National Assembly for Wales

Diolch, Gadeirydd. Honorary member of the British Veterinary Association.

Diolch, Cadeirydd. Item 2.3, the letter from Llyr Gruffydd in relation to Hybu Cig Cymru, I think what he sets out in the letter is quite concerning, so if committee is content I wouldn't mind if we explored some options about how we might be able to take forward some of the suggestions in that letter.

Yes, certainly. We can do that, if everyone is content with that. Perhaps, Rob, you can bring forward a paper and we'll actually look at the options from then on, if everyone is happy with that.

Yes.

Diolch.

There we are.

Yes, thank you very much. I'm Abi Reader. I'm the NFU Cymru deputy president.

Good morning. I'm Dominic Hampton-Smith and I'm from Usk Young Farmers Club. I sit on the rural affairs committee of Wales and I'm vice-chair at the moment.

Bore da, bawb. Gareth Parry, deputy head of policy for the Farmers Union of Wales. 

Thank you very much indeed for those introductions. Perhaps I can just kick off this session. Is the Farming Connect programme well-known and respected, do you think, amongst farmers? Who'd like to go first on that? Abi.

I'll go first, then. Yes, I think it's fair to say that Farming Connect is well known. I think that we have—well, I know that we have—a lot of members right across Wales who will use Farming Connect for a whole suite of options, from on-farm visits to travelling overseas to see what's happening in other places. I think that, keeping that in mind, it's always worth while having scrutiny on Farming Connect to ensure that it is keeping up to date with changing circumstances, particularly the circumstances we've got at the moment with the new sustainable farming scheme coming into play.

I completely agree. The Farming Connect scheme is a great scheme. Being a younger member of the NFU, it is something that we do utilise within YFC, and I know it is very well-respected and known through our committees.

Gareth Parry.

Yes, again, I completely agree, and I think it's fair to say that the support that's been provided through Farming Connect since its inception has been—well, it's undeniable, really, isn't it? And I think that more farmers are becoming aware of these services with the change on the horizon, really. I think that's thanks to promotion by organisations, the farming unions, et cetera, to promote this level of advice and service that's available. And it is respected by farmers.

I think it is worth highlighting, however, that the level of engagement that Farming Connect will receive from farmers in Wales will always vary depending on farmers' ages, for instance, demographic, the type of business that they have, and obviously business ambitions, depending on the farming system. It's sometimes difficult to envisage the peak level of engagement, if you like, when we consider the average age of farmers in Wales.

And do you think it needs further promotion, ahead of the proposed sustainable farming scheme? Abi.

I would say it definitely does need further promotion. I think we must be mindful of the fact that, traditionally, Farming Connect has not got involved with what was formerly the common agricultural policy budget, and this is a very different portfolio that we're talking about. We need to consider how and if it should fill that space. We're in the middle of the sustainable farming scheme consultation at the moment, and it's not clear in there what role Farming Connect may or may not play. Traditionally, that service has been filled by the farm liaison services, which have been highly respected. And what you get with that delivery is you would phone up your farm liaison officer, and they will organise a meeting with you and help you fill out your respective paperwork, or deal with your appeals, or whatever it may be. Farming Connect is a very different organisation, where they will recognise there's a need in an area, you will express your interest and they will organise for an expert to come and speak to you.

We also need to think about whether having farmers having to access a higher level of advice than they normally would have to receive a farm support payment, is that really good value for money when, at the moment, it is just going to your farm liaison officer and getting that advice? And also just considering the legalities of what if that advice is wrong. We can certainly draw attention to some examples that have come from members where they've been in touch with supposed experts, who've given them advice, and it's been the wrong advice and they've fallen foul of their water quality regulations. So, there are a few things to think of there.

Yes. Okay. Anyone else on this?

Yes, certainly. Just to follow on from that, I certainly think that Farming Connect could be better utilised and pushed, especially, as we say, we're in the middle of the consultation now, and it is very different to what we are currently going through with schemes and things. There could be an opportunity to push, I suppose, more of the environmental schemes that are proposed at the moment, rightly or wrongly. But they are something that, I suppose, farmers will be looking to to utilise, so funding and things there would be critical, I think, for people to be using. However, we've got to remember that Farming Connect is also there for farm skills and all that sort of thing as well, so it is important to not deviate too far from that, and make sure that we are spreading the right words.

Okay. Anything to add, Gareth?

It's undoubtedly really that the remit of Farming Connect will have to adapt and change as we move into this period of the sustainable farming scheme in future. So, obviously, promoting new services, or even existing services, would, obviously, increase that engagement. There also needs to be that consideration of hard-to-reach areas. As Abi mentioned, that's why the area officers, the face-to-face engagements with Farming Connect are so important, especially for those in those hard-to-reach areas.

Okay. Thanks. I'll now bring in Vikki Howells. Vikki.

Thank you, Chair. Good morning, Gareth. Some questions first on access to Farming Connect services. I'm interested to know if you think that the current eligibility criteria to register for Farming Connect is appropriate, and whether that needs to be amended for the proposed SFS.

So, the current requirements are basically 3 hectares of land, a county parish holding number, a customer reference number and, obviously, to be an active farmer. It is going to be important for the eligibility of the SFS, I suppose, to align with that, which it does in the current proposals: be an active farmer and have a minimum of 3 hectares of eligible land. There obviously needs to be some alignment there, but I think there will be an area to look into in future. Given the likelihood, as a result of the current proposals at least, that fewer farmers will be going into the SFS than currently receive the basic payment, making sure that those that are outside the SFS can still receive advice, support and training through Farming Connect, I think, is going to be quite important.

Thank you. We know how important succession planning is within the farming industry as well. So, with that in mind, do you think that students should have access to Farming Connect?

Yes, I think. Any students that are involved with agricultural or land-based training, we would support their inclusion, especially in light of the current SFS proposals, which don't really touch on any additional financial support for new or young entrants, really. So, any avenue, really, that we can follow to try and support our new and young entrants even before they make that step onto the ladder, so when they're doing their agricultural and land-based training courses, then by all means we'd support their inclusion.

Thank you. I'm also wondering what your views are on the process of registration as well, and accessing support, particularly whether the programme is accessible to those who are digitally excluded, and if there is sufficient Welsh language provision also.

Dominic, you want—

Sorry. Is that for me again? Sorry, Vikki.

I'll come back to you, Gareth. I know, Dominic, you just wanted to come in as well. 

Yes. We did touch on it in the last point there. I think the fundamentals are that we need to remember new entrants, and coming from a young farmer's point of view and being, hopefully, the next generation of farmers, it is important that training is widely available to us.

Being a wannabe first-generation farmer, I'm struggling to do that at the moment. But as someone coming from the outside in, Farming Connect has been a massive stepping-stone for me. Unfortunately, with access to land and things being so difficult, the training that has been available through Farming Connect has definitely put me ahead of some others. So, I think, something that we really need to still be concentrating on is making sure that young entrants are able to be given access to Farming Connect. And touching on students as well, that's where I started, with my local college, so making that stepping-stone perhaps a little bit easier for agricultural students would only be of benefit to those people. And I think it is something that we do really need to make sure that we are aware of.

Abi.

Yes, I would just concur with both Gareth and Dominic. As someone who has got a 16-year-old working on the farm at the moment on an ad hoc voluntary basis, from the middle of Cardiff, who has no real understanding of the agricultural industry, I've had a conversation with Farming Connect about how I can help her get on to some of those schemes, and it's quite difficult. So, it would be good to see access. We're going to need a lot more youngsters coming into this industry and it would be great if we could help steer them in that direction.  

Gareth. 

Yes. I think I touched on the question previously, but coming back to the accessibility question. We do receive feedback from our members in terms of problems, especially those who are excluded from digital connectivity. They often find it quite difficult to access this sort of support, and sometimes I think that navigating your way through finding the right support through the Farming Connect website can also be quite difficult.  

So, there is definitely a way of improving that accessibility point of view, especially for those who are in those hard-to-reach areas who often struggle to use online platforms and e-mails and things. And, again, it comes back to the importance of having that availability of face-to-face engagement.

But all other services, on the website at least, are in both languages, English and Welsh. Whether all courses are offered in Welsh is another question, and, obviously, a question to be asked moving forward, given that there may be a need for new expertise, et cetera, to meet the future demands of farmers in Wales. So, whether that may restrict the ability of Farming Connect to offer every single course in Welsh is, obviously, something that will need to be looked at. 

[Inaudible.]—to see, Chair, if the witnesses in the room have any comments on that.

Abi.

Just to add on, I mean this does all come back to, still, the difference between the farm liaison service and Farming Connect, because if we're talking about Farming Connect for the future farm support scheme, farmers go to the farm liaison service for help and services to fill out paperwork. Farming Connect comes to them, more or less, for guidance training, so we're talking about a very different structure potentially going forward, and whether Farming Connect can and should fit that role. 

Dominic, any other comments?

Yes. In term of the Welsh language, I do think it is important that we continue to make sure that is accessible across the board. It's a bit funny for me to say, coming from a non-Welsh speaking area of Wales down in Cwmbran there, where you don't hear many people speaking Welsh, but I do think it is important to keep our language accessible to everybody. It is an important part of who we are as Welsh farmers, especially within young farmers. It is a big part of who we are. If you look at the action report we put together, you'll see that. So, yes, I think, as we say, Farming Connect is going to go down a new route and I think it is important that we make sure that that is tailor fitted to what we need in terms of training and development for our farmers.

Thank you. Moving on to the delivery, then, of SFS, I'm thinking about the structure and the way that the SFS is structured currently, with the seven current programmes. Do our witnesses think that that is the right way to go, or does it need to change? 

Who'd like to go on that? Abi. 

We've got the 17 universal actions and the majority of those actions are going to require a significant amount of paperwork. If we're talking about the sustainable farming scheme in the context of how it compares to the old basic payment scheme system, what you would get, in May, is that all farmers would submit paperwork and it would be put forward for them, either with help or off their own backs. Looking at the actions within the sustainable farming scheme, this is going to require a rolling submission throughout the year, so that is a different type of service that's going to be delivered. And again, a lot of these actions are going to be legally binding and will come with a number of consequences. So, the advice that's given needs to be very trusted, because there could be consequences if this doesn't go right. I think, also, it's just worth labouring the point again that the uptake of the sustainable farming scheme is likely to be very low, so focusing Farming Connect services on that scheme may not be good value for money for the Welsh agricultural community.

That's a very good point that I would like to follow on. As we say, we are predicting, with the scheme in its current form, a very low uptake. I think there is room to be tweaking that. Hopefully, people are willing to work with us and look to alter a few things, which, hopefully, will happen at the end of the consultation that is currently open. But, yes, Farming Connect is going to be very key to perhaps training those who do go on to the SFS scheme with these more environmental schemes that perhaps people aren't quite so in touch with. If we look at some of the universal actions that are livestock based or more traditional farmer based, they will probably be a much easier action for people to follow. But, as Abi touched on, with the paperwork side of things, I think that's all something, as well, that is going to continually roll through the year that people will want support with. But we do need to be aware that Farming Connect is for everybody within agriculture, not just those who take up the SFS.

Do you have anything to add, Gareth?

Just to go a point beyond the very important point with regard to the additional bureaucracy and paperwork involved with the SFS proposals in their current form, contrary to the Welsh Labour Government's belief that a lot of farmers are doing these universal actions already, there are thousands of farmers in Wales who have never even heard of key performance indicators and benchmarking and carbon audits and things like this, or they've never done soil testing, for instance. So, whilst I appreciate that some of these areas are already covered in the current Farming Connect programme, there are still some gaps there that need to be filled for those who do go into the SFS, at least. 

