and from all sectors that they actually weren't listened to, and their solutions, which were based on years of experience and expertise in their businesses, in their sectors—that was not really implemented in a timely fashion.
So, the one plea I would have in terms of anything that we do moving forward is that, if we're going to have a better recovery, and Wales in particular a better recovery, then get input from all parts of the economy—get input from businesses, from the universities sector. A knowledge-based sector exists because of the balance between Government, industry and academia—the so-called triple helix. But if they—
How do you do that, then? How do you get that?
Well, it's really about Government having to open up. If Government is the only part of that coming up with ideas and delivering them, then it's going to be unbalanced. So, it's really about getting that sum of the parts. Let's have an open call for businesses and for—. There are thousands of businesses in Wales—we're all part of Wales plc, whether we like it or not, right? And there are thousands of businesses out there who'd love to contribute their ideas to growing the economy because they passionately believe in Wales, and the same is true of the university sector. The university sector hasn't really been utilised in the way it could have been during the last six months, but that can be addressed as well by having this open call to universities to say, 'How can you help us make Wales the best place that recovers after the COVID-19 pandemic?'
Is that, in your view, not sufficiently done now, that open call for businesses to have their—?
No, I don't think it is, and, when it does happen, it seems to disappear into a black hole. For example—I'll use an example—I called in March for start-ups to be looked at, funded; didn't really get a response for two and a half months. You could argue that at the time there were other priorities, but, if you were a start-up in Wales, you were thinking, 'I've got no funding from this. Where am I going to go?'
And a lot of what you're saying is touching on some of our recommendations in our earlier piece of work as well, actually. Helen Mary, you wanted to come in.
Yes, please, just briefly on that—just to ask, Dylan, why do you think that happens? Why is the Welsh Government not consulting in the way that you believe they ought to be? Why did they not respond to those ideas that you and others were putting out about support for start-up businesses way back in March? Is it a question of culture? Is it a question of capacity? Are there just not enough people in the department to do it, or is it a question of approach? Obviously, you can't know the whole answer to that, but I'd be interested on your take as to what might be going on there and, indeed, if Andrew and Gill agree as well.
Very briefly, I'll just point out what Gill said, which is really one of the most important things that have been said today, which is we need the system to have resilience in response to things like that, and moving forward, and I don't believe that at the moment that system—. We do not have a resilient system in place that actually takes account of the contribution that all parts of the economy and society can make. I wouldn't say it's a broken system, but it's not working in the way it could do efficiently and effectively, as you'd expect, potentially, a business to do if it was in the same situation.
Gill or Andrew, do you want to come in on Helen Mary's questions? Professor Gill.
I would just echo that and support the desire, I think, of all the institutions. All the universities, I think, would really welcome the opportunity to work alongside you and with you and with business in support of the recovery of the Welsh economy. We've got fantastic expertise to draw upon and I'm sure, with a collective effort, we could make a significant difference. The taskforce that we had, with ProAct and ReAct—those sorts of examples are there, which really illustrate what can be done when we collaborate effectively. I think what we're saying is we would welcome that. We also think that should be perhaps more longer term planning, so to not just think about the immediate next two or three years post pandemic, but what steps we can take now to build that longer term adaptability and transformation.
I don't think Helen Mary wants to come back further. Thank you, Helen Mary. It might be an appropriate time to bring Vikki Howells in. Vikki.
Thank you, Chair. I was going to ask about the greatest opportunities for delivering positive change, but I think all of you have touched on that, really, and you've set out where you'd like Welsh Government policy to go. So, if I could just focus maybe on spend, because we know that the Welsh Government budget is squeezed now more than ever. So, where would you like to see Welsh Government really focus their resources? Because policy and resources can sometimes be two different things, and increasingly are so now. So, if I can ask you to focus on that, then, and on the use of resources.
Just to tie that point to Helen Mary's earlier observation, one thought here, of course, is that Wales needs to pull in as much as it can from some of these central UK research budgets, because that, of course, is money that's outside the Welsh Government budget. One obvious area, which relates to the point we've just been discussing, is around all the funding that's in Innovate UK, and particularly knowledge-transfer partnerships. So, actually, if Wales could perhaps incentivise, perhaps put a little bit of an extra top-up, or something—I don't know, they might have to adapt the rules a bit—but to get more of those projects in that would then connect businesses, SMEs—or other organisations, actually; they don't have to be private sector businesses, they could be social enterprises—with university knowledge in order to actually take on graduates and to develop new knowledge and apply new knowledge to get those businesses more innovative and productive.
So, there are some wins, potentially, there for Wales, but my general observation would be to go back to the point I think I started with, which is to say that I'm sure there will be enormous pressure to squeeze the business support and economic development budgets because of the pressures on health and education and other really important areas of spend. It's going to be tough to resist those, but we do need to protect those. And a little bit further out, of course, we're still consulting over the shape of the future regional investment fund money that will replace the Welsh European Funding Office, but I think it's really important that that is properly funded. I mean, even if it's funded at the level that the current convergence funding programme is funded, it's still not going to be enough, I think, to address some of these significant regional inequalities and to build the kind of local community resilience that Professor Bristow's been talking about. Those would be some of my observations and priorities.
Vikki, do you have any further questions? I'll bring Dylan in, and if you do—. Before I move on, do you have any further questions, Vikki?
No, I'm just interested to hear everyone's response on this, really.
I'll come to Dylan and then I'll come to Suzy, who has indicated. Dylan.
Very quickly, again, it's great to see some of this radical thinking coming out of Government, and, clearly, over the last week or so, we've had this debate the Welsh Government's kicked off, although some of us have been talking about it for years, about whether people should be working more from home. And of course, that's come because of COVID-19. But, again, I think the messaging got a bit mixed up then, when the aim was—which is entirely laudable—saying that 30 per cent of workers will be at home, when actually it should be the other way round, that all workers will be spending 30 per cent of time away from the office. I think that's more likely to happen.
And if we are talking about where not only the positive change will happen, but there will be savings across both the public and the private sector, and have a massive impact on health and well-being, it's the fact that, you know—. In another role, I'm chairman of Town Square Spaces, who are developing community spaces across England and Wales. We've come up with this leaflet this week, which we've been working on for months, actually, called 'What if everyone could walk to work?' You've asked that question, and the impact it has in terms of salary, well-being, mental health, the time people aren't spent on a train—. Can you imagine, for example, having to travel every day from Merthyr at 07:00 in the morning for an hour on a packed train, and then the same journey back, and the time you don't get to spend with your kids, the time you don't get to work, the time you're stuck then not doing anything?
