Cynulliad Cenedlaethol Cymru

I'd like to welcome Members to committee this morning. We move to item 1, and we have no apologies this morning. There are a couple of Members who will be joining us shortly.

I'll move to item 2. We have a number of papers to note. Are Members content to note those papers?

Yes.

Thank you.

In that case, I move to item 3, and this is in regard to our inquiry on city deals update, and this morning we have two witnesses before us who are going to support us in our first session this morning in regard to the Cardiff capital region. I'd like to welcome Councillor Morgan and Kellie Beirne to committee this morning. I wonder if you could just introduce yourselves for the public record, if I could start with Councillor Morgan.

I'm Councillor Andrew Morgan. I'm the leader of Rhondda Cynon Taf, and I chair the joint cabinet for the Cardiff city deal.  

I'm Kellie Beirne. I'm director of the Cardiff capital region city deal. I've been in post for about four months, so I'm a relative newbie. I also chair the Innovation Advisory Council for Wales, and I'm a member of the Science Advisory Council for Wales.

Thank you for your time this morning. We do appreciate it. If I could perhaps start with the first question, what are the main achievements that have been achieved so far to date?

Either of us to go first?

Yes, Councillor Morgan.

As of when I came here the last time I appeared before the committee, the only project we've actually funded is the investment in the semiconductor industry, which is currently now being explored and developed further. We invested £38 million in the building, which is the former LG factory in Newport. There is total leveraging from the private sector of around £400 million in that development, and over the period of time we're expecting in excess of 3,000 good high-quality jobs, which are now starting to come to fruition in terms of recruitment as the cleanrooms are being developed.

In terms of other physical projects, we haven't delivered any projects, but there is an awful lot of work going on in the background in terms of the pipeline. Kellie can probably outline some of where we are. We are at risk of probably being snowed under right now in terms of the amount of stuff that's coming forward—

Literally.

Yes, literally. But we just need to be mindful, as we said previously, because the metro element—£734 million is ring-fenced for the metro. Our element, which we have direct control over, is £495 million. If we were to try and fund everything that is coming forward, we'd probably run into several billion pounds. So, we need to make sure that the decisions we make with that £495 million get the maximum leverage, and also, where possible, we are looking for the majority of the funding or a large element of the funding not to just simply be grants, which is a lot of what Wales has done—badly, I would suggest—in the past. But what we're looking to do is to see how we can recycle that funding. So, for example—Kellie can go into more detail on the investment that we've done in Newport, but we haven't given a grant there. We actually own the building; we own the investment, and we are now getting a rental back on that over the next—well, it's an extended period of time, but they have an option to buy after year 7. So, out of that £38 million you put in, we would expect most, if not all, of that money to come back in, which then allows us to recycle the money and look at other projects as we go forward.

So, that is a piece of work that's ongoing as part of the framework, but there are particular key areas that I've previously outlined that, hopefully, in the next, probably, three months we will be making some formal decisions and announcements on. That is around metro plus. We are looking potentially with Welsh Government to put—. The project as it stands is £15 million from ourselves, hopefully matched by £15 million additional capital from Welsh Government to take forward metro plus, which is enhancements to transport hubs, bus stations, train stations, et cetera.

We're also then looking at a skills package; so, we've already taken one report through, I think it was just before Christmas or just after Christmas, around looking at graduates. I've said previously we're very good at churning out graduates in Wales, but we're very, very poor at retaining them. So, we have a bit of a pilot project being launched already, and we're hoping that if that is successful—and we've been working with education providers and private business around that model—if that is successful, and it's something where the leaders on the joint cabinet say, 'We want to ramp that up for the next 12 months', that is a substantial part of what we want to take forward.

In addition to that, we have got a proposal that we put forward to Welsh Government that we are in discussion around, and that is about how we develop difficult sites, in particular for housing and infrastructure. So, we are suggesting again that we will put a mixture of some grant funding being available and some loan funding. We have suggested to the Welsh Government—and I know that Mark Drakeford when he was the finance Minister referred to it in the budget, the potential of the match—we've asked Welsh Government again to put in £15 million. Ten million pounds of that will be loan, £5 million of it will be grant, and what we would look at are these difficult brownfield sites that we know, and where an economic assessment has been carried out, will never be developed for housing needs simply because the—.

It is the infrastructure, basically. The civil works on those sites make them too costly and not affordable for private developers, so we are looking at a model to make sure that we don't just help line private developers' pockets but, actually, if they are on affordability grounds and we can help bring those sites forward, we are developing a £30 million package and we are working with and there are discussions ongoing with the Development Bank of Wales on that. 

So, they're the projects, hopefully, in the next three to six months we'll be announcing. 

That's a really helpful overview, so thank you for that. Are there any areas in terms of the implementation stage of the deal—because that's where you're at at the moment—are there any areas where you haven't seen as much progress as perhaps you would have liked at this stage? 

If I can just come in there, Chair, just adding to what Councillor Morgan has already set out, I think the fundamental realisation for a city deal is that, yes, there's no shortage of high-value, high-order projects that we could deliver over the next three to 10 years. I think the fundamental realisation, though, is post 29 March, or whenever that date is going to be, and as we've been told as well there will be no more city deals in the future—future investment is to go through the industrial strategy challenge fund, it's to go through the available funds that Welsh Government has had—we have to be much more competitive in our focus in the future.

The whole landscape around regional investment is going to change. It won't be a matter of applying for grants and having that funding and a continuous set of funding programmes. We're seeing the city deal as much more about a tool that can help build greater economic resilience for the future. 

So, more than just the projects, I think for us the key things are making progress on things like data. You know, what are the big problems that we really need to solve right across the region? That granularity of focus. So, instead of our city deal trying to be all things to all people, and cover lots of different themes and issues, the regional cabinet is really trying to focus in on the most important things we can get behind and push that will make a sustained difference, and drive more inclusive growth in the region.

So, our economic growth partnership, which is a mandatory part of our city deal governance, has pushed forward with a regional economic and industrial growth strategy, supported by local leadership and the decision making of the regional cabinet, but very much led by business, grasping hold of the innovation and the potential in our economy.

One of the things I'm sure that we'll get time to talk about is the establishment of what we've called our three-fund approach. So, as Councillor Morgan said, after you take metro out, there's only about £495 million. We've got to leverage £4 billion with that, so we've got to think bigger and more ambitiously. And having an approach to drive targeted innovation investment, targeted infrastructure investment, but also some challenge growth, is going to be critical to the future opportunities that will come our way.

So, lots of it's about projects and what we can get out there and deliver, and the strength of the delivery pipeline, but a lot of it is about putting in place foundations that will outlive the city deal and will make sure that we can be sustainable and keep growing as a region beyond funding programmes and dependency, and to make sure that we've got that resilience in-built into our economy. 

There are a few issues there that other Members will want to pick up on, so I won't do that myself. But is there anything—I'm asking either of you—where you feel that you haven't achieved as much as you would have liked at this point? Is there anything that's perhaps holding you back that you haven't achieved—if you went back a year ago?

I think—. I set out in the evidence submission, the written evidence submission, some of the things that we're trying to put in place—so, for example, a co-investment mechanism. So, if we've got to leverage £4 billion, our city deal—for every £1 that we invest, we've got to try and get £10 back. And I think the point that I was trying to make is that it's no good city deal doing that on its own. How can we connect and work with Welsh Government, so we're aligning and co-investing across investment programmes? The same with the UK Government. And I think one of the areas that we need to spend more time and focus on is how we bring those mechanisms into being, because we could do it and we could make a difference, but I think not as big a difference as if we were working together. 

Can I just add—? There are areas where we're working together, such as housing investment, transport, et cetera, but something that I think it would be right for us to say is that, in terms of where we're trying to draw up our economic plan for our region, and very much driven by business, we are finding it difficult to engage with the Welsh Government in terms of—. We are really keen that we don't duplicate things here, and I think that there is a risk that, unless we do have better alignment—. There are so many things going on—because there are individual interventions from Welsh Government, you have the Valleys taskforce, you have the city deal, and they overlap the boundaries—we are really keen to make sure that we are working together on it. And, in some areas, I think that is proving difficult—for us to try and join up the plans—and that is an area we need to focus on.

Okay. I'll hold fire on asking questions on that because that might come up during the course of discussion. I'll come to Bethan Sayed. 

Yes, I just wanted to ask about governance, and I guess what you're saying now comes into play a bit in relation to your relationship with Welsh Government and how you see governance structures working. For me, I find that, potentially, there could be more work done to involve people in our communities about what they would like to see: you know, we've had the debate about Europe and people not knowing where the funds went. Are we in danger of this happening again with the city deals, if people are either not aware of the plans, or are not engaged? So, how are you going about tweaking or changing those governance structures so that people are engaged and know what to do?

Can I just say, in terms of the engagement, I think that is a fundamental point that we've picked up on, certainly in the last 12 months, about we're trying to up our game in getting the message out of what we're looking at, but it is a balance to strike. So, for example, when we did the commission work that we did across the region, where we had an independent commission done, looking at our plans in terms of going out and engaging, one of the concerns is that, because we have to have that leverage, because we have a target to try and get 5 per cent additional gross value added, because we have the target of 25,000 jobs, we are, to a certain extent, restricted, and we have to obviously make the best of the funds. So, from a certain point of view, the engagement of the public is difficult, because the public may say 'this over here', when, actually, to get the jobs, to get the GVA and the growth, you may have to do 'this over here'. So, that is a bit of a difficulty for us to have to wrestle with in terms of the public engagement and what goes into the plan. But feeding back what we are doing is something that we've upped our game on. 

So, for example, I think, tomorrow, we're at the business—at 6.50 a.m. tomorrow at Celtic Manor, with all the businesses. There's a whole raft of events that take place. Peter Fox, the leader of Monmouthshire, leads on some of the private business side. He is forever attending seminars and meetings, and myself. We try and go out there. Certainly, engagement with business is a big one, for them to understand. We also try and get the message out through regional partnership board meetings. I sat on my own regional partnership board meeting yesterday, and I tried to explain to partners that the city deal isn't just about grants and funding. There's a bit more of a set plan to look at. It isn't just about what the health board, or what a university or somebody could bid in and get money out of. So, we are trying to go through that process of having as many meetings as possible, trying to get the message out. But also we have upped our presence on social media as well, and, quite often, we'll try and get some engagement on social media with people as well. But it is difficult, because of the two sides we have to wrestle with. It's what may be—. The communities may come back and say, 'Actually, if it's a deal, why can't you do x, y and z?' But, actually, because of the funding parameters, and our targets set as part of the city deal by the UK Government and our targets set as part of the city deal by the UK Government—we have to do these things over here. And that is a bit of a difficulty for us to wrestle with.

Do you think there should be more flexibility, then, in what you could and couldn't do, so that those types of issues wouldn't have arisen?

If we could just have £495 million without any strings, I'm sure we would do probably lots of other things. [Laughter.]

You wanted to come in, Kellie.

Yes, Chair. If I could just add, because I think it's a really critical point, because I'm constantly trying to explain to my mum what is city deal, what does it mean for her and her grandchildren and legacy and the communities around. So, I think that point about our message and how we get that across and how we engage meaningfully is really critical. I spoke earlier about the three funds that we are in the process of trying to set up so we can leverage as much value. And the third fund I spoke about is called a challenge fund. And the idea there is—. With the other funds—infrastructure and innovation investment—they're fairly straightforward in terms of how they can work; they're very business focused. But the idea of having a challenge fund is trying to solve some of the big problems that we may already have solutions to, but they're not really working. You know—what are the new things out there, the new ideas, the new thinking? How can we create and stimulate new markets? How do we know we've got all the right answers for the future? And the purpose of that fund would be more social innovation, to engage people and communities in helping us to understand big solutions to problems like air quality or active travel. Or, if we could open up our data sets and make information freely available, could young people, the development community, could they come up with new ideas and solutions to some of the big, intractable things that we're grappling with? So, I think that social innovation, engaging people more in terms of the future of the region and helping to overcome some of those big challenges, is going to be key.

