Y Pwyllgor Materion Allanol a Deddfwriaeth Ychwanegol - Y Bumed Senedd

External Affairs and Additional Legislation Committee - Fifth Senedd

04/11/2019

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Alun Davies
David Melding
David Rees Cadeirydd y Pwyllgor
Committee Chair
Delyth Jewell
Huw Irranca-Davies

Y rhai eraill a oedd yn bresennol

Others in Attendance

Dr Nick Fenwick Undeb Amaethwyr Cymru
Farmers Union of Wales
Dylan Morgan Undeb Cenedlaethol yr Amaethwyr Cymru
National Farmers' Union Cymru
Ed Sherriff Llywodraeth Cymru
Welsh Government
Gwyn Howells Hybu Cig Cymru
Hybu Cig Cymru
Jeremy Miles Y Cwnsler Cyffredinol a'r Gweinidog Brexit
Counsel General and Brexit Minister
Richard Ballantyne Grŵp Porthladdoedd Cymru
Welsh Ports Group
Sally Gilson Cymdeithas Cludo Nwyddau
Freight Transport Association
Simon Brindle Llywodraeth Cymru
Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Aled Evans Cynghorydd Cyfreithiol
Legal Adviser
Alun Davidson Clerc
Clerk
Andrew Minnis Ymchwilydd
Researcher
Claire Fiddes Dirprwy Glerc
Deputy Clerk
Katy Orford Ymchwilydd
Researcher
Nia Moss Ymchwilydd
Researcher

Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad.

The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript.

Dechreuodd y cyfarfod am 13:32.

The meeting began at 13:32.

1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau
1. Introductions, apologies, substitutions and declarations of interest

Good afternoon. Can I welcome members of the public and members of the committee to this afternoon's meeting of the External Affairs and Additional Legislation Committee? Can I remind Members that the meeting is bilingual and there is simultaneous translation available on the headphones via channel 1? There is also, available on the headphones, amplification; that's via channel 0 if you need amplification.

Can I please remind Members to switch their mobile phones off or on silent, and any electronic equipment that may interfere with broadcasting? There is no scheduled fire alarm this afternoon, so if one does take place, please follow the directions of the ushers to a safe location. Do any Members wish to declare an interest at this point in time?

My standard declarations, Chair, in terms of the three groups that I chair with a European interest.

Thank you. And we have received apologies from Mandy Jones. There is no substitute identified for her this afternoon.

2. Sesiwn graffu gyda’r Cwnsler Cyffredinol a’r Gweinidog Brexit
2. Scrutiny session with the Counsel General and Brexit Minister

We move on to the next item on the agenda, and that's our scrutiny session with the Counsel General and Brexit Minister. Can I welcome Jeremy Miles this afternoon to the meeting? And for the record, could you please introduce your officials and their designations?

Certainly, Chair. I have Simon Brindle and Ed Sheriff, who are both from the European transition team, focusing on policy and negotiations respectively.

Thank you for that. Now, clearly, we're in a different position than we would have anticipated when we originally set up our session. We're now almost in a situation of a general election, and certain things are now on hold as a consequence of that. But we are still clearly interested in some of the issues related to your portfolio and, in particular, to the actions of the Welsh Government in the next few months. So, Alun.

Ie. Diolch i chi, Cwnsler, am eich amser y prynhawn yma. Dwi'n dilyn y Cadeirydd, mewn ffordd. Beth ydych chi'n ei wneud ar hyn o bryd?  Achos mae'n ymddangos i fi fod yna ddim 'no deal' ar yr agenda presennol. Mae yna gytundeb gan Lywodraeth y Deyrnas Unedig â'r Comisiwn Ewropeaidd, ac mae'n ymddangos i fi fod yna wagle ar hyn o bryd. Ydy hynny'n wir? Beth ydych chi'n ei wneud gyda'ch amser ar hyn o bryd?

Yes. Thank you, Counsel General, for your time this afternoon. Now, I'll follow the Chair, in a way, here and ask: what are you doing currently? Because it appears to me as if 'no deal' isn't on the current horizon. There is a deal between the UK Government and the European Commission, and it appears to me that there is a vacuum at present. Now, is that true? What are you doing with your time currently?

Wel, o ran ymateb i’r cytundeb rhwng Boris Johnson a'r Undeb Ewropeaidd, mae gwaith dadansoddi wrth wraidd hynny, wrth gwrs. Dwi wedi bod yn edrych ar y cwestiynau yn ymwneud â'r cwestiwn o gydsyniad mae'r Llywodraeth yn gofyn amdano fe yn San Steffan.

O ran paratoadau, wrth gwrs, er ein bod ni wedi cyrraedd diwedd y mis gyda'r oedi a'r gohirio, dydy’r risg o adael heb gytundeb ddim wedi gadael yn llwyr. Yn wir, mae cytundeb Boris Johnson yn cynnwys elfen o’r risg hwnnw ynddo'i hun—hynny yw, y risg o ohirio. Ond hyd yn oed o fewn fframwaith yr ehangiad presennol, mae proses yn mynd rhagddi o edrych ar y paratoadau a wnaethpwyd, edrych ar allu gadael mewn amser gwahanol o’r flwyddyn a’r paratoadau fydd angen ar gyfer hynny hefyd.

Well, in terms of responding to the deal between Boris Johnson and the European Union, there is some analysis to be done, of course. I've been looking at questions to do with the matter of consent that the Government in Westminster is seeking.

In terms of preparations, of course, although we've reached the end of the month with the delay and the deferral, the risk of leaving without a deal hasn't completely been taken off the table. Indeed, Boris Johnson's deal includes an element of that risk in itself—that is, the risk of deferral. But even within the framework of the current extension, a process is under way of looking at the preparations that have been undertaken, looking at the possibility of leaving at a different time of year and the preparations that would be needed for that.

13:35

Ocê. Diolch am hynny. Dwi’n gwerthfawrogi hynny. I chi, fel Gweinidog Brexit Llywodraeth Cymru, beth sydd gyda chi ar eich agenda yn ystod y cyfnod etholiadol yma hyd at Nadolig? Mi oedd yna restr o gyfarfodydd yn Llundain gyda Gweinidogion Llundain. Ydy’r cyfarfodydd hynny’n dal yn digwydd? Ydy’r strwythur o waith, y rhaglenni gwaith, yn dal yn digwydd yn ystod y cyfnod?

Okay. Thank you. I appreciate and understand that. Speaking as the Brexit Minister for the Welsh Government, can you tell us what you have on your agenda in this campaigning period up to Christmas? Because there was a list of meetings in London with Ministers. Are those meetings still going to take place? Is the structure of the work programmes still relevant during this period?

Wel, mae’r cyfarfodydd dyddiol oedd yn digwydd yn San Steffan rhwng minnau a Gweinidogion y Llywodraeth yn digwydd, ar y cyfan, drwy gysylltiad fideo ac ati. Mae’r patrwm hwnnw wedi dod i ben yn sgil cyrraedd diwedd mis Hydref. Wrth gwrs, o fewn dyddiau byddwn ni yng nghanol galwadau eraill ar bobl yn San Steffan, felly mae’r cyfnod hwnnw wedi dod i ben.

Roedd cyfarfod o’r JMC(EN) i fod i ddigwydd yn yr wythnosau diwethaf. Dydy hynny ddim yn sicr o ddigwydd nawr yn y cyd-destun hwn, o ran cyfarfodydd gweinidogol, fel petai. Ond mae’r gwaith o ran cydweithio rhwng swyddogion—fel rŷch chi’n gwybod eich hunan, dyna sy’n gyrru llawer o’r gwaith dadansoddi ac ati—yn mynd rhagddo, gyda gwaith ar y fframweithiau ac ati. Efallai cawn ni gyfle i drafod hynny’n ehangach yn nes ymlaen. Felly, mae gwaith yn digwydd o’r safbwynt hwnnw.

Hefyd mae'n rhaid edrych nawr, fel roeddwn i’n ei ddweud, ar oblygiadau gadael mewn cyfnod gwahanol, ond yn sicr mae’r bwrlwm hwnnw o baratoi dyddiol wedi oedi o ran gwaith dyddiol, fel petai.

Well, the daily meetings that were happening in Westminster between myself and Government Ministers were via video link, for the most part. That pattern has ended in light of reaching the end of October. Of course, within days, we'll be in the middle of other demands on people in Westminster, so that period has ended.

A JMC(EN) meeting was meant to happen during recent weeks. That's not certain to happen now in this context, in terms of ministerial meetings, as it were. But the collaborative work between officials—as you know yourself, that is what drives much of the analytical work and so on—is ongoing, with work undertaken on the frameworks and so on. Perhaps we'll have an opportunity to discuss that further later on. So, work is ongoing on that front.

But we also must look now, as I've said, at the implications of leaving at a different time, but certainly that whirr of daily preparations has been paused in terms of those daily activities, as it were.

So, mae gwaith gweinyddol yn dal yn mynd ymlaen, ond mae’r gwaith gwleidyddol wedi dod i ben.

So, the administrative work is still continuing, but the political work has come to an end.

Wel, o ran cyfarfodydd gweinidogol, ond mae gwaith, wrth gwrs, fel roeddwn i’n sôn, ynglŷn â dadansoddi'r hyn sydd gyda ni a’r gwaith yna.

Well, in terms of the ministerial meetings, yes, but there is work, as I was saying, on the analysis of what we have and so on.

Ie, ie, dwi’n deall hynny. Ond mae'r cysylltiadau gweinidogol, fel petai, wedi dod i ben, yn dod i ben.

Yes, I understand that. But in terms of the ministerial contact, as it were, that's come to an end, or is coming to an end.

Maen nhw’n sicr wedi newid. Mae llawer llai ohonyn nhw.

It's certainly changed. There is much less of it.

Ocê. Diolch am hynny. Mae gan Lywodraeth Cymru gynlluniau i ddod â’r cynnig cydsyniad gerbron y Cynulliad.

Thank you. The Welsh Government has plans to bring the consent motion before the Assembly.

Mae'n rhaid gweld beth ddigwyddiff nawr ar ôl yr etholiad, onid oes e?

We'll have to wait and see what happens after the election, won't we?

Ond rŷch chi'n dal yn paratoi i wneud hynny.

But you're still preparing to do that, are you?

Wel, rydym ni wedi, wrth gwrs, mynd rhagddi i wneud dadansoddiad o’r Bil fel oedd e. Fel rŷch chi’n gwybod, cafwyd dadl yn y Senedd. Mae gwaith ynghlwm â hynny, wrth gwrs, ond mae cwestiwn yr etholiad nawr a beth ddigwyddiff ar ôl yr etholiad, wrth gwrs, buaswn i’n gobeithio bydd gennym ni Lywodraeth wahanol ar ôl yr etholiad a bydd pethau’n wahanol iawn. Ond mae’r Bil hwnnw, wrth gwrs, wedi syrthio, neu bydd e yn syrthio pan fydd yr etholiad yn cael ei alw, pan fydd y Senedd yn San Steffan yn dod i ben.

Well, yes, we have gone ahead to do an analysis of the Bill as it was. As you know, there was a debate in the Senedd on it. There is work involved in that, but the election is coming and, after that, I would hope that we would have a different Government and that things will be very different. But that Bill has fallen, or rather it will fall when the election is called and when the Westminster Parliament ends.

Ocê. So, ble ydyn ni ar hyn o bryd gyda'r paratoadau i ymadael?

Okay. So, can you tell us where you are currently in terms of the withdrawal preparations?

Wel, fel gwelsoch chi, mae ystod y paratoadau a wnaethpwyd gan Lywodraeth Cymru wedi cael ei ddisgrifio’n fras yn y rhaglen gadael heb gytundeb. Yn y cyfnod yn arwain lan at ddiwedd mis Hydref, wrth gwrs, roedd pethau fel patrwm gwaith Canolfan Cydgysylltu Argyfyngau Cymru wedi cynyddu’n bwrpasol, felly. Mae hynny, wrth gwrs, erbyn hyn, wedi gostwng yn ôl. Ond mae’r paratoadau a wnaethpwyd o ran gwaith Llywodraeth Cymru, gwaith ar y cyd gyda Llywodraeth y Deyrnas Unedig, gwaith o ran deddfu, gwaith o ran civil contingencies, maen nhw wedi'u hamlinellu yn y cynllun gadael heb gytundeb.

Well, as you've seen, the range of preparations made by the Welsh Government has been described broadly in the programme for leaving with no deal. In the time leading up to the end of October, of course, things such as the Emergency Co-ordination Centre Wales's workload were purposely increased. That, of course, by now, has been reduced back down. But the preparations made by the Welsh Government, the collaborative work with the UK Government, the work on legislation, the work on civil contingencies, they've been outlined in the plan for leaving with no deal.

Before I bring Delyth Jewell in, just two questions, in the one sense, on that. The First Minister, I think, in the debate before the half-term recess, highlighted the fact that the Welsh Government was looking to put amendments to the House of Lords to the withdrawal implementation Bill. Clearly, whilst I appreciate that's on hold and we won't know what happens until after the general election, is the Welsh Government still putting those amendments in place in readiness for a return of that Bill, so that you are putting proper amendments in, which you think—? And if it is, when will we have a chance to see those amendments?

Well, they aren't ready yet, but the work has been under way to work on some amendments to the version of the European Union (Withdrawal Agreement) Bill that was introduced into Parliament. As I say, it depends on the outcome of the election, naturally. But there are a number of areas in the withdrawal agreement Bill, and I use that term to distinguish it from the withdrawal agreement itself, which, obviously, I've no doubt we'll come on to talk about. But, from the point of view of the Bill itself, there are a number of areas even within that around the cliff edge of the transition period. We would like to see that extended and for there to be a role for Parliament and, indeed, for the Senedd in that. There's obviously the question of the oversight in negotiations, to make sure that those are properly reflected in the legislation. So there are a number of items that we have significant concerns about in the architecture of the Bill itself. And, as you say, Chair, there has been work under way on amendments in relation to some areas, in the same way, in fact, that we did that earlier in the year in relation to other legislation going through Parliament. And that, obviously, will be made available to the Senedd in due course. 

13:40

Okay. And the other question from me at this point is: you mentioned in your answer to Alun that minister-to-minister-type discussions are effectively on hold. One of the concerns this committee has always raised with you, as you know, is the position the Welsh Government will have in any trade negotiations, and in particular the negotiations on the future relationship with the EU. Does that, therefore, mean that we are not going to have an opportunity to have Welsh Government input to that discussion until after the election? So, we'll have a two-month period in which you're not able to actually keep on pursuing the agenda, to have a Welsh Government voice in preparations for negotiations post Brexit on the future relationship?

I'll bring Simon in in a moment. The work of defining our interests in those negotiations from a policy point of view will continue within the Welsh Government, obviously. With regard to engagement with the UK Government on future economic partnership negotiations, Chair, you will know from previous appearances and references in the Chamber that this has been one of the areas we've been least satisfied with in terms of ensuring that we have a forum and a channel to make sure that our concerns not only are heard, but are reflected in mandates. There has never been the level of agreement from the UK Government to the sorts of principles underpinning that that we would want to see, in particular that the UK Government would commit to not normally proceeding without the agreement of the devolved Governments in relation to devolved matters. As it happens, there have been some positive comments in meetings around that, but in terms of the formal moving forward of a set of principles in black and white that we can negotiate, we haven't got to where we need to be on that. Simon, do you want to supplement that?

Yes, just to supplement that, Welsh Government senior officials are meeting with UK Government, Scottish Government and Northern Irish civil service officials this week to discuss the planning arrangements for future negotiations, to put in place the types of meetings and involvement in discussions informing a UK-wide position. That also involves discussions with Whitehall departments on how they're going to contribute to shaping those overall negotiating positions. So, we are involved in that high-level planning decision work that's going on now. 

Okay. Huw and David, with short questions, because I want to move on to Delyth. 

Yes, it's simply to follow up in terms of the European Union (Withdrawal Agreement) Bill. When Michael Gove, the Minister, was in front of us, he seemed to be very reassuring around the issue of respecting the Sewel convention, and so on, but, genuinely, I'm seeking clarity here. The Welsh Government's position on consent that is required for the withdrawal Bill seems to differ markedly from what we're hearing from the Westminster Government. What is your take on the position of consent on the withdrawal Bill?

Well, consent is certainly required, and UK Government Ministers have written to me to seek consent, applying the Sewel convention. I heard, of course, the remarks of the Prime Minister in the House of Commons, which were surprising. But I think that none of us, probably, at this stage would wish to set too much store by his understanding of what is constitutional and what isn't constitutional in light of recent weeks. But there's no question that the consent of the Assembly has been requested and is required. 

There's a layer of detail beneath that, Huw, as well, which is to say the UK Government has proceeded on the basis of consent for certain provisions, and it's the Welsh Government's analysis that other provisions in the Bill also trigger the requirement for consent, above and beyond those listed by the UK Government. So, the memorandum that has been laid before the Assembly provides the full scope of what we think requires consent. 