So, I think this whole approach that's been kicked off by Welsh Government, it's a conversation we need to have, not only for the Welsh Government, but for the Welsh economy as a whole. Because imagine if we can get more communities, more business communities into our local communities; that we actually regenerate all the towns across Wales by getting more businesses into them. And I'm not talking about having a space with a few desks and and—what do you call it—a coffee machine that's seen better days and a second-hand printer, but having the equivalent of offices that people would expect if they were working for somebody else.
So, that, I think, is going to be really critical. And the point I want to make more than anything else is nobody else is talking about this, certainly not across the border, and this is something that Wales could not only lead the UK in, but could lead the world in, and it's time we actually looked at this very carefully as a way of regenerating our communities, but helping the health and well-being of every person in Wales that's working.
Suzy Davies, you wanted to come in. You're on mute.
Sorry. I suppose an obvious point to make on what Professor Jones-Evans was saying is a question about how long it would take to move away from a property-based financial services system, if you like, where investment in commercial property is propping up big chunks of Great Britain, certainly, at the moment, to what you're talking about. My question, just to go back to what we were talking about earlier, is about timing, and, again, this difference between long-term strategy and an immediate response to COVID, and what the effect of that is likely to be on things like capitalisation of innovation ideas. Now, some of those don't necessarily need to be capitalised, because we're not talking about products as such, but there's still a gap—or it seems to me, even when I look at this Swansea bay city deal, there's a gap—between really good ideas and them turning into something that creates jobs for people. What do you think we can learn from COVID that might help with that, over and above the increased priority for digital skills? Because I think we have learnt how important those are, even if we're not 100 per cent sure what they all are. I don't mind who answers. It's part of this resilience, I think, myself.
[Inaudible.]—and then I'll bring in Joyce as well. Professor Gill.
I think what the recovery—the pandemic, rather—has highlighted is how quickly we can adapt, I think. The implementation of short-term recovery policies, the furlough scheme, business support and so on, they were all put together very quickly, and so that does demonstrate what can be done. We can do things more quickly, we can be more efficient, we can provide services more quickly, we can make and effect change more quickly. It's having the desire and the will to do it, I think, that's key. Sorry, Suzy.
Can I just come in there? Because obviously the examples you've just given are of necessity quite short term—we can't have a furlough forever, for example. So, I'm just nervous that we get blinded by success stories like that that work in the short term, but potentially offer nothing for the long term.
I'd very strongly emphasise investment in innovation, picking up again Andy's points from earlier. And going back to the research that we did on resilience after the global shock of 2008—again, very strong evidence that regions and localities that had invested in innovation did better and were more resilient to the shock, building, I suppose, as it does, greater diversity and business opportunities. So, in particular, if particular sectors are hit with a shock, the economy has greater resilience because it's got other sectors and other businesses that are able to adapt and change. So, I'd very much emphasise, where we can, investing now, very strongly, in business innovation.
We're really pressed for time, but Professor Andrew.
Just to come in on a couple of other things to think about over the medium to long term. Dylan has talked about homeworking and the potential there, and of course that has enormous potential benefits in terms of transport and carbon footprint, but there are some things we need to watch out for. One is that it becomes an excuse for greater casualisation of the labour force and the tendency or the pressure—the opportunity—for firms to move even more workers onto zero-hours-type working or even onto new emerging platform working where they simply hire people to do new piecework, if you like. The risk there is that any investment in skills then just evaporates.
And the other, I think, is that—. We've talked about the fact that policy has had to move extremely quickly, but of course one of the things that's emerged is, if you design policy in a hurry, you create a lot of what economists call deadweight loss, and people are now talking about that with the furlough scheme. So, we do need to perhaps pause, perhaps think very carefully about policy design and not rush into policies for the long term too quickly, because they need to be really well designed.
A real bugbear of mine, and one I keep banging on about in a lot of different circles, is that an appropriate monitoring and evaluation of those policies has to be absolutely designed in from the start. It can't just be a load of happy sheets that come around afterwards that say, 'Well, did it work for you?', and everybody goes, 'Yes, lovely'. We really do have to have a really robust way of saying, 'Well, did that work?' and, if it didn't work, draw a line under it and do something different.
But, having said that, of course, actually, one of the issues with successive rounds of European funding has been this cliff edge every seven years, which has then meant everything goes back to the start again. So, with the regional investment programme that's being designed, Wales needs to avoid that and really kind of try and design support on a rolling basis that will enable continuity, without creating cliff edges.
This really is a great discussion for our committee. It's a fascinating session, this, and I'm just sorry that we're running out of time. We have 10 more minutes and we've got two blocks of questions, so I'll come to Helen Mary first. So, Helen Mary, you've got about five minutes for your block of questions, and then the last five minutes I'll come to Joyce to talk about some areas around the green recovery. So, Helen Mary, you've got five minutes, if you can manage that.
Thank you, Russell, I'll do my best. We know that the impact of the crisis hasn't been an equal impact. If anything, it's highlighted inequalities in the economy in Wales. We know that the crisis has affected some groups of people more, particularly people with protected characteristics. We can see that it's affected women more seriously than it has men. And of course, different communities and places haven't been impacted in the same way; some have been impacted much more seriously than others. How do you feel the Welsh Government's proposal for recovery should address these different economic impacts, both on different groups of people and on different places, and might this provide us with an opportunity to refocus economic support in a way that actually addresses some of the long-term structural inequalities that the COVID crisis has only highlighted?
Who would like to answer that? We've probably only got time for one person to address those points. Nobody wants to—. Professor Gillian.
I'm happy to. I agree with all of what you've said, Helen Mary. I think it's a really important challenge to recognise the inequality of the pandemic's impact and how we address that. One issue I would like to raise, I suppose, is how we manage the withdrawal of the support that's been put in place—so, things like the furlough scheme and the business support. I suppose the dangers are—and it connects to what Andrew was saying, really—that we remove that quickly or too quickly and perhaps that, in a sense, just creates greater inequality as a result. The weaker places will be the ones that will be hardest hit by the removal of, perhaps, those schemes. So, I wonder whether we need to think about how we sensitively withdraw, if you like, the life support that's been put in place to re-energise the economy in a fair way, as far as possible.
Helen Mary, do you want to come back in with anything further?
No, that's interesting as a starting point, and there's a lot more there to talk about, as there always is.
Okay. And Andrew and Dylan, if you don't want to add anything further, I'll come to Joyce Watson.
I want to ask about the green recovery. We've all heard it; it's been bandied about many, many times. I would also add the seas into it—the blue-green recovery. But my question is this: is it time that we thought more widely about what a green recovery really is? Because most people, when they talk about a green recovery, the mindset already seems to be in the wider population that you're talking about energy efficiency, fuel poverty and those sorts of things. But we've discussed this morning much, much wider issues that need to be considered, and one is working from home, for example. So, my question is not an easy question. What exactly, in as few words as you can in such a short time, should we be selling to the wider public to engage in when we're talking about a green-blue recovery? An easy question. [Laughter.]