So, how do they—? How does that improve governance? They're new funds, but how is that going to encourage good governance? Because it may duplicate, or three times, the work to do—for people to then go and look at each fund and see how it works, scrutinise it, hold it to account. That might be more complicated. So, how are you justifying—

They wouldn't see it as a fund—they would see it as a problem. We do it with procurement, sometimes, in the public sector—rather than prescribing an end output: 'We want to buy this product, or we want to buy this service in', we put the problem out there, with things like open data, community groups, so that people come together and they say, 'Well, what about this?' So, for example, there are two GovTech challenges out in the region at the moment. One is in Blaenau Gwent, which is to do with roads and potholes, and how we can be, I suppose, faster and more efficient in solving some of those issues that are encumbrances for people in everyday life. One is in Monmouthshire, and it's about how we tackle the problem of rural loneliness and isolation. The solutions are not coming from big companies and businesses—they're coming from people at a community level, who have lived experience of these things. So, I think, rather than just opening up governance and decision making, and saying, 'Come and observe a meeting', we have to be much more pragmatic and practical in how we engage people, make it more meaningful. And I think what that does to governance is fundamentally enhance it, because people are involved rather than just observing a meeting or watching something on a live stream or responding to social media. And I think—

So, where is that, then, with its development? Because I'm struggling to understand how it works without the detail. Obviously, you're saying that's how it works, and that's how you'll engage, but, for us, looking in, without seeing the conclusions of those types of engagement, it's really hard to make a judgment.

Yes. We're in the early stages of this, and putting those three funds together. I explained I've been in post for four months, so this is stuff that we're planning, because you've got to have good planning to have excellent delivery. So, those things are important. But I think we can see through a programme such as the small business research initiative, where, across Wales for some time, we've been adopting this challenge-led approach, and we've engaged different businesses and communities in coming up with different answers. And I think what we'd like to do is to incorporate aspects of that into our city deal governance, so that we're opening things up—we're making it much more transparent and much more accessible for people to actually start to engage in. So, it's a work in progress, but I think they're questions and they're processes that we have to tag and track progress with. Not everything will work, and that's the whole point of having a challenge-led approach. But some things will and the things that will, I think, we can scale really effectively.

Jack Sargeant.

Thank you, Chair. I just want to scrutinise the impact of the Cardiff city region deal. Firstly, how likely is the deal—? How likely is it to achieve its ambition to create 25,000 jobs? You spoke about the £4 billion you've had to lever in. And, just on that, because you spoke quite heavily on outliving the city deal itself, and the future and the planning that's going on, and the social innovation and resilience and so on, could you tell us how you're assessing your plans against the Well-being of Future Generations (Wales) Act 2015 and if there's a full assessment, and, if so, could the committee see that?

Could I just raise one point that you said first and then I'll pass to Kellie? One concern that we have, I suppose—. In terms of the job target, it is quite ambitious—25,000 jobs—but we think it's deliverable, based on the first investment that we made and some of the other plans coming forward. However, one of the things that we've had some discussions around is about where we talk about recycling this funding coming back in. There's currently the view, and my understanding is, that the UK Government are saying that we can only measure the impact of city deal against the fund once. So, if we do recycle the funding—. So, if, for example, the first investment we made, if, after year 7—. Because of the way the deal is structured, it's in the company's interest to buy us out of that company—you know, they're only paying rental, so, in effect, most, if not all, of the £38 million we've invested will come back by year 7 or after year 7. That £38 million becomes available for us to reinvest. But the current advice we're getting—or guidance—from the UK Government is that any money that you recycle—. And surely it must be better to use that money two and three times and recycle it, but the guidance we're having back from the UK Government is, 'No, you can use the money again, clearly, but you can't use it against your targets.' So, they're only prepared to allow us to be judged on the GVA and the 25,000 jobs, et cetera, based on the £495 million being spent once. So, if we do some fantastic deals and, after 10 years, we recycle all that money and we've got £495 million back after 10 years—and the city deal is over a 20-year period—because we are looking to front-load the investment, what the UK Government is basically saying is, 'We'll only judge your outputs on spending the money once.' But surely that's just saying to us, 'You may as well give it away as a grant', whereas our view is: it shouldn't all be about grant; it should be about trying to recycle and invest in business and bringing that money back and spend it two and three times in the economy. That is one of our concerns in terms of hitting the target.

Yes, absolutely. I think, from a well-being of future generations point of view, one of the mantras of the regional cabinet from the early days was about good growth and social justice. So, it's not just about economic productivity. In fact, as Councillor Morgan said, some of the targets we've got—5 per cent GVA growth, 25,000 new jobs, £4 billion leverage—we've very conscious that you could hit all of those targets, but you could fundamentally miss the point. So, you could have 25,000 jobs in call centres or you could have—if unemployment rose, then those of us in work would look that much more productive. So, we don't want to hit the targets and lose sight of what we're trying to do.

So, the inclusive growth and the social justice angle has been really, really important in everything we do. So, if you take a project like compound semiconductors, for which we did a full well-being of future generations assessment, the whole reason that we invested in that and the guidance from regional cabinet was that this is an economy of the future—it's going to be with us for a long time;  it's going to be sustainable. So, even though we had to do that project in a really short time frame, with massive commercial imperatives and significant commercial pressures, it was worth it, because it's going to create jobs in an industry that will endure, and, more than that, an industry that this region could be known for on a global stage. There are not many industries that this region can be known for on a global stage, so that's really significant.

So, what we're trying to do at the moment is to flesh out what good and inclusive growth means. I think that the message that we're trying to get across is that inclusive growth and sustainable growth can't just be about high-knowledge growth and it can't just be about the knowledge economy and R&D intensity. It's got to be about taking people with it; it's got to be about what we can do locally—the foundational economy and all of those things. So, the social justice stuff is really, really important—

Jack, do you have any further questions?

Just finally on that, if you could keep—. It's really interesting that that's big on your agenda, and if you can keep the committee up to date, that would be great. Just very quickly, you spoke about the UK Government and the challenges there: are there any other external risks faced by the city deal or—?

The biggest one for us, obviously, is when we go to our gateway reviews. So, recently we've met with—I can't remember the—

SQW.

SQW. We were interviewed by them as part of the process and, in fairness, they are trying to do it on a risk basis, looking at what has changed since that point that may have changed the national picture across Wales in terms of the economy, to try and take account of them so that, if we are talking about uplifting GVA, the way they measure it, well, is there something that we didn't know about at that time that would impact?

So, I'm pleased that they are looking at that and they've allowed us to put forward some areas. The biggest one for us has to be Brexit, in terms of what happens there. I’ve been attending Welsh—. I’m one of the council leaders on the committee that’s been meeting with the First Minister and other Ministers around the planning for local authorities’ contingencies, and, you know, we really are unsure what’s going to happen, and what the impact on business is going to be. It could be significant job losses, it could be impact on supply chains, et cetera. So, that is a big area, because if that does dent the economy—and let’s be honest, I think we're only guessing what the outcome of Brexit is going to be, or the impact, and whether it’s positive or not—that is an area for us that we’ve had to explain to them as part of the evaluation that we obviously have no control over. And even as part of the five-year gateway review, they are trying to factor in what the impact could be. So, it is difficult, but they are, in fairness, as part of the review, which was established by UK Government, trying to take those on board.

Vikki Howells.

Thank you, Chair. As a Valleys AM, my interest in the city deal is predominantly around how we can ensure that growth is diffused across the area and to benefit those who are living in more socioeconomically disadvantaged communities, touching on the points that you raised in the answer to Jack Sargeant’s questions earlier. My first question is about how the city deal can improve the skills base of people within the area and the quality of jobs on offer—taking aside what you said about the semi compound semiconductor, but looking outside of that.

I think, again, that’s been front and centre in our plans since day one. A lot of the research that we’ve done shows, for example, that areas such as Blaenau Gwent have been at the bottom of the UK competitiveness index since that index was first established in 1999, and we see a similar pattern playing out right across the Valleys. So, it does have to be an area of focus, and we get that this can’t just be about big development in the south and, hopefully, trickle-down economics means that it will diffuse across the region. I think we’ve proved time and time again that that approach doesn’t work.

So, it is about what are the things that we can uniquely do in some of those communities that will stimulate new skills, new interest, new job creation, new opportunities. Some of it will come as a result of supply chain benefits, from some of the bigger high-growth schemes that we do. Some of it will come out as a result of unique opportunities. I mentioned the foundational economy. Even when you look at the supply chain around things like compound semiconductors, because we're looking not just as a foundry, but we're looking to attract a cluster, some of those companies that could potentially come as part of that cluster are looking for sites in some of the Valleys, because they want to do smart packaging, they want to do testing, and some of these jobs are £30,000 to £35,000 a year. So, it’s really important that our strategy is about all areas. It’s about spreading prosperity. And one of the opportunities that I talked to somebody about the other day was about a welding centre. There’s a specific skill around welding that happens underwater, would you believe—I know, it sounds bizarre. But, again, they really want to drive a skills base around that, and the area they're looking at is the Heads of the Valleys, because they want to make sure that the practical and pragmatic skills, married up with some of the technological skills, could happen there. So, I think we’ve got to be brave and we’ve got to be bold, and we've got to say, ‘Right, these are the areas that we want to target’, and we’ve got to lever in the companies with the opportunities that fit what we’re trying to do in those areas.

Could I just add—? We're working closely with what was our strategic capital investment panel—it’s been slightly changed now, as we’re coming under the city deal. So, we're working closely with them. It’s made up heavily of business and education providers, and something that we’ve had discussions—and I may have said last year—we brought together college principals, vice-chancellors of universities and have spoken to them and said, with business people there, ‘Look, we need to focus on skills for five or 10 years’ time.’ And one of the things I’ve been critical of previously is that too much funding, in particular EU funding, has gone on courses that have been easy to fill in colleges, and I’m being critical here, but, you know, with the mass-producing of beauticians and hairdressing, which one of our colleges in my area has churned out in an awful lot of numbers, but, actually, you can’t flood the market with those particular skill sets, when, actually, the growing market is over here. So, it’s identifying with business where we need to train people up for five and 10 years’ time and making sure that the colleges and our courses are directed to that. And that’s an area, I think, and it’s certainly what business is saying, where there's been a mismatch in the past.

And building on your answer there, Andrew, how far is the city deal working with other groups, such as the Valleys taskforce and also the regional skills partnerships? Because there's an awful lot of overlap between them. We've certainly taken evidence before that said that the Valleys taskforce was meeting at exactly the same time as the city deal group but in different locations. That doesn't fill me with confidence that the two groups are actually working well together. 

In terms of the Valleys taskforce, I'm pleased to say I met with the Deputy Minister last week—I sit on the Valleys taskforce—I ran through some of my views and thoughts on maybe some areas that could be improved for the next meeting, which I think is this week or next week—

Next week.

Next week. Kellie will also now be attending the Valleys taskforce as well to make sure that the deal is being aligned. We have asked for a representative from the Valleys taskforce to also attend—an official, I should say, sorry, of the Welsh Government who sits on the Valleys taskforce—to also attend our city deal meetings to make sure that our programmes are being aligned. There is a lot of work, in fairness, going on in the background as well. Kellie does meet with officers from the Valleys taskforce on a regular basis, but we are trying to make sure—and it is a point I raised earlier—we need to make sure that Welsh Government programmes and ours are aligned. And if they're slightly not, for different reasons, then we need to compromise. It is daft for us to be spending public money running two very similar programmes trying to get the same outcome. So, I think there needs to be some flexibility, and I think between us and Welsh Government we do need to firm up on some of that.

Thank you. And one final question from me—

Can I just come in on that, just regarding the Valleys taskforce?

Yes. Hefin David. 

The Valleys taskforce has been up and running for two years now. Why only now are you addressing this problem? Because we've been raising this issue since the existence of the Valleys taskforce. 

Just to say, I've sat on the Valleys taskforce from its inception. So, as the chair of the Cardiff city deal, I'm on there, so there is linkage. The previous director before Kellie also had links and we have input into certain areas. Some of the working groups, such as on the Valleys regional park—we've had input there, we've had working groups established with that. I've actually co-ordinated meetings with council leaders and with the Minister before Christmas where we were talking about the funding streams. So, there is a lot of alignment going on, but there are particular areas that we need to focus on.

The one in particular that I mentioned earlier is the economic strategy going forward that Welsh Government is looking at—I believe it's four regional economic strategies in terms of the regions—but we've been working on one for the last year, and private business is saying to us, 'Why is Welsh Government doing its own?' Our offer to Welsh Government is we should do it jointly, and if they've got fundamental issues with something that we are doing with business, then if they can evidence there's a reason, we obviously will adapt what we are doing, but it seems illogical for us not to be bringing those streams of work together.

I'd like to return to that later, Chair. 

That's fine, thank you. Vikki.

Thank you. Kellie, you made reference in one of your earlier answers to understanding the need not just for economic growth but for social inclusion. The written evidence from the city deal poses the question: how do we better connect economic advancement and gain with more progressive social policy? I just would like to pick both of your brains about how that age-old question can actually be addressed. 