13:45

Yes. I presume that you accept that the Sewel convention requires that consent is given, unless there are reasonable grounds not to give it—i.e. unreasonable withholding of consent is not part of the Sewel convention and for it to operate, indeed, it's very important that capricious or unreasonable reasons are not presented to withhold consent. And I just wonder, in that respect, how the factors that were published earlier in the year—that a withdrawal Bill would have to be amended to meet certain policy objectives of the Welsh Government, such as free movement of goods, persons, services and capital, and a customs union within the EU—are those still active considerations for you in terms of granting consent, or do you accept that they're outwith the withdrawal Bill that is likely to be reintroduced and certainly if there's a Conservative Government re-elected at the general election?

Well, there are a number of points in that question. Clearly, consent should be considered on a basis that is (a) considered and (b) takes all relevant considerations into account, and I believe that that is described fully in the consent memorandum. But at the heart of this Bill is the implementation of a substantive agreement, and so you will also know that we have very, very grave concerns about the damaging impact on Wales of that agreement, and so we want to see that agreement fundamentally changed if it's to be presented to the people in a referendum, which is what—. We believe a referendum is the final determining mechanism for the entire question. And the Bill exists to make a reality of an agreement that we think isn't in Wales's interests.

That takes us well beyond what are clearly understood to be devolved functions, doesn't it? That very much takes us to the grounds of what sort of relationship the United Kingdom should have with the European Union, and, clearly, that affects the climate of British politics, of which devolved politics are a very crucial part—I see that—but, in terms of the constitutional arrangements, the fact that you would rather see a customs union continue and the free market continue—and they're perfectly valid opinions, of course, which you're quite free to express—but that is not really part of devolved competence, is it?

Well, a number of the areas, I would argue, do intersect with devolved competence, as it happens, but I think the broader point, which I suppose can intersect the point that you're making, is that the current version of the Bill does not protect the UK from a cliff-edge 'no deal' at the end of 2020, and our view is that these arbitrary deadlines are part of the reason we're in the difficulty that we are in. And so, the Bill itself should be amended to provide for that to be an extendable transition period if we get to that stage, so that the sorts of things that I'm sure we would all care about to ensure that Wales and the UK is protected are able to happen in a way that is orderly if we get to that point. As I say, we have a very different view about what we think is the right way forward, but in the universe of the Bill itself, that requires change.

I can see that you could construct an argument that any Bill that leaves open the possibility of a cliff edge and no agreement, in essence—and I'm not a constitutional lawyer—would have to be examined in terms of whether it would be reasonable grounds to withhold consent. But it's not reasonable to withhold consent if the Bill is not amended, to continue a customs union and a single market, is it?

Well, as I say, the Bill seeks to bring about a deal that we don't think is in the interests of Wales. We've laid a consent memorandum. My view is that I'd like to be in a very different place than this, so I hope that, when we come back at the end of December, we'll be looking at a very different proposition.

The answers you've had clarify that the Welsh Government believes that the Bill as it is currently laid does not act in the interests of the Welsh nation.

And it has a responsibility to devolved competency and to the Welsh nation. I think the Welsh Government has made its position quite clear on that. Delyth.

Diolch, Gadeirydd. Thank you, Minister. On a related matter, and you've already touched on it in terms of inter-governmental relations, your Government has recently published a paper on reforming our union, and, in that paper, the Government has set out a number of reforms that you would want to see to inter-governmental relations, including that you want certain aspects of inter-governmental relations to be on a statutory footing, that you'd want an independent dispute resolution mechanism, and that you'd want the devolved institutions to be able to ratify certain trade agreements. Now, could you tell us please whether you—? You've already touched on this a little bit. Is there anything you'd like to add in terms of whether you have had any response formally from the UK Government to any of these proposals? 

13:50

To the proposals set out in that document specifically in the form they're in that document, the answer to that question is 'no', but I did at the most recent JMC(EN), which I think was three or four weeks ago, in Edinburgh, highlight the existence of the document, provided copies to all participants in the meeting, including some UK Government Ministers, and encouraged them to read the document. I think it makes a compelling and strong case for change. 

In relation to the question of inter-governmental review in particular, which is a sort of subset of that, I think, which your question acknowledges, the intention had been that we would be in a position by the end of September to have a detailed plan, together with a mapping of the existing inter-governmental ministerial fora and a set of proposed reforms to those, a mechanism for discussion that would introduce an element of independence into dispute resolution mechanisms and, lastly, of the major issues certainly, a set of principles for resolving the role of devolved governments and legislatures in international agreements. For reasons which I think are obvious at this point, that isn't a timetable that's been met. There was a second milestone, which was to seek to get heads of government to discuss those by the end of this year. Obviously, the election will have intervened in that time frame.

But, certainly, we are working as a Government to that time frame in terms of moving forward our reflections and our work on the common framework, some of which is working in parallel to the same time frame. So, we are continuing that work and, obviously, we can all assess the likelihood of—. Well, who knows what heads of government meetings might be possible at what point in time? But, obviously, the election changes the odds of that. 

It changes a great deal, doesn't it? In the same paper, the way that your Government has framed the paper is that it sets out that those are the minimum reforms that you believe would be required to save the union. Can I ask what your Government will do if those reforms are not embraced?  

We've always operated on the basis that our position is best strengthened by articulating a very clear argument and making a case with an evidence base whenever we can, persistently, wherever we can. And I think, in a slightly different context perhaps, some of that has borne fruit in the context of Brexit specifically. I think the argument that we have made in the policy papers and 'Securing Wales' Future' and other documents hasn't ever really been challenged on the evidence. Obviously, it's been challenged on the politics, if I can put it like that. But we see our role in articulating our view of what we think is in the best interests of Wales in terms of constitutional reform. We hope that's a contribution to a broader debate.

Clearly, the pressures that Brexit has brought to bear have exposed failings in the way that Governments relate to each other in the UK, and that document is a contribution to seeking to take that debate forward. There are some very specific things in there, aren't there, in the context of the conversation we've just had about the Sewel convention. It talks about codifying that, embedding it, but it also says that there's a debate to be had about making 'not normally' 'never', so to speak, which was a debate that was had in the House of Lords. So, I think some of the direction of travel is also described in that document.  

Thank you, Minister. On the specific question about what your Government would plan to do if those—. So, it's the minimum that should be put in place. If that minimum isn't put in place, what would your Government plan to do? Obviously, you'd be hoping that it would be embraced by whatever Government there is in Westminster next, but if it's not, what steps would you take then to—?

There are some specific examples. The general principle we will apply is to seek to engage constructively with whatever Government is in Westminster to advocate the best interests of Wales. Sometimes, we will achieve everything of what we want, sometimes we'll achieve part of it, other times we will not achieve. But we continue to engage because we think that is the best way of making the case for Wales. There are some examples that are specific to this. We've talked in other contexts about the risk to public services and the health service, for international agreements, and the interest that some overseas partners might have in the health service. We would not find that tolerable in our party to have any question of marketisation or privatisation of that in Wales. We've been very clear about that. And in the context of those agreements, we've been clear that the appropriate mechanism for engaging with the Welsh Government in a meaningful, substantive way is the principle I outlined earlier—that agreements should not be reached, and we've touched on devolved competencies, other than where they've been agreed with devolved Governments.

Now, part of that analysis is that it's the competence of the UK Government to negotiate those agreements, but it's the competence in this case of the Welsh Government to implement agreements where they touch on devolved competencies, and we've been very clear that the UK Government can't expect us simply to implement agreements where we've had no involvement or no meaningful involvement in the agreement of the mandates and the agreement of the negotiation parameters.

13:55

Sorry, I know that Huw wants to come in, but, forgive me, I'm still not clear what exactly your Government would do if those minimum requirements were not answered in terms of—. Because the paper 'Reforming our Union' sets out that these reforms, many of which would be very welcome, would be the minimum that your Government sees that should be put in place to save the union. If they're not put in place, what would you then seek to do?

Well, we will continue to make the case for reform. We will seek to build the broadest possible coalition for those reforms, and I hope we can persuade you to support as many of them as you feel able to in the spirit of constructive engagement. But part of the purpose of that document is, as I said, to contribute to the debate. We think there needs to be a constitutional convention across the UK that enables a fundamental view to be taken of the shortcomings in many parts of the constitution. I hope that we will have a Government after the next election that is open to doing that, instead of hypothetical, which the Member is persistent in seeking to have me acknowledge. I hope that won't come to pass.

Well, let me ask this question, then: if those reforms or those points are not met, do you have a plan?

Chair, some of these areas—these are well-established lines of argument. In some of them, it is breaking new ground. The point is to have a response to that that provides a body of support across Wales for this set of arguments and this vision. Some of it is offered very clearly and categorically, some of it is offered clearly in the context for more discussion and reflection. And the broader support there is in Wales for that, the more likelihood there is of those provisions succeeding in negotiations with the UK Government. 

Okay, and from that I gather—. My interpretation is you have an ambition, you have a vision, you have a desire to achieve something—you have a plan to develop that vision, with groundswell, but you don't have a plan yet if that goes wrong.

Well, Chair, if I may put it like this: I don't think it's that straightforward, is it, because these things succeed through negotiation and over time, in part? And, as I say, we have, in the Brexit context, been able to make significant headway in some of these areas. So, I don't think you're looking at a question of a sort of all or nothing approach, which your question might suggest is the option we need to contemplate. We would like to be able to make progress on as much of this agenda as we possibly can.

Thanks, Chair. I just want to take your line of thinking on this back to an earlier discussion we had around legislation and the withdrawal agreement, because, certainly right now, subject to our earlier discussion, we have Ministers playing a very, if you like, clear line on where the consent is, and, as David, my colleague, said, a quite expansive view of where consent lies as well. And you could argue that that's what Governments should be doing, particularly if they want to influence and so on. So, as we go through this current process, where the Government is involved—sorry, all the parties are involved in elections at the moment—. Are you considering whether you would, for example, bring forward your own Brexit legislation now, either as a genuine serious offer or, alternatively, in a way to influence the UK Government, to say, 'We have an alternative piece of legislation here. Should we not be listened to?'?

14:00

Well, there are a number of aspects to that—we obviously are looking at what a delayed or a deferred potential exit date means in terms of legislation; there are time points in the year that bring different pressures to bear; the UK Government will respond in particular ways when a new UK Government is elected. So, all of those things are in the mix, and they're all under review, from our point of view. There have been other discussions that we've had here, about whether we would mirror, if you like, what the Scottish Government has said publicly it wishes to do in relation to keeping pace legislation, or continuity legislation, so that Wales can continue to be aligned, in a dynamic way, to European regulation. So, there's a set of considerations going on about how best to achieve that. One approach is, as far as we can tell, what the Scottish Government appears to be advocating. But there are other ways of doing it—sometimes one could see that happening as a piggyback on UK legislation, or we may have some of those powers already, or it might be appropriate to include some of those powers in other legislation that the Assembly makes. So, there's a range of options, and they're being looked at at the moment.

But it's interesting from the committee today, as we sit here at this moment in time—albeit things will move quite rapidly now—that you're not ruling anything out.

Well, we have a set of assumptions, going into the election, about how the legislative burden, if you like, will be shared between Westminster and Wales. We've had a lively discussion about this previously. That assumption remains the case—we need to see what comes back from a new Government. But I think, as I say, there are different considerations that might apply at different points in the year and so on. So, we've got to keep those things under active consideration.

We are having a lively conversation about those matters, Minister; we're not having a very lively afternoon tomorrow, are we? Government business has been quite light recently, and, certainly, looking at the legislative burden, it's been very light, and far lighter than at any other point in recent times. And it appears to me that there is an opportunity now for the Welsh Government to review its position, in terms of taking forward its own legislation. As you know, and you've referred to it, I remain of the view that it's a titanic failure of policy to find ourselves in the position we are in at the moment, in terms of, particularly, agriculture and fisheries legislation. And it would appear to me that we now have the opportunity to actually consider and to legislate in this place for the sorts of policies that we may want to see in the future, and provide the framework that we need for the future. And it would be useful, I think, if the Welsh Government were able to take a more robust view of how it wishes to take up the time of the remainder of its mandate, to 2021, to actually pass legislation that is significant, and that is important for the future of people. With all due respect, the wild animals and circuses legislation is probably not what's going to be defining the future of this country post 2021.

Well, that isn't the only piece of legislation in the legislative programme, as I think is obvious.

Clearly, we will want to see the approach of an incoming UK Government. As I say, the Government took an approach, which you might recall from your time in Government, when we discussed these issues at the time—these are fine judgments in many cases, aren't they? And the balance of where legislative activity occurs seems to me to be a pragmatic balance, as of where we are today. But I would just echo the point that I made that these things are kept under consideration.

Can I ask a question? You just said you wanted to take a view of the approach the incoming Government will take. How long do you anticipate that to be? Because if you take, say, three months, which is a reasonable consideration, that gives us only 12 months left to actually get any legislation done before the end of this Assembly. That's a very tight schedule to actually get some crucial elements of the legislation through. So, when can we expect the Welsh Government to be coming forward with proposals it now then thinks has to be done before the end of the Assembly? Because as my Member colleagues have rightly pointed out, in April 2021, you will not be able to do it—you may not be back in Government to be able to do anything.

14:05

Indeed. As I say, that's exactly the kind of thing under consideration, Chair. So, that point's well taken.

I'm not in a position to say that, Chair, but there are circumstances that are changing—obviously in the context of an election, so that changes the landscape quite considerably, doesn't it? The set of assumptions that we had on activity in Westminster and here—obviously there's a set of assumptions going into the election that we will need to look at; we are looking at what that means in terms of the balance of legislation. I'm not in a position to tell you at this point, Chair, what that means in a time frame.

Sorry, this is what worries me, you see, because we remember what was said about John Major's Government—in office but not in power. What concerns me is that you have the opportunity here and you have the capacity to be far more forthright in terms of your approach to legislation particularly, and it appears to me that you're sitting back in a way, when I would anticipate, particularly given your exchange with David earlier, that the Welsh Government would want to take a far more robust view and say, 'Do you know what? We can shape this future. We can change this future. We can do these things.' But we seem to be saying, 'Actually, we'll wait for somebody else to do something, and then perhaps we'll consider how we feel after that.' It doesn't feel like a Government on the front foot.

Well, I don't think that's a fair point to make in terms of sitting back, Chair. There'll be hundreds of people listening to this exchange and thinking they've spent the last two years working extremely hard to make sure that we have a functioning statute book in the context of a 'no deal' Brexit, which remains a risk. We are in a position where that is the case.

As I say, in relation to primary legislation, a balance is taken, as you'll be aware, on the content of that conversation and that policy being set, to ask Westminster to take some action and for us to take others. There are some examples specifically in relation to that where—fisheries is a very good example. The kind of legislation we want to take through here would be dependent upon having the competence of the Assembly extended. So, there are some very specific—a very blanket approach is the last thing that has been taken here. There's been a set of evaluations as to what ought to be brought through the Assembly, what ought to be taken through Parliament with scrutiny and with our consent. I think that judgment has been in the right place, but, clearly, circumstances are changing here, and we'll just need to see how those impact.

Diolch. Just taking you back to the document that we were discussing and your plans about 'Reforming our Union', it says in the document—one thing that I really welcome, which I won't ask you on here, but you say that if a mandate is secured for an independence referendum that that should be respected. One thing that worries me, though, is that you say that if the UK Government wanted to abolish the Senedd, then they would need to get a mandate for that through a referendum. The permanence of the institution has been established on a statutory footing by the Wales Act 2017, so is there a specific reason why you think that we'd need to address that concern at the moment?

I think we're trespassing slightly beyond the boundaries of my Brexit responsibilities in relation to this line of question, if I may just mention that.

You may consider that, but you were involved in the launch of the document, so I think I'll let this one go.

I'm going to answer the question, I just want to be clear about that caveat on it. I think it's a point about the permanence of the institution, isn't it?

Obviously, our view is that it's permanent. So, the document argues for that position.

Okay. Given what you've said, I won't push that. So, thank you.

If I can ask a question about the relationship between the Welsh Government and the UK Government in terms of inter-governmental relations, it's been drawn to my attention that the UK Government has raised some concerns to the Lords EU Select Committee that it hasn't received responses sometimes from the Welsh Government when the Welsh Government has been contacted in terms of—. There was one specific thing about matters relating to trade and transport where they'd contacted the Welsh Government and asked for input but they hadn't received a response by the agreed timetable. Does the Welsh Government always comply with the timetables that are set?

I don't know what the Member is referring to specifically in relation to that—

14:10

Perhaps if the Member writes to you directly to get a specific answer with more detail on that case, it might be easier.