On the flip side, there may be a new avenue to explore in terms of how to support those who don't go into the SFS and lose thousands of pounds in financial support on an annual basis, and it'll be those businesses that will likely need even more support to try and look at improving efficiencies and improving their output or diversification, whatever it might be, to try and make up that shortfall, really. And the figures from the modelling reports that ADAS have done and ourselves in terms of the potential impacts of this are huge, to be honest.

Could I just make one more comment on that? If we're potentially assuming that the next SFS budget will be the current BPS budget, just over £230 million, and we look at how much the Welsh Government has invested in Farming Connect over the past two years, which is a combination of £45 million, so let's just say that's £22.5 million each year, that could be a significant chunk out of the SFS budget on top of everything else. Is that really good value for money? Certainly from NFU Cymru's stance, there is no way advice and guidance is going to make up for the loss of business stability that we will see if we cannot get access to a support payment for producing food, environment and reaching net zero. There's just no way it will happen. There are no KPIs out there that will be sufficient to make sure you've got a resilient business that can invest in the future and weather the difficulties that might come towards you, whether that is drought, flooding, wars, whatever it may be.

Thank you, Vikki. I'll now bring in Sam Kurtz. 

Diolch, Gadeirydd. Good morning, panel, it's great to have you in. Just on the contract length of Farming Connect, it's currently two years and its planned successor contract is also two years. Is this a desirable length of contract, or should there be changes to that length, given, potentially, the length of funding available under the Agriculture (Wales) Act 2023 being around five years? Is two years a good term for a contract with Farming Connect? Abi.

I think it's always up for scrutiny. Farming is such a long-term game. Looking at longer term contracts can give quite a bit of benefit, as long as there are checks and balances in place, so that if it appears that it needs to go off in another direction, then it can. But, yes, some more long-term stability is always welcome.

I completely agree there. One of the big things, when we talk about the SFS, is that five years isn't, probably, realistically, a long enough window. There is an argument that the two-year window should be looked to be extended. As we say, farming is a very long-term process. What can you realistically change in two years that is of benefit? So, being able to look longer term, I think, is only a good idea.

I completely agree. Obviously, continuous scrutiny through things like the programme monitoring committee is going to be key. I think it's a really timely question, Sam, because we'd hope that the SFS proposals, as we currently see them, will look quite a bit different by the time they're introduced next year. So, the next two years, I would say, in terms of SFS development are going to be crucial, and you may find that, in two years' time, the actual remit of Farming Connect may have changed quite significantly. So, as long as we have that continuous scrutiny, that we can ensure that we're having, as stakeholders, an input in terms of in which direction the programme should go, then, obviously, that would be welcomed.

Thank you. Sticking with you, Gareth, has the current Farming Connect programme and what it has offered farmers been a positive or a negative in terms of preparing farmers for the change away from CAP towards a new support scheme, be that the SFS or anything else that may come? Has Farming Connect given good advice to farmers, saying, 'Look, this is where policy is going, this is what you need to do'? Anecdotally, I've heard of stories where farmers are being told to remove hedgerows or tree cover so that they can then apply for another grant to restore that. That seems counterintuitive to actually what's looking to be achieved by farmers. Farmers themselves feel that's not the best use of public money, but it's not good advice either. So, has there been sufficiently positive advice as to, 'We're moving away from CAP to a new scheme'?

I wouldn't say it's to a great extent. I've had members raise with myself in the past questions around whether the advice that Farming Connect is able to provide to farmers is neutral, is impartial, based on the fact that they are contracted through the Welsh Government. So, there is certainly a question to be asked there. Of course, as was said at the start, the support that Farming Connect has provided to thousands of farmers across Wales is undeniable. It has really helped those. Whether it's helping specifically with the transition away from current arrangements to the SFS is questionable, because we are still in that development phase. So, it's quite difficult, currently, to envisage exactly where we'll be this time next year. But I think it's worth noting that in 2020, Menter a Busnes, who are the current Farming Connect contractors, were the second highest recipient of all rural payments in the whole of UK, receiving over £11 million. And on the other hand, farmers have missed out on grant opportunities through certain small grants and things due to budget constraints. So, there is certainly more work to be done here, but I also appreciate that it’s difficult from Menter a Busnes’s perspective because we’re still developing the SFS in its entirety, really. So, it’s quite difficult, really, to plan ahead without knowing exactly what the future arrangements will look like. 

In some ways, it’s almost a little bit early to see whether Farming Connect is moving to fit with the new sustainable farming scheme. But if we look to the examples of the new water quality regulations, certainly there are services now available in Farming Connect for help with your nutrient management planning, and further help with improved soil management. Farmers are flocking to that, because everybody’s looking for help to fill out their nutrient management plan. It is worth stressing again that some people are getting the wrong type of help, and are falling foul of the paperwork once it’s been submitted. That does make it quite complicated.

I would probably say that Farming Connect would have been about as blindsided as we were as an agriculture industry in terms of the extent of the SFS. I do think there are general programmes that Farming Connect have put together that will be of beneficial use to the new scheme, if it should go ahead in its current state. But yes, I do think, as we touched on with the water there, Farming Connect seems to be able to adapt very quickly to what is going on and put things in place. Is it where it should or want to be? Probably not, but things like today will help to steer that in the right direction. But as Abi said, it is probably too early to tell, with the SFS being in turmoil at the moment, as to how it’s going to go ahead. It’s hard to know.

Abi, you wanted to come back on this.

Yes, it was just to restress that point that we should not have farmers having to flood for funded help to be able to meet regulations; it makes no sense.

Just one final point, then. This current SFS consultation has two mentions of Farming Connect; the previous had about 40. What’s changed that? Because it was quite noticeable how often Farming Connect was mentioned in the previous consultation; now it’s not so much. Is that encouraging, that it’s mentioned less in terms of, Abi, the point you made around funding, or is it an acknowledgement that farm liaison services is an opportunity to do that? What do you think has guided the decision for less involvement of Farming Connect in the current consultation, in terms of its name being mentioned?

We’re definitely as much in the dark as you are. Again, it has been the farm liaison service that has traditionally filled that area. So, really, what we need to see is consultation on where and how and if Farming Connect need to be filling that area. It comes back to the point that Dominic has made really well, which is what’s out there for farmers who don’t go into that sustainable farming scheme in the first place. We don’t just need to ask should Farming Connect be delivering that scheme, we need to be asking, ‘Well, if nobody’s in it, how else can they continue to support farmers as they have in the past for productivity and efficiency?’

Does anybody else want to come in on that point? Gareth. 

It’s a point worth noting, isn’t it? I think one thing that the FUW has been pushing since we saw the initial proposals in 2018 is the move away from the need to have consultants and advisers out to your farm, basically on an annual basis, through the farm sustainability review. If I remember correctly, that was the term that was used. We'd certainly welcome the shift in trying to use current systems that we currently have—RPW Online, annual declarations and things—so it does reduce that need for having consultants and things coming out to the farm on a regular basis. It comes back to a point Abi made earlier on: it reduces the amount of the overall pot of money that’s being siphoned off and moved away from the farm gate, basically. So, it is a welcome move, but obviously, notwithstanding the fact now that we’ve been able to make that shift for farmers, and unions to support farmers, to do their annual declarations without having to spend thousands in consultants, there’s now the secondary question in terms of how many of these universal actions can farmers actually do without support. That's, I suppose, one of the biggest concerns that we've got with the scheme: how bureaucratic is it and how much time is going to be involved in terms of complying with all 17 actions?

Okay. Thank you. Dominic, anything to add?

Yes, if I can just jump in. It is interesting that we're looking to move away from consultants and things. I think that could be a very tricky thing to do, especially with all of these new universal action plans. I think the work that both unions have done just shows the need for those services, in terms of the roadshows and the attendance at those roadshows—lots of people coming with lots of questions, and those things are still unanswered in a lot of ways.

You mentioned the amount of mention of Farming Connect within the current proposal; well, to be quite frank, there are a lot of things missing out of that proposal, or consultation, I should say, that probably do want to be mentioned more. Nonetheless, with new entrants and younger farmers and members, I think we're missing a trick there with supporting them as well. But I think Farming Connect could be a really key tool for those that do enter the scheme to certainly enhance their understanding of carbon audits and the environmental schemes that are currently proposed. So, I think we do need to be very careful not to move too far away from that and leaving people to their own devices.

Great. Thank you. Thanks, Chair.

Thank you, Sam. I'll now bring in Luke Fletcher. Luke.

Diolch, Cadeirydd. If we could look at expertise and skills within Farming Connect. I think we've touched on this throughout the evidence session, but I think homing in on it would be quite useful. I'm thinking right back to the start of the session now, and I think it might have been you, Abi, who mentioned the need for Farming Connect to remain up to date with the latest research and evidence. Is Farming Connect as it currently stands any good at doing that?

So, I think what they're very good at doing is providing a portal to help farmers connect with people who are going to be able to give you the right advice. It saves you having to spend hours and hours hunting around and trying to get references. They do group all these names together and help to connect you, and they take some of that admin out of it. So, I think that does work quite well from a Farming Connect point of view.

In terms of keeping up to date, it's about responding to what is going on in a specific sector, or even a specific area. That requires good communication and dialogue with people within those areas to see if they can deliver. I think that there are certainly positives where that has been achieved very well. Certainly, in south-east Wales, there has been some excellent development on cow foot health, for example. So, there are some really good examples out there, but likewise, there are always going to be things that can be done better, and that requires—. I think there is a need for much better engagement than there is. It still seems to be very much at arm's length in some things. 

Okay. Just thinking, then, to the next Farming Connect, what sort of expertise do you think there needs to be more of a focus on? What are the sort of things that you'd want to see done?

So, this still gives the split of opinion on: are we trying to deliver for a sustainable farming scheme, or are we trying to deliver for Welsh agriculture? And I'm not necessarily sure that they're harmonious. So, I think that, as NFU Cymru, we would say that we wanted to deliver for the Welsh agricultural environment, and that means making sure that we're looking after productivity and the environment, but also making sure that we're making these farming businesses stable. So, I think the focus needs to remain on that, and almost the sustainable farming scheme put to one side at the moment.

So, just to dig a little deeper on that, what sort of technical knowledge, then, do you think it would be useful for Farming Connect to draft in?

Without a doubt, a carbon-efficient business is an efficient business all round, and there are all manner of ways that you can do that. We've got our ambitions for net zero, which say that carbon efficiency comes from, yes, sequestration, and you could add biodiversity in there, but also there are renewables and then particularly there is productivity and efficiency. And if you can get a resilient farming business that can be really up to speed with the latest science—. Science changes all the time, whether it's animal health, crop health, whatever it may be. If you can help get those businesses stable and efficient, then that's really helpful. But, again, advice is not enough, it has to be followed up quite often with infrastructure investment. It's no good having advice—. I had a brilliant example of a farmer who had been given advice to modify the dimensions of their shed that they'd just spent £0.25 million on. You can't really take that back down and put it back up again.

Dominic and Gareth, I'm not sure if one of you two wanted to come in. I'm conscious I've stuck with Abi there. Dominic, yes.

Yes, if you don't mind.

Yes, of course.

So, going back to your first point, and Abi, you touched on it there, Farming Connect is very good at reducing your own research time. So, from a personal point of view, as I touched on earlier, I haven't got a farm or anything of my own, so I am currently trying to find places to go, and Farming Connect has been great at putting me in touch with business plan writers and people of those sorts of areas—something that I am not very good at, putting is mildly. However, Farming Connect have been able to steer me and many others. It's not just as simple as that. So, they are great at turning you in the right direction and saving yourself a lot of time to get key information and resources that you need. The Farming Connect scheme is something that is very well utilised around the area, I think, and is quite important to keep modifying and moving forward in terms of where Farming Connect could go.