I'll have a go at it, I guess. It is a tough question. I think that the way in which Government presents green strategies to the public and achieves buy-in from the public is a really interesting issue. Because, of course, I think a lot of this sometimes comes across as, 'This is stuff you can't do anymore', or 'We don't want you driving your car on the motorway anymore to go and visit your loved ones' or whatever it happens to be. So, I think the approach probably has to be around getting people to understand that, actually, a green recovery is about their own well-being and their own health and their own sense of engagement in their local communities. It can be allied to a whole range of other things that provide what one might call wider social or public goods, public value, if you like, to individual citizens, and not just about saying, 'Your electricity needs to come from the windmills and you're going to have to get rid of your diesel car and spend a lot of money on something newer.' So, there are ways in which Government presents this.
But the point was made earlier—I can't remember which of my colleagues made it—about identifying businesses that are actually going to take seriously innovation that will have positive benefits for the green recovery and supporting that activity over the medium to long term. So, there are a number of avenues in which I think policy can be presented, articulated and, I think, explained more clearly.
One final observation I'd make is that I think, at times, there is an apparent ambivalence on the part of Welsh Government about this. This comes across when you read stories about, you know, 'Oh dear, we're not going to have a nuclear power station here' or 'We're not going to have that car factory building big diesel 4x4s there.' On the one hand, there's a kind of long-term strategy that says, 'We really need to address this; this is all part of our commitment to the well-being of future generations' and then, when an opportunity comes to protect, safeguard or create some high-skilled manufacturing jobs, the policy gets kind of parked, and so we need to work through and resolve that ambivalence, I think.
Yes. I agree with what Andrew was saying, because it's interesting—I remember Geraint Talfan Davies, when he was chair of the Institute of Welsh Affairs, saying that Wales was the country of the pulled punch. Now, it seems that Wales is the country of the pulled projects.
It seems, you know, we've lost Horizon Nuclear Power now in Wylfa because of the decision made by Hitachi, which I think is being formally made today in Japan. That's a real tragedy. I was looking back on this concept of the energy island. We all know that Anglesey is one of the poorest parts, not of Wales, but the UK. If you look at the data since the recession, it's been the county that has actually grown the least in Wales over the last decade. So, something like this would have been incredible. But it was 2010 when the former First Minister, Carwyn Jones, announced that Anglesey would be an energy island, and nothing's happened, really. There have been a couple of projects that have been funded by European funding in tidal, but nothing really substantial. Joyce was talking about this whole idea about a green recovery, and I'm not saying that—. I'm not a fan of these big projects, but, at the same time, when you've got a situation—and we've talked about place, and we've talked about sectors—you've got an opportunity here to make good on that promise a decade ago. This is where we go back to some of the things we've all discussed today: if we can get UK Government, Welsh Government, the research council, Innovate UK, businesses to actually look and say, 'Well, maybe we should be doing this as a key project for the whole of the UK', that, I think, would be a real opportunity for Anglesey. And do it properly. My grandmother used to say, 'Gwna rhywbeth yn iawn neu ddim o gwbl'—do something properly or don't do it at all. Let's stop teasing, shall we say, the residents and businesses of Anglesey that this is going to happen. Either make it happen or don't. And I think this gives us an opportunity now to actually do something really special for Anglesey.
Thank you, Professor Dylan. We are over time, but I just want to ask our three witnesses: is there anything you think that you haven't had the opportunity to say that you think is really important and pressing in terms of our inquiry for recovery, or do you feel that you've been able to express your views through the discussion so far? I say 'so far'; we're coming to the end of the discussion, unfortunately. I'd like to continue it. No, that's fine. That's good. Thank you.
I really appreciate your time this morning. It's been a really fascinating session. If you have the opportunity, or if you pick up on the rest of our work over the next four or five weeks, and you feel that you want to add something, as others contribute, then please drop us a note, because we'd welcome that further discussion, whether it's over e-mail or otherwise. But thank you ever so much for your time this morning; we are very grateful. So, thank you. Diolch yn fawr.
I should say to the witnesses as well that we'll send you a transcript of proceedings to look over, and if you feel that you want to correct or add anything to that, then that's another opportunity as well. Thank you ever so much. Diolch yn fawr. We'll take an eight-minute break. We'll be back at 11 o'clock, just so we can have a chance to get our next panel in ready, and technically we can get ourselves organised. Back at 11:00.
Gohiriwyd y cyfarfod rhwng 10:53 ac 11:08.
The meeting adjourned between 10:53 and 11:08.
Welcome back to the Economy, Infrastructure and Skills Committee. I move to item 4 in regards to our inquiry on the recovery in the economy, infrastructure and skills areas. We have a number of witnesses with us this morning, representing two think tanks. I'll let them introduce themselves now for the public record. Helen, would you like to introduce yourself first?
Good morning. I'm Helen Cunningham. I'm project officer with the Bevan Foundation.
Hi. I'm David Hagendyk. I'm the director for Wales at the Learning and Work Institute.
Thank you. I know that you've prepared just a brief overview for us to kick off this discussion, and perhaps if you could do that now, but also incorporate what you think are the challenges for the Welsh economy at present. Would any of you particularly like to go first?
Shall I go first?
There we are, Helen and then David. Thank you.
Okay. I'll keep it very brief then. So, in terms of the challenges for the Welsh economy, we see them in terms of short to medium-term ones and then the longer term challenges. So, in terms of the short to medium, that's really around the immediate impact and fallout of COVID and the lockdown from COVID. So, we've seen that that's affected some places and parts of the economy unevenly. We've seen the highest rate of business closures in places in rural Wales and the south Wales Valleys. And we've seen people being affected differently in terms of different sectors. So, you're probably very familiar with sectors such as food and accommodation, hospitality, arts and entertainment and construction—parts of manufacturing have experienced different levels of impact. In Wales, generally, we saw one in five temporary business closures in the peak of the lockdown.
And then, obviously, there's the furlough scheme, which we have 45 days left of. When that comes to an end, we think there'll be a bit of an unknown impact about how many staff will remain in jobs. And then, towards 31 January, there's the retention bonus scheme, which also comes to an end. And so there are those concerns in the short term around what kind of redundancy and unemployment levels we're going to see. The number of people claiming out-of-work benefits has doubled since March, and, in places such as Newport, we have one in 10 men claiming unemployment benefits.
Then, moving to the long term, we think that it could result in a fairly major restructuring of the economy in Wales. That's partly down to the industry and business survival that we're going to see. So, if we look at some industries, such as the airline industry, which is facing really difficult challenges at the moment, its long-term future and the future of its supply chain—there are still some really big questions around that.