Yes, I think that would be very helpful. The generality of the situation is that this is a set of arrangements where the Welsh Government has been the party knocking on the door seeking better, more timely, fuller, contextualised information. We'd succeeded, as you will know from previous exchanges, under Theresa May's Government, in getting to a pretty good working relationship. That arrangement dropped back under Boris Johnson very dramatically. And that, I'm afraid, is the dominant theme, rather than individual time frames. I'm not in a position to comment on the particular point, but I think the take-out point, if you like, is we want there to be better sharing of information, better engagement. We've had indications that will be the case and we look forward to that happening. In some areas, certainly, it has been the case.

Yes, if I can go off on a slightly different tangent, and recognising that we're in the rounds of speculating here on future Governments, and a lot of the discussion we've had so far has been on the idea that we'll have something like the Government we've currently got back, with something like the agenda of the Government that we currently have—but of course there could be an alternative Government in there, and it could be a Government that is standing on a manifesto of putting choices back to the electorate in a referendum, which is Welsh Government's position, is UK Labour's position. Now, you've been across in Brussels recently. I'm just wondering have you had discussions with any European counterparts about how they would look upon the idea of a further extension to enable a referendum to happen.

I was most recently in Brussels a few weeks ago, where I met the former President of the European Parliament and Danuta Hübner, who I think you've met in your visits as well. The question of a referendum is an internal question for the UK, really. We've been very clear, and I was very clear when I was there, that the Welsh Labour Government advocates to remain, obviously. There were discussions then about extensions, and clearly that was very much in the air at the time, given the timing of the point I was there. That wasn't specifically about a referendum. The Prime Minister has been saying, hasn't he, that he doesn't want there to be any extension beyond 31 January. I would hope, the Welsh Government would hope, that we have an incoming Government that is open to putting the matter back to the people in a referendum, which is what we want to see. And, in those circumstances, again, as I made the point earlier, artificial deadlines aren't the most helpful thing. We would hope in those circumstances that our EU partners would agree a further extension to enable that to happen. That would be our aspiration.

The reason I ask, Chair, is because it's that 'marching the troops up the hill' syndrome again. There's an enormous amount of time and resource and literally cash expenditure that's been done on preparing for 'no deal' Brexit, but also different types of managed Brexit process as well. We've had last April, we've had this October, now we're looking to January. So, curiously, regardless of the issue of the reasons for a further extension, have you thought through the impacts of that within Wales, particularly about January, then March or June or whenever?

Well, there are two aspects to that question. One is the question of uncertainty, which underpins the entire enterprise, doesn't it? We are very clear what impact that has on businesses and organisations in Wales. It's tremendously problematic for businesses, and in many cases even worse than that. Having said that, I think, at the end of the day, the notion that leaving without a deal is a resolution to any of this—I know that you will share the view that is obviously not the case. But we are absolutely mindful of the impact uncertainty has.

I think you're also making the point about what does it mean to leave at a different point in the year, and obviously that was part of the considerations we had between March, April and October—what does it look like to leave at the start of the winter? And that process is obviously live now in relation to a deferred possible departure date.

In your first answer to Huw just now, you said you had met with Danuta Hübner and the former President of the Parliament. Did you actually take the opportunity to meet with any of the senior members of the incoming Commission? And, if so, did you have a chance to discuss what their priorities would be as far as the relationships would be concerned post Brexit?

'No', Chair, is the short answer to that. The Commission hearings were still under way at the time. I think they may still be under way. I think the expectation is the Commission should be in place by the start of—

14:15

December, yes. So, the short answer to your question is, 'not with the new Commission', but you will know that we've had extensive engagement with the existing Commission, and, as soon as we are in a position to engage with the new Commission, then Welsh Government officials there and Ministers here, when it's appropriate, will wish to do that. We've taken opportunities in the past— 

So, will you take the opportunity, say before Christmas, to see if you can have a meeting with them just to understand their priorities for the relationship that EU institutions will have with Wales in the future? 

We will want to make contact on that basis at the earliest possible opportunity, Chair, yes. 

Yes, thank you, Chair. I note, from the latest UK Government report, published on 24 October, that it's delivered very much around the theoretical framework of the need to preserve an internal market, and that this will have an impact on UK governance. So, the UK Government is in discussion with the devolved administrations; they're looking for ideas and best practice from other countries. Now, here, I have some sympathy with the Welsh Government's position. Why aren't we at a more robust position yet, in terms of what these governing structures are going to be, because we're leaving the EU because so many of our fellow citizens thought that the single market meant we were losing control? Now, we've got to look at how the internal UK market may have an impact on some very important devolved areas, and it's still a very, very, very loose concept of shared governance, isn't it, over the frameworks. Or are they about to come to some great agreement about how this structure will look between the Governments? 

Well, I mean, this—. The frameworks relationships sit under that broad inter-governmental review, don't they, which is the umbrella, if you like, for dealing with all dispute avoidance, ideally, and dispute resolution, where it's not possible, between Governments. That's one of the aspects of that IGR. And so each of the common frameworks will have a different—. That will mean different things in different contexts, depending on what the framework itself is trying to achieve. So, it isn't one size fits all across all the frameworks, because they just do different jobs. 

On the question of the internal market, which I think I heard you raise in your question specifically, we aren't at a position yet around that discussion to know what the ultimate formal bodies will be, if any. At one end, there are ministerial fora, which have a capacity for reaching agreements or otherwise. I suppose, at the other end of the spectrum, there's an independent body of some sort. All those things are on the table at this point. The key thing, from our point of view, in the context of the internal market, and indeed the frameworks generally, is parity of participation in relation to those questions.

But just to give you a sense of the challenge that's involved here—the internal market is a very good example of that, if I may say, because, with the new Northern Ireland protocol being published and indications from the UK Government of taking, potentially, a radically deregulatory perspective, well, that creates just a very different landscape for an internal market, doesn't it? If you have Wales—perhaps Scotland, Northern Ireland—wishing to remain more aligned to dynamic EU standards, and the UK Government, on behalf of England, going in a very different direction, that's a challenge to that internal market, potentially. And creating a regulatory and customs border around part of the UK does the same. So, I think that gives you an understanding or an insight, perhaps, into the changing landscape in some of these areas. 

So, if we get—. Let's get to some nuts and bolts, because this could be awfully abstract. Look at environmental regulations, right. Now, the UK could argue it should have analogous power to direct sub-state Governments, just like the EU can. If that sort of principle is what's going to be required to keep a single market going, that's a very active principle, isn't it? So, I just want to know if that's where we're likely to be going. If we move from designation on environmental grounds to much more emphasis on active monitoring and measurement, which has been a real criticism of the current structures we have—. We have all sorts of zones, and we declare them with great fanfare, and they cover all the land and sea area around us, but, when it actually comes to what scientific data do you get and measuring, there's a whole issue again. So, there's a lot that could be discussed there. In farming policy, well, just what form of state subsidy would we have?

These are huge principles, and I think the people we represent will want to know what sort of framework governance there is going to be so that, when those big decisions are taken, which then will determine what or any level of discretion is then available, they can influence, the Assembly can influence. I don't sense—you know, we could have had this conversation—. It's not your fault; we could have had this conversation two years ago, it seems to me, and not much has been nailed down yet.

14:20

Well, I'll ask Dylan to come in in a bit on the granular and some of the detailed points around those areas, in terms of governance, but the point you make is correct. We've been pressing very hard to make progress in relation to this for the reasons that you identified, and we have not had the level of engagement until very recently that we, frankly, expected, bluntly.

You mentioned a point about intervention. That is exactly the kind of thing that is not acceptable, clearly, in a devolved context—for the UK Government simply to have the power to direct. But the whole point of frameworks is to enable there to be managed divergence. It's not to say, 'You can have one size fits all', obviously, and all Governments accept that principle—even within an internal market, there's going to be policy divergence. The basic point, in short-hand terms, is that, on the main thing, on the main fundamentals of that, you need to have a way of managing a diversity of approaches within the UK. So, that's why we are so clear to make sure that these frameworks work, because we think, as a country that is likely to wish to be continuing to align into the future with EU standards, and certainly maintaining standards that we've got now and pushing them further—we want that to be part of a broad framework so that other Governments are coming along as part of that as well, and that's why we've been pressing so hard on the frameworks.

We are hoping that there'll be three or four in the public domain by the end of this year, beginning of next year, so that, during next year, there can be parliamentary scrutiny across the UK. Obviously, there's a piece of work under way at the moment, which, I think—we hope to be in a position in December to share that, about our proposal for how that might work. The Chair very helpfully wrote to me with the proposals the committee had for that. Clearly, when the time comes, we will need to engage, I think, around some of that to make sure that the Assembly has its input in what is otherwise an Executive decision, obviously. But, plainly, there is a need for the frameworks to be scrutinised appropriately.

I wanted to ask—. This is specifically something about preparedness and on Holyhead port. So, in our last evidence session, with Michael Gove, we heard that the UK Government have not conducted an impact assessment on the impact of the current deal and how that would—the impact it would have on Holyhead. Do you think that the Welsh Government should conduct its own impact assessment of that, and has any work towards that end been started? 

We have been pressing the UK Government to share some data with us around some of that so that we can gain a clearer picture of that. But, as I may have mentioned the last time I was here, essentially, that regulatory burden and the customs burden down the Irish sea will pose the sorts of challenges we were planning for in a 'no deal' context, in some ways—that level of friction, as it were, at the border. You will know that we've had further information, data, from the UK Government, which suggests a certain level of turnaways, effectively, from haulage and freight operators, which has caused us to look again at what arrangements we have in place in Holyhead and to look for additional capacity there. So, having close working on those things is very important and we've had to recalibrate some of our plans as a consequence of that information coming through. It's not information that, by the way, is—. The numbers in the analysis are pretty stark. They don't resonate, necessarily, with some of the ferry operators' own and freight companies' own understanding, but we're operating on a worst-case assumption, or certainly have been until the end of October.

14:25

When would you be in a position, do you think, to make those assumptions public?

In terms of anything close to an impact assessment that you might be able to do.

Well, that's what we've been asking for the UK Government to share, because much of that's about the regulatory burden on the customs border.

I think, just a couple of things, we've had follow-up discussions at official level just to try and understand some of the thinking behind it. So, we've asked some questions about what kind of sectors, what kind of goods are going to be at risk in terms of that flow into the single market, and as yet we haven't had any confirmation about what the UK Government's assessment of those goods is. We've asked them around what kind of processes, what kind of infrastructure might be required if you have regulatory divergence between the island of Ireland and the rest of Great Britain, as could happen under the protocol, and all we've had is, 'Yes, they will need new processes' and 'Yes, there'll be new infrastructure.' We haven't quite scoped out the details of what those are yet, but they're looking to share that once they have. So, we've asked the questions, but haven't quite got the answers yet.

If I could ask one final question on that point, then, please. It's slightly political, perhaps, but I think it is important. Michael Gove had said in that same sentence, I think, when he'd answered saying that there was no impact assessment that had been done, that he was confident that if the deal is passed, Holyhead port would be in a better position than ever. Do you have any basis on which to believe that the UK Government actually does believe that?

Well, I think what ought to have happened was an economic analysis of the variables in the negotiation, which would have been a basis on which these judgments could have been taken, and that analysis from a Welsh Government point of view could have proceeded. But clearly that hasn't happened. It hadn't happened, certainly, at the point where the deal became public, and we will all have heard UK Government Ministers say, 'Well, there isn't an economic analysis because the deal was only agreed two or three days ago', which is putting the cart before the horse, to put it mildly.

Can I therefore ask, based upon Ed's answer, there is a five-to-six-week run-up to the general election, officials will still be working, is there an expectation and are there discussions going on so that by the time the election has been completed, that economic analysis will have been undertaken, so that actually, following that election, whichever Government is in position, you'll have a better picture of what this deal means to Wales?

We're definitely expecting UK Government to respond to our questions. So, we put questions down in writing to them and we've had conversations and they've said, 'We'll get back to you; we'll provide formal responses.' And, until we've got that understanding of how they see this working and what assessment they've got around these goods and the kind of processes, it's very difficult to move it forward, but we are expecting a response to our direct questions that we have asked at official level.

The question I'm asking is: do you expect that response within the five weeks of a general election campaign? Because we will be in a position that if a Conservative Government is returned, this Bill, I think, would go forward, and I would think that we'd want to be in a position, before we talk about consent within the Assembly, to have an understanding of the impact. Is there pressure, is there an expectation that you will get that data within that five-week period?

We have asked for it for those exact purposes, to inform that process, and they said that they would get back to us shortly.

Based upon that, my understanding would be that if a Conservative Government is returned, this is the deal that would be placed before the Government and Parliament, so 'no deal' is effectively taken off, at this point in time—I appreciate the end of the transition period, but 'no deal' is taken off the table. So, are you standing down your 'no deal' preparations to look more carefully at what the implications are of this withdrawal agreement, if it's now put before Parliament?

Clearly, the risk of 'no deal' has receded, hasn't it, but we aren't in a position yet to know what's going to happen in the new year, Chair. So, it's not a question—. Clearly, the pace of preparation has changed, and in particular the intensity of preparation around civil contingencies has been stepped back, as would be appropriate, but the notion that we can simply not do anything between now and the end of January is not reasonable.

Forgive me, I wasn't—. Of course. Clearly, the pace has changed, but certainly, as we did between March and October, looking at what might need to be new considerations for a departure in January if it came to that is obviously part of the thinking under way.

We're coming to the end of our time. Are there any other questions that Members have before we reach—? In that case, can I thank you, Minister, for attending? I do appreciate that they are changing circumstances, and we are in a situation that we would not have expected, perhaps. However, it is important that the Welsh Government takes this time—I think, as Donald Tusk says, 'Use the time wisely.' I hope that the Welsh Government will use the time wisely in that period of election campaigning, so that post election, whatever new Government is in place, you'll be in a position to provide us with a vision, a strategy and an analysis, as much as you can do, so that come the point when we need to take decisions as an Assembly, we're able to take them based on very good information.

So, as you know, you'll get a transcript sent to you. If there are any factual inaccuracies, please let us know if there are any as soon as possible. Once again, thank you for your time this afternoon.

14:30

Gohiriwyd y cyfarfod rhwng 14:30 ac 14:41.

The meeting adjourned between 14:30 and 14:41.

14:40
3. Gwaith dilynol ar barodrwydd ar gyfer Brexit—sesiwn dystiolaeth gyda chynrychiolwyr o’r sectorau porthladdoedd a thrafnidiaeth
3. Follow-up work on Brexit preparedness—evidence session with ports and transport sectors

Can I welcome Members back to this afternoon's meeting of the External Affairs and Additional Legislation Committee? We move on to the next item on the agenda, which is some follow-up work on Brexit preparedness. And the next evidence session is with representatives of the ports and transport sectors. And can I welcome Richard Ballantyne, who's representing the Welsh Ports Group, and Sally Gilson, who's representing the Freight Transport Association? Welcome to this afternoon's session. I'm sure you're aware that we've done some work previously on this area, but we want to obviously follow up on this, particularly in relation to considerations of the withdrawal agreement and the implications that will have, and perhaps some of the preparations you've been undertaking. 

So, we'll go straight into questions and start with Alun. 

Thank you very much. It's been quite a rumbustious few weeks, hasn't it, so I thought it might be useful if we could start with, if you could simply outline to us where you believe we are at the moment, and where you are at the moment. 

Do you want to go first, Sally?

Thank you. I think there's been a bit of a collective sigh of relief, certainly from the team that were desperately trying to pull all the 'no deal' work together. And, obviously, the one thing that we've always said, that freight transport has always said, is that we'd be better off leaving with a deal. Obviously, we need that smooth transition to allow us time to be able to adapt to whatever is agreed from that point onwards. 

We've never taken a political position on this. Our members are both for and against, so it's purely about what is best for logistics in terms of getting us to that end point. So, I relaxed a little bit too much, I think, last week in terms of my other work. So, all of sudden it was like, 'Ah, I'm back on it again today', but certainly with the election that's going to be kicking off next week, it's just a case of, from our point of view, making sure that all parties understand that whatever happens, that vital transition period should be there. 

And I think I'd echo—. I thought you were going to give us an overview of what's happened, actually, so I could just—. All these things—. I know you've all been keeping diaries—

Well, I hope you're all keeping your diaries because this will be the subject of many books and documentaries in the future. But, firstly, to say thank you again for the invitation to come back. It's good to see you again; I've met some of you before.

As with Sally, I think the ports industry welcomes some clarity in terms of an extension, which was secured, admittedly very briefly, until January, and we're looking at ways in which the new withdrawal agreement, which I think we'll come on to later, may have implications for our sector in particular, in relation to cross-border controls and customs checks, et cetera. So, while we've got a bit of a welcome extension, we still don't have the clarity that we seek in terms of what the longer term arrangements will be. 