You spoke very well there, Abi, about carbon efficiency. I think that is something that is becoming more and more prevalent and something that we are talking about a lot more. As a younger generation, as we start to come through, we're seeing, perhaps where sons or daughters are taking over the farm, that push to evolve things and not do it how generations before have done. I think that's key, and that's something, certainly, Farming Connect and other organisations should be looking to tap into—the hunger and the want to get better in the younger generations. So, you know, Farming Connect could be looking at supporting the carbon side of things, and water quality, and efficiency. That is going to be one of the key things to drive us forward towards net zero. And as Abi touched on there, it is probably going to be more important to concentrate on Welsh agriculture as opposed to the SFS scheme, just purely on an efficiency and an uptake point of view. I think you're probably going to find a lot more people farming without the SFS scheme than perhaps potentially on the current schemes that we have in place at the moment, so it's something that we've got to remember and make sure that all of Wales is taken care of.

Gareth.

Just two very quick points I'd add to that as well. The agenda around net zero is obviously growing. There doesn't seem to be as much discussion around reaching net zero in a sustainable way. If we look at the modelling reports that have come out with the SFS consultation, for instance, yes, I suppose it does result in increased habitat, tree cover and things across Wales, but the detriment on the rural economy and Welsh jobs is far from sustainable, so there's a gap, I feel, there, in terms of trying to strike that balance between productivity like Abi mentioned, but also then environmental objectives.

The second point is that we've got to remember as well that Menter a Busnes, and any company or provider that tries for a tender for Farming Connect, are often bound by the tender requirements as well, so there is a need for that direction as well from the Welsh Government in terms of the future look for the SFS, so that organisations such as Menter a Busnes can start designing the Farming Connect programme in that direction.

Diolch, Luke. I'll now bring in Buffy Williams. Buffy.

Thank you, Chair, and thank you for joining us this morning. I have some questions on new entrants. I think you've already touched on a little bit about what I'm going to ask you this morning, but if we could have a little bit more information, please. How might the new Farming Connect contract be designed to encourage new entrants and young farmers into the industry?

Who would like to go first on that? Dominic.

I'll go first, if you don't mind. Yes, so I think encouraging people into farming is probably one of the more important things that we should be looking at and concentrating on. I think the current Farming Connect scheme does a lot in that sort of sense. There are a lot of schemes and training out there that can encourage people into the industry, not just purely farming, as we said about foot trimming and things, and foot healthcare. There are courses and schemes that can get people into the wider circle of agriculture as well, which I think is of importance as well, because you're always relying on outside services on-farm to support your business. So, I think that is important. 

In terms of new entrants into farming businesses, as I say, I'm currently looking into that as well at the moment on a personal level, and Farming Connect has done great things for me there. I think there could be more of a push with advertising and things like that. Farming Connect can help you with that sort of thing. I know about it because I'm involved, and I keep asking the questions, but I think it almost, for a wider audience, does potentially need to be a little bit more spoon-fed to tell people that Farming Connect is there for people—it's not just for farmers, it is for people within the wider area as well that are looking to get into that.

And I suppose that comes back, circles back, to the eligibility and the criteria of actually getting on to the Farming Connect scheme. It was very difficult for me, when I wasn't renting patches of ground, and when I was first starting out, to actually get on to the scheme. So, I think, looking at that will also encourage new entrants on to the scheme to access the help and support that Farming Connect can give. 

Sorry, Chair, could I also ask you: could Farming Connect be strengthened in terms of promoting agriculture as a career, to bring new and young people into the sector? And if so, how do you think that could work?

A 1,000 per cent. It could be utiliised a lot more, I think. The more businesses and schemes that you have promoting farming, and pushing the fact that there are a lot of opportunities within agriculture, is only a good thing. I think that we should be looking to try and progress in that area and really bring people in. Farming can sometimes be seen as a bit of a horrible job—24/7, every day, you're out working, day or night, wet or warm. So, getting past that, I think, is going to be tricky, but I do think it's something Farming Connect could certainly help push along with, and to really show that agriculture is key. You see a lot of videos around the SFS about how often do you need a doctor or a nurse, and how often do you need a farmer. Well, I think that sort of thing is a key message that people are now starting to understand, and the importance of agriculture, I think, is now becoming more widely known than what it would be just within our industry. 

Okay. Abi.

So, we're very pro encouraging young people coming into farming. I would suggest that the promotion of getting young people into farming should come out of a different pot. I think that the role of Farming Connect is to help the current businesses that are there and make sure they're strengthened for the future. I think we've also got to be mindful of the fact that if we've got a new sustainable farming scheme that is predicting an 11 per cent loss of jobs in the countryside, we will then be dealing with a group of people who are—instead of 57,000 people working directly on farms, it's going to be about 51,500 people. So, that's fewer people working on those farms, so what is the responsibility of encouraging more people to come in? And then we need to balance that with the fact that we're going to have to feed 10 billion people by 2050, and how we're going to do that with less and less land. I'm here in Cardiff today, which is great, and certainly seeing a lot of the farmland that's currently being developed at the moment for housing because people need somewhere to live—there are going to be increasing challenges of land for food, for housing, for recreation and everything else. So, we always need young people coming in, but we need to make sure we've got a good environment to welcome them into, and make sure they are fit for that future.

Moving on, then, Chair: can you discuss the role of Farming Connect in tackling the issues of mental health in rural communities? What would you like to see in the new contract?

Gareth. 

I'll come in there, just for one very quick point on the previous question. There is a role to promote their joint venture programme further, I think. That's brought some really good successes, and given potential barriers for tenants receiving equal support through the SFS in future, then that may be a new avenue for new entrants to come into the industry. So, yes, in terms of mental health charities and things, we would like to see closer working relationships between Farming Connect and mental health charities particularly, and more than anything, signposting, making sure that farmers are aware that they are there. We're trying to do that, and I'm sure other organisations are trying to do that as well. So, as much as that is possible, really, given future challenges.

Yes. Anyone else on this? Abi.

Well, I think the—. The current issues with mental health are being created by the evolving regulations that are surrounding farming, and the disruption that's happened, particularly post Brexit. Again, I don't think that is the responsibility of the Farming Connect pot or the agricultural pot; these are still citizens of Wales, and their mental health is important. It's excellent to see that—. I think Farming Connect have a good grasp of what is happening out there, and they are helping to signpost people. I don't think we should really be expecting them necessarily to do anything beyond that, because that is quite a specialist task for them to do. I have also had conversations with Farming Connect in the past, particularly when people have been trying to get funding for discussion groups around bovine TB, and how issues that are so deep have actually been really difficult for them to manage, so, again, I'm not necessarily certain that Farming Connect fills that role, or should fill that role.

Thank you, Chair.

Thank you, Buffy. I'll now bring in Hefin David. Hefin.

There has been a great amount of learning that we've gained from this evidence session. That's certainly the case. I just wonder: are there any processes that the Welsh Government could use to formalise that learning? Are there evaluation programmes that you've been involved with that will enable you to feed that back formally and for the Welsh Government to learn and capture this great amount of knowledge that we've received today?

Dominic.

Yes, if I can start there. I've certainly enjoyed this morning, and it is something that is a rarity for us, to attend these things, as a young farmers group. So, I suppose, firstly, thank you for inviting us along, and I hope that this does continue.

One of the big things being part of the rural affairs committee at Wales is communication. We are very good, within our industry, at talking, and within YFC, we're very good at voicing our opinions. I think there is a bridge missing between the likes of ourselves and Welsh Gov. I know when we try and get hold of Ministers for meetings—we're seeing it an awful lot with the SFS at the moment—trying to pin someone down for a conversation can be difficult, to say the least. So, I think that is very key. We should be working much harder than what we potentially are to make sure that it is an easy gateway to communicate both ways, because, as much as it's good for us to come and tell you what we think, we love feedback just as much as you lot do. So, to be able to speak with yourselves and have that transparency of what you're trying to achieve, compared to what we're trying to present to you as well, I think, is really key. So, building bridges and opening doors to one another is something that I really think we do need to be pushing.

Okay. And just before we move on to other panel members, is there a formal evaluation approach that might assist that?

No, to be honest. I think there should be. As I said, trying to get hold of somebody sometimes is very, very difficult, whether that be a clash of diaries or not wanting or not seeing the importance of speaking to us—. That might sound a bit harsh, but that's how it can come across. I'll be very careful how I say it, but we, as a young farmers movement, do feel sometimes that we don't have the power, or, do I dare say, respect, to be heard sometimes.

So, how about we ask the Farmers Union of Wales whether they feel that they're in the same position, with regard to evaluating this programme particularly?

Abi.

So, I think, in fairness, the disruption with the farm support payment is perhaps what's brought all of this into the forefront at the moment. So, is there a formal process for feeding back on Farming Connect? No. Has it been required in the past? Potentially not. Is it required now? Yes. At the moment, formal feedback for ourselves would be via Minister Griffiths, where we have quarterly meetings for an hour, but they are usually dominated by issues such as water quality, bovine TB and farm support payments, and, by the time we get to the end of an hour, there isn't anything left.

So, Farming Connect's evaluation is limited, then. And I'll ask the same of Gareth as well.

I think it's worth, to be fair, highlighting that ourselves and others do sit on programme monitoring committees to monitor current Farming Connect programmes. However, we haven't been engaged with any meetings to date to forward look what the future of Farming Connect may look like. On a wider point—it's slightly wider than Farming Connect, really—I think back in 2020, in the Welsh Government White Paper, if I remember—. In one of the previous Welsh Government's consultations, it was suggested that a rural development advisory board was going to be created in Wales to formally look at, with stakeholders, the future of rural development in Wales and to try and prioritise where funding should be allocated and, since then, we haven't heard anything further. I appreciate that's a slightly wider point.

I think, yes, it's clear. I'm conscious of time, that we've run out of time. I think it's very clear and I think there's an option for us to consider that as a committee.

Yes. Thank you, Hefin. Thank you very much. Yes, as Hefin said, I'm afraid time has beaten us. So, thank you very much indeed for being with us this morning. Thank you for your evidence. It'll be very important to us, as far as this inquiry is concerned. A copy of today's transcript will be sent to you in due course, so, if there are any issues with that, then please let us know. But, once again, thank you very much indeed for being with us. We'll now take a short break to prepare for the next session.

Elaine Harrison.

Hello. I'm Elaine Harrison. I'm representing Confor, the forestry industry.

Thank you very much indeed for those introductions, and perhaps I can just kick off this session with a question. Do you think the Farming Connect programme is well known and respected amongst farmers and foresters? Elaine.

I'd start with a 'no' from a foresters' point of view. There is a perception that Farming Connect is a well-funded body, but there are procurement issues. There has been a historic bias, where one—. There have been two areas where foresters have been able to get access. So, it hasn't been an inclusive entity, allowing, say, all woodland planners to be involved to be able to support farmers; it's only been a certain percentage. So, a lot of people have been disengaged from it, and haven't been able to support the farming sector. There is a limited amount of woodland management and forestry on the books, so it seems to be a tiny area that has been allowed to be explored with Farming Connect, and then—. Yes, that's everything. Thank you.

Okay. Anyone else? Hywel.

As a network, we recognise the positives that Farming Connect bring to the farming community—training courses, the advisory service, discussion groups, benchmarking et cetera—but we do also find that a lot of farmers are not participating in it, for a few different reasons, I suppose. Probably the age of farmers is probably the biggest barrier—quite stuck in their ways. Maybe we need to push more on supporting younger farmers, in a way. But, on the whole, yes. And farmers in England, Scotland and Northern Ireland are quite jealous and envious of what we have in Wales.

Arfon.

I think it's probably one of the things that, as a network, we wouldn’t have a position on that. But I think it’s probably one to get feedback directly from farmers and foresters themselves. 

