Cynulliad Cenedlaethol Cymru

Yn ôl i Chwilio

Pwyllgor yr Economi, Seilwaith a Sgiliau

Economy, Infrastructure and Skills Committee

07/06/2018

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Bethan Sayed AC yn dirprwyo ar ran Adam Price
substitute for Adam Price
David J. Rowlands AC
Hefin David AC
Joyce Watson AC
Lee Waters AC
Mark Isherwood AC
Russell George AC Cadeirydd y Pwyllgor
Committee Chair
Vikki Howells AC

Y rhai eraill a oedd yn bresennol

Others in Attendance

Dr Rachel Garside-Jones Is-adran Polisi Sgiliau ac Ymgysylltu Ieuenctid, Llywodraeth Cymru
Skills Policy and Youth Engagement Division, Welsh Government
Eluned Morgan AC Gweinidog y Gymraeg a Dysgu Gydol Oes
Minister for Welsh Language and Lifelong Learning
James Davies Diwydiant Cymru, Llywodraeth Cymru
Industry Wales, Welsh Government
John Lloyd Jones Yr ymgeisydd a ffefrir ar gyfer Cadeirydd Comisiwn Seilwaith Cenedlaethol Cymru
Preferred candidate for the Chair of the National Infrastructure Commission for Wales
Ken Skates AC Ysgrifennydd y Cabinet dros yr Economi a Thrafnidiaeth
Cabinet Secretary for Economy and Transport
Mick McGuire Cyfarwyddwr, Busnesau a Rhanbarthau, Llywodraeth Cymru
Director, Business and Regions, Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Ben Stokes Ymchwilydd
Researcher
Gareth Price Clerc
Clerk
Joe Champion Ymchwilydd
Researcher
Robert Lloyd-Williams Dirprwy Glerc
Deputy Clerk

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

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

Dechreuodd y cyfarfod am 09:17.

The meeting began at 09:17.

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

Croeso, bawb, i'r Pwyllgor Economi, Seilwaith a Sgiliau.

Welcome, everyone, to the Economy, Infrastructure and Skills Committee.

I'd like to welcome the Minister to the meeting this morning. If I could just go through some items first. Item 1: we have had apologies from Adam Price and our substitute this morning is Bethan Sayed. I'd like to welcome Bethan to committee this morning. And I would like to say that this is the last session, as I move to item—. Are there any declarations of interest? There are none.

2. Gweinidog y Gymraeg a Dysgu Gydol Oes—Awtomeiddio ac Economi Cymru
2. Minister for Welsh Language and Lifelong Learning—Automation and the Welsh Economy

I move to item 2 and I'd like to welcome the Minister, Eluned Morgan, with regard to our last session on automation and the Welsh economy. Eluned, I would like to ask you if you would like to introduce your colleague for the public record.

This is Rachel Garside-Jones, who is the director responsible for employability and skills.

Just that I'm really grateful that the committee is taking such an interest in this really important area. I think it is an area that we do need to focus on; it's an area that's moving very, very quickly so that we, in Welsh Government, I think, need to respond very quickly. We are putting some measures in place to deal with that response and I'm sure we can go through some of those in the next hour or so.

Is the Government prepared for the effects of automation on the workforce?

Well, are we prepared? I think it would be fair to say that we're not prepared yet, but there are measures being put in place to prepare for those changes. So, I think we need to understand, first of all, the scale of the issue and the problem and I think that, to begin with, is quite difficult to quantify. You've got some estimates by people like Mark Carney in the Bank of England suggesting that maybe even about 700,000 jobs in Wales could be impacted, but then that's certainly not the kind of estimate that somebody like Professor Phil Brown, who is, of course, leading for us on this automation agenda, would subscribe to. So, there's a range of views in terms of how broad the impact will be. What we're trying to do is to understand the pace and scale of change, and I think part of that will be about when employers determine when and how and if they are going to adopt these new technologies, and that obviously will make an impact on how sudden those changes are. The key thing in relation to skills and employability is that you've got to get the timing right, and so we do need to get some measures in place to make sure that we are reforming aspects of the curriculum, that we are preparing people for the jobs, but I think there needs to be an understanding—I think there's an increasing understanding—that when people in future will probably have to change jobs up to 12 times in their lifetime, there will be a need to have much more lifelong learning. I think that's a growing recognition now within Government.

09:20

Thank you, Minister. Are you happy, also, because we've got limited time this morning, if Members think they're not quite getting to the point, to be interrupted?

Thank you very much. We'll come to Lee Waters and then to Joyce Watson.

Can I just clarify: did I hear you say that Professor Phillip Brown doesn't agree with Mark Carney about the impact? Because you're right, there is a range, but there's a fair degree of consistency on the impacts being around the 30 per cent mark of all jobs, so does Phil Brown not think that?