Okay. I'm grateful to you both for that. Donald Tusk, of course, has suggested that we use this time wisely—more perhaps a forlorn hope than anything else. But how are you using this time, because we're in a rather curious situation, aren't we? We've got this agreement, which has been accepted in principle by the UK Parliament, but the UK Parliament is to be dissolved this week; then we've got a general election, and then we've got another potential deadline at the end of January. So, we're in a rather curious and fluid situation, and I'd be interested to understand how you, and the people you represent, are approaching this period, and what you intend to do in this period of fluidity.

So, I'll just kick off firstly to say that one of the frustrations, I guess—and we're not sort of questioning the political process here—but with an election comes purdah, and a lot of the discussions that, in my case, the ports sector has had with the UK Government and the Welsh Government will be limited somewhat, in terms of what can be publicly announced, because of purdah. So, there is a bit of a period of where we don't quite know what's going to happen next, and there are some fundamental questions that have arisen out of the new withdrawal agreement, as was proposed and agreed recently with the European Union, and questions, for example, about what happens on the Irish sea. They're some pretty fundamental questions. So, at the moment, we're waiting for the UK Government to answer some of our requests as to when we can get together and meet with them, discuss what they may mean.

In terms of the general day-to-day discussions with both the Welsh and the UK Governments, as I understand, things will continue for now. There is a meeting of the border delivery group tomorrow in Westminster, which covers the ports sector, and I would assume the logistics sector that the FTA is on will continue for the time being, notwithstanding any political sensitivities. And, of course, ports and shipping operators will be working out what they may need to do, but, again, until we get the final details of what the arrangements will be they aren't investing huge sums in new facilities, but they are as prepared as they can be. 

14:45

From our point of view, at the end of the day, 'no deal' is never completely taken off the table unless it is revoked or obviously we've actually got to the end of the transition period and negotiated a new deal. So, we can't forget there are two other points at which we could accidentally go into a 'no deal' scenario. We've spent quite an amount of time doing briefings for our members and for non-members as well. There have been three briefings on the scenario of 'no deal'. What we'll be spending this time on is looking closely at this potential new deal, at what the implications would be especially for the northern Irish and GB movements. We're still trying to work that out completely. It would be very much just giving that long gentle warning that we're not completely out of the woods for 'no deal', and I think it's good to keep on stressing that. But, yes, the main bit of our work will be continuing those meetings. Obviously, we've got the border delivery group meeting on Wednesday, but there's also another Welsh border ports meeting next week, which I've not been told has been cancelled, so I'm presuming it's still carrying on. So, those conversations on making those arrangements and preparations are still ongoing, but obviously there will be some work that's paused during this time. 

I appreciate that purdah will kick in shortly. It hasn't yet kicked in and, as such, you have the possibility of raising some of those concerns in the public arena, which allows institutions like ours to actually start asking questions of Welsh Government in particular as to their actions in relation to that. Is there an intention to put some of those questions you think you want answered into the public arena before purdah kicks in? Because once purdah kicks in you can't do it, and therefore we haven't got any idea of what you are looking at as the issues, because with this withdrawal agreement we could be in a situation where we come back after a general election and you might end up having days before the Government takes this through. In which case, we'd have little chance to actually have a discussion on the issues you are deeply worried about, so is there an intention to put some of that information into the public domain yet? 

We're not a political organisation, so we're quite careful in the way that we put messaging out. We'll definitely be firing questions internally to both the Welsh Government and the UK Government. If there was something that, say, this committee and others wanted us to provide further guidance on, we'd be happy to do that, but we'd just be wary of making statements that may be interpreted as political points criticising or supporting certain deals.

The fundamental question for us is: will customs controls be required on the Irish sea? It looks like they potentially will be if this withdrawal agreement is accepted, which is of direct interest to Welsh ports and Welsh businesses and Welsh logistics operators. But then also, outside Wales, there is a fundamental question about whether domestic ferry services travelling between Northern Ireland and Scotland and England will also be covered by full custom controls and port health controls and regimes, which we also understand are likely to be included and covered. And then, what does that mean? Where are the controls going to be enforced? Who will pay for certain bits of infrastructure, warehousing facilities? Will there be enough resources to do this? So, they're quite technical and operationally related issues and questions, and we have the right contacts with the various parts of the UK and Welsh Governments, so we'll probably be doing that. But, again, I'd reiterate what I said, if there are points this committee would like to hear further on, we can happily provide further evidence.

14:50

We appreciate that. And can I came to the FTA? You've talked about another possible 'no deal' cut-off date, which is the end of next year. When the original 29 March date was set up, we had 20 months before the end of a transition period, and then we had 14 months, and now it's likely we'll have 11 months. Is the FTA worried that an actual free trade agreement cannot be agreed within that period of time, and we could end up in a situation where we leave because there's not enough time? Because the transition, if it's to be extended, has to be done by 1 July—that's part of the agreement.

Like I said, from my understanding, there actually has to be an agreement by July. So, clearly, we're going to have to be working to much shorter time frames to make sure that everything is in place. But a lot of it really does depend on what the long-term agreement is. In its current state, and if we are going down the free trade agreement and without the customs union and single market, then, clearly, there is going to be a lot more work to be done around the ports than if we were staying within those agreements. So, it really does depend on what the final FTA looks like. Sorry, it always gets quite confusing when I keep on saying FTA when—we need to change our name. [Laughter.] So, we need as much time as possible to be able to make sure that we have got the systems in place, that everybody knows what is happening.

And one of the big issues that we have at the moment is that we don't fully understand exactly what's going to be required for those movements from Northern Ireland to GB, and, clearly, there was quite an amount of confusion within Parliament itself as to what that actually meant, and it's going to be issues like those that are going to cause potential delays and cost money. Obviously, any extra administrative costs for making those movements across the water, but effectively still part of the same deal, will be problematic. And we need to know exactly what will be required especially with regard to value added tax. They've talked about having the trusted hauliers doing those regular movements—will they be required to make the same kind of stops as someone who was actually travelling across to the EU? Clearly, if a product starts in Northern Ireland and is going to GB and staying within GB, then we need to clarify exactly what potential checks they might have to be part of at the ports. 

Thank you, Chair. We just had another delayed date of departure, and on the basis of if we had actually left the European Union in October with the withdrawal agreement and the protocols, there were also some transition measures put in place. Can we make this understandable to somebody looking into this committee—if we'd have had that withdrawal, what would it have looked like the day after, the week after? And if we have that withdrawal in January, what will it look like the day, the week after?

The day after—it was very lucky, actually, that it was a public holiday in France, so the truck movements wouldn't have been happening from France on 1 November. So, it would have given a slight—slight—delay. Yes, you're right, there were some transition arrangements made, and one of the biggest issues that we had was this requirement for permits for every truck movement across to the EU. So, it was negotiated that we wouldn't need those permits, and I'm desperately now trying to remember the date that that ran out, but I believe that runs out at the actual end of this year. So, obviously that's something that needs to be renegotiated again, because we don't want to be in the scenario where every single truck needs a permit to go to the EU, because last time around there was, off the top of my head, something around—. It was incredibly low, about 10 per cent of all journeys across to the EU would have actually been entitled to a permit. So, it's those kinds of things that we need to look at, and, obviously, make sure that the air traffic negotiation—all of those things that were sorted out, to make sure that everything could still move, will come to an end over the course of the coming year.

14:55

Yes. So there are two types of things. One, as Sally mentioned, is, I guess, the one-offs or things that would last for some time. That could be a permit for a vehicle or it could be, for example, an insurance sticker that shows your car is insured and you can travel with that. But then there are the other routine things that you'd need to do on a per-journey basis, and that's customs related. And so, that would vary on the types of freight you may be moving and each journey may be different. So, traditionally, you'd be required, when you import something, to submit a customs declaration with a breakdown of what you're transporting, and that would be submitted to HMRC for their processing, and they can approve it, and then any kind of fiscal requirements, tariffs et cetera are collected within, I think, 14 days.

So, HMRC had pledged that for goods coming in from the EU, there'd be an easement facility where the goods wouldn't be held up at ro-ro ports—roll on, roll off ports were mentioned, ferry ports—and that would include, obviously, the three in Wales. And it would be—I don't like using this term, but it's a bit like an honesty-box approach, where the freight operators would be required to submit their paperwork to HMRC post event, as opposed to having it cleared on condition so that they could go off and leave the port gate. And the idea was that that would ease traffic through ports, avoid congestion, avoid queuing at the gate that may go back onto the ferry and delay departures.

The challenge we have is that that's all well and good for inbound traffic, but outbound traffic going, in this case, to Ireland, as in the Republic of Ireland, the EU are more strict, or would have to be more strict because their rules require this. So, there would still be the challenge about how you clear goods in, say, Dublin, which could impact ferries going back and forth to Holyhead.

So, if we get to January and we find the incoming Government comes back and it puts the Bill to Parliament and it's passed, and there we go, and we're off, what's your assessment currently, in terms of haulage and the ports, of how ready we are for that moment? Have those signs above the motorways worked? Is everybody aware of what they need to do?

I'd say, first of all, what it would mean is we wouldn't have to do this as of 1 February, so you have a further period of transition. Admittedly, that transition is starting to look quite short, because you've only got until the end of next year. Then, what is markedly different from Theresa May's withdrawal agreement, where you have an aligned customs and port health regime, essentially, because they're running in parallel and they're complementary, you wouldn't need to have customs controls or customs processes for 99 per cent of our goods travelling on the Irish sea. It would be a small anomaly that may need correcting, but, for the most part, there wouldn't be any controls, whereas the new agreement is much more a traditional free trade agreement, and not a customs union-type agreement, which does mean that customs and port health controls and other things—standards—are outside that, which means, traditionally, you would need to check them at the border or in close proximity to the border, somehow—potentially electronically or physically.

To get to the stage where we can have a regime where that is systematically checked for every lorry that's coming off a ferry at Holyhead, Fishguard and Pembroke, we're certainly not there yet, and there is going to be a need for a very quick turnaround of a solution that is not just a temporary measure, and is more a long-term sustainable arrangement.

Are hauliers all ready for this, albeit with a transition period, so they know what they're doing? I think that's what we're looking for. How has this been communicated? I would have thought one of the sectors that was most aware of this now would be every single, not just haulier companies, but every individual driver now would be thinking, 'What does this mean for me?'

Yes, I'd like to think so, certainly. And I will say there was a lot put in place in the run-up to 'no deal' that we can now potentially make use of. So, not only did we have the signs on the motorway, but if you stopped at motorway services, you probably saw Brexit preparedness, people who could help. So, we did say, right from the word go, that we would need some kind of pre-checking process, so that a lorry driver could check that they had the correct documentation before they'd even got to the port. Obviously, that means that they do have to stop and check before they get there, but those kinds of processes will potentially be needed, even though we're going to have a much longer, hopefully, transition period.

So, I think our biggest concern at the moment is that we're still not 100 per cent on what we need to tell them with the new deal. I've mentioned it before—it's those GB to Northern Ireland movements, where, at the moment, you've got potentially something called 'no-risk goods', but we've got no real clarification on that. So, until we know what that looks like, we can't fully inform exactly what pieces of documentation will be required. But the point that Richard just made is that once we know potentially what our future trading agreement will look like, there will potentially need to be new infrastructure in Holyhead and the other ports to be able to work around that, because we are, obviously, moving away from that alignment. So, whether that means a border inspection post on Holyhead, obviously, we'll have to wait and see. But we're going to need that information as soon as possible, because, for the goods to run smoothly, everyone needs to know exactly what they're doing, right the way from the driver to your customs officer, and potentially, as well, we need to be able to start recruiting these people, and, at the moment, many of these businesses don't have these people in place, and they don't have the knowledge. So, some support in terms of that would be good.

One thing I will say is that, in the run-up to no deal, the Welsh Government did a lot of good work. Certainly, I had quite a number of meetings, and the moment they changed the preparedness for the ports, basing it on a different scenario, on perhaps more of two thirds of trucks turning up without the right documentation, obviously, it completely changed the modelling. But you did feel like everyone was prepared for the worst-case scenario, and that was some real good cross-departmental work. 

15:00

I understand that whatever arrangements we eventually have to manage the border between us and the EU, and, in this case, the Republic of Ireland, are going to be irksome compared to what we have now. But it seems to me things will adapt; there will still be trade, and I'm not quite sure if we face fundamental risks to our main ports. And the only one, it seems to me, that has been identified, and I don't fully understand this, is a shift in the pattern of trade between the Republic of Ireland and the UK, whereas a lot of that would have gone through Wales, but because of the strange relationship of Northern Ireland—it's sort of in both schemes—that it will be easier and less irksome for goods to transit via Northern Ireland, or indeed into Northern Ireland, and then into the Republic. Is this a real threat, or is this something that's unlikely to be part of the system—i.e. the type of custom and regulatory enforcement is going to be such the same if you go via Belfast as if you went via Dublin?

There are a couple of different threats here. So, if all of a sudden, the ports in Wales started to have substantial queuing times, and the goods weren't actually coming to the UK, they were going onward to the rest of the EU, then it could be that Irish businesses looked to bypass the UK and cut off, obviously, the Welsh ports, and go direct to mainland Europe. And that's something that we've definitely got to be aware of.

In the case of the new deal, it goes back to the whole understanding of exactly what will be required of those Northern Ireland to GB, because they will undoubtedly be travelling at some point through the Republic of Ireland, and coming via Dublin. So, it's whether they're almost going to have to have those checks at Dublin even though they're only ever going to remain in GB. And that's the bit that we need some further clarification on—although you might be able to answer that.

15:05

Yes, but it's a good point you make about whether it's fundamental, or whether it's a short-term hit. And just to broaden it out, so it's not just the roll-on, roll-off ports, like Pembroke and Fishguard and Holyhead, we also have, obviously, the port operations handled by Milford Haven and those at Mostyn, and also the Associated British Ports south Wales ports, where, it has to be said, I think they're a bit more resilient to these kinds of things. Notwithstanding the impact on the economy, I think most of the ports in Wales, away from the ro-ro sector, are relatively prepared, because they already do these kinds of things anyway for goods that are coming in from outside the EU, and the dynamics of processing cargo, I guess, in a more traditional manner—bulk cargos, or even containers, et cetera—the timescales and the dynamics are just completely different. So, agents usually do a lot of the work already. So, I think that side of the sector would say—as I say, notwithstanding an impact on the economy—I think they're fairly robust and ready. And even the ro-ro ports would probably say they are also prepared, as much as they can be.

But it is about the haulage sector, the wider logistics flows, as you mention. There are now direct services around, from places like Dublin to continental Europe, into France and to Belgium, which are not a consequence of Brexit, but you could see, potentially, growing further. Different kinds of dynamics of flows, of course—those would be drop-trailers, where the lorry driver just drops the trailer and goes off and does some other things. The trailer is transported on its own and collected when it gets to continental Europe. Whereas, traditionally, the ro-ro ports in Wales are facilitated to driver-accompanied trailer, where the driver drives it across the UK, potentially, if it's not dropping in GB anywhere, and then land bridges over to France and beyond, et cetera.

So, I think it's fair to say that the sector is pretty resilient, so it would be able to adapt to certain arrangements. But, in the short term, there could be some politically and operationally challenging times, which the Welsh Government and others in industry would get dragged into trying to solve. And, just to reiterate comments Sally was making about relations between our sector and the Welsh Government, there's definitely been a good dialogue there, and so we thank the officials. And also I think this committee would be interested to know there's been a very good working relationship between the UK and the Welsh Governments. So, there have been regular calls, particularly in relation to Holyhead. I have to say that the two other, smaller ro-ro ports have probably been dealt with more on a regional basis. But there is also, as you mentioned earlier, the Welsh border planning group, which has all the main interests represented. But, yes, it's something that probably isn't, I would say, critical to the future of the Welsh ports industry—they'll be there—but it may represent short-term challenges, which may lead to longer term changes and trends.

And do you see a threat to some trade going via Northern Ireland, both inward and outward? Obviously, there's a certain amount of that anyway, but is that going to increase enough to—because of the convenience that that offers, if such exists—affect Welsh ports?

Well, ironically, with the current withdrawal agreement, it is at least, on one level, a level playing field up the Irish sea. Because, as we understand it, there will be broadly the same controls enforced on domestic ferry services between Northern Ireland and England and Scotland, as well as between the Republic of Ireland and Welsh ports. But, that said, that's still a major challenge for operators—a big culture change for them to get used to. And although hauliers might be ready, the people—the cargo owners, and the importers and exporters—they're not used to this kind of thing. It will obviously bring increased costs onto their businesses, which they will not be able to, presumably, avoid passing on. So, ultimately, it could be passing on to you and me and others—consumers, businesses, importers, traders, builders, et cetera. So, there's something to bear in mind there. But, for the most part, coming back to your original question, there is a slight irony that there will at least be a level playing field north and south.