Okay. And do you think it needs further promotion ahead of the sustainable farming scheme? Arfon.

I'll pick that one up. I think Farming Connect has to be known by farming across Wales, the sector across Wales. Transition into the scheme and then transition through the scheme is going to be critical for helping farmers meet those scheme objectives, so having Farming Connect accessible to those farmers—. So, they need to know about it, they need to know how to access it, how to benefit from it. I think there is a case to certainly up the profile and make sure that it's an organisation that farming across Wales is aware of, or farming and foresters across Wales are aware of. 

Elaine.

It should be added within the sustainable farming scheme information. The scheme isn't widely published. Farmers and landowners feel like they have to go and look for the information. They are short on time. They need it pushed out to them and they need to be helped and signposted so they can make an informed decision. So, yes, there's no active promotion, there's a desert of information. It seems to be that the Government has information but you have to seek it out, and in other sectors it seems to be a lot easier to find information. The Royal Welsh Show is a perfect opportunity to try and bring that out to the sector. Also, it's very singular, and there's the opportunity of looking at land-based management as a whole. It's quite historical in the way that it's looking, so having the opportunity to look at it as a kind of farming, foresters and wider land management—that is the perfect opportunity to look at getting people to integrate and share ideas and exchange. I think there are definitely a lot of barriers that could be reduced. 

Hywel.

Yes, definitely. I think we're at a critical moment now in agriculture and with the SFS proposals. I think more presence in the marketplace, maybe, I don't know, to try and get people involved. Like I said earlier, I think the age barrier just restricts people. The older population are just stuck in their ways a bit more and I think we're at a critical point. We need to push and emphasise that there's change happening, and there's change needed, and Farming Connect are the ones that should be promoting this, I think. 

Okay, thank you. I'll now bring in Vikki Howells. Vikki.

Thank you, Chair, and good morning to our panellists. Some questions on access to Farming Connect services—firstly, whether you feel that the current eligibility criteria to register for Farming Connect are appropriate, or do we need to see any amendments to those ahead of the proposed SFS?

Who wants to go first? Arfon.

Yes, okay. Thank you, Vikki. I'd probably look at this from two sides, really. So, eligibility, I think there's the eligibility of those who want to be included in order to provide advice and guidance. I think the Chartered Institute of Ecological and Environmental Management have been talking to Farming Connect about how to improve the numbers of ecologists available within Farming Connect. I think CIEEM struggled. It made its members aware, but I think the process is very much weighted towards recruiting the types of skills that Farming Connect currently needs, currently wants, which is very much based on a kind of productionist agenda. So, I think, going forward, the eligibility criteria for advice providers and those supporting the scheme need to broadened out to reflect the aims and objectives of the SFS and sustainable land management more broadly. 

I also think, on the other side of it, those benefiting from Farming Connect services—. I'll probably come back to this; I'll repeat this throughout the session. I think Farming Connect needs to undertake some sort of skills audit or an audit of what it is that it is providing support for. We'll talk about the sustainable farming scheme. The sustainable farming scheme really is a vehicle to secure sustainable land management. So, in securing sustainable land management, who needs to be involved in that? Which parties, which individuals, which agencies need to be brought into this? I think a Government and Farming Connect joint audit, or whatever, to look at who do we need to deliver this, when and how will then inform who needs to be involved in Farming Connect, both as a service provider and a beneficiary. 

I'd just like to point out that it is an ageing workforce and I think it's important to get younger people having access. It's also people who are tempted by the industry and having that option of being able to almost window-shop and have a little bit of access to understand the Welsh farming community, and to have, maybe, some modules where they can look into entering the sector. It needs to be more welcoming. And to bring down barriers and look into helping people to have better access to each other to learn and collaborate—I think that that is missing. 

We're reasonably happy with the eligibility criteria. Maybe there could be a bit more done for smallholders or horticulturalists with fewer than three hectares. We're quite lucky in Wales, we have got Farming Connect, and especially, it creates work for young people, rural children and people to stay in the rural areas. Some of those advisers need to be a bit more focused on more nature-friendly farming, and include a bit more forestry, perhaps, as well, just to balance. But on the whole, yes, we're quite happy with it.

Thank you. Just quickly to all three of you, then, would you include students within the eligibility criteria?

I think, with horticulturalists, we need to value and promote what they're capable of—growing a lot of food off small areas of land. So, just open it and give support to them. And with more nature-friendly farming, looking at the SFS, having discussion groups based around it, having more consultants aware of it and understanding where policy is going and deliver it, with mentors. We've got a good mentoring service currently in Farming Connect and there are plenty of farmers doing fantastic work in Wales—just promote and use them.

Absolutely, I think a system that encourages students and new entrants promotes their progression to Farming Connect. Potentially, there will be future land managers coming from outside of farming, so I think a system that works for them in order to provide them with the skills, knowledge and ability to delivery sustainable land management going forward is vital. There's probably a question there around more closely working with agricultural colleges and institutions across Wales and forming more of an effective working relationship there. Because, clearly, there are increasing asks of future land managers, not just food—we're talking about climate change, we're talking about environmental security, we're talking about biodiversity restoration. Providing them with the knowledge and skills necessary to tackle those challenges is going to be vital. 

Thank you. In terms of the process of registering and actually accessing support from Farming Connect, to what extent do you think that the system has got it right? Do we need to be looking at whether there are issues with people who are digitally excluded, and in terms of accessing support through the Welsh language, as well?

I think it has to be bilingual. Most advisers should be bilingual, because it's surprising how many people just feel comfortable speaking in Welsh and struggle to speak in English. So, that's an important part. And diversity is important, as well, and to encourage all sorts of religious backgrounds as well. I think, moving forward, we have to be more open minded and encompass and welcome everybody on board.

I think the issue of digital accessibility is probably more of a rural broadband issue. So, I think it sits within there. This is something we keep on coming back to, about accessing this information through digital means. There may be a role for Farming Connect as well, to provide those kinds of skills and the ability to do that.

Anything to add? No. Thank you, Vikki. I'll now bring in Sam Kurtz. 

Diolch, Gadeirydd. Good morning, panel. Thanks for joining us this morning. In terms of focusing on how Farming Connect can support the delivery of the SFS and future farm support schemes, in terms of its structure, how can it be better structured? Does the emphasis need to change away from the seven current programmes? Arfon, I can see you nodding, so I'll jump to you first.

I think the seven programmes were a good start. I think there's scope to broaden those out. My main comment would be the programme needs to be now redesigned around the sustainable land management objectives and all that that entails. That will require encompassing more of the environmental side of sustainable land management. I think one of the recommendations that came out of the 2021 evaluation of Farming Connect was that lots of other similar programmes running elsewhere in Europe were doing a lot more for the environment. So, I think Farming Connect needs to bring in the environment in order to be able to provide the services required to help farmers deliver sustainable land management.

An area that is probably lacking there as well is that there needs to be some sort of inclusion around research and development. As we move forward into supporting land managers to deliver this suite of outputs and objectives that will deliver environmental benefit and food security, a lot of this is going to be new. How do we transition to it? How do we implement regenerative farming at scale? How do you implement nature-based solutions and how do you join all of this up?

Is it the role of Farming Connect to do the R&D side of it, or is that where you think—? I'm thinking of the Institute of Biological, Environmental and Rural Sciences in Aberystwyth as an example of R&D. Is that Farming Connect's role, or is that just a nice-to-have? If you're thinking of where budgets will be, should that be a core focus for Farming Connect? That's what I'm trying to say. 

It's a good point. I think Farming Connect have got a really good role in perhaps helping those ground-based, farmer-based collaborations to take this stuff and trial it on the ground, to learn through doing. I think that would involve academia, like IBERS and Bangor. I think we've lost that from—. That was there within the CAP provision. We had that ability to test this sort of stuff. Where we are in Wales now, I think we all recognise that farming needs to change, it needs to adopt these kinds of regenerative principles, it needs to be much more sustainable. That's different to what we've got now. I think we will learn what that looks like through doing, and it'll look different in different parts of Wales. But having Farming Connect enabling that development and understanding of this—what does regenerative farming actually look like in Wales, how do we implement it and how do we derive the benefits from that—we'll only get to grips with that when we're actually piloting it and trialling it.

I think it's important to look at the continuous professional development units and ensure that you include forestry in there, and woodland. It's really important to consider merging the sectors, and not just having Farming Connect—maybe a rebrand of the name. Is farming the right word? These are the land managers, you're trying to push them towards looking after the habitat and the woodlands, as well as creating food. It's taking away that polarisation and embracing a broader remit of how you manage your land. I think it's really important to bring the other people into that room and to collaborate and exchange ideas. I think it's the perfect platform to explore that.

I think there has to be a structure around the sustainable land management outcomes and more emphasis on the 17 universal actions. Maybe we should be looking at Farming Connect linking up with schools, colleges and universities to get the ball rolling a bit sooner, educating our children on how food is being produced, because we need food production, to look after nature, timber production. It shouldn't be as three, it should be as one, one goal. And we need some demonstration farms that are SFS ready, SFS champions, so farmers can go and have a look at what exactly do they mean by certain outcomes, certain universal actions, so we can seen it on the ground, and get an understanding of how it looks, how it will work for my farm at home.

That’s helpful. I want to come back to a point that Hywel mentioned, and Arfon mentioned separately, in terms of what Farming Connect is delivering, and whether the advice that’s been given is sufficient for that transition away from common agricultural policy, which we’ve had for 40 years, to new sustainable land management objectives. Do you think it’s been sufficient, the advice that’s been given? Has it been appropriate advice that Farming Connect has been giving farmers in this era of post-Brexit transition? Arfon. 

I don’t think it has been. I think it’s still very much based on—. Farming Connect is an agency; it’s a product, really, of that same policy that has shaped farming. We have a very production-based industry, and a very production-based advisory service at the moment. I think we’re now seeing with the concerns within the farming sector, with change coming, there hasn’t been that investment in preparing farmers for that change. And a key part of transition is explaining why; before we get into the how, it’s explaining, ‘This is why we need to do it.’ And I don’t think there’s been an adequate investment in that. Clearly, it hasn’t been done effectively. So, it’s something that needs to be done urgently.

To me, this is part of the conversation as much as everything else; we need to start that conversation by having a conversation around why what we’ve got now, why business as usual, is no longer appropriate. It came out in the last century; it came out mid twentieth century, what we’ve got now. Going forward, we’ve got a whole suite of challenges now to meet. Farming is critical to meeting these challenges, but we’re not having that conversation with farming about why we need to change, and the absolutely essential role the farmers must play in not just producing food, but tackling climate change and restoring—. We say ‘restoring nature’; restoring nature sounds a bit kind of fluffy, doesn’t it? But restoring the ecosystems we all depend on is the bottom line there. So, that’s the role that is now facing farming, and that’s the role that we’re asking of farming. But I don’t think anyone has actually sat farming down collectively and said, ‘Right, this is what we now need you to do and why.’ 

Hywel, you’ve mentioned Farming Connect being the envy of Scottish and English farmers, yet at the same time you mentioned it hasn’t really been targeted towards nature-friendly farming. Has that been a bit of gap in its provision over the last couple of years?

Yes. Three or maybe four years ago, I had this conversation with Farming Connect and they said, ‘This is where policy is going.’ We didn’t really know what the name of the scheme was then, but they should have prepared farmers ready or get them on the journey, just get them on this bus, to say this is where we’re going, this is what’s being asked from farmers with society, the nature recovery, biodiversity, food production—food production is still important—and climate change et cetera. And I just feel that with Farming Connect, even though it is a Government-owned business, those two departments in Government weren’t actually working together. And then the important thing was 'why?' Farming Connect should have explained to farmers why we’re doing this, why it’s important, and I just feel like we’ve missed a trick. We’re at a stage now where we’re seeing all these protests et cetera, and farmers getting angry, because nobody has actually explained to them and helped them with this transition. I think the Welsh Government and Farming Connect have missed a trick, unfortunately.