And can I just say we're probably a little squeezed for time, so we just need it to be pinpointed? Thank you.

Sure, yes. I think again it's in a very pragmatic way. When we're looking at things like metro and metro plus, it's about behaviour change, it's about understanding what drives people to behave in certain ways, how we can bring people together, it's about making sure that we've got fit-for-purpose infrastructure around things like electric vehicles, so we're looking into the future. I think on things like food security, air quality, making sure there are no barrier issues for people when they come into the labour market, for me, I think it's very pragmatic and it's making sure that every single project reaches out and can be tested against those well-being goals to really add maximum value, not just to do the day job a little bit better but to ask the question: what does really, really good look like? I think it's a key challenge. 

Any further questions, Vikki? No. Thank you. David Rowlands.

Can we just look, if we can, at the wider investment fund? Can you give us some further details on how the £495 million of the wider investment fund actually operates?

Who wants to take that?

So, the wider investment fund is £495 million, and because that £495 million has got to hit the targets that Councillor Morgan referenced—the £4 billion, 5 per cent GVA and 25,000 jobs—that's a hard task. That's challenging. So, what we're trying to do is to understand how we can drive that forward. The best way is to split the fund into an innovation investment fund—which is the research and development projects, the knowledge intensity, the big business growth stuff that we can do in the region. The reason that fund is so important is because that will create the wealth that we can recycle across the programme to keep the city deal evergreen. So, that fund is always self-replenishing and self-recycling. The infrastructure fund is more about enabling works, so what the transport, mobility, digital, housing sites and premises challenges are that we have to solve to enable development and prosperity in other areas?

Then the final part of the fund is the challenge fund where we want to experiment and get new solutions to problems like air quality, open data, active travel, food security, climate change where we don't know all the answers but we've got to have better answers than the ones that we get at the moment. And the idea is that we try and keep the city deal fund self-perpetuating. So, we're not dependent, so we can create our own wealth, resources and opportunities. 

When you're talking about the infrastructure fund, that brings up the probabilities that it may mix in with the metro aspirations and things like that. How are you going to make sure that the governance is there to make sure that that doesn't happen—that you're not duplicating what's going on?

In terms of the metro, for example, we've got the regional transport authority, which is chaired by Huw David, leader of Bridgend. Welsh Government officials attend that meeting. We also then, below the 10 authorities, obviously have our senior transport officers, who are co-ordinated by my transport officer. They regularly meet with Welsh Government. So, for example, the metro plus project we're putting forward, where we suggested £15 million from the city deal with a potential £15 million from Welsh Government. That £30 million package of interventions, which is, as I said, bus stations, train stations et cetera, all of our transport hubs—that programme has been worked through with Welsh Government. So, we are talking to KeolisAmey around the timing of their works, because it's pointless in us looking, for example—. I could tell you one on the list is a big park and ride. We don't want to have the park and ride being developed if we haven't got assurances that the additional capacity of trains is coming on that line by a certain date. So, KeolisAmey are part of the discussion as well, so I should have total confidence that there is no duplication and overlap, because they are working together, and we have these monthly regional transport authority meetings that are held in Bridgend. And as I say, officials come there, we have an update every month and we work through it. So, I hope, on areas like that, there wouldn't be—.

On housing, that's where we're discussing with the Development Bank of Wales, whether they're able to work with us around this additional fund I talked about for housing sites and brownfield sites. Again, one of the things in my letter to the Finance Minister at the time was to say that if we are to put some money towards this, and Welsh Government would be prepared to put some loans and some other funding in, we wouldn't want to set up our own development bank, in effect, doing loans. It would be foolish for us to have to do that. There are some procurement issues we have to overcome shortly. I believe our own approach has been—if we could have the Development Bank of Wales to do this work for us, it would mean that we wouldn't have to set up any new processes, any new systems. But we're in discussion on that to make sure that those areas of governance don't overlap.

Could I just ask—?

Bethan, do you mind if David comes in quickly?

I just wanted to ask on the housing—would that be part of the target, then, for Welsh Government housing, if you're proposing to build on brownfield sites? I know there are questions later about dovetailing with  Welsh Government, but just because you're on housing—. Sorry. Thanks, David.

We haven't actually discussed, I don't believe, Kellie, the targets, because we've been talking about, in particular, private sector housing, so how we can bring forward—

But it would be public money then that would be used, wouldn't it, because it would be city deal money?

Yes. But as part of the Welsh Government targets, I'm not sure—I couldn't give an answer. Possibly I could come back to you on where the discussions have been, because there's been an officer leading on that. But what I would say is that our drive is that not only can we deliver the extra units we need in certain areas where we need additional private housing being built, but if we're able to work with a private housing developer and say, actually, if we can get the infrastructure on a site sorted out as part of a grant or a loan, because of the affordability issue on the site—if they can come forward and deliver then, say, 300 houses on that site, that private sector investment will also account as our leverage towards our £4 billion target, because it would show that without some sort of private sector intervention, those houses simply wouldn't be built. Otherwise, you'd be looking at, say, a three-bedroomed house being sold for £0.5 million on a site, when, actually, it's only worth £200,000 because the infrastructure or the clean-up of the land is so expensive that private businesses are telling us they would never touch it unless we do something.

Okay, do you have further questions, David?

If I can move on, the Cardiff capital region website states that

'An extensive list of projects totalling over £800m has been abandoned by REGP'—

and these are pretty disparaging words—

'as a fragmented, disconnected, project-based investment approach is not acceptable.'

Can the witnesses clarify what this means in practice in terms of the type of projects that will be supported by the wider investment?

Sure. I think the really important points—and it goes back to the point that was made about governance and engagement earlier. The regional economic growth partnerships are led by business, run by business, and even though they come under the city deal governance, they are independent. If they think something needs to be improved, strengthened and enhanced, they will say it. I think that is absolutely right for strong, public accountability, that they're able to have that view.

It comes down to what I described from the start, which is that, progressively, this city deal has evolved. It's no longer just about projects in lots of different areas; we're being much more targeted now at some of the big problems and the challenges that we've got to solve. We've got good data, we've got a strategy. So, the view of the economic growth partnership—and I'm sure they won't mind me saying these few words on their behalf—is that we've got to create a story about what the region is about. Projects have got to connect and be mutually interdependent. They can't just be one off and isolated. So, I think the message of the economic growth partnership is: how do we build an ecosystem? How do we build a system here that makes sense? What are the messages that we can market to the world, and how can we make progress on the right things, not just the easy things? I think that's a message that we'd all endorse and accept.

So, why do you think that these projects became fragmented, disconnected, et cetera? Where was the governance there to make those sort of—?

Well, I think what can happen with city deal is, we've got a wider investment fund, so, anyone can apply to that wider investment fund, and there is a lot of interest out there. But what we've had to say is, 'This isn't a grant; you can't just apply to us for a grant.' So, I think that's where a lot of this has come from—people just assuming that they can apply to city deal. And, going back to my point—having three funds in place with proper governance, proper criteria, proper controls, proper targeting sends out a very, very different message. So, I think we'll see a big change in approach in the future.

Can I just say that duplication is also an issue?

Yes, massively.

Some of the projects that have been pushed forward by—as I say, it's open now—we've been quite frank about it—it's open to anybody to put forward proposals, and they'll be considered through the various partnerships. But some of those proposals that have come forward are simply duplicating either what the private or the public sector are doing. So, we've been quite mindful, as well, and that's now business that the group has set up and established as part of the challenge session, to look at—well, actually, somebody's come forward with an idea, or they think, I don't know, 'This is the way to solve something', but actually, it's already gone on over here, and that is part of the scrutiny of it.

The idea is that by having these various partnerships, through the economic growth partnership, through the regional body, the transport body and skills body, they all look at these projects before they come to joint cabinet. So, the intention is that when they come to joint cabinet, they should be in a condition and worked up in enough detail for us to have the confidence to say, 'Okay, quote a full business case', but, actually, when they go through those partnerships, if it's identified through, say, the—. Somebody might come forward and say, 'Well, as a private business, we want to build a new station here, a big park and ride that's going to deliver all these jobs, but we want £100 million off you.' But if Welsh Government then say, 'So, actually, about 2 miles down the road, we're already working with Network Rail about developing this station for park and ride, and the—'. So, that information has to be collated—

So, you need a robust filtration process—

Yes, and that's part of what that is.

—and that has to be put in place, because what worries me about this greater community involvement et cetera is the spectre of Communities First coming up, where it was led, really, by people within—leaders of the community and not the community itself. And that's what worries me, that you have to keep a real tight control on this operation.

I think the fact that the economic growth partnership is taking that robust approach is a sign of good governance because it shows the right things are getting through, not just anything is getting through. I think your point about Communities First is well made, and we're ensuring that kind of thing is in-built into process in the future.

Mark Reckless.

You mentioned the park and ride, but, for instance, there is, I understand, a proposal around the St Mellons business park, a sort of Cardiff parkway station to the west, incorporating a large park and ride, and it's entirely driven by private money. What's your link with that? And if you're going around subsidising other park and rides, potentially competing with that, what are the implications?

Because of the—. That has been more led by discussions with Welsh Government because Welsh Government are in discussion, obviously, with the regional transport body, and we also have two members of staff, I think it's two—Clive and another gentleman—from local authorities who are embedded as part of Welsh Government with metro to make sure that things that local authorities are looking at, as part of the joint cabinet, don't duplicate.

The sort of things that we're looking at in particular—we're looking at transport corridors. So, for example, how do we get people off the A470? How do we get people off the A4119 and some of those areas—they are two in my own county that are carrying thousands and thousands of cars. Seventy-seven thousand cars travel into Cardiff every day on the A470, which is 10 per cent over capacity. If we could get 10 per cent of that transport off the A470 onto park and ride—people using the metro in future—the A470 will run absolutely fine, but it's 10 per cent over capacity.

So, we're looking, fundamentally, across the area and we've described it as a bit of a necklace on the outskirts of Cardiff or the main commuter areas: where do we need to put park and rides in? That work then is being fed into Welsh Government through the metro provider and also the regional transport authority to make sure that our plans are being developed through the three-case business model. So, again, on that one, I'm quite confident. That's probably one of the strongest areas that we're confident of not duplicating because we have staff working together and we have local authority staff actually as part of the team with Welsh Government.

Another reason why there's so much traffic on those roads is that, disproportionately, economic growth has been in the south and around Cardiff, and people have commuted in from the north of the region, in part, because house prices are so much higher to the south of the region. When you look at facilitating housing development, what is your strategy for doing that? Are you wanting that development up-valley to generate economic activity there or are you trying to ensure that that trajectory in house prices doesn't grow too great by increasing supply where the highest job growth has been to allow people to live closer to their work?

The housing investment fund we've largely described as being for the north of the M4. So, it is for those areas north of the M4, although it doesn't exclude areas in the south. We've previously described it as being largely driven to areas north of the M4, where there are these brownfield sites, which are ideal to be developed, but are not cost-effective.

In the south of the region, there is very little need for public sector intervention in terms of housing. The market is driving itself. Unfortunately, the way things work, though, is that house builders only build the number of houses that they see fit, because ultimately, if they were to build—. If Welsh Government has targets for building thousands of extra houses, that is great, but if they've been done by the private sector, they're only going to build the houses that they want to build because they control the house prices. If they suddenly decide to build an extra 5,000 units this year in the south, because of the additional supply, that will affect house prices. So, unfortunately, I would say that some house builders have got a stranglehold on it. But what we're looking at in particular is: how can we get new housing to areas. 

As part of the early discussion, the former leader of Caerphilly County Borough Council talked about Bargoed and Aberbargoed where there's depopulation. So, if we don't see new housing in those areas and the possibility of new jobs coming in, then some communities are dwindling away—

He's not the only one to speak about that.

Sorry?

He's not the only one.

Right, okay, sorry—of course, it's your constituency. But it was raised and that was part of the early discussions that we had, saying, 'This fund and this wealth need to be spread across the area.' But it's not just about building houses, we need to give people the skills to get the jobs and, hopefully, if you've got people living there and they've got the skills, we need to then attract the jobs. So, it is a whole set of measures that we've got to follow.

I think, fundamentally, it's about the public sector being much more interventionist—much more enabling, targeting areas, and, as Councillor Morgan said, making sure that any plans for housing are very much joined up with job creation activities, business growth, inward investment and transport. I think the whole purpose of that regional economic growth plan that I spoke about is to create that integration and to create that pattern. So, rather than things happening in a transactional, one-off way, we understand the framework we're trying to build out for the region, which is why things like data and evidence are so important. We've got to go with the grain of change.