Well, I think it's because it's not a hard figure—. Because there will be examples where, for example, and I've been speaking to some of the big companies in Wales about how this will impact on them, and they're telling me—. For example, you've heard about this Google Voice and the way that people can adapt to—it's unbelievable now, it sounds like somebody is answering the phone and it's actually a machine that's speaking to you. What's interesting is that anywhere where you have a consistent change and you have a repetitive process is easier to be automated, but what will happen—what's more likely to happen and what is happening in some companies is that, actually, those people who were previously doing those jobs are being upskilled and upgraded, and they're doing different jobs. So, those jobs are not necessarily going, but they are doing more sophisticated jobs that need more skill and more upskilling. So—

Well, up to a point. That is happening in some cases and it's not happening in some cases—you know, the Tesco call centre going from Cardiff, arguably, Virgin too, because those jobs are just disappearing—

You're right that it's about rules, and you're right that there's a range, but I think you'd be wrong to—. Sorry, I took from your earlier remarks that Phil Brown—there's some contention within the academic community around it. There's a consensus that the destructive effect is going to be colossal, but, clearly, in granular terms, there's going to be a different picture and nuance to it, but in terms of the macro look at this, the Welsh Government does think that this is a game changer.

I think the Welsh Government is very aware that it's a game changer. It's a question of how we prepare to upskill and upgrade the workforce so that we can dissipate the changes where possible, but there will be vast examples of where jobs will go, without question.

Okay, thank you.

Good morning, Minister. You've already identified that there is a need for continuous education provision for mature students, and we've had the Learning and Work Institute telling us that, due to the cuts that we previously made, we are going to struggle and perhaps be five years behind that curve. So, therefore, are you confident that we're now going to be able to play catch-up pretty quickly in order that the people who are currently in the workforce who will need new skills will be able to stay in the workforce?

Well, I think we've got to put our hands up and admit that austerity has meant that we've had to focus our attention within adult education on key skills, on basic skills, on digital skills as well. But I do think that there is still space for us to look at how we can make sure that people who are in jobs who need to be upskilled, who need to be prepared to perhaps change jobs—that there are opportunities to do that. One of the recommendations in the employability plan is the introduction of individual learning accounts. So, the plan is to look at where the gaps in the market are. We will then—and we're working this up with the Learning and Work Institute—look at how we can give individual credits to people so that they can upskill while in work and prepare for those changes in the jobs market as adults.

09:25

There was Government co-investment on skills implementation in previous papers, and the recognition that both parts have to contribute—the employer, who's implementing change, and the Government, who want to secure employment. How is that working out now in your opinion?

I think what's been really interesting in the past few years is that a lot of the funding we've had through the European social fund has underpinned and paid for a lot of that upskilling for employers. So, there's a dependency that has developed, I think, amongst some companies, where there's an expectation that, effectively, Government funding will be responsible for that upskilling within the workplace. We're going to have to wean companies off that understanding as Brexit kicks in.

So, if you look at just the scale of that, the European social fund has paid for over 240,000 people to be retrained in Wales. That's a huge number of people. That's equivalent to the population of Cardiff, practically. So, we simply won't have that kind of funding in future. So, there is a funding issue that we're going to have to contend with, and I do think that what we made clear again in the employability plan was that, actually, this has got to be about a partnership and understanding that, actually, employers have to sit up and also have to take their responsibilities in terms of training their own workforce seriously as well.

I agree, but if we look at the fact that it's going to be the major supermarkets that are going to lose maybe 30 per cent of their workforce through automation in the first tranche, and we've also got the apprenticeship levy available, how are we going to persuade those people who are clearly driving forward automation to their own benefit and that of their shareholder to invest in the staff that they intend to lose?

Well, I think what's interesting is that we are having quite an active and interesting discussion in particular with supermarkets, for example, where they are trying to push us constantly into helping to train people for the shop floor. We're actually trying to discourage them to an extent on some of these matters, because one of our key requirements now within Welsh Government is that we have to push up to those higher levels. So, they're looking for level 2 apprenticeship level support, and we're saying, 'No, we need to be pushing towards level 3, 4 and 5, which is where our skills gap is.' So, we are pushing people in that direction, so rather than just say, 'Actually, we are going to support you to help people on the shop floor', it's, 'We would like you, if you are going to come to us for funding, to make sure that you are upskilling them to do managerial work or whatever else', so that there are opportunities there. But sometimes I think what may happen in future is we're going to have to actually redirect people into different work opportunities, and that's something we're going to have to come to terms with.

Thank you, Minister. I'll come to Bethan Sayed and then I'll come to Vikki Howells. Bethan.

I just want to ask, because I'm new to this committee—I'm just wondering whether it is inevitable, and whether you've made any analysis as to whether it's something that has to happen, or is it something that you can take a more pragmatic view about, especially in relation to the sector Joyce is talking about? I read an article recently that the new—not that they're new anymore—the way that you pay for your shopping in many of our stores now without the cashiers there are easier ways to take advantage of the system and to potentially not pay for some of the goods that you have bought, because of the fact that there isn't that human element there. Then they're losing money by virtue of having that automation, so I'm just wondering whether you've made an assessment as to—yes, we need to do it in some areas, especially in the high-end areas, but in retail and such, is there that move to discuss whether, actually, that is really what we need?