Arfon, I know you wanted to come back in.

In terms of Farming Connect as an idea, as an organisation, as an agency, I think we’re very fortunate to have it in Wales, and I think to some extent Farming Connect has suffered in the way that Hywel just said there, actually, with the lack of clarity about the scheme’s design and purpose. I think Farming Connect to some extent has to prepare farmers for the transition, but until we’re actually 100 per cent settled on how we’re going to achieve that through the scheme, I imagine it’s quite difficult for Farming Connect to respond to that. There’s a bit of a chicken-and-egg thing going on there as well, isn’t there?

Just quickly—I’m conscious of time, so as succinctly as possible, if that’s okay—the current contract length is two years, and the planned successor is a two-year contract as well. Is two years the right amount of time?

Well, I would probably say, given where we are and the need to get through transition from 2025 to 2029—I would have thought about perhaps looking at a longer contract for that period with built-in reviews and then probably revisiting that at the end of transition.

Okay. Elaine.

Yes, I agree. I was going to say the five years, because it lines up with the SFS, but, obviously, I think it’s really key to have those reviews, like Arfon just said.

Yes, I agree, it has to be a five-year contract, and for that transition—we need to get hold of the staff, train them up, and that sort of thing. And on staff retention or devised as retention, and information—I don't know if a two-year contract is secure enough. So, yes, definitely longer.

Thank you all. Diolch, Gadeirydd.

I'll now bring in Luke Fletcher. Luke.

Diolch, Gadeirydd. If we could focus in on the expertise and skills within Farming Connect and thinking to the next Farming Connect contract, what sort of expertise would you be looking for within that contract?

So, we need more ecologists on board, more people with biodiversity knowledge, whether those are farm mentors or skilled ecologists, because it's a specialist topic. There are a lot of farmers—they don't know if their fields, land or habitat are ready. I'm hearing stories where the map says it's a habitat but it isn't. Farmers don't actually know what's the definition of habitat—that's a fair question. What is the definition of habitat?

And just a bit more broad, in terms of what the scheme is asking of us, we need advice on it, whether it's pond management or, I don't know, forestry management—just on a farm level, just those key skills.

Elaine or Arfon, do you have anything to add?

I was going to say, it's knowledge-sharing events around, say, new planting—getting people out talking about it—continuing professional development events for foresters and farmers, so an exchange, and events that allow the sectors to understand each other, but also providing elements of learning but work around, say, farmers. Would it be an online course that they can access at home, where they don't need to travel, or having podcasts that they can listen to while they're in their tractors, or being face to face and being able to see each other and have those informal discussions where a lot of the questions come out? I think it's really important to try and find the best method of delivering this information. And also, professionalising the sector so that people can really have that information and be able to make informed decisions about their business and to make these businesses thrive and to futureproof.

A few things, I think: referring to that skills audit again, I think there needs to be a real, thorough skills audit of what provision is required so that when it comes to contracting that advice, Farming Connect is filling all the boxes that it needs to fill. I think probably an internal audit as well of Farming Connect, as Farming Connect transitions itself from supporting a policy largely based on production to one that's around sustainable land management—is it internal thinking and ability and skills? Do they reflect the requirements of Farming Connect? So, I think there is that looking within Farming Connect.

You mentioned, I think, that Farming Connect has got a big job now over the next few months to raise awareness, or work with Government to raise awareness of why we're talking about sustainable land management, and, importantly, what the opportunities are around sustainable land management. Currently, sustainable land management, environment and climate and nature, are almost seen as a threat, and I think there's a job of work in trying to bring these things back together and integrate them in a way that sustainable land management is absolutely dependent on.

I think there's probably something in the forward planning as well—understanding that when it comes to finalising the sustainable farm scheme, if there's some sort of sequencing of delivery through the various layers and through the kind of transition period, I think Farming Connect needs to think about that kind of sequencing as well: what should it be focusing on initially in order to have that conversation with farming?

And finally, I think what is very effective in getting messages across are demonstration farms. I think probably investing in demonstration farms now—but demonstration farms that don't separate out nature, climate and production, demonstration farms that bring these things together. And ideally I would like to see the most productive farms in Wales having that nature element in them. How can you incorporate the required amount of management of nature within those farms? And the same for climate. And, importantly, how would you integrate this, and where are the mutual benefits in doing this as well. So, I think, probably, get yourself sorted, think about the skill set it's promoting, but get the show-and-tell examples up and running, because those are the things that I think really resonate with farmers. 

On demonstration farms, I know the Nature Friendly Farming Network has also suggested demonstration farms. Can you expand a bit more on that?

Yes. I think what's important on a demonstration farm, as Arfon was saying, is that you see the benefit of the livestock grazing to the habitat. It's not just the case that we've got habitat and that's it; the habitat is there because of your livestock grazing it, and that's part of the success of the habitat. So, it's not a case of having production or habitat or nature, it all works together. And on demonstration farms—. One example is a demonstration farm proceeding with herbal leys, which is great, but it was just isolated herbal leys. I don't know if there's more that demonstration farms can do for habitat management and control. So, you encompass the woodland into the farm, the benefit of the woodland, whether it's shelter for animals et cetera, some cash crops, fencing materials for the farms, the livestock grazing it is of benefit to the woodland—the farmers need a vision of what Government policy wants from us and what society is asking of us. And it isn't food production against nature. As farmers, food production is our priority, but also nature is a priority for their business as well. So, without both, neither wins. 

Sticking with some of the expertise elements of this, then, what sort of third party organisations would you want to see the next Farming Connect contract collaborate with to increase the access to expertise or the level of expertise within the scheme?

For example, ecologists, because that is a specialist job. So, you could have a third party ecologist—someone like Plantlife, for example, who are very knowledgeable. The national parks have got their own ecology teams. Personally, I have had a biodiversity blitz—five days on the farm. There's an amazing amount of knowledge and information, and a lot of them pointed out the benefit of grazing livestock for the habitat. For example, without sheep, we wouldn't have waxcap mushrooms here on the hills. So, basically ecologists and good mentors that are actually doing it. There's a lot of mentoring going on in Farming Connect, and it's a fantastic service. Push more of that and get more farmers willing to share their experiences, rather than just production—production and nature. 

Moving to Confor, then, Elaine, do you see a role for Confor in the sense of the woodland elements of SFS? Is there a way in which Confor could complement Farming Connect?

Yes. Confor wants to help support the continuing professional development elements on the woodland modules to help bring that element in. I think it's also important, during the process, to bring in forest research. So, they're using evidence-based practice and they've got access to that data. And I think it's also important that, when it gets implemented, the farmers have access to the woodland advisers that are in Wales. There are 20 to 30 registered with NRW. They're professional foresters, and they're happy to advise in a non-biased way on the best for their businesses, and not necessarily for environment or economic—. It's done on a case-by-case basis. And also the Institute of Chartered Foresters have got a register of professional foresters. But, yes, Confor are very keen to support the—. Do you want me to go into a bit more detail on the CPD?

I am looking at the clock and I'm conscious of time, so it might be worth, if you wanted to give a bit more detail, to write to the committee.

Yes.

And I do have one final question, Chair, so if we can be as succinct as possible. How well is Farming Connect at keeping up to date with some of the latest evidence and research that's out there? Arfon, I can see you're ready to come in.

Just to come back to your previous question—I know you're pushed for time—I'd just like to say, with the third party, clearly with, you know, restoring ecosystems being one of the kind of the key objectives of SLM, then I think there's a key role there for NGOs—you know, those farms who are kind of practising regenerative farming, agroecology, agroforestry, those farming systems that work with nature. I think there are lots of really good examples out there, so—. And, you know, perhaps the work that—. You know, as an example, the work that RSPB's doing on Lake Vyrnwy and peatland restoration is very specialist stuff. I think we've got a lot to bring, a lot to contribute to supporting Farming Connect going forward. And then, the—. I forgot your second question then—

How well is Farming Connect at keeping up to date with some of the latest research and evidence out there?

I think it's massively challenging. I've come out of a few meetings where Farming Connect have been involved and we've all gone, 'We didn't know about that.' I think there's so much information out there at the moment, I think it's just massively challenging. I think, as Farming Connect is going into, you know, kind of helping support sustainable land management, and into kind of stuff that is kind of constantly developing as well—you know, there's stuff around carbon sequestration that's coming out all the time, regenerative farming. I think we're all struggling with it, I don't think Farming Connect is any different. So, I think they could probably do better, in the way that we all can. So, I think there probably needs to be something for Wales plc to be able to get a space where we can—. That might be a job for the Welsh Government, I don't know, but somewhere where we've got kind of a hub for all this information and it's easy to access as well. And I think that's the challenge with all this stuff—often, it's out there, but, you know, we're all very busy individuals and organisations and we don't necessarily have time to read through reams and reams and reams of stuff, we just need the kind of critical stuff that makes a difference. And importantly—and I think this is another job for Farming Connect as well—it's got the added challenge then of integrating all of this. Because, you know, if it's going to be successful in achieving these outcomes, it's got to move away from kind of production, environment, climate, and somehow bring all of these things together. Because we've only got one Wales, we've got a finite amount of space, and we need to use it as effectively as possible, and that really requires a kind of a joined-up approach. So, you know, it's a big ask of Farming Connect here.

Okay. Elaine or Hywel, anything to add briefly before I hand back to the Chair?

Yes, quickly. I think, going back to the pilot farms, basically, and demonstration farms, let's not focus on just success, just focus on trying something. If it fails—we learn more by failure than success sometimes. If you look at different technologies, there's always new technology coming on board; maybe the demonstration and pilot farms could trial these. For example, virtual fencing with animals for various reasons, conservation grazing and getting more cattle back on the uplands, on the hills, because we need cattle up there. There are technologies out there. And, yes, just pilot farms for demo farms.

One more thing: I just feel that Farming Connect need support and I feel that Confor should be in a position to support and champion the option of forestry and woodland management, and I feel that that is an element that is missing, and I think that is something that should be explored.

I'll now bring in Buffy Williams. Buffy.

Thank you, Chair. I know that we're pushed for time; I just have the two questions. How might the new Farming Connect contract be designed to encourage new entrants and young farmers into the industry?

Who would like to start on that? Hywel.

Yes. It's a good point and we desperately need new entrants and new blood into farming. And you could argue that the old farmer hinders the development of the succession sort of thing. So, succession on farms, that's a big headache. I know Farming Connect have got facilitators that are dealing with succession; it's a massive hot potato at the moment. And just—. These CPDs will be targeted at younger people. The younger people will be more likely to participate, and, hopefully, that sort of thing will allow the older generation to hand control to the next generation. Unless we do something quick, we won't have anybody to manage the land and farm the land anyway and produce food. And new entrants altogether, the price of land is obviously the big issue for new entrants, but share farming, which might need tweaking, is a good system within the current Farming Connect. It probably needs tweaking and more emphasis on who gets the payments rather than the landowner. But succession is the key.

Anyone else on this?

The thinking there would be—. The question there was about farming, I think if we think about sustainable land management, that does open up the future to a much wider range of potential new entrants. I think Farming Connect, in addition to perhaps appealing more effectively to farming, probably needs ways of reaching out to those who perhaps don't know there are opportunities here and who want to actually get into sustainable land management. I'd probably start with the universities and colleges—colleges across Wales—but then look at where else might those new entrants be coming from. Again, I think it's part of that wider skills audit: who needs to be involved to deliver sustainable land management and where might those future managers be as well.

Anything to add, Elaine?