I think I infer from what you've said that the various levels of Government have worked quite well, actually, on the practical challenges and, obviously, whilst there was an abrupt shift in the Government, or the new administration, I suppose, under Mr Johnson, what is now currently proposed had been looked at at least by Mrs May's Government and, indeed, it seems to have been the preferred option of the EU in the first place. So, presumably these arrangements offer a reasonable way forward, and even may be the optimum given that the UK has decided to leave the UK and that's the reality we have to deal with, otherwise the EU, probably, wouldn't have favoured this whole scheme in the first place. So, are you fairly optimistic in that sense, that practical issues will be sorted by these various levels of Government in collaboration and discussion with your sectors?

15:10

I think the one thing I've always said is that it had to be frictionless and as easy as possible. Clearly, completely coming out of the customs union is going to create some friction. So, it's working out what's going to be put in place to try and help along, going forward. It’s difficult to answer this without getting too political. I think that, with regard to the Northern Irish scenario, it’s going to be those supply chains that are much more complicated, perhaps, in the food market, where they might make several journeys, either across the north-south border, but probably more problematic now are the ones going from east to west. So, that would be the chicken that might be bred in Northern Ireland but then comes across, gets turned into a pie and then gets taken back across. It's those kinds of movements that, obviously, are going to become a lot more complicated. So, you're right that it probably does simplify things. It was, obviously, dismissed for all of the reasons that we know, and then a decision was made that, actually, it was possibly the best way to go forward. I think it's going to be a lot more complicated for Northern Ireland than for, perhaps, GB mainland, and I hope I haven't got too political in that answer.

What I would say is I think we're going to need a longer transition if we want things to be seamless, and if I said that to No. 10, I don’t think they'd particularly like hearing that. Post election, I think, potentially, there could be some tough decisions to be made by the UK Government as to the level of our readiness and preparedness, and I think there are going to be substantial costs for industry as well, which, I think, policy makers are now alive to and understand, and some of it might, potentially—the money they've given recently—be political gesturing. Other pots of money that have been allocated, I think, have legitimately understood there are challenges. So, I think there is definitely going to be cost, and I think the other thing is we're going to have to deal with the fact that these will have cost implications on our trade ourselves, so you'll find that certain manufacturers or exporters in the UK are going to have things that cost more than they did to export. So, is the UK Government going to have think about ways to support those industries and, indeed, substitute subsidies or replace subsidies that we used to have from the EU previously?

So, all that has got to be agreed in just over a year. Yes, there's work in progress and we work as we go, but it is going to be a big change. And that's why I think an extension will be required, because, at the point when we actually know what the final arrangements are, then all the operators can finally start—the ports, the hauliers, the traders et cetera, the agents—to say, 'This is what we need. This is what we need to do. This is who we need to train. This how we need to resource it.'  But at the moment, and as we found for the last three years, we have just been looking at 'what ifs'—you know, 'We might need to do this.' And as soon as we get the clarity as to what it is, then I guess the industry will be able to feed to Government and say, 'It's going to take us two months, two years—however long—to prepare.'

The one thing I will say about logistics is they're adaptable, but we need to be given the resources to be able to do that. I missed the announcement, because I was heading up here, but I think I'm right in saying there was £54 million announced today by Welsh Government to help with Brexit preparedness. We really need to see that across all of the devolved countries and in England, and really put into doing some training for businesses. That's going to be really key—getting that training in place, because it's a long time ago since we did this. I'm sure people will have forgotten; it will be quite different as well, going forward, but certainly training will be key. 

15:15

You highlighted training there. Just to confirm, the announcement was capital investment, which is not necessarily going to be used for training. But I appreciate that—just to clarify. Huw. 

It's only a short one. Do you anticipate within the haulage sector, within the whole logistics sector, any reconfiguration as a result of what we currently see as potentially on the table? I include within that the displacement of logistics centres, displacement of haulier operations. Clearly, if there was more use of a direct European route for whatever, that would have an impact, because if I was a large operation based currently somewhere in Wales, I'd be thinking where should I be based and making use of that—maybe not complete withdrawal, but I'd be rethinking. Are there other things that we should be aware of as a committee? What's the talk when you meet with people about what they're thinking about the future shape of their operations? 

The majority of our members are actually domestic hauliers, so they only ever deliver goods within the UK. So, most of them will be unaffected; it's those that are picking up the trailers from ports and then taking them on their onward journeys, but also, most importantly, it's our members that will be travelling across to the EU and across to Ireland, crucially, from here. I've not heard anything with regard to any changes, apart from the fact that, obviously, they're going to have to take on some extra staff, potentially, because they will now need freight forwarders and customs experts. But, certainly, you'll still need the depots here with regard to hauliers, because—

So, hence we get to the strange scenario that you are painting and you were saying, which is that this could actually lead to some additional employment opportunities. However, with that comes the costs that flow from that to the end user of those products, and so on. Okay. 

You may have seen, obviously, media coverage that, under a 'no deal' situation—and I'm not an expert on the oil industry here—refineries and temporary tariff regimes could have had a potential implication for refineries in Pembrokeshire and how our oil was exported and whether or not it would be as competitive as other sources leading into the EU. That would have been a legitimate concern, and I'm sure that is something that the oil industry in Pembrokeshire would probably welcome a chance to feed in some additional evidence to this committee on. 

I've just thought of one crucial point, actually. So, going forward, we need to ensure, obviously, that the tariffs for new commercial vehicles do not increase too much, because, as I'm sure you're all aware, there is a big push to get new Euro 6 vehicles, and at the same time—clearly, this was in a 'no deal' scenario—you're looking at 22 per cent tariffs on those vehicles. So, that will be a key ask for us as well to ensure that—. Most commercial vehicles come across from the EU—the parts certainly do—so, if we want to make sure that we have new fleets on the road for all of these clean air zones, then that will be another crucial ask from our sector. 

Just to come back to your original question, but with a slightly odd response, which isn't probably anything to do with what you were saying, but it's in that sphere, and this is on the UK Government's announcement about free ports. I don't know if this committee noted that, but it's potentially where there could be up to 10 free trade areas around the UK, which could be based around ports or airports. And politically, I would imagine, there would have to be at least one in Wales, but that would be for the UK Government, who is managing the process, to consider. That may, in a slightly odd way, influence decisions about where manufacturing or trading may take place. There are concerns about displacement—for example, the automobile industry, et cetera. It's very early stages—that policy announcement is obviously now, I guess, waiting for purdah and elections and possible new Governments. But, essentially, it is something to consider, because there will be, I would imagine, one, two, three, maybe four, proposals in Wales, maybe more, for certain areas. It could be joint bids between airports and port operators; it may be completely other types of operations. But that is something to consider in how it may draw or pull economic and business activity away from traditional areas.

15:20

That's all right. I was going to ask some questions on whether you've actually had any involvement or discussions with the UK Government as to the issues about free ports, because, yes, there are, obviously, opportunities that this does provide. We have raised this and looked at it before, and there are several sites across Wales that could fit into that agenda but, clearly, it impacts upon freight as well. Because, if you get the wrong place, the logistics become difficult. Because the concept of a free port, of course, is that you bring goods in, you work on them, you do things and you send them back out again without the taxation. So, that means, sometimes, that there may be a need to have logistics to bring other components in to do that bit of work. Have you had discussions with the UK Government at this point in time on that? 

Yes. So, the announcement, I think, was—yes, it was at the end of July or August, because I was on holiday, which was very helpful when you're trying to get your media done. But, essentially, the announcement was around a panel that would be appointed. I'm on that panel, with several other organisations, and that panel has met, and that is chaired by the Secretary of State for International Trade, Liz Truss, and has the Chief Secretary to the Treasury and the maritime Minister from the Department for Transport on it, and is being briefed and linked to officials at the Welsh Government, although it is very much a UK Government-led initiative.

So, it had the first meeting, where we looked at what the likely dynamics of a UK free port policy may be—and that has yet to be agreed—whether it should be the traditional customs area, where you temporarily or completely suspend tariffs and customs formalities, or could it be broadened out to a wider enterprise stimulus package where you, for example, have a preferential capital allowances regime, or no business rates, or skills initiatives with local colleges for training staff, or, indeed, widened out even further to include things like planning easements—so, either fast-track planning or exemptions of certain environmental processes that are covered under the Town and Country Planning Act and other bits of legislation.

Officials at UK level are considering what our first thoughts are. I understand that there would be a consultation in due course, which is now obviously going to be delayed because of the election. The suggestion that there is still likely to be a competition of regions where somebody—it could be a development corporation or it could be an enterprise partnership or local government or, indeed a port or airport operator—comes forward with a suggestion of a particular location. So, it's still at an early stage, but things are starting to be thrashed out and discussed.

You're absolutely right: it may have an implication on certain dynamics, but it's probably fair to say that it's not necessarily a Brexit solution. Because, for gateway ports like Holyhead and Fishguard and Pembroke—and, indeed, Dover and Portsmouth, et cetera, and Immingham—to temporarily suspend the customs formalities serves no purpose for a lorry or even a container that is just going to move through a port, because, at some point, it's going to meet a customs boundary where there will need to be a customs process. The case you mentioned about manufacturing or processing or transshipment, et cetera—I think that that's where, potentially, the value would be on the customs side.

But the planning easements and the enterprise easements may be just as beneficial to connected organisations clustering around ports and airports—not necessarily directly involved in trade themselves. But it could—we would like to see a vision of where port areas become areas where you can get economic growth and developing jobs et cetera. So, that's our position at the moment. I'm happy to give you a further update in due course when things progress. 

15:25

Well, that's interesting because, clearly, you were just talking about planning and the environment, which are both devolved competencies. They are the responsibility of—

Yes, that was the other slightly—. The UK Government, you could see they're very keen to progress, but as soon as you add in enterprise and planning policy and environmental policy—those, as you rightly say, those are devolved matters, which—. It may be that a single package would have to be either agreed with the devolved administrations or, indeed, just recommended, and the Welsh Government in this case would have to give their blessing to any sites that were fortunate enough to get the classification.

Yes, I'm really interested. I take what you say—it's very early days and there'll be a consultation and so on—but I'm really interested not just in the upsides, but, if we get this wrong, the potential downsides here in terms of displacement of activity from areas that also need investment and so on. So, that co-ordination on a cross-border basis, when you think about areas like the north east of Wales and that whole area around, then, the west Midlands, Liverpool, Merseyside and all of that, the ports that traditionally have in some ways—. The ports and the economic development areas there that traditionally tended to compete alongside each other, everybody raises their game—everybody raises their game, but there's a competitive edge to this. If you look at the announcement this week of the chairman being appointed to Bristol and south-west Wales, described as 'west Britain'—west Britain something. So, you know, out of that—. I guess what I'd ask you at this stage, without having great detail: are those sort of discussions taking place in here about how does the Bristol tie in with the Cardiff, tie in with the Newport, tie in with that area? Or is it more focused on a more competitive approach? Because you touched on the competitive approach.

Yes. All I'd say to you is there are over 140 cargo-handling port areas in the UK, of which—. I don't represent them all, but we represent a lot, so, if you've got 10, and you try managing an association where you have expectations where a lot of them would have their own offers, maybe perhaps more regionally focused than nationally significant, it is, essentially—I don't like saying this, and I have to say the Government's vision for this is well-meaning, they're coming from a good place, they want to stimulate growth in deprived areas, that's the fundamental thing they're saying, but the unintended consequence is that you're, effectively, picking winners. So, there is a balance, and you're right to be concerned, representing, in this case, areas of Wales that may not have the, I guess, prepared offer that other areas may do. So, it is going to be a sensitive one.

We're thinking of—. Not all my members—including some in Wales—are comfortable with this, but we're thinking perhaps more down the lines of a policy where any port area could get some kind of—subject to UK Government approving and consulting with devolved Governments, they should be able to apply and not just limited on the number 10, but, of course, then that limits, I guess, the exclusivity and the attractiveness of certain areas. But it's—. There'll be a consultation, at least, on the proposals, which the Welsh Government and others could feed into. But it is—. And officials at the Welsh Government are very aware of this and feeding into the discussions with Treasury and the Department for International Trade.

Diolch, Chair. You've spoken—you've both spoken—a lot about the balance in terms of whether the contingency plans that you're putting in place or the effects that you're seeing on business models or generally in the planning that you're doing, either that they would be short term or fundamental—. To what extent—?With all the uncertainty that you're facing, to what extent are the changes that you're having to make at the moment short term, or are you able to put in place fundamental changes or are you completely prevented from doing that because of the uncertainty about what situation we're going to be in?

It's very difficult to be putting in place those changes when you don't know definitely what they're going to be long term. What we are doing is the training of staff, because we do have some idea of potentially what forms are going to be required in the future. So, it's training up new customs, freight forwarders, those kinds of people. It is difficult to plan for something that we still don't know exactly what it will look like. We possibly have a better idea, but we've got an election and that could all change. I think, clearly, if things switch back and take a change towards more of a customs union arrangement, then obviously that could make things simpler in what needs to be amended. But we're ready to make the changes as soon as we know what they are, but we are already doing that training within—certainly within England, and I've got a meeting on Wednesday with Welsh Government about apprenticeships. But there was an apprenticeship developed for international freight forwarding, and it's those kinds of things that we can start to put in place now. So, we can get—. As I say, it is a potential training opportunity for young people to get into logistics, but we need to make sure that those options are there for businesses to be able to access. Beyond that, I'm sure that businesses will be looking at their own impact assessments, if you like, as to the potential costs towards those freight movements in future. 

15:30

And I'd just reiterate what Sally was saying. I think, until we know the final arrangements, it's difficult for businesses, private sector organisations, to invest. But I think there probably is a role—and fair play to the UK Government, they have recognised this—and there is a role, potentially, for public sector investment in things like grants towards training schemes and other things that the UK has been allocating, which a normal business wouldn't be able to do or justify—sort of taking a kind of blind guess as to, 'Should we invest in training or upskilling, et cetera?' 

Thank you. Sally, you said as well that the Welsh Government and the UK Government had put in place a lot of support to help with planning for no deal, and you said that a lot of that was very useful. How much of that was not useful, inasmuch as how much of it will not end up being useful for you if we're not in a 'no deal' scenario? How much of it do you think will have been wasted?

Oh, it's never wasted, not in terms of making sure that—. If that scenario had happened, then, obviously, we needed to be prepared for it. 

Ah, yes. Sorry, to clarify, I'm not trying to ask you to say that anything that you've done has been wasted. What I mean is—. Forgive me, that's not my implication at all. 

So, going forward, if we land up with a free trade agreement, then, actually, quite a number of the arrangements that we would have had to have put in place for a 'no deal' potentially could be used, because we are obviously going for quite a—. Well, we're splitting completely with the alignments, so those scenarios will still play out, but, obviously, we will have time to prepare for those scenarios. So, you shouldn't have the same kinds of issues with regard to delays at the ports because x amount of trucks don't have the right paperwork. But, in terms of preparing for what people are going to need to do in the future, it will look quite similar to the 'no deal' scenario, because, obviously, it is quite a hard Brexit.

I think it's difficult to exactly say that. Can I be cheeky and say: how would you feel if we asked this committee how much of your time do you think—? If we get the right outcome in the end, then you'd say, 'It's all been thought through.'

I should rephrase what I said, because I was in no way—forgive me, I was in no way trying to imply that your work was—

I was trying to say that the work would still be useful—

What we actually need—. Depending on the final outcome, I think, now, as Sally says, the latest withdrawal agreement, which we're led to believe may progress—I know it's a big 'if'—that is more akin to a 'no deal' Brexit, but with a period of transition. So, we will be—the sector will be expected to collect and submit customs formalities and paperwork, et cetera. So, that is all—. To prepare for that at any point is useful. 

Okay. Thank you. My last question is asking about to what extent your sectors have been involved in helping the UK Government with scenario planning, and has that changed significantly under Boris Johnson being Prime Minister, or would you say that it's pretty consistent—if you have been involved with scenario planning?

15:35

Yes, we have. Scenario planning from a kind of—. Well, it's predominantly about 'no deal' preparations. So, that hasn't particularly changed under the new administration, but I would say it's fair to say it has cranked up a bit. And in the run-up to the end of last month, before we had the agreement and the extension, we could definitely see, not only because of the timescales, but also because of the new aims and aspirations of a different administration, that they wanted to demonstrate they were serious about leaving the European Union, potentially. I think it definitely is fair to say things escalated and moved forward. But I have to say the officials predominantly stayed the same, a lot of the discussions were on the same issues, working through the same challenges, even if the political dynamic and the backdrop changed.

I'd agree with that. It definitely ramped up, but a lot of the scenarios were similar, I think. I gave you the example earlier on in the evidence session where I said that the modelling changed within Wales. And obviously that, then, substantially changed what preparations were going to be made. I don't know whether that was as a result of advice from UK Government or not—I couldn't say. But the one issue is that there were still quite a number of unanswered questions, when you got into the real detail of the movement of goods, so we're still pressing for that information, still now, just in case. But, yes, certainly the number of meetings increased.