Of course, that's not the only challenge—it goes alongside other challenges around Brexit, around what kind of deal we'll have and how businesses will respond to that deal. It goes alongside some pre-existing challenges in terms of the relative weakness of the Welsh economy and then other things such as automation and climate change.
In addition to that, we think there's something around the changes we're seeing in people's behaviour patterns, such as purchasing consumption patterns and potentially some quite complicated shifts if levels of disposable income drop substantially, for example.
In terms of the opportunities, we think that there are some opportunities to deliver positive economic change. We think there's an opportunity to deliver a more equal and fairer economy that works for everyone. We think that there is an opportunity in a major economic stimulus that looks at investment in green infrastructure, but also our social infrastructure and digital infrastructure and connectivity. We think there's an opportunity around a different spread of economic activity in Wales and, linked to that, perhaps, a more balanced spatial model.
Finally, we think broadly that it could be an opportunity to reset the economy—so, looking, for example, at the things that we need and the things that are essential to life potentially being produced more locally, with a lower carbon footprint. So, I'll wrap it up there as my introduction comments.
Thank you, Helen—appreciated. And I'll come to David Hagendyk next.
Thanks. I think the first thing to say is that we agree with all of that, so I won't go over the same ground that Helen's been over there. I think, just on the long-term challenges, there's a key point that, even before the crisis, there were some pretty big economic forces and challenges facing the economy—so, whether that be demographic change, climate change, skills and inequalities. And I think the crisis has made some of those worse. In particular, I think we should have a real eye on the level of inequality between different groups in different parts of Wales, and also I think we've also been a little bit exposed in terms of our skills profile as well, particularly around digital skills and essential skills.
To pick out a little bit more from what Helen said, I think one specific challenge we would highlight would be around youth unemployment. We know that young people, particularly young women, have been particularly badly hit by the crisis because of the particular sectors in which they work. So, they've been in the shut-down sectors of retail, hospitality, tourism, for example. Those are the sectors least likely to recover quickly because of social distancing. The figures, I think, show that, pre-crisis, one in 15 young people not in education were claiming universal credit; that figure now is one in seven. So, we have seen a real challenge for young people's employment prospects. There is a long-term scarring potential from young people having prolonged periods out of work that is storing up big social and economic problems for us in the future. But, within that as well, I think within young people one particular challenge is to make sure that those young people who are most marginalised already in the labour market aren't left further behind. So, in particular I'm thinking about maybe disabled young people, looked-after young people, young adult carers who are already challenged in the labour market to find work. They are going to find it particularly difficult, I think, in the long term as more and more people are chasing fewer and fewer jobs.
The opportunity, I think, for us is around lifelong learning and skills, and we've seen during the crisis that lots of people have turned to adult education and lifelong learning and skills to try and improve their prospects. And I think there's a real opportunity for us here to invest in adult education and adult skills to really give people that chance to access flexible learning. Talking to a number of providers of post-16 and adult education, they've been really challenged, I think, to provide learning in a more flexible way, to open up opportunities— online and blended learning. And it feels to me there's a way that we could potentially reset the system a little bit here and find a way to deliver more adult education and lifelong learning.
Yes, okay. I like that last comment—'resetting the system'. You've both touched on areas that I know that Members want to ask very specific questions on, so I won't ask any questions myself, because I'd be taking other Members' questions. I'll come to Joyce Watson.
Good morning, both. One of the key things is about skills and you've both touched on that. The assistance that perhaps the Welsh Government can provide to business but also the workers to allow that recovery and whether you feel that there should be particular targeted help and support—.
Who would like to address that? Helen, I think.
Yes. So, I think, first of all, when it comes to the support that we need for businesses, we think that the focus should be on the adaptation and diversification that's needed in response to the shifts that we're seeing in the economy. We think part of that is supporting the creation of all types of enterprises, so that's enterprises ranging from microbusinesses, self-employed social enterprises, for example, and we think that's linked to a broader argument around probably the need to diversify the economy and strengthen it more.
I think that, in terms of specific support to sectors, that needs some really careful consideration. I think, if that's going to happen then there needs to be careful consideration about whether that support is going to a sectoral business that may not necessarily survive anyway. I think the thinking has to factor in, unfortunately, that there's always a level of churn within the economy around business, and that's a natural churn and that's linked to the births of businesses and the folding of business as well. So, I think there needs to be careful consideration around propping up sectors that, long term, may struggle to survive.
I think there's also something around how that support can work to a specific sector. So, if it goes to a specific sector, how does that support then knock on to its supply chain, for example. So, if you look at the example—I don't know—of laundry services, if they're supplying to a hospital they're probably doing relatively okay, but if it's a laundry service that is supplying to hospitality it's likely that they've seen a big shrinkage in business. The same for IT, for example: it's generally seen as quite a buoyant and flexible market, but if you have an IT company say that its business model is focused on supply to non-food retail or arts and entertainment, then it could have really taken a hit on its business as well.
So, I think that needs some careful consideration, but I think, more importantly, linked to that that's around the support that's given to workers and workers who find themselves made redundant or out of a job. And that's where the focus really needs to be for supporting those people and making sure that there are pathways that are really viable for them to reskill, to enter into new markets, and I think there's probably some learning perhaps from previous schemes we've seen, such as ReAct and ProAct, which did some quite interesting things in terms of the support they provided both to workers and to employers.
Joyce, did you want to come back at all, or a further question? And then I'll bring David in. You're just on mute, Joyce. Sorry.
I was going to wait for David to come in, and then come back from that.
Again, I think we would agree with a lot of what Helen said there. We've argued this week, particularly around business support—we've argued for wage subsidies in targeted sectors. I think we would look at sectors like hospitality, tourism, parts of retail, for example—ones that do have a long-term market, but are going to be impacted by social distancing restrictions. Obviously, a lot of this is predicated on delivery of a vaccine and long-term sustainability of the economy. But we've argued for wage subsidy support in those targeted areas.
One caveat, I think, around businesses being able to create jobs is just the lack of headroom a lot of businesses do have at the moment. Talking to small businesses, and small and medium enterprises, a lot of those have taken on personal debt, credit cards, overdrafts in order to see themselves through this crisis. They don't have the headroom right now to start recruiting, and they don't have the certainty of their markets yet, I don't think. So, we are going to need to provide support for industries in the short and medium term, I think.