Yes. Going over what I've said earlier, really. I think it's really important to have a bit of a re-brand and a refresh and having a suite of information that people can access. They're interested in it, so, 'Here's some CPD to learn about it,' and then raise the professional standards, so people see it as an industry that they want to get into and they can see the economic benefits of it, and that it's not necessarily a struggling industry, that it's cutting edge, using the newest technologies and being as efficient as possible. I think it's a really exciting time to come in, and I think that needs to be almost shouted out, really.

Thank you. What is the role of Farming Connect in tackling the issue of mental health in rural communities, and what would you like to see in the new contract?

Hywel.

I think the first thing I'd say is to look at what Farming Connect are currently doing, and is any of that creating mental health issues, because there's a lot of peer pressure, and there are a lot of expectations from farmers. Are we pushing farmers to do more than they physically can, both mentally and physically? That's the first point. We have got a lot of mental health charities in Wales, and we're quite fortunate in that. Sometimes, if you talk about something too much it becomes reality, and I think just having somebody there to talk to—. And some of these discussion groups don't have to be focused on precision grazing or, I don't know, key performance indicators; maybe just a day out to the races or something like that would be enough sometimes—just down time. There's too much pressure. It's all about work, work, work and sometimes down time is all that's needed. Just have a discussion group, they can meet every so often, and for one item every so often, they don't talk about farming and they talk about the fun things in life.

Would anyone else like to add to this? Arfon.

Only to say that we recognise it's a significant issue. It's a serious issue facing farmers across Wales, and I think that provision of emotional support for farmers is vital. That should be something that's prioritised—the well-being of farmers, or any individuals, is kind of paramount. I think, alongside that as well, we need to understand what those drivers are as well, and what's causing that level of anxiety and stress, and if some of those solutions can be delivered through the Farming Connect programme, through helping farmers move to a more sustainable, less stressful—. The things that Hywel has highlighted, moving towards a more sustainable future for farming, but for themselves as well, I think that's important. So, I think, yes, they need that emotional support, but there's a role for finding practical solutions as well.

Thank you. Thank you, Chair.

Thank you, Buffy. I'll now bring in Hefin David. Hefin.

Diolch, Gadeirydd. I'd like to understand how all of this learning that we've had today—all of this really helpful information—is captured by the Welsh Government and used to build their future Farming Connect strategy. Could you just elaborate on how that happens?

Arfon.

I think Farming Connect needs clarity on what it is Government is looking to achieve for rural Wales. I think that's essential, and I think that's part of the confusion at the moment. So, providing that kind of clarity, that leadership, and then resourcing Farming Connect adequately to deliver that. I think there's also a role to ensure that Farming Connect is then kind of held accountable for it, that the advice and guidance to the sector that Farming Connect is delivering is up to standard. So, I think there's an important role there to ensure that it's the right advice, to the right standard. But, I think, Government has got a key role to play in providing the, 'This is what you're delivering.'

Anything to add, Hywel?

Yes, similar to what Arfon was saying, I think it's the 'why' that the Government needs to explain to Farming Connect: 'This is what we want from policy, can you help us deliver it?' And discuss the 'why'—the 'why' is important, sort of thing. I just feel like, sometimes—we discussed it earlier— Farming Connect and Government are not talking to each other, so better communication. 

Okay. And it might be helpful, perhaps, if you elaborate on that, and how that might happen, in further communication with the committee, rather than take the time today. 

Yes, so, basically, if I go back a few years ago, I had a conversation with Farming Connect about the future schemes, and they said, 'Well, we don't really know what Government are doing, they aren't actually telling us.' So, they need to meet. They probably do somehow, but they need to meet often and explain to each other what's happening on the ground, what farmers are doing, what they want. And the Government needs to explain why they want to do it, and in stakeholder groups, cross-party groups, just to have an understanding. It's all about the 'why'. 

Okay.

Thank you, Hefin. I'm afraid time has beaten us. Our session has therefore come to an end, but thank you very much indeed for being with us this morning. Your evidence will be very important to us for this inquiry. A copy of today's transcript will be sent to you in due course, so if there are any issues with that, then please let us know. But, once again, thank you very much indeed for being with us. We'll now take a short break to prepare for the next session. 

Diolch. My name is Ben Cottam. I'm head of Wales at the Federation of Small Businesses.

Thanks very much for that introduction, and perhaps I can just kick off this session with just a few general questions. Overall, what are your views on the development bank? Because I think, in your written evidence, you say that, generally, the Development Bank of Wales is perceived well and is a valued institution in the financial landscape for small and medium-sized enterprises.

Yes, I think our perception is that, since its institution, the development bank has done a good job in creating visibility of its function and its role. I think it has been quite business focused. It's been quite proactive in reaching out and it's been quite proactive in using networks such as FSB to create recognition. When we've undertaken research that looks at both awareness and general satisfaction of our membership with the development bank and its mission and its products, generally, there is an overall level of satisfaction.

I think also it sits in a landscape where we talk about development banks and similar entities throughout the UK. For instance, its role is very distinct by comparison with the Scottish National Investment Bank, for instance, or the British Business Bank. It is more business facing and more keenly aimed in on the needs and engagement with SMEs. So, it's still though a relatively new institution, and there's always improvement, but I think it has been a very positive start, and I think, clearly, to some extent, awareness of the development bank has been aided by its important role during the COVID pandemic, and so therefore more businesses now have a visibility.

I guess the next question and the next challenge is: what is the next iteration of the development bank's mission in a very, very convoluted picture of business support in Wales? Maybe we can come to that. But also, what is the bank's role in recovering our economy post pandemic, post certainly the Brexit vote, and as we hopefully move out of the cost-of-doing-business crisis? But, generally speaking, among our members, it has a good level of awareness by comparison to some of the other players out there.

The task and finish group suggested that the creation of a development bank for Wales would enhance the capability of the Welsh Government to support SMEs in Wales. Do you think the development bank has actually achieved that?

To some extent, it has. I think we have to remember that the development bank is only one part of the business-support infrastructure and there is a separation of both awareness and a separation of access that my members will have to the development bank versus Business Wales, for instance. I think, though, that it is, as a business-facing entity, generally proactive. I think there are some questions about the amount of resource that is leveraged into getting in and amongst businesses, particularly in more rural parts of Wales, but I think, generally speaking, it is achieving its mission.

It is important and I think it is seen as a commercial entity by businesses, rather than just—. If you're talking about arm’s-length bodies, the arm is seen as relatively long, and I think it is perceived as being able to act commercially. Now, I know that you've heard from other witnesses as to improvements in that area, certainly from the work that we've undertaken with businesses. The fact that the development bank is active in engaging individual businesses, engaging networks, in a way that maybe some other entities aren't, is seen as positive. So, I think, yes, it does, it's a valuable tool for Welsh Government. It will only be as good as the strategy that underpins it and the economic strategy that Welsh Government does or doesn't have though.

Now, the data we've received from you shows that a significantly lower percentage of women business owners are actually aware of the Development Bank of Wales as compared to men. What steps do you think the development bank should take to actually address this?

I think this is underpinned by a wider challenge that we have, not just in Wales, but across the UK, of encouraging women to go into entrepreneurship, for instance. Now, I sat, along with a number of other representatives, on the supporting entrepreneurial women group that Ken Skates, when he was Minister, convened. Now, that group, I think, undertook some really useful investigations and came up with a series of recommendations that we feel still have yet to be taken forward realistically. I think, where we assess the barriers that women entrepreneurs feel, some of it is the availability of finance and, I guess, the hit rate, the success rate in accessing finance. Now, I think, to their credit, albeit it is early days, the development bank has developed the Women Angels of Wales network, which is there to grow the number of female angel investors in the current system. We need to do more on profiling and role modelling female entrepreneurs to other aspiring entrepreneurs.

I think, though, dare I say, there is a much bigger job of work, though, that we as the business support ecosystem have to do in making sure that where we reach out to businesses—. And it can be something as simple as the nature of the networking we undertake, and it's about making sure that the visibility of entrepreneurship is there, the access to networks is there. I think, though, the role of the development bank is it can take risks in areas that others can't, is to be discerning and go out there and do the leg work of making sure that there is a better hit rate for successful investment in female-owned businesses. Now, the Women Angels of Wales network, I think, is only a year old. I've not yet seen any assessment as to its success, and that might be a question for the bank, but I think it's positive that they've identified that gap in female angel investors in Wales, and its own role in helping bridge that gap.

Okay. Thank you. I'll now bring in Luke Fletcher. Luke.

Diolch, Cadeirydd. If I could just come back to one of the answers you gave the Chair just now in terms of the development bank is only as good as the strategy that underpins it, would you say then that the current strategy that underpins it is good for SMEs? Is it the right one at the moment?

When I talk about strategy, I talk about Welsh Government's economy strategy more broadly. That is not there in a way that is identifiable. Now, we have the missions approach, and, at the moment, that is still relatively new. It is very broad; it needs a lot of detail to come from that approach, and I think it will be that that iterates what the development bank does next. I think it's very difficult for me to point my members to a strategy from Welsh Government that articulates what the aspiration for entrepreneurship is, what the aspiration for particular sectors is, and therefore what the development bank's role is in that. I think Professor Dylan Jones-Evans mentioned a lack of sector specialism within the development bank. That is going to have to be one of those next questions. As we seek to grow the economy, we will have to look at what sectors will need—more support, more pump-priming, and we'll have to organise ourselves accordingly. At the moment, it feels like we're in a bit of suspended animation, and I hope that whatever the outcome of the, I guess, competition for the election of the new leader of the Labour Party and therefore First Minister, we would like to see an articulation, a clear articulation, of economic strategy that talks about growth out of what we've been through, and therefore what the role of SMEs is.

I guess one of the challenges for the development bank and one of the challenges for us all at the moment is it is a massively fragmented landscape of business support. Partly due to things like levelling-up and the shared prosperity fund, we have a dispersal of business support that means it's very, very difficult to track where that support is; it's very difficult for us as an organisation to signpost our members now to the various pots of support. Now, I've been around the FSB quite a long time, and I've been around these sorts of roles for quite a long time, so I can remember where we tried to consolidate a plethora of business support schemes through Business Wales, and I suppose it's my fear that what we're doing now is, again, we're seeing that dispersal. So, we need to (a) bring that in—there needs to be a better articulation and a better drawing in of all these pots of support, and we need to articulate what is the development bank's role in that new environment of business support.

Well, thank you for that. It's really helpful. I'm conscious I might start straying into a set of questions that I know my colleague Sam Kurtz has here, but I'm going to risk it anyway. One of the things outlined right at the start, when they were looking to develop the development bank, to create that entity, is that it would become a one-stop shop. So, taking it from that previous answer, it sort of is and isn't at the moment, just based on the financial landscape that's out there in terms of where business gets funding from.

Yes, I think we are seeing a dispersal of that. I think it has been, and our assessment, as FSB across the UK, of the business support landscape, not just the development bank and its role, but the business support landscape, was—and it was undertaken by colleagues in our Westminster team—that, actually, Wales had a very well co-ordinated business support landscape. And, actually, one of the recommendations of that report, some years ago, was the creation of Business England. We've seen, in England, the local growth hubs, for instance, are now not receiving—the level of funding is very, very patchy. So, I'm always mindful that what we've got in Wales is actually pretty good, but I am concerned that we are seeing that fragmentation. And it makes it really difficult, where we are talking about driving economic development aims. Whether that be the growth of entrepreneurship in under-represented groups, whether that be the growth of entrepreneurship and business growth in rural areas, it's very difficult, if we don't have, I guess, the influence on all the levers to target that resource in on strategy. And, of course, as I say, it's a very difficult landscape for us to navigate as an organisation that our members look to, because these—. And we do have a lot of—. We have a plethora of providers now outside Welsh Government's influence. So, it is challenging. It is still, I think, a pretty positive and well-functioning business support network, but I do feel that we're at a point now where, as we emerge and as we look to how to regrow the Welsh economy, and what we want to underpin that growth, we need to have a stock take. I think it's important to have a stock take of business support, and that includes the development bank and its role.