Can I ask one last question, because our time is almost up? You talked about the possibility of a trusted trader concept earlier. I suppose what I'd question is, we have heard a lot of hype about the technology being there for you. Do you believe the technology will be there in 12 months' time if we are in a situation where we may be facing a 'no deal', end-of-transition period, to allow things to happen more smoothly? Are we still going to be in a situation where the technology is not catching up with us, yet?

I think that probably, firstly, to give you a bit of a waiver, I'd say I don't represent the customs software supply organisations, and different suppliers will have different responses. But I think in short, no, I don't think it will be ready. I think there is the technology there, but it needs to be adapted and introduced, and physically installed, and tested, at the frontier but also with the UK Government systems, because it will have an interface into the HMRC. It could do it in theory, but I think it will take longer than a year.

Yes, I agree. I think that's probably why we are now in the scenario we are. There isn't any other border in the world as complicated as the Northern Irish and Irish border. And the software, I think we can safely say, does not exist for that border. If you are simplifying it, and it's more of a border movement from mainland Europe to France, then I'm sure that the software will be up and running, and you could put that in place. But it's a very complicated border, and if there was that kind of software available, then I'm sure Sweden and Norway would be using it as well.

Could I just add, I wasn't actually talking about Northern Ireland? I was talking about the Welsh ports, and others. And also, the other dynamic to remember is that many of Sally's and other associations, like the Road Haulage Association, and other organisations, their members will have to be ready as well. So, it's all well and good having a nice IT system that interfaces well with HMRC, but you need to culturally get the whole logistics sector ready and knowing what they need to do, and experienced, and trained, et cetera.

Okay. Thank you. We have come to the end of our session. Can I therefore thank you very much for your time this afternoon? You will receive a transcript of the meeting, for any factual inaccuracies—if you see any, please let the clerking team know as soon as possible, so that we can have them corrected. So, once again, thank you for your time.

We'll have another short break before we go into our next session.

Gohiriwyd y cyfarfod rhwng 15:39 a 15:50.

The meeting adjourned between 15:39 and 15:50.

15:50
4. Gwaith dilynol ar barodrwydd ar gyfer Brexit—sesiwn dystiolaeth gyda chynrychiolwyr o’r sectorau bwyd a ffermio
4. Follow-up work on Brexit preparedness—evidence session with food and farming sectors

I'd like to welcome Members back to this afternoon's meeting of the External Affairs and Additional Legislation Committee, and we move on to our next item on the agenda, which is continuing the follow-up work on Brexit preparedness, and this evidence session is with the food and farming sectors. Can I welcome Dr Nick Fenwick, Famers Union of Wales; Gwyn Howells, Hybu Cig Cymru; and Dylan Morgan from National Farmers Union Cymru.

Welcome to this afternoon's session, and, if it's okay with you, we'll go straight into some of the questions. I would remind you that things have changed dramatically, and we're now in a situation, as far as we see, where there are one of two scenarios: a 'no deal' scenario is off the table, effectively, at this point in time, so, it is either a 'deal' scenario, or it is a 'no deal' scenario. Those are the two options we've got, because we don't know where we are. Anything else is speculative, but we're in those two positions. So, if we move straight into questions—David.

Yes, I want to start by just asking you to reflect on the situation, really, that we now have an agreement that might come into force by 31 January and then bring in a transition. I just wonder if this whole process, and we got quite close to a 'no deal', I suppose—many of you thought so anyway—. What sort of support were you getting from the Welsh Government and are there any lessons to be leant from that just in case we find ourselves here a year from hence and facing a similar sort of scenario, where we will be leaving in a very abrupt fashion at the end of the transition period?

Okay, it looks like I've got the short straw, Chairman. I think we would welcome the support that we've had to date from the Welsh Government, albeit that we would describe some of it as being rather late in terms of some of the meetings we've had to formulate contingency plans for different types of events, in particular the hard Brexit scenario, which we were duty bound to prepare for. 

However, it has to be said, whether you're talking about an individual business or an organisation, such as the Farmers Union of Wales, or indeed the Welsh Government, a lot of the scenarios we face are catch 22—how do you prepare for something that you don't know is going to happen? You can invest huge amounts of money in preparing for something—it's rather like buying millions and millions of snow ploughs for that extreme winter that may not come except once every 200 years. So, we have had support. I would suggest that some of it could have been a lot sooner, given that we were due to come out of the EU originally at the end of March, but we have to recognise how difficult it is to prepare for such an extreme event that may never occur.

I think, in the lead-up to the potential 'no deal' at the end of last week, in terms of the meetings and the discussions that we had, they were probably a lot better and a lot more advanced than they were in the run-up to the end of March. I think, possibly, if we'd had a criticism, it's have we looked at a broad enough range of potential impacts for the sector in Wales, in particular after we knew the proposed tariff schedule from the UK Government. There's extreme concern, really, at the potential impact, with the tariff wall effectively broken for pretty much all our main commodities, that would have across a huge range of sectors.

I'm thinking in particular in terms of the sheep sector. We've had some quite detailed discussions and negotiations with Government. I think possibly we could have looked a little more at some of the other sectors in addition to that and particularly after we knew what the tariff announcement would be. But I think, as you say, in terms of the last few months, there was probably a lot more discussion than prior to the end of March. So, I'd like to think that we can continue with that, going forward.

And I think I would endorse and echo those thoughts. I think it has been difficult not only for Government, but for industry as well, in terms of this is probably the fourth deadline, cliff edge that we're facing now in January. Therefore, there is some fatigue amongst the industry generally, in the individual businesses, getting them to understand what it means and registering interest in terms of exporting, for example. But, certainly, the Welsh Government has led in terms of Treasury commitments in terms of sheep contingency planning, and I think that's proven to be very timely and useful and appropriate given the predicament that Wales might find itself in were there a 'no deal'.

But, in particular, I'd just say that, in terms of our work in terms of finding markets for Welsh lamb and Welsh beef both in Europe and in third countries, during this time and previously to that, but it's certainly been ramped up in this Brexit period that we've faced, the help and support that we've had from agents of the Welsh Government in key markets or key developing markets, in new markets such as the middle east and Japan and North America, that's worked very well. And that's not been an easy task in terms of talking and dealing with potential customers, and Governments for that matter, in a time of political uncertainty in the UK. It's not helped our cause, and keeping those contacts informed and interested has been quite time consuming, and we've had a lot of help for that, I must admit.

15:55

So, if we look at—let's choose the most vulnerable sector—lamb. We could have gone out with no deal in October, which is when light lamb goes to the European market. It couldn't have been a worse time. It seems to me that the various agricultural Ministers got together and then proposed a ewe headage scheme, but that was fairly late in the day, wasn't it? In that ewe headage scheme, did you have any involvement? Was that what you were pushing for? Was that the optimum insurance and intervention you wanted from the Government if we had been in that position? I just want to know what sort of interaction went on and did they come up with the right policy response, which obviously in the end was not needed this October, but, of course, in the future we may find ourselves in a similar position.

If I can start on that very quickly, certainly we as an organisation had a lot of interaction with Government in terms of the thinking and the notion behind that scheme, and, from my point of view and the industry's point of view, I think it is the right thing to do. The policy, as it was defined in a headage—and that might still be the case, of course—and the proposal going into Treasury, I think, is the right and fit one to actually offset any problems that might arise. For how long they arise, we don't know. But certainly, from a policy-making point of view, okay, it's fallen short in terms of actually getting the tick-box from Treasury, but that will come again. But the groundwork has been done, and I think, from an organisational point of view, we're happy with that. 

I'd certainly agree. I think it was a good model in terms of how stakeholders and Government could work together in terms of discussing and debating and agreeing a Welsh way forward in terms of the sheep sector. So, certainly, I think that was positive. Just referring back to what I said before, I think the model that we've had, for those discussions and how we've worked to come together to agree a way forward, is probably something that we should look at to make sure that we cover all the key commodity sectors in Wales, going forward, if we do end up in a situation obviously none of us wants to find ourselves in.

I would only add that the original talks that we had, which weren't formal, as they were more one-to-one discussions with civil servants going back a number of years, considered other options such as private storage aid and that sort of thing. In all fairness, the idea of a headage-type intervention, which still hasn't been finalised, bear in mind, was originally, really, firmed up as a likely way forward probably back in February. But, obviously, there are things to do with the UK Treasury and other devolved administrations as well. So, certainly, with regard to that issue, I think we had a clear idea of what was in Wales's interest in terms of preparations for that worst-case scenario. As has been said, I think maybe—. That was certainly an issue that needed considering, but, of course, there are also other issues, such as beef and cheese and the dairy industry, et cetera, and possibly more attention could have been paid—or, certainly, more attention could have been paid—to all those other areas, including supply chains, for example. Slaughterers were in a situation where, within weeks of the original March Brexit deadline, where we could have gone off that cliff edge, they really didn't have a clue what health marks they were going to have to be using, and neither did the people who are supposed to be telling them what health marks they were supposed to be using.

16:00

So, obviously, now we hope there will be a deal and then in the transition period, in our agreement, free trade or at least substantially free trade, with tariffs much lower, presumably, than were facing us under WTO and 'no deal' terms. But, in terms of livestock exporting, the export health certificates will still be required, and I just wonder if the sector is used to doing something fairly similar under the EU's auspices, in terms of the documentation. Or is this a big additional burden and how are we placed to meet it, for instance vets signing off the certificates, and such like? Where are we there, because it seems to me that even if we get low tariffs, we're still going to have to do that? But I may not have understood this fully, so, that's why I'm asking you, the experts.

I think you're possibly right. Being optimistic, I would hope that in the transition period, up to December 2020, and maybe a couple of years hence, because there's a provision in this new withdrawal agreement for another two years after that if a trade deal isn't forthcoming. But I would sincerely hope, and I think we would need and argue, that we need unfettered access to the European market as it is largely now, accepting perhaps that there will be some non-tariff barriers that may exist, which you've just alluded to in terms of documentation at borders, and remembering that we'll have a border between GB and the EU and also between GB and Northern Ireland as well. And, therefore, life will become a lot more complicated, and you touched upon whether that will be something that is readily taken up and adopted by exporters. I suspect that won't be the case, and there will be probably two obstacles: one the processors themselves, in terms of what they need to do to get registered and aligned to the paperwork; and secondly, for the authorities as well to provide for what is needed at border inspection posts. And, therefore, I think life will not be difficult. Let's hope that we don’t get to that position, and that we do have tariff-free trade.

The disappointment for me—and not that I wish to be a-political, totally—. Theresa May's deal aligned us to a customs territory, whereas the new deal doesn't align us a customs territory and, moreover, doesn't mean that we have to align ourselves with the same rules and regulations that exist in the European market as they are now. And that, to me, is a bit of a concern, because if the deal doesn't go well and there's—how shall I coin it—a divorce and relationships aren't good, obstacles might be created and that would fetter trade, undoubtedly. Let's not forget that our trade with the European Union is by far the biggest that we have, and, therefore, I'd like to see us keep that as much as we can.

I would only add that the equation is fairly simple in my simplistic mind, which is that the height of the barrier for our exporters is proportionate to the closeness of our relationship to the EU. This latest deal seems to be one step further away from the EU compared with Theresa May's deal. Again, it's an interim deal. At the end of the day, it's very short term, but nevertheless, taking us that one step away simply raises the barriers. Our ideal position, given that we want to respect the outcome of that very narrowly won referendum, but also reflect the other 48 per cent, is that, yes, we should leave the EU, but we should stay within the common market and the customs union.

16:05

Ie. Dwi'n deall y pwynt dŷch chi'n ei wneud, Mr Howells, ac rwy'n credu bod pob un yn gwerthfawrogi ac yn cydnabod y gwaith mae Hybu Cig Cymru wedi'i wneud dros y blynyddoedd i sicrhau marchnadoedd newydd i wŷn yn arbennig. Ond, y gwir yw, dyw'r marchnadoedd dŷch chi wedi'u disgrifio ddim yn mynd i 'replace-io' beth sydd gyda ni yn yr Undeb Ewropeaidd ar hyn o bryd a ddim yn mynd i ddod yn agos at wneud hynny yn y tymor byr—a buaswn i'n dweud yn y tymor canol hefyd. Felly, mae pwysigrwydd y farchnad yn yr Undeb Ewropeaidd yn bwysig i ddyfodol y diwydiant defaid ar draws y wlad. Ac, felly, ar hyn o bryd, dŷch chi wedi disgrifio sut dŷch chi'n teimlo amboutu'r cytundeb presennol, a dwi'n derbyn hynny. So, ble ydych chi ar hyn o bryd yn y ffordd dŷch chi'n gweithio, a'r cyngor dŷch chi'n ei roi i'ch aelodau a'r bobl dŷch chi'n eu cynrychioli? Pa gyngor ydych chi'n ei roi iddyn nhw? Oherwydd, i fi, pan oeddwn i'n edrych ar y headage scheme, roeddwn i'n meddwl bod hynny'n teimlo fel rhywbeth hynod dros dro; dyw e ddim yn teimlo fel rhywbeth gall fod yn fodel ar gyfer y dyfodol. So, ble ydych chi ar hyn o bryd? Mae gyda ni seibiant o ryw fath dros y misoedd nesaf, so ble ydych chi yn y cyngor dŷch chi'n ei roi i bobl?

Yes. I understand the point you make, Mr Howells, and I think everyone appreciates and acknowledges the work that Hybu Cig Cymru have been doing over the years to ensure that there are new markets for sheep especially. But, the truth of the matter is, the new markets you're describing aren't going to replace what we have in the European Union at the moment and it's not going to come close to that in the short term—and also I'd say in the middle term, too. So, the importance of the market in the European Union is key to the future of the sheep industry right across the country. And, therefore, currently, you have described how you feel about the current deal, and I accept that. So, where are you currently in the way that you're working and the advice you give to your members and the people you represent? What advice do you give to them? Because, for me, when I look at the headage scheme, it seems to me that it's something very temporary; it doesn't feel like something that could be a model for the future. So, where do you sit currently? We have some sort of break over the next few months, so where are you in that advice that you give to people?

I fod yn hollol onest, mae'n anodd iawn rhoi cyngor, yn enwedig efallai i ffermwyr unigol sydd yn cynhyrchu cig oen, dywedwn ni, neu hyd yn oed cig eidion. Mae'r cylchdro cynhyrchu yn cael ei fesur mewn blynyddoedd yn nhermau cig eidion. Mae'n cymryd tair blynedd o pryd mae'r llo yn cael ei eni i pryd mae'r anifail yn barod ar gyfer y farchnad. Felly, mae pob peth yn—. Yn sôn am gyngor tymor byr, mae'n anodd iawn pan rŷch chi'n sôn am ddiwydiant sydd yn mesur buddsoddiad mewn blynyddoedd. Mae'r un peth yn wir, i raddau llai, yn y diwydiant defaid.

Ond y cyngor yw, wrth gwrs, yn y cyfamser, heb fod unrhyw dystiolaeth hollol saff i ddweud, 'Wel, mae hyn yn mynd i ddigwydd', mae'n rhaid ei fod e'n business as usual, achos fel arall does dim byd gall rywun ei wneud, dim ond efallai paratoi pobl i feddwl, 'Wel, gall fod yna newid', ond does neb yn gwybod beth mae'r newid yn mynd i fod.

To be entirely honest, it's very difficult to offer advice, particularly perhaps to individual farmers who are producing lamb, let's say, or even beef. The cycle of production is measured in years when it comes to beef. It takes three years from when a calf is born to when the animal is ready for market. So, to be talking about the short term, it's really very difficult when you're talking about an industry that measures investment in years. The same is true, to a smaller extent, with the sheep sector.

But, in the meantime, the advice, without evidence that we can entirely rely upon to say, 'Well, this is going to happen', is that it has to be business as usual, because otherwise, what can one do? We can only prepare people to think, 'Well, there could be a change', but then nobody knows what that change is going to be.

Ond, dŷch chi'n glir yn eich meddwl chi fod y marchnadoedd newydd ddim yn mynd i fod ar agor ac yn bosibl i gynhyrchwyr wŷn yng Nghymru am flynyddoedd maith, efallai.

But, you're clear in your mind that these new markets are not going to be open and viable for lamb producers in this country for years to come, perhaps.

Na. Mae'n rhaid inni fod yn hollol glir, achos mae yna rai wedi sôn bod yna farchnad fel Japan, er enghraifft, yn mynd i fod yn llenwi'r bwlch yn nhermau beth rŷm ni'n ei wneud yn Ewrop nawr. Dyw hwnna byth yn mynd i ddigwydd. Mae gyda ni farchnadoedd newydd yn Japan nawr; mae gyda ni rai yn y dwyrain pell, yn Hong Kong a gobeithio ar gyfer bîff yn Tsieina ar ddechrau'r flwyddyn; ac i fod yn onest, mae'r farchnad yn y dwyrain canol yn gwella bob wythnos ar gyfer cig oen.