In terms of individuals, the two things I think we would say—and I hope this is where Wales is potentially better positioned—is one thing that adults always tell us is that they need help to navigate the system sometimes. If you're out of work and, potentially, you've been in work for 20 years, it's the first time you've been out of work, you don't know where to look for help, you don't know where to go. We have the Working Wales programme now—and I declare an interest in that I'm on the board of Careers Wales, which runs that programme. But I think if we didn't have Working Wales in terms of advice and guidance—and it is not perfect and it needs more investment—if we didn't have it, I think we'd be saying, 'This is something you should create in order to provide adults with that help to navigate the system.'
And I think, as Helen was saying around career switching as well, we have the personal learning account programme—pilot, now onto a programme—but we do need more investment in that career switching. There are people who will have worked in careers that were in viable and sustainable industries previously and are now going to be facing a challenge not of moving from one company in aviation to another, but potentially having to move from aviation or from other industries into entirely different sectors. So, I think that advice and guidance and that support for career switching feels really important.
I keep pressing the wrong button, so I clearly need reskilling. I want to talk about skills, really, and what sort of skills we would, in your opinion, look to encourage, to promote, to invest in, going forward.
I think the first one I would say is probably—well, it's definitely—digital skills. I think that feels like a real weakness in the economy that was there before and has certainly come out now. We know that the demand from individuals has been around basic skills and lower level employability skills. I think the risk, in terms of picking which sectors, is I think it's really hard to predict, so I think you need that flexible skill set to be able to transfer industries and you need help with employability skills. What we've argued as well is—. One of the weaknesses we had before the crisis was we had a real shortage of young people and adults with level 3 qualifications. Now is the time to start investing in those level 3 qualifications, because those are the ones that set you up for longer term success in the economy.
I think, just to add to what Dave said as well, where that focus goes, where that lies should—. There needs to be a focus on those workers with lower level skills and qualifications, and that's really for two reasons: No. 1, they're at greater risk of displacement in the first instance. But, secondly, it really makes sense, because that kind of investment tends to deliver bigger returns for the investment in their upskilling. So, I think there's a very strong case there for a focus on people at the lower end of the skills and qualifications spectrum.
Okay. I want to ask about the green recovery—
Joyce, do you mind? Is it okay to bring Suzy in and then I'll come back to you?
That's fine. I'll come back.
Yes, absolutely. Suzy.
Thank you, yes, because it is specifically on this, and this tension between what you were just saying, Helen, about making sure that we don't forget those with existing lower skill sets, and what we heard from the previous witnesses, which was that there are higher level skill gaps, particularly in management and the type of ways that you have to think in order to turn innovations into something that can create jobs, if I can put it as bluntly as that. Not everyone can be a manager—I do get that—but when we're talking about our younger people, what exactly are we talking about as essential skills these days, because presumably we've moved on from reading, writing and basic digital skills into something a bit more complex now, which may have nothing to do with academic ability but has everything to do with—I think you mentioned, David—employability skills? That might have been Helen, sorry. When we're talking about where Government should target resources, if we're not talking about specific sectors, are we talking about specific aptitudes and potential for career paths, even if the sector itself is unclear? I don't know if that made any sense, but I think this Government's going to have to choose, or, if it doesn't have to choose, put more money into supporting those with lower skills and those who could actually bring people along with them.
I'm happy to jump in here, Helen. I tend to agree. I think it's really difficult to predict the skills that you need, and we do need those managerial skills as well. I think particularly you can see a challenge in managing remotely. I think there are different skill sets needed. I think I wouldn't underestimate the value of literacy, numeracy and basic digital skills as the underpinning for much of what we need in the workplace. I think you're right around people skills, around aptitude, et cetera. My only warning, I suppose, on some of this is that we have done this before; we have tried to pick skill winners for young people and then found out that the economy changes rapidly over five, 10, 15 years. I mean, if you're a young person leaving school now, you're facing potentially 50 years in the workplace, and the idea that your skills that you acquire when you're 16, 17 and 18 are going to be the ones that you need in your mid 20s, mid 30s—. So, I think it is about having that broad, flexible base of skills, and teaching aptitude and giving young people real, meaningful, long-term experience of the workplace as well. It's really important. But we also need to invest in lifelong learning as well so that people have got those longer opportunities to reskill.
If I could just come in on that, I think I'd echo that it has to be both, and I think, like Suzy says, you need that entrepreneurial and innovative way of doing things and creativity, and, like David said, you have to have the softer skills, really, for that and that exposure to the experience that starts to bring that and develop those skills. But I do think, as well, if we look at the skills profile that we have in Wales, there's still a challenge there to raise that profile, and if you look at generally the ingredients, the flexible economy part of that is having a population that is well skilled and well qualified.
Thank you. Joyce Watson.
I gave you an indication of what I'm going to ask, and it was about the green recovery and investment in that infrastructure. But what I'm particularly keen on is your views on what you think a green recovery is and what it really means beyond big infrastructure projects, because we're really talking about people here.
Who would like to go first—David or Helen? Helen.
Well, I think, on the green recovery, those jobs and those workers, you can't deny that to a certain extent they are going to be linked to the big infrastructure projects, but I think there's a balance there. So, the potential is there for the green recovery. I don't know if your last witnesses spoke about the potential with housing, but, as an example, we think housing is an important one and that's because we know that there's a need for decent, quality housing in Wales. We know that we have a target for more decent homes for people, and so that seems an obvious easy win, if you like, in terms of retrofitting homes and bringing them up to better carbon standards, and by that you're also tackling things around fuel poverty, for example, and that's about giving people skills and potentially there's a long piece of work to be done there.
But we think that probably needs to go alongside a real investment in social infrastructure as well, and they have to go hand-in-hand, really. So, if we think about the kind of social infrastructure I'm talking about—those are things like social care, childcare, and partly, actually, that is housing as well—I think there's an interface between the two. The Wales TUC have done some interesting work on a green recovery, and they've suggested where the jobs are. I think part of that has talked about housing, part of that has talked about the kind of marine energy and tidal energy that, fortunately, we're quite well placed in Wales to harness—harness better. So, I think that investment, really, is interlinked with social infrastructure and, as we've mentioned before, things around digital connectivity, the digital infrastructure that we have, social infrastructure as well, and physical connectivity, too, actually—how people travel in their communities, how they get from A to B safely and in a way that meets their needs.
You touched on health and social care, and that was a key issue. But the other thing when we talk about a green recovery and big sector investment—which there has to be; I understand that—we also heard this morning about the casualisation of labour, and any thoughts that you have around that, linking into the fact that people might be working more frequently from home—there's a 30 per cent target that's just been announced by the Welsh Government—and any thoughts that you have about making sure that when we talk about a green recovery, when we talk about people working closer to home, that we don't lose at the other end their safety nets that keep them able, if you like, to afford all those things that they currently afford in their current way of working.