But how do you assess the data for the baseline? Presumably, the economy would grow to some extent without your intervention over the next 20 years. How do you assess your 5 per cent value add to that?

It's really difficult, and the company that Councillor Morgan spoke about—SQW—have been engaged, on behalf of central Government, to undertake a national evaluation framework and then how that's distilled at the local level. So, we had them in with us before Christmas and what they're doing is the contextual economic baseline. So, they took us back to 2015. They've engaged a company called Cambridge Econometrics, and what they're trying to do is to use their forward forecasting model to understand: if certain things hadn't happened, what would the economy have been like? And, given that these things happen, what is the pattern that we expect to play out? And then they will take into account things like the cessation of European funds, some of the stuff the public sector would have funded anyway, and that will give us a magic number baseline that will be at least a figure that we can work with and we can track progress against over the next few years.

And the Treasury gateway assessments—I think they're five yearly from 2021: have you been liaising with the Treasury about how they're going to do those and how is that linked through into the assessments you're making of projects so that, hopefully, they pass? And what will you do if they don't?

Yes, absolutely. So, that company is working with us already, because the gateway review process isn't just a snapshot point in time. They're working with us on an ongoing basis. So, they're doing stakeholder interviews at the moment, they've done the forecasting and the baseline information. They're only assessing the £495 million, so metro is not covered in terms of the remit and scope of their work. So, we're working with them closely to inform that. Compound semiconductors is the one that they're going to look at in depth, because that's the project that we have in delivery at the moment, but I think that, as Councillor Morgan said, we've got some issues that we want to play out with Treasury. So, for example, the fact that our first deal has leveraged a lot of private sector investment and is recycling moneys—we want that to be counted again because we think that creating an evergreen fund is a really important principle, but, unfortunately, some of the criteria they have at the moment can't really withstand that approach. So, we're saying, 'The approach needs to change, then.'

Thank you.

Hefin David.

Councillor Morgan, you mentioned the economic and industrial plan just in your previous answer. Can you just elaborate a bit on that?

Welsh Government's or—?

No, yours. The city deal's that's been passed by the cabinet.

So, the work that's been going on and, in particular led by the economic growth partnership—we've been doing the work over a period of time. They, in particular—and I am trying to set up a meeting with the Minister—have done a piece of work; some of it's based on the commission that we established back at the start of the city deal to get a baseline for us and information from all the stakeholder engagement with business, individuals, public meetings held. So, that plan was put together, the issue being that we understand that Welsh Government are also looking at regional economic plans and, as I said earlier before you arrived, one of our concerns is that we're not aligning them. So, we have suggested to Welsh Government that we are prepared to be flexible in ours, on an evidence base, but what we need to do really is align and have one plan for our region so south-east Wales is covered by one plan, which Welsh Government, city deal, private business all sign up to in which we can have confidence and help deliver.

So, you've already said that you're concerned about the connections between the Welsh Government regional plans and yours.

Yes.

What's the primary objective of your plan?

It's to advise us in terms of—because it's heavily dominated by private business and those industries, they've been able to advise us on those key areas that we need to be looking at.

So, what is it trying to achieve? What's its core aim?

Well, that's part of our investment strategy. So, they're helping to advise us on the right areas, just like we have the skills partnership advising us on the skills area. It's looking at it in the round. We've got five of the advisory bodies, and it's taking advice from all five of those in terms of helping to set our direction.

On which the regional skills partnerships are advising.

Yes.

Yes.

Right. And the regional skills partnerships—they are reporting to Welsh Government, though. So, is there not a difficulty there with them sort of reporting to two separate bodies?

It could be, but, so far, I think it's worked—

No, we've made it work.

—reasonably well. They've been quite flexible, I think, I have to say, in fairness, about looking at slightly adapting. So, from where they were three years ago, they have adapted slightly, and Welsh Government have been supportive of that. And, as I say, the projects coming forward go through them anyway as part of the sifting, as part of the first layer of evaluation to give us advice and feedback. And, so far, I have to say they've been very positive. I think some of the individuals on that board have got some really good knowledge and it's worked really well with us.

And they are conscious of the kind of dual remit that they'd be operating under reporting to two different governances.

Yes. But just to say that, although the governance of that is with Welsh Government—as, in effect, it's their partnership, in our heads of terms when we agreed it, it did say about strengthening and looking at the partnership in terms of adapting it to our needs, and that is on the basis of being the advisory body to us on skills and also then around evaluating projects. So, even things like—it could be a metro plus project—will still go to the skills partnership for their view, so all five bodies will give a view on every project before we, as a cabinet then, take it to the business case for evaluation.

Joyce Watson.

We talked about the long-term aspirations. I'm just wanting to examine whether there are any short-term goals that you have, and if there are, what they might be, and how you're prepared to meet those short-term goals.

In terms of short-term projects, we've got a number of approved project frameworks, so, for example, skills for the future: how do we get a robust and sustainable apprenticeship scheme up and running across the region? The housing investment fund—that's an approved framework and it shouldn't take too much work to have that up and running in a reasonable timescale. There are projects like metro plus, where every local authority has a strategic transport project related to the metro spine. So, in the short term, we should be able to get these things up and running fairly quickly, but there are wider critical success factors in the short term that we've got to think about, and one is influence. I think the point about the coming together of the city deal strategy and the Welsh Government strategy for the region is really critical. 

So, all investment in the future at a regional level will either come from Welsh Government or it will come from the UK industrial strategy, which is a UK-wide strategy. There's about £6 billion available a year there across four grand challenge areas, going back to the point about challenges that I was making earlier. And one of the things we've got to try and do, I think, in the short term, is to get more influence in that space, which is why it's really important that our strategies are joined up. Currently, we don't have a representative at a Wales level on the board of UK Research and Innovation, which is the non-departmental body set up to oversee this. We need better alignment with that, we need better influence, we need better proximity. Because post 29 March, I don't think parts of our economy in the region will have the resilience or the maturity to compete on a bigger scale with other institutions and regions in the UK. So, I think influence around the leverage and the opportunities is going to be absolutely critical.

Sorry, Chair, just to go back to the point you made earlier about the things that we need to make more progress on, I think what will make our region investable in the future is to have a set of fiscal measures and incentives that will make us stand out. So, what are we going to do with business rates and business rates pooling? What about tax incremental financing? What about an innovation income tax, enhanced R&D tax credits? What are the short-term incentives so that an investor will look at this region and think, 'I'm going to go there, because all of this is on offer'?

So, I think, aligned with project delivering, influence and thinking about some of those financial levers are going to be really important in the short term, because the clock is ticking and I don't think we have much time.

So, what you're really saying, if I've understood it right, is because, at the moment, the way that European structural funds are structured, they come into an area on a bid basis and you can manage that within that area, whoever is successful. But it's going to be far more competitive, more centrally controlled from the UK, so you need to find your space within that space. Is that what you're saying?

Yes, to compete. That's absolutely it, and to date—and this is a recent statistic—only about 3 per cent of Innovate UK moneys is actually coming to Wales; the same with the Economic and Social Research Council, and the same with some of the other research bodies. And our representation isn't not just on the board of UKRI, it's not on the eight funding councils that underpin it. So, if we're going to have ambition and we're going to have influence in these spaces, then, as part of our strategy for city deal, these are the wider critical success factors that we need to be on and we need to be taking forward.

So, in the short term, you've recognised the problem, you know what the solution, or part of it, is, so in the short term—and when I said 'short term', I should've said within the next 12 months—what exactly are you going to do to make sure that some of those things—and at least you've identified them—happen?

Well, in the short term, it's much more competitive, challenge-based bids into Innovate UK. One of the questions we've asked of Innovate UK is: can we jointly establish a co-investment mechanism? We've got the chief executive of Innovate UK coming down next month. We've organised for UK Research and Innovation to hold one of its board meetings in Wales in July. I'm on the panel for the chief scientific adviser, alongside two board members of UK Research and Innovation. We're developing our Strength in Places cluster bid with UK Research and Innovation, so I think it's being much more muscular and just putting ourselves out there, making sure we've got the brand, the messaging, and just putting ourselves in that space. So, we're going to MIPIM—Councillor Morgan and I and a few others are going out to the south of France to promote the region, to talk to investors, to try and see what interest is out there. We're part sponsors of the Wales in London week, which is coming up in March. So, it's putting ourselves out there, taking ourselves out of this comfort zone and making sure that we've got the right message and mindset.

And very quickly, in some of these areas we're being encouraged to get in the door, because there is an open door for us, but I think we just need to be there pushing that bit harder for Wales and our region. So, the indication is that they're actually coming to us and saying, 'Well, there are certain funds available. No bids are coming in', so that is part of the reason why Wales is missing out and we're only getting 3 per cent—it's because, realistically, we're not going to them and putting powerful bids forward to secure the funding. It's just not happening, so that's an area we've been focusing on in the last six months now. 

Absolutely, yes.

Okay. And you're quite happy you've got the capacity to do those things you've just outlined?

The central team have carried out a review. That's something that Kellie has done, when she came into post, and we are in the process of recruiting and bringing in some people. City deal at the start was heavily led by local authority officers, but something we have done is looked at it and said that, in terms of skill set, working in particular fields, we've had to recruit, and we are in the process of recruiting people from those particular sectors to make sure that we are really focusing. So, that is something again that is under way. We've already filled some of the posts and we've had to beef up the team now over the last three to four months. 

Okay, thank you.

We're very grateful for your time this morning. There will be a transcript of proceedings, and if you do look through that and you want to add to anything you've said this morning, then please do get back in contact with the committee. Is there anything finally you'd like to say to the committee, or are you happy with this morning's session?

Just thank you for your time. 

Thank you for your time. We greatly appreciate that. 

Thank you. 

We'll take a 10-minute break and then we'll be back, and Rob Stewart, the leader of Swansea bay city region deal, will be with us. So, a 10-minute break. 

Welcome back to Economy, Infrastructure and Skills Committee. We move to item 4 with regard to our city deals update, and we have two witnesses before us now. I'd be grateful if you could just introduce yourselves for the public record.

Certainly. Rob Stewart, the leader of Swansea council, and also the lead leader for the Swansea bay city region. 

Mark James. I'm chief executive, Carmarthenshire County Council and I'm the lead chief executive for the city deal.

Congratulations on your new post, and I'd like to welcome you both here this morning. Perhaps I could just start with an opening question. I notice in your evidence submission to us that you talk about the independent review that's been carried out by the Welsh and UK Governments. Is there anything you can tell us about how that process is working? 

The company that's been chosen to undertake that review was announced, I believe, last week—that's Actica. They are now progressing that review, and it was announced at the time when the review was commissioned that it would be a rapid review, and the aim is for that review to complete by 31 January is our understanding. So, again, we've lined all of our organisations up to participate and to respond to that review. As you'll know, we've also commissioned our own internal reviews, which will run alongside that and dovetail into a common set of recommendations that will then go to both Governments and to the joint committee.  

Okay. I wonder if you could just talk to us a little bit about the timescales undertaken by the deal in terms of how you're carrying out your own review as well. What are the timescales of your own review that you're conducting? 

Okay. So, you will be aware that the independent review preceded the announcement by our joint committee that we would conduct an internal review. That was something the Governments were looking at in order to give them the confidence that they could then sign off the first tranche of projects, because, as you'll know, in the Swansea bay city deal, we already have 11 very heavily defined projects that were worked up prior to the signing of the deal. Those projects have progressed over the two years since the deal was signed, and, of course, we became a formal joint committee in the summer of this year, so we'd been working in shadow form up to that point. 

In terms of your direct question in terms of our review, following the announcement by the Governments of the independent review, and given the actions taken by Swansea University in terms of individuals within its organisation, the joint committee thought it prudent that we take the opportunity to review all of our internal governance structures to ensure that there were no concerns within the city deal structures, or city deal operations, or the governance itself, and to ensure that the checks and balances, and the governance that was agreed only a few months prior to that with the four lawyers, obviously, in the region and the lawyers from the Government, and signed off by both Governments, are as robust as they can be. So, it's an extra step, if you like, that we're taking to ensure that we assure ourselves that the governance is as strong and as appropriate as it can be.  

Okay, thank you. We've got some questions from Members. We'll dive straight in. David Rowlands. 

It may be a little premature now, given that you're only two years into the project, but the questions still have to be asked. What are your main achievements and the main areas of expenditure so far? 