I've dipped my toes in that element now. If I can focus on the structure of the development bank now, then, do you think that the financial structure of the development bank, at the moment, is inhibiting its willingness to take risks? You mentioned earlier Professor Dylan Jones-Evans—he believed that it did.

I think our observation is, it's the bank's job to have a higher risk appetite. It's really important—. When we articulate this conversation to our members, it's very important to articulate the distinctiveness of the bank's mission versus that of other main lenders, and we are seeing—. There is a danger that everyone sees the bank as another bank in the market. And it's not; it is there to drive up market—to, I guess, offset market risk. Now, where we see this most prominently, and I guess where the challenge is greatest for the bank, from our perspective, is lending to rural enterprises, for instance. So, we quite consistently hear from businesses that there is a lack of awareness by main lenders of the nature of an economic environment, the nature of a regional economy, for instance. I think that's been driven by a withdrawal of a banking footprint on our high street, because, remember, those high-street branches do also have a business development function. You withdraw that and you withdraw the boots on the ground that understand the local economy. I think that then puts a demand on the bank to fill that gap. And we've seen, in work that we've done, and evidence that we've taken from members in the past, that rural businesses find it much more difficult to get positive funding decisions. I can't say that that's replicated in the development bank, but we would like to see more work to interrogate those gaps in rural areas.

Now, I couldn't say that that's down to funding structure. I couldn't say that that is the bank being conservative, but it cannot afford to be conservative in the way that other banks are. It is there to fill a market gap and, dare I say it, agitate for that market gap to be repaired. Because the challenge of any success in the Development Bank of Wales is, I guess, a complacency by other banking and financial institutions that they don't have to step into that gap. So, I guess a challenge for the development bank is what is the—? You step in, you repair that gap, at what point do we make an assessment that they can withdraw from either that agenda, that region, whatever, or lessen their support? So, there is a danger that the bank gets leaned on beyond its resource and beyond its ability to continually plug that gap.

So, I suppose that that gives me a good segue into some of the suggestions that have been put forward by the FSB, and specifically here I'm interested in the recommendation, or suggestion, that the bank should be put on a legislative footing. So, given what you've already said, how would putting the bank on a legislative footing benefit the activities of the development bank and benefit SMEs?

Sure. Well, that's part of the package. The proposal was for an economic development Bill for Wales, and I guess the proposal is to see the architecture put on a legislative footing—so, that's the bank, Business Wales and the national infrastructure commission. And I guess part of that is that we need a long-term approach, certainly for recovery. We always have needed a long-term approach to economic development, but there is an inherent insecurity in those really important parts of the architecture not having, I guess, a legal status, which would give them consistency for long-term planning, which would give them certainty for long-term planning.

Now, the Welsh Development Agency, in 1974, was underpinned by an Act of Parliament. It doesn't stop Governments from choosing to change those institutions, but it gives confidence on the part of the customer, it gives confidence on the part of institutions that invest in Wales, it gives confidence on the part of SMEs, that there is that long-term approach, that it is probably less susceptible to changes of direction by Government—not immune, because it's important that these institutions are answerable to Government. But our assessment is that, if you have an economic development Bill for Wales that looks at the architecture and securing that architecture, then that gives it that stability for long-term conversations like decarbonisation of the Welsh economy, where we need a 30-year-plus-term horizon. But, at the moment, the bank and other institutions are susceptible to those political cycles.

Okay. Diolch, Cadeirydd.

Diolch, Luke. I'll now bring in Vikki Howells. Vikki.

Thank you, Chair. Good morning to our witness. I've got some questions on the role and remit of the development bank, firstly, to ask: where exactly does the development bank sit in relation to the wider business support landscape, and how well does it work alongside Business Wales?

If I take the second part first, to our assessment, it works pretty well with Business Wales. I think that hasn't been—. They've had to be fit together; they're institutions and organisations and brands that have developed at different rates, at different times, and, necessarily, they have had to find ways of working together. The experience of our members, so far as we see it, is that there is cross-referral. I should have declared at the outset an interest: I sit on the task and finish group for Business Wales. And on that task and finish group, there is a representation from the Development Bank of Wales, and, similarly, on the Development Bank of Wales, there is a Welsh Government lead for Business Wales. So, at a strategic level, there is that cross-fertilisation. What we see less of, though, is how effective the referral between the organisations is, and I don't see—. It's very difficult for me to see the data that suggests that that's as successful as it could be. Anecdotally, we see positively where people come through Business Wales and are gated out to—sorry, are then sent to—the development bank. The challenge there is we quite often see where it has worked, and not necessarily—. We need to really push our members to tell us where it hasn't worked.

I think though we have now, through the British Business Bank—it's got a substantial footprint in Wales, a £130 million investment fund for Wales, administered through three different funding partners, fund managers, including FW Capital, which is a subsidiary of the development bank—. So, you could say that that is positive because that provides a connectivity between the development bank and the British Business Bank. Now, that I think is where we probably need to see more work. So far as I see it, in my engagement with the development bank and the British Business Bank, I think there is connection. But there will always be a separation, in that one entity is controlled and administered by UK Government strategy, and another is controlled and administered by Welsh Government strategy. So, I think our challenge to Governments is that we need to see where those join together. This committee will have heard me say it before, so forgive me, but my members shouldn't have to care about the wiring. We need to do all we can to avoid a duplication of effort. With that dispersal of business support, it is important now to look at that wiring and say, 'Is that appropriate for 2024?'

I think, though, so far as we see it at the moment, the development bank and Business Wales are working relatively well together. Business Wales is under significant pressure, its resources are more limited than they have been in the past. I know that there are those within the economic development ecosystem that think that Wales is awash is grants—it's not. There isn't a lot of grant funding. So, businesses have to be sure about why they are going for funding support from the Welsh Government, and, increasingly, the development bank will become an important part of what Business Wales is able to deliver. 

Thank you. In terms of the type of support that the Development Bank of Wales is currently offering, are there any gaps there? Are there any extra areas of support you feel should be offered? And, conversely, are there any activities or types of support that you feel the development bank could cease?

I think there is more work to be done on supporting not just women entrepreneurs but also disabled entrepreneurship, and I guess our challenge to the Welsh Government and Business Wales has been that we would like to see, I guess, an increase in visibility of that support and appropriateness of the products. That's something that has come through our membership and FSB at a UK level. I think 18 months ago we produced a report that looked at both the opportunities and then the need to increase the support and services available to disabled entrepreneurs. 

From the conversations we've had with membership, and it was represented most recently in the skills report that we released, there is a perception—and I think we want to interrogate it more—that, irrespective of size, beyond three to four years, that is when some of the support tails off, and the appropriateness of support isn't as much as it is in the early stages. So, we do have businesses that have that relationship—quite a long-term relationship—with the development bank, but feel that that tails off after three to four years. That's come up consistently enough that it's something that we need to yet interrogate, but we just haven't been in a position as FSB to do that. The bank needs to continue, like any organisation—certainly any commercial organisation—to interrogate whether the services and support that it's offering are relevant to the marketplace. I'd say that marketplace is shifting, because of the nature of the economic challenges we've been through.

We will need to ask, for instance, those businesses that have come through COVID heavily weighted with debt what is the appropriateness of the support that we're able to offer into those businesses to help them regrow. There isn't an ambition among businesses at the moment for committing to debt. That is potentially where a conversation about equity comes in. I'm conscious that, when I talk to businesses, it's easy for me to say, 'Borrow to grow', but the growth opportunity has to be there, and if you're a microbusiness, if you're a small business owner, then the challenge and threat of borrowing and indebting yourself more is much more real than it would be for me. I think that is where we need to have an assessment as to whether the products and support that go through the development bank and Business Wales are appropriate for 2024 and beyond.

Thank you. One final question from me. Cwmpas has suggested to the committee that the language in the development bank's remit letter could arguably be strengthened, with greater compulsion to act, especially in relation to worker buy-outs at the point of business failure. Is this a suggestion that you would support?

I think, broadly, yes. Increasing the number of employee-owned businesses is an economic development goal, it is a policy goal, and therefore it is right and proper that the bank is targeting and tasked in that area, if I'm honest. Again, it's one of those areas that we can't just hand over to the development bank. This is a conversation that needs to be familiar for the advisory community, which includes the FSB, but also includes legal support that small businesses seek, and, crucially, financial support through accountants that businesses seek. And I know from my previous role with one of the accountancy bodies that this is a conversation that doesn't come up as frequently as it should when we're talking about succession planning. So, I think it's right and proper, where we perceive that that is a gap, to task the development bank with helping to fill that gap, having a more active conversation. I think it is beholden on us all, though, to make sure that the entirety of succession options are a part of the conversation that we're having with businesses. What we know is that we are having those succession conversations with businesses too late. We say to our members, 'This needs to be part of an annual review of intent, you'll review it with your business plan, your intent as to where the business goes next', and the option of employee ownership should necessarily be a part of that. 

Thank you. Thank you, Chair. 

I'll now bring in Buffy Williams.

Thank you, Chair, and thank you for joining us this morning. Do you have any views on the way in which the development bank’s business funds are structured? Are the resources focused in the right area? 

We haven't taken a view as to how the funds are structured. What we're seeing, though, at the moment—I've mentioned it before—is this change in need. Certainly, if you look at the activity and funds available for decarbonisation and sustainability-related activity, that is a relatively small proportion of what the bank administers now. I'll pre-empt it, because I think it will be a question: our assessment of the green loans fund that was announced last year is that we haven't heard a great deal of feedback from our membership on accessing that or the success or otherwise of accessing those funds.

Necessarily, though, decarbonisation and productivity-related activity are the areas that are going to necessarily require more funding, more visibility in the conversations that the development bank has with its customers and with potential customers. We haven't taken a view, though, as to what the different proportions should be. We haven't made that assessment. But I think where we consider what economic regrowth looks like, we will have to consider whether the proportions of funds that are made available by the development bank are appropriate for the scale of the task that is there.

The productivity challenge is quite profound, obviously, as we all know. My job is to articulate what productivity looks like for my members and what the opportunities are, and then challenge the development bank, and other institutions and the main lenders, to make sure that there are funds available that answer that productivity challenge, particularly around innovation. In any new assessment of business support, I would want to see that assessment as to whether the bank has proportioned its funds accordingly. But we've not made an assessment as to, at the moment, what those ratios should or could be. 

Thank you. What are your views on the terms the development bank offers on its loans?

Some years ago—and it would be years ago—we had real concern from our members about the level of interest levied against the development bank's facilities. I think we see substantially less of that now than we used to. I think the bank has responded to some extent. I think also we are at a point where interest rates on the average loan levied through main high-street lenders, but also other funding streams, are higher than they otherwise would be. So, there's probably a levelling out. I guess the challenge for the bank is that it is there to take on board that risk and it has to be competitive in the interest rates it charges. So, as we hear about that less than we used to, I think where we are incentivising businesses to access finance for growth, it has to be at an affordable level. Because when we look at our survey work, the affordability of finance is one of the things that puts off businesses going for finance for growing their business at all. So, it's important that the development bank realises it has a mission to take that load and to compensate for that. And the fact that it is Government backed means that it can and should be more nimble in offering more competitive rates of interest. It is offering rates of interest that are within a market range at the moment, so far as we see, but I think Dylan Jones-Evans made the point that there is an argument as to where we want to really drive in things like decarbonisation, where we should be looking at exceptionally low rates of interest for that kind of investment, and I think that's a pretty compelling conversation.