Yes, I mean—I'll jump in, Helen, if that's okay—I think that that's right. I think one of the concerns we have around the recovery, if you look at the last recession from the financial crisis, one of the reasons why we didn't have such high unemployment—we had a rise in unemployment, but we didn't have such high levels—was that there was an adjustment in people's wages, wage demands, wage rises, and also in terms and conditions. There is a real risk that one of the adjustments that we might see in the economy, as people are struggling for work, is that we might see the adjustment being that people are happy to accept—or not happy to accept, but have to accept—poorer terms and conditions, poorer wage levels, in order to offset the risk of being unemployed. And we've heard it before, but I think it is about making sure that we are able to build back better.
For what it's worth, in response to your last question about a green recovery, I think it's a real risk that we think about building back back better as being big infrastructure projects. If you think, four years ago, where we were, we were struggling to think how we were going to find the skills and the people to do all the big projects—would there be a Circuit of Wales, the M4 relief road, the metro, the tidal lagoon? Most of those have gone. I think big infrastructure projects don't lead to the kind of job creation that we would hope in our communities. So, we do need to think very carefully about terms and conditions and making sure that that isn't offset, but also not put faith in big infrastructure projects as the panacea for our economic troubles, really.
Okay. In that case, then, Joyce, I think you've finished your line of questioning. So, Helen Mary Jones.
Thank you, Chair, and thank you, both, for your contributions so far. You both in your initial presentation talked about the way in which the pandemic hasn't impacted equally, that there have been groups of people in society that have been disproportionately affected—people with protected characteristics, women—and also communities that have been disproportionately affected. I think we could argue that what's in fact happened is that the crisis has highlighted pre-existing inequalities and imbalances in our economy. And I'd like to explore with you now how you think the Welsh Government's proposal for recovery should address those inequalities. You've both touched on it a bit, but this is an opportunity to say a bit more about that. So, if we are talking about building back better, which has become a bit of a cliché, is this an opportunity to—David, you've already used the phrase—reset? Can we use this as an opportunity to tackle some of those inequalities that were there anyway?
Do you want to go, Helen?
Thank you for that. The answers is 'yes', absolutely. There is the real opportunity here, and that is around people and places. So, as I said in my opening comments, we saw, in terms of business closures, that parts of rural Wales and the Valleys were most significant and saw the highest rates of business closures, and we know that, for some of those places, they already had pre-existing challenges in the economy. So, that comes on top of things that, already, policy makers are trying to grapple with. And then people as well, as you've highlighted—different groups have been affected in different ways, and there is a real risk that inequalities could be increased even further.
So, in terms of places, I think that that does need a focus, on those places and on some quite targeted interventions there. I know that we hear that the reduction in commuting, for example, may lead to people shopping more locally and in their localities, but I don't think that's necessarily an automatic effect of the changes that we're seeing in consumer behaviour. If you live somewhere where your high street declined 20 years ago, then there aren't the places there for you to spend your money, so there's not going to be that necessarily be that automatic effect.
I think that there's a real opportunity, partly linking back to Joyce's question, around ramping up the living wage movement—really building on those risks to particular workers in specific industries that are at risk of perhaps coming under pressure to accept lower terms and conditions, poor wages or work becoming more precarious. So, that's really about the fair work agenda that we have in Wales and how we can implement the recommendations of the Fair Work Commission. But I think the living wage, for example, is paid in some areas of the economy but certainly not others. If we look at the economic contract, that has a certain impact, but that's not a whole-economy effect, as it were. So, I think there's definitely something there in that. And then, linking back to the people that need to be targeted most, just to reiterate what I've said before, it's those people really at the sharp end of being most at risk of losing their jobs, those people potentially with lower skills and qualifications, and the focus on having an upskilling programme that is really tailored to them and really flexible enough to meet the kind of needs that different workers in different places have.
Yes, again, I agree with all Helen's been talking about there. I think one of the interesting stats that we've been collecting around labour markets is that it's those local authorities, those communities that went into this crisis with the highest levels of unemployment, the highest levels of disadvantage, that are the ones that have seen, over the last six months, the highest rises in unemployment, and that's before the furlough scheme really starts to unwind. So, we are seeing a doubling down on unemployment and inequality in those areas.
And I think, as I've said before, particularly for young people, there is a real risk that there are young people who are already very marginalised, already quite far from the labour market or disadvantaged in the labour market, and they are really going to struggle, I think. If you're talking about college leavers, school leavers, graduates all entering the jobs market along with people who've been made redundant, who've got maybe 10 or 15 years of work experience, how does a disabled young person compete in that kind of labour market? And they already face a lot of disadvantage. How does a looked-after young person or a young adult carer with caring responsibilities compete in a very overcrowded labour market without that targeted support and wraparound support from employability providers? And I think one of the things we'd like to see from the Welsh Government is not just recognition that it's not just about a kick-start scheme—because the Kickstart scheme is great, as is Jobs Growth Wales; they're all very good schemes and we welcome them—but that there's a risk that they end up picking out the young people who are closest to the labour market. And we need to make the systems that we've got at the moment work better, and make sure that they're able to do targeted outreach and engagement and wraparound support for young people. I think you talked about other protected characteristics as well. I think one of the things we've learnt is that we do need to do outreach and community engagement for some of these services. So, if you are going to deal with particular protected characteristics, you need services that are in their communities. It's not enough just to have a service and hope people come; you do need to do outreach and engagement with particular groups as well.
Thank you, that's very helpful.
Okay, in that case, we'll move on to another section, which I know quite a few Members may want to come in on. We've already covered it to a point—well, we've just covered it, actually, to a point, but perhaps to expand a bit further, Vikki Howells. Vikki.
Yes, I was just waiting to be unmuted. Some people might think it's better if I start talking when you can't hear me, but there you go. [Laughter.]
So, I just wanted to pick up, first of all, on the issue of youth unemployment, which you've already started to touch on, really, and what you think the potential scale of that could be, and the impact as well, both on the economy and the social impact, and the physical and mental health impacts of that as well, unless we get to grips with it, and what sort of policy recommendations you would make around tackling that. I'm particularly interested in the youth that you think are furthest from the labour market, which you alluded to just a moment ago, David.
Yes. I probably need to defer to Helen on this one, but certainly what we've been arguing for for youth unemployment is a youth opportunity guarantee, where it's the guarantee of a place in education, work or training for all 16 to 24-year-olds. It's expensive, but I think, you know—. I'm not well-placed to talk about the mental and well-being impact on young people—there are certainly people better placed than I am—but there is a lot of evidence around the long-term scarring impact of prolonged periods out of work for young people. We've seen that before in Wales and in certain communities, industrial areas. So, it isn't rocket science to say that this should be an area where we do target investment and support.