Again, despite the fact that it's taken a while to get, if you like, all of the bodies set up, the structures in place and the governance in place, the local authority and our partners—the health boards and the universities—have been working on the projects that were, in principle, agreed with Governments at the time of signing the city deal. I'll give you some examples: if you go to Carmarthenshire, the Egin project there, the creative hub. The first building is already up. It's more than 80 per cent occupied, and I believe we're on course for 100 per cent occupation in that building. S4C are in there. In Swansea, we've already undertaken a significant amount of enabling works in terms of the projects for the city-centre redevelopment—the arena digital square. Also, the University of Wales Trinity Saint David are taking forward the box village element of that project. And the partners have incurred expenditure at risk for those projects in terms of delivery. So, progress is being made on the ground, despite no formal, yet, sign-off of any of the projects with Government. Again, we're working to do that before the end of the financial year. That's still the aim that's shared between the Governments and the partners. 

I think in terms of achievements, obviously, there was the unanimous vote across all four local authorities to set up the joint committee and to cede powers to the joint committee. Again, for clarity, the way in which our governance has been set up is that decisions taken by the joint committee are not referred back to the councils for ratification. So, when the joint committee makes a decision, it is the decision, and therefore we progress on that basis. I was really pleased that it was an unanimous vote; there was not a single vote in any Chamber against setting up the joint committees or the city deal. All of the councils, of course, ratified the city deals, and they're all progressing their own individual projects. And we've created the implementation plan as well, which is awaiting final sign-off with both Governments, which is the overarching plan, and, underneath that, then you've got not just the first set of projects that are awaiting sign-off, but the further tranches of projects of the 11 that are making their way through the governance process at this time.

In addition to that, just to close off the structures bit, we've established and recruited sectorial leads from the private sector to form the economic strategy board. They've begun their work, and, again, we've engaged with them in terms of a remit, looking at not only the 11 projects we've got, but what can they as an economic strategy board do to add to the city deal that we already have to gain further investment, scan the horizon for further opportunities, and help us create that longer term strategy for growing economic growth. 

Okay. So, you've got governance structures in place. You say you're setting up boards, et cetera. Obviously, what that raises in everybody's minds is that it's not going to get too bureaucratic in what you're doing. It's nice to know that you actually have some infrastructure projects actually under way, and others in the pipeline, I would have thought. 

Yes, absolutely. So, there are physical buildings you can go and visit, which have been delivered as part of the deal. The councils have taken, at risk, those projects forward. Again, as leader of Swansea, I do get criticised from time to time for building and disruption, but that's part of the city deal being delivered, which I'm happy to take. On top of that, the digital infrastructure project, which, again, all of the partners are keen to deliver, is progressing, and that's key. It's a thread that runs through the deal. It's another type of infrastructure, but if we're going to be successful in the twenty-first century, we need to have the best internet and the best connectivity throughout our communities, both through our transport corridors, through our cities, and through our rural communities, to make sure that that supports business growth. So, yes, infrastructure projects; the skills and talent project is also progressing well, and that's another core golden thread that runs through the deal, because, again, skilling people up to service the economy we're creating is a really important aim of the city deal. 

Okay. That's the good news, but where are the areas where you think progress has been slowed or, for some reason, been held up?

Again, it's a challenging position for, I guess, all collaborations. You're working not just with four councils of different political make-up, but I have to say we are largely harmonious, and certainly united in our aims to deliver the deal. You're working with large organisations in terms of our partners, but also you're working with two Governments, both of whom are of different colours and sometimes have different views in terms of where the focus should be on some of the project delivery. Built on top of that, you've got Brexit, which is consuming everybody, and getting the resources, certainly at the Government levels, to focus on the deals and to make sure that they give us timely responses to the business cases that we've submitted has been a bit of a challenge. 

We have worked with the Governments to try and streamline things at their end, so we get one body reviewing the final business case rather than them being passed between the two Governments and us getting separate sets of comments back. That has been a real helpful addition and change that the Governments have made. But I think that's been the major challenge—we've spent so much time prior to signing the deal going through all of the Treasury evaluations, all of the financial evaluations in Welsh Government. We then had all of the local and regional evaluations, and we're now back at Government for final sign-off, and, again, it's just making sure that we're all lined up to make sure we get over the line in a reasonable amount of time. That's been the biggest challenge. 

And it's having to deal with so many disparate agencies, and, before you can actually do anything, you have to make sure that you're not treading on anybody's toes, or you're not overdeveloping or doubling up on anything. 

Look, we were given a very, very clear steer by both Governments before the deal was signed, and that was that they wanted to see delivery on the ground as quickly as possible. They didn't want, as has happened elsewhere in the country, a city deal signed and then nothing really happening for years after that. And the councils and our partners have taken that on board. We have pushed forward with our projects, at risk, as I've said. Our next aim now is to complete the review, get those sign-offs for the first projects in place, so that we've got that financial assurance and the underwriting for the risks that we've taken to start delivering the deal. 

Is there any significant issue in having two different Governments with different agendas and different priorities? Has that proved to have any difficulties at all?

I don't think, in and of itself, it's a political issue. I don't think it's somebody wanting us to do a different project because they've got different views on the economy—it's not that. I think it's just the fact that you have two Governments, who have different manifestos, perhaps, different focuses. You then, within each Government, have got many different departments who may want to contribute or comment on the business cases that they work their way through. It's just making sure everybody's aligned, and you get a consistent, streamlined process. That's been the biggest challenge. To give an example, if something sits with us, we've got a streamlined process at the regional level, where we can generally return comments within two to three weeks—going through all of the process, making sure they're correct, giving the answers back to Government. It's been sometimes months sitting at the other end for us to get a response back, and that we have raised concern about. It has improved, but, again, that was one of the things that constrained the progress in the early days, I think.

You talk about having that steer, but is the steer from both Governments clear, or are you—

Yes, absolutely.

Right, okay.

Look, neither Government is coming to us and saying, 'Do different things.'

Right, okay. That's good to know. Bethan Sayed.

This independent review, the company doing it is based in Surrey. So, can you tell me what you think people in Surrey will understand about the Swansea city deal?

I make no comment on who has been chosen. My understanding is that it was done through a right and proper, transparent procurement. Actica were the bidder that was chosen. Again, we will work with whoever the Government appoints. I don't think their location really has a bearing. I understand that they're a professional company that undertakes these sorts of reviews, and we will work and engage with them.

Can you tell me, from your perspective, though, why you thought that a review—or they thought that a review—was needed? There are two ongoing. You were talking earlier about wanting to get things done swiftly, but, surely, having this review will actually slow things down, because you're waiting for outcomes, for sign-offs, and, in the interim, you can't do as much as you would like to do.

Look, the Governments were very clear in the letter that they issued at the time when they started the reviews, which was that the work on the business cases would not be hindered and would not slow whilst the reviews were going on; it would be a parallel process. I have to say that Ministers in both Governments, and the officials, have continued to be very supportive and have worked to help us get those projects in a place where they are ready to sign off. Look, I think part of the—

What's the independent review going to change for you, then?

I think the independent review gives that extra level of confidence to Government that they are now—. Because it's been two years, of course, since the deal was signed, and I think projects have evolved through that. You know, we've worked to make sure we create the five-case business models that are required for the release of public finances. We have, therefore, added detail, the projects have evolved and grown, and I think the Governments just want that level of assurance, before they go to final sign-off, that the projects still contribute to the overall plan and that the plan hangs together—it still delivers what we thought in 2016, and it's making sure that they have that extra level of assurance so that they can proceed to sign-off.

But if you're working in parallel, you can't get sign-off until this review ends. So, what does not being able to sign off until the review ends mean to you? For example, what if the independent review said, 'Well, some of these plans need to be scrapped, or changed, entirely'? Sign-off, then, will be even longer than anticipated. So, what happens in that type of eventuality?

The review itself is not—and it's specifically excluded from the terms of reference—looking at the business cases and the—

But why can't you get sign-off on them, then?

We have been working, as I've said, for many months to achieve sign-off on the business cases. The first tranche of three projects is nearly there on that. As I've said, and as you would imagine, in the whole 11 projects, some projects are more advanced than others, as you would expect in such a big, economy-changing deal. I believe we are very close to getting those first three projects signed off. It has been a diminishing number of questions that has been going back and fore to the organisations as the information and the detail around the business cases have been created and agreed. I still believe that we are now very close to getting those first couple of business cases—first two or three business cases—signed off. Unless I'm missing something very, very big, I don't foresee the review coming back with that sort of, 'Well, you're going to have to scrap half your projects'; I really don't think that's the remit. What this is about is saying, 'Look, you have an implementation plan, and you have an overall deal that delivers these sets of growth outcomes, these skills transfers, this change to the economy.' Those projects have really been scrutinised heavily both in the run-up to the deal and since. I think what this is about is saying, 'Look, the Government are about to release the first lot of their city deal moneys—the £240 million—the first slice of that will be coming out. There are projects ready to do that. Do we have the independent assurance that we're ready to start releasing the money from the deal? Is everything as it should be in terms of preparing to spend that money to make sure it goes out?'

Directly on us, in terms of the projects, as I said, the councils, the partners, are moving forward with the projects anyway. The thing that it creates as a tension is, of course, that we're taking a financial risk, because we are continuing to spend money until such time as the money that is promised by the city deal is released. So, it's opening a risk for the councils and their partners in terms of money that's being spent. That's the only real impact that we have in terms of delivery.

So, just in terms of governance in general, you paint a really rosy picture of working with other political parties, but, of course, we know that Neath Port Talbot Council put out statements in the past about problems with the city deal. We know, obviously—. We've seen from the Wellness Centre how—. Let's be political here—there's been a decision made, and I've seen a Labour councillor then go on the television and undermine that programme, minutes afterwards. How are you going to be assured that all councils and all political parties are going to be able to sign up to the same thing, if you're going to be getting those political tensions from some projects that are getting up and running already?

Look, I understand that it's easy to confuse an opposition playing its part in a council, which is perfectly reasonable—if I were in opposition, I'd be challenging the administration on what they were doing—. I don't think that's unreasonable in politics; it happens in the Senedd all the time—

No, but you're saying that people are working together, but, as soon as that proposal went through, that's not the reflection that was given. 

No, I'm more than happy to—. Because, again, I wouldn't want individual statements to be taken out and used as some sort of mask to create some dissent in the region—it's simply not that. The leaders operate very collaboratively; we are very close. And whilst Emlyn Dole in Carmarthenshire is a Plaid leader, we have a very good relationship. And whilst David Simpson in Pembrokeshire is an independent leader, again, we have a very good relationship. Myself and Rob in Neath Port Talbot—Rob Jones—again, have a very good relationship, and all four leaders share a very good relationship.

In terms of Neath Port Talbot's comments, they were not about the working of the city region and the councils within the city region. Most of Neath Port Talbot's comments that were made were the frustration with agreements between the two Governments, largely, as I understand it, around agreement to the business rate relief, which was still outstanding at the time—it's now been confirmed—and decisions on certain things that could frustrate our ability to deliver projects more quickly. It was not about the city region or the governance within the region; it was actually about our Government partners and NPT at the time wanting further assurance that things that had been promised and are written, actually, into the heads of terms and other parts of the city deal, were actually signed off and formally in place for the Government. Because, again, you've got to remember that, when we are taking reports through our various councils, which potentially could end up with us spending millions of pounds of public money, we want to be assured that the deal that we thought we had with the Governments is absolutely written in and is absolutely agreed. 

So, again, for instance, we were very pleased to agree with the Welsh Government a retention of 50 per cent of business rates for everything that we create as a city deal. That's a first; no other region currently has that. There is a second element that we're going to continue to negotiate that should cover all of Wales, which is about the economic uplift of things that we create out of city deals and the retention of some of those business rates. But we wanted that absolutely guaranteed and absolutely written in a confirmed letter from the finance Minister at the time. And I'm very pleased to say that Mark Drakeford gave us that confirmation and it was signed off, so—

So, you're confident, moving on, that all the governance arrangements will be such that people will be able to understand and scrutinise and hold to account what is happening with all the projects?

Yes. Look, I'm not saying that we wouldn't change the governance or that we may not tweak it, because, again, that's what the internal review is primarily looking at here. And, again, one of the questions that the joint committee has asked is: whilst the governance that we're working to was something written between the lawyers in our authorities and the lawyers in Government in good faith, in practice, as it works, is it as strong as it could be? Are there further checks and balances that we could add in to that governance?

We already, as you may be aware, have devolved regional scrutiny arrangements—NPT lead on that. Members of the joint committee and of the city region have been to that committee to give evidence. We have local scrutiny committees as well, operating, which are scrutinising the individual projects within committees. There are audit functions. So, I would say, you know, governance is there. Can it be improved? That’s one of the things that the independent review and the internal review will identify. But I would say again, just to remind Members, we’ve only been operating as a joint committee since the summer, so it’s very early days for us to be in the formal governance structure.