Ond, wedi dweud hynny i gyd, mae gyda ni £200 miliwn-werth o fusnes yn y fasged, sef Ewrop, a does dim byd yn mynd i basio hwnna yn y ddegawd neu ddau ddegawd nesaf. Mae'n rhaid inni fod yn onest: does dim byd yn mynd i ddigwydd. Felly, mae'n rhaid inni gadw'r 500 miliwn o gwsmeriaid sydd gyda ni ar drothwy'r drws yn Ewrop, ac rŷm ni wedi bod yn masnachu gyda nhw ers 40 mlynedd a mwy, wel, mae'n rhaid inni drio cadw hwnna. Byddai unrhyw un sy'n rhedeg busnes yn meddwl, 'Reit, sut ŷm ni'n cadw'r busnes yna, hyd yn oed gwella'r busnes yna, ac wedyn chwilio am fusnes ledled y byd?' Dyna beth ddylem ni fod yn ei wneud, rwy'n credu, a byddai'r economi'n fwy llewyrchus o'r rheswm hynny.

No. We have to be entirely clear, because some have said that a market such as Japan, for example, could be one that fills the gap in terms of what we're doing with Europe now. Well, that's never going to be the case. We do have new markets in Japan now; and we do have some in the far east, in Hong Kong, and hopefully a market for beef in China at the start of the new year; and to be honest the middle east market is improving week by week for lamb.

But, having said all that, we have £200 million-worth of business in the basket, mainly in Europe, and nothing is going to exceed that in the next decade or the next two decades. We have to be honest: nothing can do that. So, we have to keep the 500 million customers that we have next door in Europe, and whom we have been trading with for 40 years and more—we do need to keep that. Anyone running a business would think, 'Well, how do we keep that business, and even improve that business, and then seek out global business?' That's how we should be doing it, as far as I'm concerned, and the economy would then be flourishing and more prosperous because of that.

Buaswn i'n cytuno 100 y cant. Ers y cychwyn, yr unig bethau dŷn ni wedi gallu'u gwneud yw gwneud ein haelodau a'r diwydiant yn gyffredinol yn ymwybodol o'r sefyllfaoedd gwahanol, sef hard Brexit neu close alignment, neu beth bynnag ydy o, eu gwneud nhw'n ymwybodol o'r effaith y byddai hynny'n ei gael o bosib ar eu busnesau, a hefyd gofyn iddyn nhw i edrych ar eu busnesau, ffeindio allan lle mae'u costau nhw a lle maen nhw'n gwneud eu pres, fel eu bod nhw'n gallu, cymaint ag sy'n bosib, gwneud unrhyw newidiadau yn gyflym i'w busnesau i newid pethau pan ddaw Brexit yn amlwg, neu beth bynnag sy'n mynd i ddigwydd o dan Brexit yn amlwg. Mae unrhyw gyngor pellach na hynny yn ofnadwy o beryglus. Er enghraifft, ar hyn o bryd, byddai rhywun wedi gallu cynghori rhywun yr amser yma llynedd i beidio â rhoi hyrddod allan, achos roedden nhw'n disgwyl cael hard Brexit, neu i leihau nifer yr hyrddod oedd yn mynd allan achos byddai yna ddim marchnad i'w hŵyn nhw a bydden nhw'n methu eu bwydo nhw. Byddai'r cyngor yna wedi bod yn hollol, hollol anghywir o dan yr amgylchiadau fel rydyn ni'n eu deall nhw rŵan, ond efallai byddai'r cyngor yna wedi bod yn gywir os oedd pethau wedi mynd ffordd wahanol. So, mae'n amhosib rhoi mwy o gyngor na jest gofyn i bobl i ddeall eu costau nhw a deall lle maen nhw'n gwneud eu pres.

I would agree with that 100 per cent. Since the outset, the only thing that we've been able to do is to make our members and our sector aware of these different situations, a hard Brexit or close alignment, or whatever it is, and make them aware of the impact that that would have, possibly, on their own businesses, and then ask them to look at their own businesses, to find out where their costs are incurred and where they make their money, so that they can then, as far as possible, make any changes quickly to their businesses when Brexit becomes apparent, or when whatever happens under Brexit becomes apparent. So, any further advice than that is very dangerous. For example, currently, someone could have advised someone else this time last year not to put out the rams, because we were expecting a hard Brexit, or to reduce the number of rams that were to go out because there would be no market for their lambs and they wouldn't be able to feed them. That advice would have been completely wrong under the circumstances as they stand now, but maybe that advice would have been correct if things had gone differently. So, it's impossible to give more advice than to ask people to understand their costings and where they make their money.

16:10

We've been exactly the same. We've got a Brexit toolbox, which is now in its sixth edition, basically just making sure in terms of the facts that we've got in terms of the data out there, and we just try and keep it up to date about what we know. And, as you say, when we're dealing with 1,700 farming businesses, individual businesses in Wales making their own business decisions, all we can do is provide the maximum amount of information possible, so in terms of the context they're working in, they've got the information, the best possible information is available to them, taking account, as you say, in terms of the number of versions we've got, how quickly things are changing all the time.

I'm wondering whether you have any comments, any observations, not simply on the sector and the aspects of where the current markets are and so on, but on the aspects that you're all involved with in terms of wider Welsh communities and societies as well, because when you drill down to some of the individual conversations that, Nick, you were saying that you were having with individuals, they can see what's coming in worst case scenarios and there's a whole scale along here. There is a worst case scenario and we can see which way that would fall, and then there are some better gradations as well. But what is your take, from where you sit within the industry, because you speak to people at a farm level in rural communities? This isn't simply a matter of business and trade on a Welsh level; this is far deeper than that.

Absolutely. I'm afraid I'm going to repeat something that I said last time we were together, which is, in the run-up to Brexit, and it's now becoming very clear, certainly to me as an individual, that lots and lots of very experienced and clever politicians didn't understand the implications of trade deals, WTO rules and things like that. Why would they? We handed all that over to the EU many years ago. So, that's very clear. By extension of the same argument, people out there, normal people, also find it mind-bogglingly complicated to understand the repercussions of these very complicated trade deals and what happens if you put a barrier in the Irish sea or along the Irish border, et cetera, et cetera.

The feeling out there is one of extreme fatigue, as it is probably in this room to some extent, plus confusion, and you will all have heard it, that wish that it would all go away. I think that is a big, big problem because it prevents people from making plans, but also, as has just been said, how can people make plans in such a horribly complicated scenario, where I don't think I would put any money on what might happen by the end of January, or even by the end of December?

Dylan, I wonder whether you have anything to add to that, but particularly what it's meant in terms of that wider investment that particularly family farms seek to do over the longer term. Are we in a situation at the moment where people are just treading water until they see which way things go, or are people still forward thinking, still going in to their bank manager and saying, 'Look, we've got plans'?

No, I think, as everyone has already mentioned, that uncertainty, which is everywhere, is stalling business and investment decisions, isn't it, really, because everyone is waiting and thinking, 'Well, this time next week or this time—we will have some more details.' So, people are concerned about doing anything at the moment. I think there has been some sort of stagnation around in the last couple of years, just waiting to get some further clarity and certainty, going forward. So, it certainly is an issue in our industry, like I'm sure it is in every other sector and every other industry in Wales that relies so heavily on export markets to be able to drive forward the ambitions that we have for our industry. 

If I can ask you about one very specific, technical issue as well, and it's to do with the position we now find ourselves in, perhaps different from last March and so on, in terms of the readiness of the veterinary sector right across the industry, including all the way to slaughtering, but also in terms of animal welfare, issuing of certificates—all of that. Are we ready if we get to an agreement in January and the transition that comes with that? Are we ready for a worst-case scenario?

16:15

I think all we can go by is the advice we've received from Government and others. I know in terms of Wales, some of the funding from the EU transition fund has been used to help the veterinary profession to upskill, and a significant number of vets in Wales have taken advantage of that. So, there are lots of vets in private practice now who have got the qualifications in place to be able to carry out a number of the checks. But it's one of those things where, probably, until we actually end up in that period, we won't be certain if we've got the right number of vets in the right places at the right time.

I think there is a real danger in terms of being absolutely ready; I suspect we're not quite there yet. But the vets issue touches on a slightly wider issue for our industry and lots of many other industries, and in terms of hospitals: the availability of labour. And that is still, perhaps, an unknown, and there's certainly unease and uncertainty amongst the European migrant workforce that we have working in our processing sector, for example, which are probably about half of the workforce. There are two things there: (a) they're uncertain as to how it all hangs together for them in the future and, obviously, on a macro economy scale, the pound is relatively weak and has been for some time, and therefore that makes it less attractive and they seek employment in other European countries, namely France and Germany, in the main.

Therefore, that is unresolved as far as the sector is concerned, in terms of what will be the ongoing position, and will it help our processing sector meet the market obligations that we have for our products? So, that is quite an issue that is exercising minds at the moment.

Chairman, if I could just add to something that Dylan said in terms of uncertainty, or maybe put it in correct—sorry, not correct—but add to the context of it. Uncertainty is causing huge, huge problems, but it's better to be in this limbo of uncertainty than it is to have certainty of the most extreme negative scenario that might develop. And also, in terms of that insecurity, I'm afraid to say one of the things that has fuelled it has been the barrage, it feels like, of Welsh Government domestic proposals that have hit farm businesses, where they're uncertain about the implications in terms of some of the legislation coming through in relation to agricultural pollution and, indeed, the consultation that's just ended and the consultation that happened this time last year regarding future payments. It all adds to that uncertainty, where you will no doubt have heard we have been saying for many years that we actually need to buckle down and concentrate just on Brexit and trade, and then sort out future policies, rather than being dangerously overambitious.  

I think you've all been excellent at bombarding our individual e-mail boxes with campaigning on that. But wouldn't you accept that one of the difficulties with that, and I absolutely see—I'm quite sympathetic to that idea that the only thing we should be focusing on now is just Brexit and what comes after, or whatever. But one of the problems with that is if we put these other difficult issues off for too long, it'll be of no service to the food farming sector whatsoever to say, 'Let's park this', because then we get into panics again, then we get into last-minute decision making. Surely, it's better to try and work through some of these with people like you who can speak for the industry?

I think the right approach is to work through it with people like us and then, ultimately, put something on the table that's been fully formed, maybe after a number of years, once we know what the post-Brexit landscape looks like, and your ideas are formed in view of what you now know about our economic world, rather than in anticipation of something that you can never actually know. Even at the end of December, we will not know what will happen even in nine months. We will not probably know what is going to happen after the genuine Brexit date, which is after the transition period.

16:20

I think it's just providing certainty and stability to farming businesses throughout Wales at the moment is what, as unions, we've been calling for, really, and there's an opportunity to do that by making early commitments in terms of the basic payment scheme, to ensure that that continues in the same manner for 2021, to continue with the Glastir agreements. So, there is some level of—. The things that we can control in Wales, that we can put some control on—. Because we have just spent the last 16 weeks on a consultation that's very conceptual in nature, in terms of trying to explain to a farmer what it might mean on the ground; there is nothing in there to provide that level of detail, because it doesn't talk about any certainty in terms of contract lengths, payment levels, what you have to do to receive those payments. So, I think that was a sideshow that didn't need to take place at this moment in time, when we've got the very real threat of where our market will be, potentially, in a couple of weeks' time.

Chair, let me just put back to you one last comment on that. If that process actually ended up in the right place, some of those individual farms that I was talking about a moment ago, some of the ones that are most exposed to any post-Brexit scenario—if we can get that into the right place through proper dialogue and getting the incentives right and so on, albeit under a very different framework, it could be those that end up being most protected.

If that were the case, that would be fantastic. We're coming from a point of view where we're very proud to have worked with Welsh Government, over successive Ministers, to get a state-of-the-art system, which is second to none, I think, in the UK, absolutely second to none, and has delivered timely payments for many, many years, when other countries, or other nations within the UK, have failed utterly, horrendously, to deliver the same. And what we've advocated, what both farming organisations have advocated, is the development of that, so we don't throw the baby out with the bath water. There are things that we need to work on, and we need to be looking at things like job creation and looking after the environment and public goods and the economy, and all these things together, but delivered through this state-of-the-art system that can be developed, rather than proposing or implying that it be thrown in the bin and replaced with paper contracts.

I'm surprised by some of that evidence, and I'm interested in understanding what lies behind it, because you've been in a stakeholder group, I think it's been called, with the Welsh Government since weeks or a month or so after the referendum result. And I've been seeing this second or third hand, and I was assuming that the work that was going on as part of this grouping has led to a situation whereby there is almost a joint venture, if you like, between you and Welsh Government. I always think it's important to have a little bit of tension, as you know from our history, between the unions and Government; I don't think it's right and proper that you're holding each other's hands all the time. But it appears to me that there hasn't been that sort of joint venture from the evidence that you're giving, and I'd be interested, if my assumption is right from this evidence, as to why you think that and what could be done to improve matters.

When you were a Minister, Alun, you—

No, no, but this is important. When you were Minister, and, indeed, other Ministers prior to you have put in place groups when there have been reforms of agricultural policies—and you were one of those people. And at that time, a group was created to look at all the possible different options, based against a framework of policy objectives that we, as stakeholders, and the Welsh Government, had all agreed were our priorities. And then we tried to develop policy, but based on these principles. And that group did fantastic work. We sometimes fell out, and there were these difficult legal issues that we had to deal with, because we were all on the same side, but, nevertheless, we ended up with the best possible policy for Wales after many years of discussions, so we have what is now called the redistributive system, which is the best one we can get for Wales. That was the model, and that's the model we favour for the policy development. And that is not the model that we have had in the last two and a half, or whatever, years, since that group first met.

I'll be brutally frank with the committee—what was produced in the consultation paper last year was, in my mind, basically the same report, or same proposal, that was put out by the Department for Environment, Food and Rural Affairs and the Treasury back in 2005, in terms of the domestic policy proposal. We had hoped to achieve something far more imaginative, which looked to hit a number of Welsh policy goals, including employment and economy, and not just environment.

16:25

I think what we're looking at is some sort of core stakeholder group, so that people directly affected and directly impacted by the changes—that, as you say, is what we had with the various common agricultural policy reform modelling groups back in 2012 and onwards. Another example that we've both used is what we've used as stakeholders in terms of development of the rural payments Wales online system. Again, a very core small group of stakeholders working closely with Welsh Government to implement those policies and get something that, as Nick has shown, is the envy of many other countries in the world. I think, in terms of what Welsh Government have talked about sometimes, in terms of the stakeholder groups, and some of the round-tables that have been held, the problem that you've got is you can hardly find a room big enough in Wales now to have everyone sit around the table who wants to be there. And as such, it gets to be a grandstanding event, rather than actually something that starts to get into the real nitty-gritty and work and develop strong proposals that we could take to the industry so they know exactly the direction they're going forward in. So I think that's what we're looking for—greater concentration and work with the core people who will be impacted by the proposals, rather than 40 or 50 people sitting around a table, each wanting to have their say.

I'm interested in this. My feeling has always been that the Welsh Government should have brought forward its own agriculture Bill, rather than being dependent on the UK Government to legislate on its behalf—and I thought that was where we would want to be. But it would appear from the evidence you've given this afternoon that the Welsh Government wouldn't be in a position to do that, simply because it hasn't got any proposals that have been worked up, or that are in a position to be able to be delivered through a legislative vehicle. Would that be your understanding as well?

It would depend on the nature of how vague that Bill was, effectively, let's be honest. The current Agriculture Bill, which is stuck at the moment, isn't it, gives so much freedom to Wales that, potentially, we could do something that we support, or, potentially, something that we abhor and think would be disastrous, because it's so open-ended. The policy development, really, starts in rooms with small numbers of people having shared objectives. And in Wales we have our legal shared objectives of the Well-being of Future Generations (Wales) Act 2015, and in our mind, the policy as proposed is not formulated with the well-being goals in mind, and well-being indicators in mind. It's formulated with a far narrower objective in mind, which relates to a United Nations definition of sustainable development. We think that that is a noble objective, but there are other objectives that can sit alongside it, including prosperity creation et cetera. That should be our starting point, and then we start filling in the gaps, and working out how we get there.

One technicality as well with regard to this, if we do potentially leave at the end of January next year, is—in terms of the withdrawal agreement, the one regulation that's not within the withdrawal agreement is the direct payments regulation. So, basically, we would need to make sure that, pretty quickly within Wales, we put a piece of legislation in to ensure that we continue with the direct payments regulation throughout whatever transition period we would have. So, a technicality, but I think it's a very important thing that we do need to make sure we have in place.

Diolch. Byddaf yn newid y pwnc, ond mae'r thema yr un un, o ran y cyferbyniad rhwng pethau sy'n gorfod digwydd nawr, ond hefyd effaith hirdymor. I ba raddau mae'r newidiadau dŷch chi'n eu gwneud, neu y mae'ch aelodau chi wedi eu gwneud, yn gorfod bod yn bethau tymor byr iawn? Ac i ba raddau dŷch chi'n cael eich rhwystro rhag rhoi newidiadau mewn lle ar gyfer y tymor hir oherwydd yr ansicrwydd yma?