So, I think what we're looking for around that youth opportunity guarantee is that there's investment in expanding college, university and training places, and, by expanding places, we mean high-quality places as well. What we're not looking for is just to warehouse young people in college until the crisis starts to ease. If they're going to be spending six months a year in college, then we need them to have real investment in high-quality skills and training that's actually relevant for the workplace. But, certainly, I think colleges, training providers and universities have got an absolutely pivotal role to play in this, and it's about making sure the skills system and the employment system are really joined up together.
I talked before about wraparound support as well. We do need to invest more in helping those people who are furthest away from the labour market. They do need more help and they do need more support and we need to give that wraparound support for them. What our warning to Government's been so far, I think, is not to try and come up with a brand new scheme or a brand new whizz-bang thing that looks great, it's actually to build on the infrastructure we already have. We have lots of good things in Wales already. We have lots of the infrastructure that we need. It needs more investment and there are gaps, but I think it's about using the existing infrastructure, and I think, most importantly, making sure that there's a common purpose between all levels of government.
Operationally, as well, we all need to work together. I know it's going to be hard over the next six months, but I think we do need to make sure that we are maximising the investment that we're putting in for young people so that there aren't any gaps and no-one falls between the cracks. But also, importantly, that, when you've got service providers and agencies like DWP, Careers Wales, they are working closely together operationally. Now, I think the evidence is that they are, but I think that needs to be stress tested over the next few months that we are still—that those organisations are working together for the benefit of young people.
Following what David's said, I think I'd agree with a lot of that, and I think, when it comes to youth unemployment specifically, what we saw pre coronavirus was we already had quite a worrying rate of unemployment with 16 to 24-year-olds—it was around 10 per cent—and then the worrying trend, as coronavirus hit, was where that might go.
Now, with the latest data, we've seen that around 80 young people have been added to that, so we've seen more sizeable increases amongst older workers, but I think there are some real caveats around what the data is saying, because we don't know what the future trends are doing to be, for example, and there's a delay on the data from July, reflecting to what's actually happening now.
So, I think that I'd have to echo what David says in terms of the flexible options for young people, especially around using what we already have. I think that's very important. In terms of people who are leaving school specifically, at the moment, if you're a young person leaving school without five good GCSEs, what are the options for you at the moment? They're actually really quite limited. So, we think that there probably needs to be some reconsideration around that group of young people and the pathways available to them—the options for retakes, the options for vocational, further education learning, apprenticeships, but the whole range, actually, because you shouldn't have any young person leaving school with such a limited range of options, I think.
Vikki, did you want to come back further? If not, I can bring others in.
I've got additional questions, but I think Suzy had a supplementary there.
Okay, thanks, Vikki. Suzy.
Okay, thank you. Vikki, you might have been about to ask this anyway—sorry if I'm doing that. But this £40 million and the additional £16 million that is being pumped into skills now, what are your expectations of the achievements of that? Because it's money that's been found quickly for quick spending, and I imagine a fair bit of it, from what I can see, is being aimed at exactly those people that Helen was talking about earlier on, with the lower skill set, as well as the ones that you were mentioning, David, about being already furthest from the workplace. Were you involved in the putting together of this package, or consulted on it at all? Because I think we all want it to work, don't we?
Yes. As an organisation, we weren't directly consulted, but we do lots of informal pieces of work with Welsh Government and we convened, for officials last month, a round-table around youth unemployment, just to try and get stakeholders together to explore some of these issues. I think, with that £40 million, where we'd say it's positive is that it is focused on trying to build on the existing infrastructure. So, we're not looking to create something particularly new, other than the personal learning account pilot, which has rolled out. But it's trying to build on saying, 'We've got an apprenticeship scheme, we have a traineeship scheme. Okay, these aren't perfect, but we know that they work up to a point, and can we get more places? Can we offer more opportunities?' But I think that only takes us, potentially, to April/May next year, and, as we see the furlough scheme unwind, we are going to need to—. And as we have another year of school leavers coming out next year as well, we are going to need to see a real increase in support.
I think our analysis shows that, for past recessions, it takes about three to six years for job levels to return. And this is a really unique recession, isn't it—it's around a health challenge with social distancing—so, it could take longer. So, we are going to need much more support as it goes forward. The £40 million is welcome, definitely, but I think that even Welsh Government would admit that it's a small step forward for the short term, and it's certainly not a long-term solution.
Okay, thank you.
Thanks. Was Helen wanting to speak?
Just very quickly. We weren't involved in that, but—. I think the pilot is an excellent thing, but, as with all pilots, it's actually about—where there's good practice, it's about scaling it, if it works well; scaling it at pace and really being responsive. So, I think that that needs to be something to be watched quite carefully, that, where's there's good practice, it is scaled very quickly.
I think what we'd expect is that the people who are accessing that support that's been available to be able to navigate it quickly and easily, and that it provides the kinds of pathways that we've talked about in terms of actually improving people's skills, the kinds of skills that they need to enter the jobs market, and that it potentially provides those kinds of qualifications that they need to go alongside that.
My other area of questioning was around adult training and workforce training. It's always an area that we look at and wonder whether more needs to be done on that, but, particularly in the context of the recession, I'd just like to know, really, your thoughts on the level of investment that employers need to make in that and what you'd like to see from Welsh Government in order to assist.
Yes. I suppose this is our area, to a certain extent, or to a large extent. What we've seen—and there isn't data at the moment, because it's a little bit too early, but what we see anecdotally, and from talking to providers and starting to see some interesting insights from companies like LinkedIn, for example, is that we've seen a real rise in interest in learning and interest for adults to access skills and training over the last six months, particularly around employability, but also around health and well-being as well, for individuals during that lockdown period. So, we think there's a real opportunity to say, 'Maybe this is a chance to reset the system and to actually really invest in lifelong learning for adults.'
I think the things that probably stand out a little bit, from what we've learnt over the last sort of six months or so—and they're probably already things you knew, I think—are that we do need investment in local, community-based provision. That's often the provision that those furthest away from education and training, those who—. If you look around our college system, we have some fantastic colleges in Wales; we have really good leadership and we have some great buildings, really good investment in capital. But the idea that someone who hated school is going to find it easy to walk through the gates of the campus in Nantgarw, for example—. They are going to potentially find that first step back in their community-based provision.
Secondly is, I think, that training providers have really responded well over the crisis, and they've put stuff online, they've developed blended learning services. There's an awful lot to learn and to improve on there, but there was a real appetite from individuals who were in work, particularly, to have that flexible access to online and blended learning. But we also need to make sure that we do that digital divide as well—make sure that we don't leave people behind as we move towards more blended forms of learning.