Okay. Time is short, and if Members could be pointed with their questions as well—. Jack Sargeant.

Thanks, Chair. You spoke quite heavily there about the 11 projects that make the city deal. How likely is it that the projects will achieve the ambitions of the city deal and create the 10,000 jobs suggested and the £1.8 billion as well? And just secondly on that, you talked about the scrutiny that’s got involved—quite heavy scrutiny. During that scrutiny, have you assessed the requirements of the future generations Act and how these projects will fall in line?

Yes, in terms of the overall impact of the deal, we’ve got no reason to believe that it won’t. At the end of the day, as I said, we’ve spent a huge amount of time pulling together a plan that suited our region—because it will be different from the north Wales plan and it will be different from the east, the capital region plan, because they have different challenges. We absolutely think those 11 projects give us the best chance of changing, diversifying, growing our economy, creating the jobs that we need, creating the skills that we need. So, there is no reason for me to think that that isn’t the case.

What we think as a region, though, is that the 11 projects should not be all we deliver. We would really be missing a trick if that was the case. These should be a catalyst for attracting further projects to the region, further investment. I’m on record, for some time, you know—. If we can, and we're working as a region at the moment, we’ve got a task and finish group on it in terms of trying to get tidal lagoon technology—not the tidal lagoon project that was previously thought of, but, of course, we’ve got a Welsh coastline, there’s an opportunity to deliver tidal lagoons, we’d love to do something to get a tidal lagoon project up and running. Transport is a real issue for our region, as it is elsewhere in Wales. We’d love to have a regional transport project potentially come along as well, which we could run regionally.

So, I think it’s not only about we have confidence that we can deliver what’s there, but we should aim to exceed it. Sorry, Jack, what was your second bit?

Just as to the assessment of future generations—so, during the scrutiny, have you assessed against the requirements?

Yes. In terms of future generations, yes, that is a main element that we do look at in terms of how we operate. All of the councils have it embedded as well, in terms of their operations. So, certainly, it’s a key strand of what we do in terms of evaluation of our city deal aims.

Thanks, Chair.

Vikki Howells.

Thank you, Chair. I’m interested in how city deals, and your city deal, can benefit the socioeconomically disadvantaged in your area. So, firstly, I’d like to ask about how you are working to improve the skills and the quality of jobs that will be provided through the deal.

Yes, a couple of key points here. As I said, we've got a specific project—skills and talent project. On a very basic level, what we're trying to do there is not only try to align what we do in our primary schools, our secondary schools, our tertiary colleges and our universities more closely, so we've got that pipeline of appropriate skills being created, but also making sure that the people we put out into the economy have, then, the right skills for the economy we're creating, and that we do what we can to retain them in our region. You know the story: if you look at where people—if you track them on LinkedIn and other places, there is a trend where people come out of our universities and our colleges and then leave the region to pursue a career or a salary that they need. The city deal aim is to try and arrest some of that, keep people in the region, allow them to be supported to set up businesses or pursue the career or the salary that they require and, you know, really, to make sure that we make that change, diversify our economy so that we have indigenous businesses that can provide that.

Sorry, Vikki, the second part of your question—.

Can I just jump in there, actually, and ask you what work you might have done already with the regional skills partnerships that would enhance that?

The regional skills partnership that we have actually sits alongside the regional office running the city deal. So, they actually work very closely together. So, we’re working with the regional skills and learning partnership staff to look at the city deal element. They’ve got other work to do as well, because they cover the mid Wales region as well as our region, but they’re working specifically on the city deal and, as Rob says, on the skills and talent project, which is one of the 11 projects. So, they're intimately involved in that.

Thank you. And the second part of my question was about the quality of jobs in the region.

Yes, as I said, I think that if we—. Again, it’s not one element of the deal here. So, if we take the skills and talent, making sure that we bring people out of our education system with the right skills, then there's the part about making sure that you have the right infrastructure to attract businesses in. So, again, as I said, the digital project helps us to do that. If we have—. Recently, within the region, Openreach have committed to give us the fastest ultrafast broadband in the UK. Three areas of Swansea will benefit from that initially: 24,000 homes, plus all of the city centre businesses and the businesses along Fabian Way up towards the university bay campus. Again, Openreach are very clear that they came to Swansea with this investment—and, again, we're a second-tier city in the UK, we're not a capital; we would not normally have got this investment probably until the mid 2020s—. So, 2025 onwards was the time at which Swansea probably would have got it. Again, this is about moving us forward, getting us to catch up and overtake other cities and have unique reasons as to why people would invest in this region rather than anywhere else. So, again, it's a helpful additional tool to have and thing to promote.

Great, thank you. One final question: the Welsh Government's economic action plan talks a lot about inclusive growth, so how are you trying to fit that into what your city deal is doing?

Well, we're looking at inclusive growth across all the projects to make sure that we capture the entire socioeconomic base in our area. So, we've been working closely to make sure that, from the lower skills all the way through all the levels up to postgraduate, in a lot of the schemes that we're doing, everybody is captured within that. So, that fits in. It's very strong for the joint committee and for all the council leaders that that happens, that it is inclusive growth, it's not in one particular sector or socioeconomic group.

Thank you.

Thank you. Mark Reckless.

Can I ask about how you are determining the baseline of data against which you're going to be judged for this economic growth and jobs creation?

Yes. So, prior to signing the deal, we worked with the Treasury with their Green Book analysis, so actually the figures that are in our deal in terms of GVA uplift and job creation are ones that actually were provided back to us following an exercise with the Treasury, so they are figures that have been through the formal processes and then provided back to us. So, they've taken the projects, they've looked at the potential impacts, and then allocated that back to us. But, of course, if you look at the economic data that's available now, you will see a trend from around the mid to late 1980s—mid 1990s, sorry—where Swansea's region—Swansea bay city region—has declined compared to the rest of Wales, and Wales has declined compared to the rest of the UK. So, we're using that data as a baseline in terms of what are the right interventions to close the gap between where we are, which is about 77 per cent of UK growth, back up to around 92 per cent, which is where we should be operating as a region. So, it's about £5 billion-worth of GVA if you turn it into a number. The city deal aims to get us roughly around £3 billion-worth back of that, and then further interventions that are being taken forward and other actions within the region hope to close the further £2 million gap. So, the city deal gets us a large rate back; it recovers 70 per cent of the lost GVA and jobs that we should be having.

So—. I apologise, I don't have the region GVA in my head, but you used a percentage and then it as an absolute thing. So, the 77 per cent to 92 per cent, where would you expect to get up to because of the ambitions of the city deal?

Okay. So, again, turning it into numbers, if 77 per cent is £0 and 92 per cent is £5 billion, it gets us around 70 per cent of the way back towards that £5 billion. Then, as I said, other things that the councils are doing and the other partners are doing will hopefully fill the gap, and of course the additionally that I mentioned earlier is again something that we will add to the deal to try and recover and exceed where we should be as a region. Because, again, it's not just about getting back to where we should be; it's about doing better than that. 

And, as Rob said earlier on, I think in response to Jack's question, it's not just the city deal. The city deal is very much a catalyst for other things. So, we've already got things growing, happening, in the region that simply would not have happened without the city deal being there—linked to the city deal, but not one of the 11 projects. So, we've got businesses setting up in Ammanford that are directly linked into the housing project and the city deal, but they're not part of the project, and we've got jobs being created that get us the other 30 per cent back up to GVA average in Wales. 

Thank you.

Joyce Watson, you've got a supplementary—do you want to come on to your section as well?

Exactly on that point, because it is a regional city deal, and I want to put the region back in, which won't be a surprise, since I cover Carmarthenshire and Pembrokeshire. So, you've highlighted Ammanford, setting up a business—I don't know which particular business you're talking about, but what about further west, Pembrokeshire, because that's where I live? So, could you give me an example of where the regions attached to the city deal have benefited and might not have benefited as a consequence of the city deal?

Just specifically on that, the business that has opened in Ammanford is an expansion of a business that's come from Pembrokeshire. The business is actually based in Pembrokeshire. We've seen them. They're a unique housing product. They've now opened up and they've expanded to Ammanford.

What is it?

Tŷ Solar.

I know who they are. Right, okay.

They're linked into the housing. They're not specifically within the housing project yet. I think they will be once we get to that point, because Carmarthenshire and Pembrokeshire see them as something that we can build and manufacture to employ people locally in Carmarthenshire and Pembrokeshire specifically to build the hundreds and hundreds of houses that we need as part of the deal.

So, that's one example.

That's one example.

Can I give another one? It's linked again to housing, because, of course, whilst Pembrokeshire is leading on the Pembrokeshire Dock marine project, which, again, I've no doubt you'll be familiar with and, of course, that could create the largest wave technology area in the UK—. In terms of homes as power stations, which is another significant project, it's a cross-authority project, so all four authorities are participating in it. At a very basic level, homes as power stations is about creating the next generation of homes that not only have zero-energy bills, but are energy positive, so they have battery technology attached to them, enabling us to provide energy back to the grid or to provide it out. So, if you think about the jobs that that would create, not only in terms of the construction of the homes, but also the people who then live in them who are likely to be either on low incomes or on no incomes, it removes a very big bill for them, an energy bill. I can't think of a better social intervention than that, because not only do we create the technology in our own areas, we use our local workforce to build them, we then put our own people in those homes, meet the housing shortage. But when they go in there, they go in there on the basis that they have lower bills to deal with. So, we deal with the fuel poverty element as well. I think that's a really good example of a project that touches many of the aims that we're trying to achieve with the city deal.

Okay. So, can I just—? Because I'm really keen on this. So, it's about building futures—that's what city deals are about, and you've outlined an example of something I quite support. Two areas. So, in terms of linking that into the future skills market, apprenticeships, that we do very well with here in the Assembly—is all that happening at the same time? Because I'm not entirely sure, really.

So, councils have apprenticeships and skills schemes anyway within their—

But is it in the city deal?

You've got to remember, it's in the city deal, but the city deal, in and of itself, can't stand alone from anything else—

No, I understand that.

It has to be aligned and connected with what's going on. So, all I was going to say is, in terms of the city deal again, you asked the question about, 'What has the city deal caused?' Now, one of our partners, Trinity Saint David—one of the other regional universities that we have—have been able to attract the construction institute into SA1. That will allow us to train the next generation of architects, surveyors and people with the skills that we will need if we're going to create the infrastructure that we need to be a successful economy. Of course, those skills are then ones that the people in the region can benefit from and they go to jobs within the region, using those skills, into the new economy that we're creating. So, again, it's stuff within the deal, but also stuff that's going on along with our partners, which is complementary and aligned.

The other area that we're looking at that would benefit Pembrokeshire and Carmarthenshire in the more rural parts of the region is digital, of course. So, the fifth generation project—we're doing a lot of research at the moment on the baseline. We've brought a company in to work with us, a company that's worked in Cardiff successfully to enable Cardiff to access national funds—the local full fibre network programme. So, they're working with us to do the baseline, but we're looking at three or four digital projects, one of which will be rural, and that's first in the queue. That's likely to be west of Swansea—quite a long way west of Swansea, I hope.

That's good, thank you. Thanks for allowing the intervention.

Thank you. Hefin David.

What news headlines can we expect to see from the city deal over the next six to 12 months?

Okay, all right. That's a loaded question. [Laughter.]

Lots of JCBs on site.

It's a happy question, and you can answer—

I'll tell you the headlines I'd like to see.

And we'll judge you by them.

Firstly, I'll start with my own council, because it's the closest bit that I'm familiar with. We will begin building the digital arena, which is delivered as part of the city deal, for the city centre. We will be on site doing that by April. We are already—. The four councils are starting to build those homes that we just talked about across the region. We've all got individual projects to deliver that, so I expect that to be further sites being delivered. I would like to see a headline around securing the first phase of the 5G project, in terms of some of the money that could be released, both via the city deal, but also—it's a really important one—we have complementary bids going into the Department for Culture, Media and Sport, and, again, it's important that when we bid as a region, the thresholds within the UK Government are set so that we are not automatically excluded because of our population mass. Again, some of the limits that exist in the UK Government at the moment have prevented us from bidding for some of the stuff that we would have an excellent bid for. Back to headlines, I would expect Neath Port Talbot to be saying something about steel science. We'll be talking to Welsh Government about the land involved in that project shortly, so there will no doubt be a good headline there. Pembrokeshire are pushing forward very quickly and are accessing European funds in terms of the project at the port authority. And Carmarthenshire, of course: Yr Egin is already up and working; the Delta Lakes scheme has received planning permission.