Thank you. Do you have an opinion on the development bank's activities in relation to supporting the Welsh Government's drive towards a net-zero-carbon Wales?

I think I've hinted at a couple of those areas. On the commercial funding available for decarbonisation and net-zero-related activity, that market is growing significantly. We are seeing a push from investors, we are seeing a push from supply chains for businesses to be smarter, more nimble, more responsive to the demands of net zero and decarbonisation. I think there is more work for the bank to do.

It would be interesting to see, I guess, the full assessment of the response to the development bank's green loans fund. I have to say, when we go out and talk to businesses, it is a very challenging environment for them. Businesses, where we survey them, have a high level of interest, a high level of commitment and dedication to moving themselves to net zero, not just because it's profitable and the sensible thing to do, but it's the right thing to do. The trouble is that we are seeing that, as I mentioned earlier, it's very difficult for a business to commit to debt. So, there's a role for the development bank in making sure that the cost of those facilities and the burden of that debt, in its activity, is less than it would be, to help drive up activity in that area. So, I think there is a lot more that the bank can do. I'm not here to argue for them, but I would suspect that they say it is very difficult to get businesses at the moment into that space at scale. But I think we are seeing businesses driven by the market.

Thank you. Thank you, Chair.

Thank you, Buffy. Before I bring Hefin David in, I know that Luke Fletcher would like to come in on this point. 

Diolch, Cadeirydd. I'm just thinking about patient finance here, and specifically equity. How do your members feel about the prospect of the development bank taking equity in their companies? Obviously, we've heard about the reluctance to take out loans; is that something that they see as a credible alternative, or something they'd be open to?

All the conversations we have, and, actually, all the evidence that has been gathered over the years, shows that we've got a less well developed conversation around equity. If you look at particularly the central belt of Scotland, you have a density of financial institutions and a density of angel investors, which allows for that better developed equity conversation. In Wales, that conversation is still stubbornly, relatively speaking, underdeveloped. So, I think the first part is to help businesses understand the role of equity, the complementary nature of equity finance, and help them understand the risks or otherwise. It is more easily accessible, at least in terms of timescales, finance for businesses. But also, then, we have to drive up the equity products that are available.

I think we are seeing more businesses commit to equity and show an interest in equity. We find it tends to be more effective where they hear the experience of other businesses. So, we've done some work, for instance, in profiling and helping businesses learn from each other the experience of seeking equity finance. The British Business Bank has undertaken some work across the UK and compartmentalised by nation. They looked at this, I think, some 18 months or two years ago. It's an interesting piece of work. Some of it is cultural; a lot of it, though, is down to the density of equity investors and, therefore, the equity conversations. If your network isn't full of businesses that have experience of seeking and gaining equity finances, you're that much further from it, so we need to be talking about it.

It isn't a panacea, it's not for everyone, but it is an important part of this conversation. And I think, again, where we look at the need for arm's-length institutions to do more of the graft, this is absolutely a role for DBW. I will say that they have approached us on a number of occasions to facilitate that conversation with our members. So, I think it is an area on which they're active, but it is an area that we probably have to do more work in in Wales to raise the visibility of this as a funding function, probably more than in other areas of the UK.

That was really helpful and interesting. Diolch.

Diolch, Luke. I'll now bring in Hefin David. Hefin.

How effective is the development bank at the task of bringing inward funding into Wales? And is there anything it could do to improve its activities in that area?

We haven't got a great deal of visibility of the breadth of its work in this area if I'm honest. Where we do see it is things like the Angels Invest Wales, where it has used its clout, its power to convene and to agitate for a critical mass of angel investors. We've seen an increase in the number of angel investments as a result of that. I think there is a lot more that can be done in that. Again, rural businesses, by all the assessments, tend to be further from those opportunities and the visibility of angel investment than those in locations like Cardiff, for instance, where you have a density, not just of financial institutions and networks, but also a greater density of angel investors physically located in and around and on the M4 corridor. So, I think that's the area that we see most that they are actively leveraging external finance. I have to say, beyond that, we probably don't have a great deal of evidence of their activity in that area.

So, what do they do to enhance it?

Sorry?

What would they do to enhance that?

To enhance more work in that area?

Yes.

I'm well aware that the development bank has a footprint in other areas of the UK. There is an opportunity for us to work with them in other areas of the UK in a way that we don't. Our conversation with the development bank is almost entirely centred on its activities in Wales, but where it's working in other areas of the UK to agitate and leverage in finance sources and for a greater breadth of commercial finance options for businesses in Wales, I think there is work that we can do to sit down at other locations in the UK and be a part of those conversations. There is a tendency for us to look to DBW to undertake that task. I do think that all of the networks in Wales have a responsibility for this, and it is part of the wider conversation about, for instance, the team effort for attracting inward investment to Wales. The conversation about attracting different finance for availability of businesses in Wales seems very, very similar to that. So, I think there is more work that the development bank can do to lead networks such as us in that activity.

Okay, thank you.

Diolch, Hefin. I'll now bring in Sam Kurtz. Sam.

Thank you very much, Chair. Moving on to the relationship with the private sector, obviously we've heard evidence previously in annual scrutiny sessions with the Development Bank of Wales, but in 2015 the Welsh Government's task and finish group report suggested that the development bank would work more closely with the private sector to address the supply and demand dynamics in the Welsh finance markets. From your perspective, do you think that's happened?

Where we talk about funding gaps—and it's happened at various points in my time at FSB, it happened during COVID, it's happened in conversations around Brexit, and prior to that it happened in 2008, 2009—we see an inhibition and withdrawal of the main funders. We all get around the table, sometimes with the Minister, and we all say to the main funders, 'You have to be doing more, you have to be doing better in this space.' They tell us that there is money to lend, but there's not an appetite among businesses to do that. Now, the development bank is always a part of that conversation, and there is always a resolution that there should be an onward conversation between main institutions, the rest of the private sector and the development bank, but we don't see a lot of that activity beyond that. It may just be that we're not involved in that. I have to say we're not involved in and don't see, for instance, the development bank's interaction with other funds, for instance, across the UK—

So, from an FSB perspective, you're not confident that you could say that that, what the task and finish group said in 2015, has happened, has been closer? From FSB's perspective, you can't see evidence of a closer working relationship with the private sector.

Not with funding institutions. What I can speak to is the development bank's proactive engagement with networks such as ourselves and other networks. And I think that that is pretty good, to be fair, the visibility of the brand, but the outward-facing nature of its activity, of its staff, is very good. We have a very good relationship as FSB with the development bank. You'll see that we undertake here the quarterly briefings, which draw on their intelligence and our intelligence, and we do go away with that intelligence and say, 'Well, what can be done? Those are trends; what can be done to repair or address that?'

So, I think the relationship with customers—the private sector, customers—and its visibility in those networks is very good. What I couldn't say is its relationship with the funding institutions, and agitating for them to fill gaps in finance in Wales.

Sticking with the task and finish group, a suggestion from them was that the bank would develop its own

'innovative approach to provide solutions that directly address the needs of the SME sector.'

Now, FSB focus predominantly in the SME sector, but do you think there has been an innovative approach from the bank to this?

To some extent, yes. I think the example I'd point to is the conversation about the development of patient capital. The conversation about the appropriateness of funds for what we've termed the 'missing middle', I think that shows innovative responsiveness. We have seen it profile products in the response to that, so I can speak to that.

How innovative it is by comparison to the expectation in 2015, I couldn't tell you, but I think we do see innovation. I think we do see responsiveness from the development bank to some extent, and the green loans fund is an example of that. How innovative the green loans fund is is another question, but I think it is responsive.

Again, we've not taken a view as to what the innovation should be, but we have found them responsive. Where we've identified market gaps, where we've identified needs so far as we can see them from our members and the wider small-business community, we have seen some response from the development bank, both at a strategy and policy level, but also at a customer-facing level to some extent as well.

Okay. When we've purposely previously taken evidence from Professor Dylan Jones-Evans, he talked about a complaints procedure or concerns around the involvement of the development bank in businesses. Do you think that, or do you have any views on how effectively businesses are able to raise concerns or complaints regarding the development bank?

The complaints that we receive, such as they are, tend to be—. Quite often, it is those who have been unsuccessful in a bid for funding. You have to be very cautious about that, in the same way as if it was a high-street bank. It may well be a business is disgruntled, but it might be quite right that a funding decision was turned down. So, we tend to see those.

I think there is a case in what Dylan Jones-Evans has argued for, an independent panel to allow that to take place. I think that helps in a couple of ways. It not only gives confidence to the customer and confidence to the ecosystem, including ourselves, but I think it also importantly gives a source of information as to whether the bank is performing or not, which is available for decision makers and scrutiny. The bank is a development arm of Welsh Government and as an important part of the economic development architecture, it is important that we have all the information on where it's performing or not, and I think that having an independent panel that gives confidence to customers that they have a recourse, I think—. We've not taken a view previously on it, but I was struck that that seems like something that is worth investigating.

And as we lean on the bank more and more—as we are—and as maybe the bank grows in its mission, but also the funds that it administers, so we need to understand where the bank is not performing, or where businesses are struggling with its performance or its response.

So, just for clarification: an independent panel isn't something that you would advocate for specifically at this point, in improving the effectiveness of raising concerns and complaints, but it's definitely something that should require more scope and investigation, given the development of the development bank over the years, or its increasing role within Wales's economic footprint.

I think it's an increasing role. I think what having some sort of independent mechanism does is it helps people understand the role of the bank more, and it helps to understand their avenues to recourse.

As I say, we do tend to be cautious about the complaints that we get, and they are very few from any banking institutions, because quite often, it's just that no-one's thought to come to FSB, so you would have to actively go out and ask people. Quite often, people don't want to tell us where they've been unsuccessful, or unsuccessful in funding decisions anyway, so we have to have a weather eye as to what sits behind that, and we have only one side of that conversation because we don’t—. We have a more active conversation with the development bank, but they will be unlikely to go into a commercially sensitive individual conversation with us. So, it does give a visibility of trend—that process would give a visibility of trend that I think is helpful for an arm's-length body to make available.

Okay, that's really helpful. Thank you, Ben. Thank you, Chair.

Thank you, Sam. I'll now bring back Luke Fletcher. Luke.

Diolch, Gadeirydd. Just a short question from me: thinking about some of the comparator organisations that are out there, do you think there are any examples of good practice within comparator organisations that the development bank could learn from and implement themselves?

We've not done an assessment. We've undertaken, I guess, a view as to this landscape in the UK, which is quite limited. We've not undertaken an assessment more widely of the development bank and similar entities. I know that Professor Dylan Jones-Evans mentioned the Canadian model, which, because of the task and finish group, is the model that we're most familiar with. I'm always a little cautious that the Canadian model—instituted in the 1940s, with its SME mission in the 1990s—has a pedigree and it has longevity that the development bank doesn't have.

I think, where we look across the UK, at the Scottish National Investment Bank, for instance, the experience of the FSB in Scotland is far less favourable at the moment. It's still, again, a relatively new entity than the Development Bank of Wales. I know my colleagues in Scotland have called for a commitment from Scottish Government that 20 per cent of its funds are leveraged to SMEs, so it is a long way behind where we are.

I think, though—and I come back to this point—that we are at the point where we feel that there needs to be an assessment of the breadth of business support in Wales. And it is sensible that we go to the models that are familiar across the world, and where we see there is practice that could improve the development bank, that we challenge them to adopt that practice. Beyond that, I'll be honest, we just haven't undertaken an international assessment of similar.

Diolch, Luke. Our session has come to an end, so thank you very much indeed for being with us today.

Thank you for the opportunity.

Your evidence will be very important in our inquiry. A copy of today's transcript will be sent in due course, so if there are any issues with that, then please let us know. But once again, thank you for being with us today.

Thank you.