I think there's a real challenge for employers. I think they will find it tough to invest in skills and training, particularly where they haven't got much cashflow and capital, because that's been absorbed while demand has shrunk so rapidly for them. So, I think Government are going to need to support—they are going to need to support companies, and I think there's a real challenge there as to where that money's going to come from. We're prioritising investment in supporting people to enter the labour market, but I think programmes that actually support people currently in work are essential as well.
Great. Thank you.
Yes. Thank you. I just wanted to ask you about the effect of the pandemic on the transport network, because that's coincided with Welsh Government's prioritisation of active travel, of course. We've also had the announcement of, 'Let's try and get 30 per cent of people working at home.' So, I'm curious to know what you think the (a) transport network would be for, who it should be for, and what you think would be the socioeconomic impact, I suppose, of something that I think it was Helen mentioned earlier about not propping up businesses that won't survive. Obviously, the bus regulation Bill has disappeared now, so we're not going to be able to see the effects on that, but it was a sector that was already struggling in terms of its own viability, if you like. So, what do you think we can—what should we do next with transport?
The $1 million question. I think you're right, it is a sector that faces real challenges, but it's also a sector that, essentially, provides an essential service. So, our position is that transport is a universal, essential service, and, for that reason, I think it's always going to need some level of Government subsidy. But I think, alongside that, you have to look at how the system currently works. So, if you look at the people who are more likely to use the public transport system, going back to your question, it tends to be people on low incomes, it tends to be older people, with disabilities. So, there's a question here, really, around social justice, because they're a lifeline for people to access a decent standard of living, to be able to go places and see people and access work and access leisure and be involved in their communities. So, we think that, fundamentally, you're always going to have to have a transport service of some kind, but we think, probably, that may need looking at—the kinds of ownership models that we currently have—which is really, potentially, quite complicated. It could be extremely challenging, but I think that's something that needs to be looked at.
I also think that, if we're going to have a recovery that relies on consumer spend, which, I think, there's an expectation there that there will be, you do have to have people able to actually go out and spend their money, and there are people that will not be able to do that without the public transport service. So, it—
Could I ask you there, just going back to Vikki's questions on youth employment, whether we should see something very specific for younger people and their willingness to use public transport—free bus passes, for example? Obviously, we've focused as a nation on older people using public transport, but are we offering enough incentive to younger people to use it?
Well, I think on the concessionary fare scheme, there's a wider issue around the fact that Welsh Government is contributing to the cost of growing numbers of people using that concessionary fare scheme but without regulating the provision of bus services themselves. So, we've got a forthcoming paper where we're probably going to advocate potentially a flat rate or a two-tier flat rate, depending on long and short journeys, because I take your point about younger people, actually. I think that they do have to be able to access those services, and, potentially, there is a real case there for a different offer to them when it comes to public transport.
On that, it's not our area around transport, I suppose, but I think, just around that, the 30 per cent target for homeworking—we're really careful here that, yes, that's fine, and it's fine for people like me, middle-aged white managers in leadership positions in organisations who are able to give themselves flexibility to work from home. I think, as Helen was saying, it's a real social justice issue, though, isn't it? If we start saying that we're going to start not investing as much in bus and rail services, because we don't think they're going to be needed so much any more, but care workers, shift workers, retail workers, people on low pay—they're the ones that rely on that transport infrastructure. So, I just think we've got to be really careful that we don't think there's a saving here, which there is, environmentally and in lots of other ways, but it's to say the ones who are going to benefit from that flexibility may not be the ones who we most want to help in terms of the lowest paid workers.
I think that's a really important point to make, and, actually, my inbox latterly—the biggest amounts of complaints that are non-COVID related have been about bus services. So, I think people rely on them more than we perhaps understand, because we don't use them.
I think, just coming back on the point around the 30 per cent homeworking ambition, I'd be interested to know, I suppose, why not a different number—where does the 30 per cent come from, just out of curiosity, I suppose? And then, if it's an ambition, how does that ambition interface with business interests? Because, for most businesses and their employees coming into work, the key driver for them, really, is around productivity and around profits—and other things as well, but they're the big drivers. Echoing David's comments, absolutely, that that ambition does not apply equally, depending on where you sit within the labour market, what you do and who your employer is, and, potentially, where you live as well. So, there are some issues there.
And there are issues around homeworking as well, in terms of isolation of workers, mental health—some people really need that contact—to build a virtual contact. There are issues around solidarity, potentially, between employers, employer conduct, if it's a one-to-one, virtual situation. So, I think the ambition is—there's something in it, but there does need to be some quite careful consideration around what those implications are for different people.
Yes, and just on a tangent, I'm a bit worried about the effect on use of Welsh language in the workplace if everything goes online, if you don't have an office atmosphere to do the casual, non-work stuff in, whether there might be implications there, but that's for another day.
I didn't have anything specifically other than I just wanted to hear about what you had to say on buses. If there's a little bit of time, Russ, maybe I can ask this one thing—certainly in south Wales, and I know in north Wales as well, there's a lot of talk about metros and steps forward to those are now being taken. Should we be a bit nervous about investing so much effort in that if we're going to be in a situation where active travel and staying at home are the flavour of the month, if you like, or will a different type of transport system be enough of an attraction to get people using it and off the roads, which is what the primary purpose of it is?
I'm thinking perhaps not our area of expertise, but I think—
No, but for people who are working.
Yes, but I think both are needed. If we had a well-functioning public transport network in these areas, you might say: why would you need to invest more in a different system? But I think at the moment the system is not working particularly well in lots of parts of Wales, so I think it's still a very worthwhile investment to make. But also I think it's important that we continue to utilise that investment to make sure we're offering job opportunities for local people, young people, those who are out of the labour market, whether they be in apprenticeships, training schemes or whatever, and make sure we actually maximise that investment that we're making.
Yes, the purpose of that transport is social as well as economic. I completely accept that.
Okay. Well, unless there are any other pressing points or questions from Members we'll draw our session to a conclusion. Can I thank both our witnesses very much for their time this morning? We'll send you a copy of the Record of Proceedings, but please come back to us if you think there's anything you want to add, and, indeed, as our inquiry progresses, if you see other evidence coming on you want to comment on, then you're very welcome to do so. But we have had two very good sessions today. In next week's session we've got representatives from the business sector, the Confederation of British Industry and the Federation of Small Businesses. The following week we've got representatives from the transport sector, so some of the questions we've asked towards the end of this session will also be very applicable to them. But thank you both very much for your time this morning. We appreciate it. Diolch yn fawr.
Thanks very much.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(ix).
that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(ix).
Cynigiwyd y cynnig.
That brings us to item 5, and under Standing Order 17.42, can I resolve to exclude the public from the remainder of the meeting, if Members are agreeable with that? Thank you.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 12:01.
The public part of the meeting ended at 12:01.