Unanimously, across the board.

Unanimously, cross-party, of course. So, there is progress across the piece. I really do believe the biggest headline we could get is if the Minister and Secretary of State sign off the first few projects in the next few months. That would be the key headline, because that not only shows that the Governments have therefore released the money, but it also helps with the confidence in the region for us to push forward even faster.

Thank you. There's a stick by which we can measure progress now, then.

There is. That's very useful. Do either of you want to add anything further to what you've said—anything you want to draw out that has not been drawn out through the questions, at all?

No, look, I just want to restate the fact that the intent to deliver this deal is shared across all councils, all parties, in this region. Our partners are fully committed. We really do want to get the reviews concluded and we will incorporate the findings of those reviews. If we need to tweak governance, we will do so, but delivery is where our focus is, and we hope that both Governments will be in a position very soon to sign off on the first tranche of projects so that we can crack on.

While all that is going on, none of the work on the projects is stopping. It's continuing. All the work is ongoing, across the four councils, to make sure that the city deal stays on track for all 11 projects.

Can I ask a question on steel?

Yes, certainly, Bethan.

We had the Cross-Party Group on Steel last night, and the picture that was painted in relation to the future of steel post Brexit was pretty bleak. I'm just trying to understand: with the steel science project, what contingencies or what deliberations are you having with Tata and other partners to determine what would potentially be possible to do in a situation where there are tariffs from the US, Europe, Canada? That may impact on the level of provision in Port Talbot and other areas of South Wales West, so—.

There are a couple of separate things here. The project itself is entirely about making sure that we develop the processes and the technologies to be able to give the UK steel industry an advantage, so that we remain at the forefront of innovation, and that our industries can compete appropriately—not just steel, but aluminium and others. I think the risks you quite rightly highlighted are more to do with the outcome of Brexit and not necessarily on the steel industry. You'll know there's a taskforce that was created previously—

But if you're preparing this, surely that should be in line with what's happening with Brexit. Do you know what I'm saying? Because this could be created and then, actually, things would change because the hinterland changes.

Yes, but I think they're different challenges, because if you're saying that you're going to have to deal with different tax regimes or trade agreements, being innovative and having the best product is what the steel science is about—that will help in any scenario. You'll be aware of my personal views; I hope that we avoid a 'hard deal' Brexit and that we remain as a member of the customs union and primarily within Europe if we can. I think that is the best future for the UK, but the project will be—

So, there's probably more need for this, if you think about the innovation that's needed, potentially, post Brexit.

Correct. This should strengthen our position with steel, by putting in that research and development facility, which is state of the art, and it will protect what we've got, going forward, if the environment becomes more challenging.

Thank you both. You will be sent a copy of the transcript. Please have a look over that, and if there's anything you want to add to the evidence you've provided, that would be appreciated by the committee. Can I thank you for your time this morning? Have a safe journey back. Thank you.

Thank you all very much.

We're just remaining in the public session. If I can just go through it so Members are aware of what topic areas we've got to cover, I've got David covering topic 2, then Mark 3, Jack 4, Bethan 5, Joyce 6, Vikki 7 and Mark 8.

We move to item 5, and I'd like to welcome Nick Jones, the Traffic Commissioner for Wales, back to committee for the second time. Welcome back. This is your second annual report that you've published in that regard, so if I could start with an opening question and ask you to summarise what you think you've achieved since you were last here before committee.

Well, in terms of what's gone well, there is an exciting trajectory for the future, because it looks as though there's going to be beneficial and rapid change for the future with my successor and, hopefully, in the very near future there'll be announcements relating to accommodation both in north Wales and south Wales, so they'll be able to move forward considerably. We've held some very successful seminars, and there are some additional seminars being programmed for the current year as well.

When you were last before committee, you outlined a number of challenges that you had. Have those challenges been overcome?

I think undoubtedly the biggest problem is the process of finding suitable accommodation. It's been far too slow—there's no getting round it. I have no control over staff, unfortunately, but I think we're about to have some announcements soon, which is good news.

And are there any areas of challenge over the last 12 months that have arisen that perhaps weren't there 12 months ago?

Well, the difficulties in finding suitable court accommodation have got worse because, in Cardiff, of the closure of various courthouses, especially magistrates courts, the use of the Cardiff magistrates' court and the civil justice centre is particularly difficult and so I often have to go weeks at a time before I can use the civil justice centre and the magistrates' court is usually only available on a Monday or a Friday and it may not be convenient for witnesses and so on. I'm not critical of the Ministry of Justice—I'm very grateful—but it does illustrate the need, in the medium term, for accommodation. Fortunately, that's being addressed because the Welsh Government has indicated that it's looking to ensure that there'll be a facility in the new Transport for Wales building in Pontypridd, for hearing, for the traffic commissioner.

I know that other Members are going to pick up on that point. David Rowlands.

You're being critical, if I could put it that way, of the Driver and Vehicle Standards Agency in your report, so can I have a little idea of some of the issues that you've raised, for instance, the reason for delays in developing a new agreement between the DVSA and all the British traffic commissioners, given the commissioners' collective view that the current agreement is not fit for purpose? What issues does this present? Is it ongoing?

There have been ongoing problems. I should say to start off with, whilst we're talking about the DVSA, that there is no issue with the very excellent front-of-house staff—the vehicle examiners and the traffic examiners do a tremendous amount of invaluable work protecting the public and protecting good operators as well. The issue relates to a wholesale lack of understanding by senior management and apparently the board.

The issues have been ongoing for quite a period of time. There's a lack of transparency, a lack of transparency relating to the fees that have been charged, but this has been referred to in successive annual reports. I've been referring to it for a number of years and it's a matter of having this addressed. There have been a number of unfortunate interventions by the DVSA management and it's clearly had a very negative effect. I could go into detail, but I suspect that much of it's for the organisation that determines who is the appropriate body to provide the service. We are customers of the DVSA and the question is whether it's value for money and whether they are the right body to provide that service. 

You talk about the structures and whether the

'operator licensing is capable of supporting the regime that is required to deliver it'.

Do you feel it is? The structure—

Sorry, you're talking about fees. Yes, the traffic commissioners have said over a number of years that there's a need for fee reform, and, in fairness, it may not be just the DVSA that is reluctant to deal with fee reform. I understand that Government, particularly the Department for Transport, is busy at the moment, and will be busy with other matters, but there is a need for a wholesale review of the fee structure for the work of traffic commissioners. As we've said—

If we go a little further on in your comments: 

'The fees charged…should not be used to subsidise other schemes of DVSA.'

Is there any evidence of this happening?

Well, there's a complete lack of transparency. That's the problem. We've been asking for transparency for a number of years and we don't appear to have it. We know that the way that the fees are structured, the haulage industry effectively subsidises the public service vehicle industry—I've been saying that at industry events for a number of years. And the haulage industry's response is usually one of, 'Okay, but the fees charged are the price of a repair to a vehicle' and therefore it's not one that causes them sufficient concern to make too much of a fuss about it. But there is a principle involved and the fees ought to be proportionate and they ought to relate to the work that's undertaken. There are many transactions that are simply not chargeable and the way that the fees are structured is unfair on the small and medium enterprises as well. And that's one of the reasons why there's a need for fee reform.

Okay. There's one glaring problem that you've had with regard to the commissioner and that is that they lost nearly 18 months of work that had been done. I mean, that's pretty catastrophic.

It's not all the traffic commissioner's—. I had a particular problem and nine months or so has been recovered, I'm pleased to say. The problem, in my case, arose because I'd been working away from an office base. People have assumed that I've been working from one of the DVSA offices and I haven't. I've been waiting for the office in Wales to be sorted, so I've been working from home, and although I can see the beautiful Black Mountains of Wales, it's not the same as having an office. And therefore, when there was a technical problem transferring data onto a cloud-based system, a lot of work was lost. It causes problems. Having hard-wired IT connectivity increases efficiency, and for me personally it's always a difficulty if I don't have access to staff.

Is there a wider impact on the HGV and PSV sectors because of that loss?

I hope not. It's for me personally—the difficulty is more for me. It's just more difficult for me. 

Okay, thank you.

Mark Reckless. 

Just to clarify, are you saying that this data that was lost, that that's all now been recovered? 

No. 

No. How much has been lost and—?

About nine months or so. But it's about my personal file, so it's my copies of decisions. So, if necessary, if there was an emergency, they could be copied from elsewhere, no doubt, but they'll be working to do that. 

Okay. And did I hear you refer to being based in the Black Mountains—you're based in the Black Mountains, I think?

No, no, I said I can see the Black Mountains. I live in Hereford, so I can see the Black Mountains of Wales from my study window.

And the offices you are proposing—I wasn't on the committee back in November 2017 when you came before, but I think you said at the beginning that there's the potential for some announcements coming soon, but we had hoped for a bit more than that. Clearly, if there are commercially sensitive negotiations around a particular lease, we understand that, but can you give us what information you're able to in terms of the proposed office accommodation?

I was hoping that by today there would be announcements, and it's for others to make the announcement. It looks like the leases will be taken up by the Welsh Government, which I think is a very positive step, because it gives the Welsh Government flexibilities on the future use of the accommodation, particularly as the Welsh Government is yet to decide on what issues it wants to have devolved, and so if areas are devolved, it will give them greater flexibility.

It's likely that the accommodation for staff, which will have fully bilingual staff, will be in Caernarfon. It's also likely that there will be a room available in central Cardiff that I could use for when I need to meet with Government and industry and others in the capital.

And how would you cope with the commuting between Herefordshire and Caernarfon?

It's fine. It won't be a problem for me. In my particular case, I think I said in my report that it happens I'm retiring at the end of the year. When the accommodation is available, when it's signed, then there will be a commencement on the recruitment process, and because the staff will be civil servants, it's necessarily—and in the private sector, because there's a need to go through a process as to whether people are at risk and so on—. But the person specification will clearly indicate that the people need to be bilingual.

Why are people at risk on account of your upcoming retirement? I don't understand that. 

No, no, any recruitment in the civil service—if there's a new post in the civil service, my understanding is that before you advertise to the general public—'Do you want to join the civil service?'—there is an internal round internally within the civil service if there are posts that are at risk. It may be there are no posts at risk, but usually there are at some stage. I'm just illustrating the fact that, because the staff will be civil servants and they're new posts, it's not the same process as recruitment in the private sector, and I don't wish to say—it's not more than that. 

Okay. And could you update us as to where you are now in terms of Welsh language provision?

Me personally?

In terms of people who are engaged—

The staff in the new office will be bilingual. That's the really important feature. So, all the staff working in the office in Caernarfon will be bilingual, and indeed that's one of the reasons why it was felt to be particularly helpful to have the office in the Caernarfon area, where, if you walk down the street, most people speak Welsh. I know people speak Welsh in Cardiff as well, but there are more people who speak Welsh in Caernarfon, proportionally, than most other parts of Wales. 

And you say that all members will be bilingual. Are you saying that people who don't speak Welsh will not be allowed to take any of these roles? 

Correct. That's been my desire. The problem has been, of course—I appreciate you've said this is your first meeting—that the staff—. Wales has been managed from England and there's been a complete lack of compliance with Welsh language legislation. And the means of addressing that is to have fully bilingual staff, and the Welsh Government, as part of the memorandum of understanding between the Welsh Government and the Department for Transport, setting up a separate traffic commissioner for Wales with different funding, included provision for bilingual staff in Wales. So, that's something that you, the Welsh Government, or the Welsh Government has agreed previously, and it's formalised in an agreement.  

Well, I certainly haven't agreed. I'm aware of what the Assembly may or may not have done in the area, but it just seems quite a radical change going from a situation where no-one speaks Welsh to not allowing anyone to work there—

They have to speak English as well. 

—who doesn't speak Welsh. 

They'll speak English as well. I'm pointing out that in—

But someone who wants to work or is attracted to this line of work would be excluded from any chance of having that unless they speak Welsh. 

If you see the posts there, yes, that's correct. 

Okay. And these various documents and guidelines that are done on a UK-wide basis—the example that I have is the guide to maintaining roadworthiness—presumably now all these can quite quickly be translated into Welsh with that level of resource in the new office. 

No. I think I've mentioned in the report that the staff who are going to be employed and based in Caernarfon—assuming it is Caernarfon; let's see what comes about, and I have no reason to doubt it—they will translate letters and deal with correspondence in both English and in Welsh, but they won't be translating specialist documents. The Welsh Government have a team that will translate specialist documents with specialist language. 

Thank you. 