Thank you. I'll change the subject but keep to the same theme, which is the contrast between the things that have to happen now, but then the long-term effect as well. To what extent are the changes that you or your members have made have to be things in the very short term? And to what extent are you frustrated in terms of putting changes in place for the long term because of this uncertainty?

Wel, dwi'n credu bod busnes a meddylfryd pob un yn rhywbeth tymor byr ar hyn o bryd, gan eu bod nhw'n mynd o ddydd i ddydd, yn llythrennol, yn gweld newidiadau. Ac, wrth gwrs, yn sicr, mae hynny'n cael ei adlewyrchu yn nhermau penderfyniadau busnes, buddsoddi, a hefyd mae e'n creu ansicrwydd a diffyg hyder. Ac mae unrhyw farchnad, ble bynnag rŷch chi'n cynhyrchu yn y byd, yn dibynnu ar hyder a gallu, a confidence ar gyfer y dyfodol. 

Mae hwnnw wedi'i wanhau yn ofnadwy dros y tair blynedd a hanner diwethaf, ac wedyn gallwn ni ddadlau fod yna stagnation yn yr economi o achos hynny—mae pobl yn meddwl, 'O reit, eisteddaf i ar fy nwylo a disgwyl beth sy'n mynd i ddigwydd.' Ac, wrth gwrs, mae'r peth yn mynd o un tymor i'r llall. Rŷn ni wedi cael pedwar ar hyn o bryd—mae pedwar yn January nawr, so bydd hwnnw y pedwerydd. Felly, dyw hynny ddim yn beth doeth, a gall unrhyw un sy'n rhedeg busnes dim ond gwneud penderfyniadau tymor byr yn hynny o beth, a wedyn mae unrhyw gynlluniau sydd o ran buddsoddiad, ehangu, datblygu sy'n fwy canolig a thymor hir, byddwn i'n awgrymu bod y rheini yn cael eu cadw o'r neilltu ar hyn o bryd er mwyn eglurder, achos dyna beth dylai pob un ei wneud, mewn gwirionedd. Does dim sicrwydd o gwbl, mewn gwirionedd, o ran beth mae'r support payments yn mynd i fod, beth mae market access yn mynd i fod, beth mae'r sefyllfa llafur yn y lladd-dai ar hyn o bryd yn mynd i fod yn y dyfodol.

Felly, mae'r pethau yna i gyd, mewn gwirionedd, yn cael effaith ar y macro economy, sy'n golygu—. Os edrychwn ni ar consumer spending, mae'r economi i gyd yn ddibynnol ar allu'r cwsmer i wario arian. Dŷn ni ddim yn gweld hynna'n digwydd. Ac, wrth gwrs, mae hynny wedyn yn torri nôl ar y galw sydd gyda cwsmeriaid am beth bynnag—ceir, neu gig, neu beth bynnag arall. Ac, wrth gwrs, mae hynny'n effeithio ar y cadwyni cyflenwi sydd yn y diwydiannau i gyd, gan gynnwys y ffermwr yn y pen draw. Felly, mae eisiau rhyw sicrwydd, a gobeithio y cawn ni rhyw gyfundrefn a dêl sy'n mynd i olygu ein bod ni'n gallu symud ymlaen unwaith ac am byth, achos mae'n llyffetheirio'r diwydiant a dyw'r economi ddim yn mynd i elwa o hynny o gwbl, mewn gwirionedd. 

Well, I think that business and the mindset is something that is short term at present, because we go from day to day, quite literally, seeing changes afoot. And, of course, that is reflected in terms of business decisions and investment and also it creates uncertainty and a lack of confidence. And, in any market, whatever you produce in the world depends on confidence and ability, and confidence for the future. 

That has weakened very badly over the past three and a half years, and you could argue that there's stagnation in the economy because of that—people think, 'Right, I'll sit back and wait and see what happens'. And, of course, you go from one season to the next. We've had four seasons so far—four is in January now, so that will be the fourth. So, that isn't a very wise move, and anyone who runs a business can only make decisions in the short term in that respect, and then any plans for development or expansion that are more medium term or long term, I would suggest that those are being kept to one side for the time being just for clarity, because that's what everyone should do. There's no certainty at all in terms of what the support payments are going to be, what the market access is going to be, what the labour situation in the abattoirs now and in the future is going to be.

So, those things all have an impact on the macro economy, which means that—. If we look at consumer spending, the economy is very reliant on the ability of the customer to spend money. We're not seeing that happen. That, then, cuts back the demand from customers for whatever—for cars, for meat, or for whatever else. And, of course, that impacts on the supply chains in all the industries, including the farmer, ultimately. So, we do need some certainty, and hopefully we will get a regime and a deal that mean that we can move on once and for all, because it's very cumbersome and the economy is not going to profit from that at all, in truth. 

16:30

Buaswn i'n ategu bod—mae yna rai pobl uchelgeisiol, neu ddewr, buasech chi'n gallu dweud, efallai, sydd wedi buddsoddi oherwydd Brexit, yn enwedig yn y sector cig gwyn ac wyau, mewn rhai ardaloedd, pan fyddan nhw'n gallu. Ond dydy hynny ddim yn gallu helpu pawb, ac mae yna risg pan fo pawb yn mynd ar ôl yr un sgwarnog yna. Ar y llaw arall, fel y mae Gwyn wedi ei ddweud, mae yna reini sydd eisiau buddsoddi yn eu busnesau sy'n meddwl, 'Wel, dydy o ddim gwerth cymryd y risg a mynd at y banc i fenthyg y pres', neu, hyd yn oed, 'Dydy o ddim yn werth i fi gymryd y fferm ymlaen o fy nhad neu fy nhaid', oherwydd y risg yna—oni bai am Brexit, efallai byddai hynny wedi digwydd. Ond, yn sicr, dwi'n adnabod rhai pobl sydd wedi penderfynu, 'Wel, na, mae'n well i fi fynd allan i weithio neu efallai mynd i'r ddinas i weithio' achos bod yr ansicrwydd yn rhy eithafol. 

I would endorse that—there are some ambitious people, or brave people, you could say, perhaps, who have invested because of Brexit, particularly in the white meat sector and in terms of eggs, in some areas, where that's been possible. But that isn't possible for everyone, and there is a risk when everyone chases after that same hare. On the other hand, as Gwyn has said, those who want to invest in their businesses may be thinking, 'Well, it's not worth taking that risk and going to the bank to borrow that money', or even, 'It's not worth me taking on that farm from my dad or grandad' because of that risk. Whereas, if Brexit were not happening, that might not be the case. But I certainly know some people who have decided, 'Well, no, it's better for me to go out to work, or to move to the city to work' because this uncertainty is too extreme. 

A—. Sori, oedd gennych chi rhywbeth—?

And—. Sorry, did you have something to add?

Na, does dim byd i'w ychwanegu.

No, nothing to add. 

Wel, roeddwn i'n mynd i ddweud ei bod hi'n amhosib, onid yw, i—beth bynnag ydy 'quantify' yn Gymraeg—'quantify-o' hyder, neu ddiffyg hyder, ond efallai ei fod e yn bosib mewn rhai llefydd. Roeddech chi'n sôn am beth fuasai'n digwydd os nad oedd Brexit wedi digwydd, nid os, nawr, na fydd Brexit yn digwydd o nawr ymlaen, ond o ran fel byddai'r sector wedi bod os oedd Brexit byth wedi dod o gwbl, os nad oedden ni wedi bod yn trafod hwn. Ym mha ffyrdd ydych chi'n meddwl byddai'r sector wedi bod yn wahanol nawr os nad oeddech chi wedi bod yn treulio'r blynyddoedd diwethaf yn paratoi ar gyfer pethau efallai fydd byth yn digwydd?

Well, I was going to say that it is impossible to—whatever is the word for 'quantify' in Welsh—quantify confidence, or lack of confidence, but maybe it is possible in some sectors. But you talked about what would have happened if Brexit hadn't happened, not if Brexit was not going to happen from now onwards, but in terms of how the sector would have been if Brexit hadn't arisen at all, if we hadn't been discussing this. In what ways do you think the sector would be different now if you hadn't spent the past few years preparing for things that might never happen?

Buaswn i'n dadlau bod rhai o'r datblygiadau diweddar sydd wedi cael eu gwerthu fel pethau sydd yn ymwneud â Brexit—dydyn nhw ddim yn berthnasol i Brexit. Er enghraifft, ein mynediad ni at rai o'r marchnadoedd yn Japan, er enghraifft, ac yn y dwyrain pell, er enghraifft—mae'r rheini'n bethau sydd wedi bod yn mynd ymlaen yn y cefndir; dwi'n siŵr byddai Gwyn yn cadarnhau hynny. Mae Ewrop wedi sicrhau ein bod ni wedi cael mynediad. Felly byddem ni'n canolbwyntio, gobeithio, ar ddatblygu'r marchnadoedd yna'n well a gweithio ar America a Chanada a llefydd eraill. Mae hynna'n rhywbeth arall sydd yn ddim byd i wneud efo Brexit—mae yna fynediad i Ganada rŵan.

O ran beth dŷn ni'n ei wynebu, byddem ni ar hyn o bryd yn mynd trwy'r un proses roeddwn i'n cyfeirio ato yn gynharach, pan oeddwn yn siarad efo Alun, sef CAP reform. Mae Ewrop ar hyn o bryd yn mynd drwy'r proses yna ac mae ganddyn nhw syniadau rydyn ni fel undeb yn gefnogol iawn ohonyn nhw—hynny yw, er enghraifft, mwy o bwyslais ar y fferm deuluol, mwy o bwyslais ar y gadwyn fwyd a'i gwneud hi'n fwy deg, a llawer iawn o newidiadau i'r CAP o ran gwella'r amgylchedd, ond cadw'r un fframwaith, jest ei ddatblygu o i rywbeth gwell. A dyna le bydden ni fel staff, mewn ffordd, yn treulio ein hamser ni yn trio gweld sut byddai hynny'n gweithio i Gymru i drio gwneud yn siŵr bod y bobl ifanc yn aros ar y ffermydd ac yn cynhyrchu'r bwyd gorau.

I would argue that some of the recent developments that have been sold as things that relate to Brexit are not really relevant to Brexit. For example, our access to some of the markets in Japan, for example, and in the far east—those are things that have been going on in the background; I'm sure that Gwyn will be able to confirm that. Europe has ensured that we've had access. So, we would be focusing on better developing those markets and working on America and Canada and other places. That's something else that has nothing to do with Brexit—there is access to Canada now.

But, in terms of what we're facing, at present, we would be undergoing the same process that I was referring to earlier, when I was talking to Alun, which is CAP reform. Europe is currently going through that process and they have ideas that we, as a union, are very supportive of—namely, for example, a greater emphasis on the family farm, a greater emphasis on the food chain and making it more equitable, and a great many changes to the CAP in terms of improving the environment, but keeping the same framework, only developing it and improving it. And that is where we as staff, as it were, would be spending our time, trying to see how that could work for Wales to try to make sure that our young people stay on the farms and produce the best food possible.

16:35

I think supply chain relationships is somewhere else where we could have moved on a lot more if we didn't have this distraction at the moment, in particular in terms of the dairy sector. We put together some voluntary codes about six or seven years ago now. I don't think those probably worked as well as any of us would have liked to have seen and I know that they've been delayed significantly now as a result of all the other works going on, and we're looking always to try and find greater fairness and transparency in the supply chain. And I think, particularly in the dairy sector, we could have moved a long way forward without this, and similarly in the beef sector—some of the discussions we've had recently about, again, how we could bring some statutory codes to what's currently a voluntary code, and things like that, I think, could have moved forward a lot better in terms of the supply chain without the distraction that we've currently got.

Thank you for those answers. Can I just—? A couple of quick points before we finish. You've talked about the food supply chain in the last couple of answers. How do you view perhaps the strength or lack of strength of the supply chain at this moment in time, because of the whole Brexit uncertainty? Is there a weakness within that supply chain that we need to address and we should be trying to show up in this time, or is the supply chain strong enough to endure?

It's a good question and it's a very difficult one to answer, as most good questions are. I think the beef supply chain is waning at the moment. There are some serious structural issues amongst the beef supply chain at the moment, and it's a myriad of different variables, supply and demand being one of them, and competition globally and downward turns. So, that's not in a great place at the moment. 

The sheep one, funnily enough, ironically enough, has been more robust of late. But, obviously, Brexit hasn't happened as yet, and therefore it is a continual 'business as usual' until such time as we know something different. But supply chains will always be—there'll be up and down affairs amongst supply chains, but I think what Brexit seems to have done is hindered our progress in developing markets at pace, if you like. And what we've been dealing with over the past three and a half years is trying to maintain markets at all costs and keeping our European customers, for example, on board so that we haven't lost anything.

We haven't either developed as we would normally have sought to have done year on year. There has been a bit of a stagnation in that, because, if you're a European buyer—and I was out in Germany a couple of weeks ago—they're willing to talk to you until the end of—well, it was just before October then; thereafter, it was like, 'Oh, well, we'll wait and see what happens in November'. And now it'll be the same again. So, it's just pushing the ball into the long grass all the while. Therefore, that impedes progress and economic growth, certainly, and therefore, one day, it'll be nice to be out of that confusion, if you like, and to give our customers reassurance that we have a product, we can supply you, and we can develop this business once again, as we did before. That would be a good day.

But you don't see—[Inaudible.]—before, at the earliest, the end of next year, at the end of the transition period?

I don't think so, until the end of December. If we can get a trade deal by the end of December, that's all well and good. But, to my mind, and from a business and an industry point of view, if that transition needs to be extended for its provision over another two years to ensure that we do have the best possible deal, I think it's something that the industry could live with.

16:40

I would hope that—when Gwyn says that we'll get a trade deal, I would hope he's referring to the EU, because it's who the trade deal is with that is critical as well. And, obviously, you'll be aware of the concerns regarding a deal with the USA and the implications for us—or indeed with other countries, the Mercosur bloc, for example—and the very dire implications for UK producers if that happens, and indeed other industries and public health, et cetera, you might argue. 

Every food chain is only as strong as its weakest link, and the weakest links—clearly, given that our food chains are more like webs and they extend internationally around the EU, the weakest links are on our borders, and so the higher the barriers to trade then the greater they are at risk of being severed, and that we then lose markets for what we may regard as byproducts but which are desired in other countries for manufacturing, and vice versa.

But, of course, at the moment we've got tariff rates that are on the table for the worst-case scenario that do not demonstrate support for British food production from the UK Government; they demonstrate quite the opposite, because they're almost like a valve—they would allow food in, but we would have a huge barrier to our own exports. Those sorts of things are a huge worry for all our food producers, and things like ingredient availability. These chains extend across the EU and internationally as well.

I haven't got anything to add, apart from what's been said. Free and frictionless access to our largest and most important markets—you know, we are almost the opposite of the car industry: where the car industry is putting a product together from a number of different pieces, we've got a product that we need to maximise the value, and the way we do that is to be able to put it into a huge number of different components, and market to upwards of 100 markets, really, to get the most possible value for our products. So, it's absolutely crucial that we do have that free and frictionless trade going forward. 

Okay, thank you. Any Members got any questions? We've almost reached the end of our session anyway. So, can I thank you for your time this afternoon? You will receive a copy of the transcript. If there are any factual inaccuracies, can you please let the clerking team know as soon as possible so we can get them corrected? Once again, thank you for your evidence.

5. Papurau i’w nodi
5. Papers to note

For Members, if we move on to the next item on the agenda, which are papers to note, the first one is correspondence from the Counsel General and Brexit Minister regarding Assembly scrutiny of UK-wide common policy frameworks. Are Members content to note that at this point in time? We did have a discussion with him this afternoon. 

Thank you. The second one is correspondence from the Paymaster General and Minister for the Cabinet Office regarding inter-governmental relations. Again, are Members content to note that? Though, I did note, or want to note, the last paragraph, or last but one paragraph, where he basically asks us to ask the Counsel General all the questions.  

6. Cynnig o dan Reol Sefydlog 17.42(vi) i benderfynu gwahardd y cyhoedd o weddill y cyfarfod
6. Motion under Standing Order 17.42(vi) to resolve to exclude the public from the remainder of the meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).

Motion:

that the committee resolves to exclude the public from the remainder of the meeting in accordance with Standing Order 17.42(vi).

Cynigiwyd y cynnig.

Motion moved.

Okay, the next item on the agenda is a motion under Standing Order 17.42(vi) to resolve to exclude the public from the remainder of today's meeting. Are Members content to do so?

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 16:43.

Motion agreed.

The public part of the meeting ended at 16:43.