Sorry to go back to the data, but if you've lost it, it's still held somewhere, so if somebody needed to get to that data if there was an issue with it, they could still get access to it. 

I have no reason to think that there would be a problem. As a—

But is it worrying for you that you don't have access to it as the actual commissioner? 

It's a case of my being frustrated because I don't have access to previous decisions. If I needed it in an emergency, I would be able to access it because it's staff who would have that data in any event. Because if I produced—

And where are those staff based? 

Our staff are based wherever. There are staff based—. Data is held electronically, so it could be based anywhere. There are staff based in Leeds, Birmingham, Bristol, Eastbourne—wherever. 

But nobody is actually based in Wales at the moment in terms of staff that work for you.  

Correct. That's right, and that's the frustration. There will be staff working for the traffic commissioner in Wales and—

So, what's been—because I'm new to the committee as well—the delay, because it seems odd to me that with so many Government offices, be it UK or Welsh Government, that there's nowhere for you—. I mean, there are offices in Merthyr, there are offices in mid Wales—there are quite a lot of offices that you could base yourself in. 

Are you talking about offices for staff or offices for me? 

Well, for you and the staff, I guess—I guess you could tuck in. 

The process has been slow. At one stage, there were comments to the effect that perhaps some of the Welsh Government accommodation could be used. There are some very practical problems, because the staff who will be working for the traffic commissioner will have files that relate to a lot of personal data in terms of bank accounts, and very personal data relating to operators. So, it's got to be capable of being locked away, and so when one of the Welsh Government properties was suggested, it clearly wouldn't have been suitable because the accommodation that was offered would have been available to other staff to be able to access, and so there were security reasons why that occurred. 

Couldn't you have a locked filing cabinet? 

Yes, you can have locked filing cabinets, but it's actually about whether people can get into that particular building. 

Okay. And just in relation to the line manager situation, if there is an office in Caernarfon, could the line manager not be moved to Caernarfon as well? I've had representations from people from that area of Wales who would like to see that happen, so that you haven't got that disparity. Allegedly, that happens in Bristol and in other areas where there are traffic commissioners.   

Each office at the moment of the traffic commissioner has a line manager there; they'll have a team leader and they'll have a senior team leader-level post. Historically, when Wales was part of the same office as the west midlands, in Birmingham, then the Birmingham line manager dealt with both Wales and the west midlands of England. 

When it was originally envisaged that there would be an office in Wales, it was initially envisaged that there would be an office in Cardiff, and it was thought, 'Well, perhaps the line manager could come from—could be shared with the one from Birmingham or the one from Bristol.' But now that the office is in Caernarfon, the distance involved is such that it's difficult to see that being practical. There is an office in the north-west of Wales. I'm quite clear that there aren't staff in England who are sufficiently bilingual. What I've been saying in my report is that, if there's to be a line manager, because you want value for money, my view is that you need to decide what functions you want the traffic commissioner to do, because the three staff who've been allocated in the memorandum of understanding signed between the Welsh Government and the Department for Transport—that deals with the three staff who currently undertake work in preparation for public inquiries. And so I'm saying that, if you want other tasks to be done, be it bus registrations, or a raft of other areas, then you're going to need additional staff. So, I'm saying: make an informed decision, and have a proper professional process relating to the grades of the members of staff who'd be there.

If you're saying to me, 'Shouldn't there be a line manager in the Caernarfon office in the long term?', my response is, 'Yes, that's my view.' That's a matter that needs to be addressed, but before addressing it, don't you really need to decide what the office is going to do? The office is flexible. The site is sufficiently flexible so that, if there is a need to expand, it can. If it doesn't—

That's fine.

—that's fine.

I've got a couple of supplementaries before I come to Jack Sargeant. Hefin David. 

Do you understand why Members are looking baffled, that it seems so complicated to do something so simple, which is to set up an office? 

Yes. I've set up offices in previous employment. I've set up buildings—capital schemes and private finance initiatives. I've signed PFI contracts as a project sponsor for PFI projects. I—. The difficulty is that—. The difficulty is that the traffic commissioner doesn't control staff, and I don't—.

Your role isn't taken seriously.

No, it's—. I think that—. I've said earlier that there are issues relating to the agency, but I think it's the fact that we're dealing with different—I was going to say Government departments; different organisations. So, the Welsh Government—. It's a matter for Welsh Government and the DVSA. It makes it more difficult because they've got different teams dealing with work. If you're asking for the minutiae on why there's been delay, at first there was the issue relating to Cardiff, and there were issues relating to costs of buildings and recruiting staff. And, in the case of north Wales, it looked as though there was going to be some other accommodation, not in Caernarfon, but not far away, but that didn't come up to fruition because of change of ownership, and so that's part of the reason for the delay. 

But it seems that this—. When the Chair asked you what challenges you've faced in the last year, this is over and everything that you've tried to do. 

It's—. My objective, from when I was appointed the first full-time Traffic Commissioner for Wales in October 2016, was to seek to set up an office of the Traffic Commissioner for Wales for the benefit of the people of Wales and for the industries in Wales, and to do that before I retire, knowing that there is a compulsory retirement age. That will happen. I would have preferred to have seen it happen before, of course, but what I am clear about is that it will happen before I retire. So, my successor will be in a position to ensure that the things that I would have wanted to do, in terms of promoting a number of other areas, will be able to come about. 

So, is there one figure in Wales, one person in a position of authority, who's able to sort this out for you, if we went to that person and said, 'Please, can you sort this out tomorrow?' Is there anyone there who could do it?

My understanding is that, if you're talking about the accommodation issue, it's being sorted. I've been—. In both cases, the leases are being signed by the Welsh Government. And, in fairness, it's a matter of Welsh Government lawyers fine-tuning the details. I have no reason to doubt—

So, we can criticise the Welsh Government, and say, 'You haven't been fast enough.'

Well, no, it's—. No, I'm not doing that; I'm not doing that.

But we could do that.

Well, I—.

We've obviously got concerns.

In the case of the office in north Wales, in fairness to the Welsh Government—. Because other accommodation was identified that was suitable, but became unavailable at a very late stage because of potential change in ownership, the Welsh Government, at that stage, because of the delay—which you've talked about, and I've expressed frustration about—because of that, senior officials within the Welsh Government, really, came to me, and said, 'Look, we really want to help', and bent over backwards to try and assist. And so, in fact, in the case of the Caernarfon accommodation, senior officials—people who didn't have the technical responsibility for this, but actually sought to be of assistance—approached others, including Gwynedd Council. And it's very likely that the accommodation that will be used is accommodation that is owned by Gwynedd Council, and some accommodation that is used by other bodies that are in Caernarfon. And so, in fairness, the accommodation that's been identified, the Welsh Government has been very helpful, and they've moved rapidly. The problem has been the previous accommodation that we were wanting to move into at one stage, but which, it was decided, became unavailable.

David Rowlands.

I have to say that I share this bewilderment about this inability to set up an office. We're all charged, as AMs, to set up offices within a month or two of us actually taking office. And we might come from very disparate backgrounds, but we're charged with doing that. I can't understand—if you felt that there was something holding you back from being able—. I mean, under the circumstances you were working, I'd have been shouting from the rooftops about the fact that someone was prohibiting you from getting this fundamental adjunct to your job. I just really can't understand it.

It's been frustrating, yes.

I know. I just want to—. We have got other topic areas to cover. Is there anything new you could add to the accommodation discussion—

No, other than the fact that I expect—I really anticipate that, within weeks, if not days, something will be announced.

Okay, weeks or days.

Cross fingers—I really hope.

Okay, right. Okay. Jack Sargeant, on a new topic area.

Thank you, Chair. I'd like to talk about the future role of the commissioner's office. [Laughter.] You said in a report to the Secretary of State that there will be a real increase in the work for the Traffic Commissioner for Wales. Could you just help us explain why this is, and will you have the—? Fingers crossed, in the next few days, you'll have the sufficient resource to deliver the work.

I think that that's the reference to the fact that there have been examiners appointed in areas where, in the past, there was a lack of regulation. And a lot of that's in the Caernarfon area, as well—in the north-west area. And so I am seeing operators at hearings where the knowledge as to what they should be doing is very low. It doesn't necessarily mean that they're bad people—it means that they haven't had the benefit of effective regulation. There are some bad operators as well—and I've taken some very strong action against one or two very bad operators in that area. But there are operators filtering through who, frankly, weren't even aware of what a traffic commissioner was—they're finding out.

So, have we now—? Because, obviously, with the additional transport powers that may come through devolution—have we got the structures in place to bring that up to scratch to where we need to be?

There's a need for the Assembly and the Government to make decisions as to what devolved powers it's going to take up, before you have the staff in there. And I think, in my report, I've given the example of bus registrations. There isn't a resourcing of bus registrations; you could cut and paste what is done in Leeds, and, in theory, I think I've said, it's about a half a member of staff. I don't recommend it. You might prefer that you did it elsewhere or you expanded the numbers. It's part of the reason why I've said, 'Make informed decisions, having had advice from officers', because you don't want to waste money—you want value for money. But there's a lot of good work that could be done that isn't being done, but you need to make some decisions and have discussions. Some of it's going to flow from the outcome of the White Paper as well.

Finally, Chair, you spoke, commissioner, about the compulsory retirement age. Have you had those discussions with Welsh Government and the Department for Transport to make sure that there is a successor lined up and it's under way?

I have no reason to doubt that there will be a successor lined up. The Department for Transport is well aware of that. Clearly, it's not for me to appoint. I'd point out to you that a link to my report is a report to the Commission on Justice in Wales, which, if you read it, you'll see that I make some comments in there about the legal status of the traffic commissioner role, because it's unusual, to put it mildly.

Okay. Thanks, Chair.

Thank you, Jack. Bethan Sayed.

I just wanted to ask about: you've mentioned the White Paper. Last week in the Chamber, I asked Ken Skates about bus services and I suggested that the system was broken—you've got situations where bus services are being cut. Yes, some subsidies are happening, yes, some councils are running their own services, but that's not happening across the board, and he agreed with me that the system is broken. So, I'm just wondering what ideas of your own you have in relation to how we can improve bus services here in Wales, and whether you have any comments on the White Paper in relation to councils setting up their own bus services and about partnerships emanating from those proposals—just so we can understand, from an expert opinion, where you're coming from.

I will answer the question fully when I've produced a written response to the White Paper, but I'm happy to answer some basic points now. If you're dealing with local authority-owned bus operators, referring to that, I'd point out that the numbers of local authority-owned bus operators across Great Britain have reduced considerably because a number of them found that they were in financial difficulties. There are a number of reasons why. Often, it relates to pension funds, to be quite frank. And so the financial consequences of setting up a local authority bus operator can be considerable.

So, they would need significant investment if they were going to be setting up new bus companies that would run, say—. Gwynedd Council, I think, are looking at it—to be able to run their own services.

The law relating to public service vehicles is difficult. The law relating to heavy goods vehicles, which I regulate, is simpler—there are issues there that need reform. But, in the case of PSV legislation, it's actually difficult to understand. In fact, if someone asks, 'What is a definition of a PSV?', then it's difficult to answer that in a simple way—it's several pages of paperwork describing what is a PSV, particularly for small vehicles and so on. It's partly because buses have been the subject of legislation over the years, and it's an area that is political and party political, so the legislation has been introduced on a piecemeal basis, and so some of it is unintelligible, or certainly difficult, and that's why I'm suggesting that you, with the right advice, have the tools whereby you can get the best value for money in Wales.

You do have a big advantage in Wales in that, in England, there is a bus service operators grant, which is at a flat rate, and it's very much a scatter gun. In Wales, you have a bus services support grant and that's something I've mentioned in my report. That is potentially a powerful tool, because you can target it where you most need it, and that's something I'm happy to expand upon in great detail. I appreciate that the money spent on bus services support grant is relatively small, especially compared with the concessionary fare issue—almost 3:1; 2:1 to 3:1. But I noticed that the White Paper makes a number of recommendations about concessionary fares, and so, if that came about, and, if the moneys were used for BSSG, then the Welsh Government and local authorities, or joint transport authorities, as the case may be, would have powerful tools to promote quality bus services in a local area.

Just to ask about—. For me, from my basic understanding, there are a lot of issues because of the fact that many bus companies can’t cross-subsidise, and then that creates a problem for them in relation to how they run their services; they're not able to provide a service in one area if they're providing it in another. Is that partly a problem in relation to this agenda, or does it need to be re-regulated? That’s the question, really.

You do not have authority to legislate in relation to PSVs, it’s a reserved matter, but you do have authority in relation to bus service support grant. And so, you do have some tools to make considerable improvements.

But not everything.