09:30

Well, I think part of the idea of establishing this board to look at and to advise us on the impact of automation is that they will be looking into exactly where those vulnerable areas are. I think what's important is that we understand that there are opportunities for us to understand that we're not going to be able to stop this—things are going to change—but the question is: how can we prepare that population for the change? But also what's really key, and I know something that Phil Brown is anxious to look at, is how we don't just focus on the supply side and the people side of how we respond, but also on the demand side: how do we interact with business in terms of what that might look like in future as well?

Thank you, Chair. I'd like to bring a focus on the here and now, really, because we know that Wales has already been affected by automation. Are you confident that an adult working in a job at high risk of being automated now and who wants to retrain would have the support needed to do so?

I think this is where the dialogue has to be with the employer to begin with. We have to look at to what extent it's possible to redefine that job and to upskill that job within the current workforce. But there will be examples where that is simply not possible and the job will be eliminated, and therefore there is scope for us to maybe redirect people. I think part of the first phase will be, and we've had examples in retail, for example—. We know that we have a shortage of care workers, so it may make sense for us, then, to redirect people into care work. We do know that we've got apprenticeships in those areas and that there are mechanisms to progress within those areas. That's why what's key for us is that when we are redirecting people, we have to redirect them into jobs where there is an opportunity for them to progress. Have you got anything to add, Rachel, on this?

I think in terms of apprenticeship framework, it's important that we've got that continuum, both so that they can get into work at the lower levels, but also, as you said, build up at the higher levels and provide those pathways, and that's what we're focusing on. And in terms of the review of automation, helping us really in different sectors to map some of that out—that could be really key.

So, our all-age apprenticeship offer would be a part of that, then.

It's a fundamental part of it, and, as I say, we're really pushing on this agenda of really trying to encourage those work-based learning opportunities to focus on level 3 and above. That's the key for us.

When we look at the Welsh Government's adult learning strategy, it seems to focus very heavily on basic skills and English for speakers of other languages provision. Do you think that's appropriate now, given the skills challenge caused by automation?

I think we've got to be clear that we have seen some big cuts in that area. We've had to focus our funding and we've focused it on basic skills, but digital skills are still a part of that offer as well. So, I regret the fact that we've had to make those very austere cuts in that area, but I think what's important now is that we review the situation and that we have an understanding that, actually, we will have to relook at the opportunities for lifelong learning. Part of the idea of the individual learning account is to just test the concept of whether that is possible in those areas.

And you talk about review there, and indeed the economic action plan commits to reviewing the adult learning policy and adapting the funding formula for further education as well. Would you be able to provide us with any more detail on this, for example whether you're considering investing more money into the system and what the principles behind that review are?

So, on FE in particular, I think one of the things that I've been very keen to do is to make sure that our FE sector is being much more responsive to the employment needs of various regions. So, the requirement now is that—I've set up a new, £10 million fund where we are asking further education colleges to—. They won't get access to that fund unless they are responding to the requirements of the regional skills partnerships. So, that's the first step. So, they're getting into the idea that, actually, you have to be responsive to what the needs are. The question then is to what extent we will push that further. That review is being undertaken now. I'm hoping that, by the end of the summer, we will be looking at a new funding formula that is more responsive to the requirements and needs of our economy.

09:35

In terms of the regional skills partnerships, do you feel that they have got a grasp on this agenda?

Well, I think they are still relatively in their infancy—so, we're only on about the third year of the regional skills partnerships. We are looking at—. We've had a review of the governance of the regional skills partnerships.

I think that what's been interesting with these is that, hitherto, what has happened is that we've gathered all this information and actually not much has happened as a result of them, because they were quite new. Now that we've got a funding pot that is responsive and we have indicated that—not just with this, but with work-based learning providers as well—there will be an expectation for them to respond, people are piling in to those regional skills partnerships in a way that they hadn't engaged before. They understand that there is—

Have you set an expectation on them to think about the impact of automation specifically?

I haven’t yet. I haven't yet. But I think that part of the review of the governance system is to look at that. Now, I understand that, I think, only one of the regional skills partnerships referred specifically to automation, and I think—

Yes, I think that does trouble me. But there were different aspects. I think they all drew attention to the fact that we need to improve digital learning skills, for example, which I would include as a part of the response to automation. So, I don't think it was a void, so I don't think we should get hung up on 'the word "automation" should be in there'; I think 'digital' actually addresses some of those issues. Rachel, have you got anything to add on that?

I think you're right in terms of Cardiff capital region was the one that most specifically said, in terms of automation, digitalisation, it's going to have a huge impact, but all three of them, in terms of advanced manufacturing, outlined that unless they embrace new technologies then we won't be able to compete in future. But it was the most specific in the south-east.

I think that, through the review of automation now, over the next year, we can set the more specific objectives relating to what the review finds.

Okay. I'm not sure I wouldn't characterise that as a void, if they're only thinking about it—there's only one of them thinking about it, and thinking in terms of manufacturing. That leaves a massive gap in terms of the other things. Because, if you take this in context, in terms of the well-being reports that local authorities were required to submit under the Well-being of Future Generations (Wales) Act 2015, of the 19 reports submitted to the future generations commissioner, none identified automation as a risk or a tool for future success. So, taken together, I think there is a void, and, rather than seeing this simply in terms of governance reviews, surely the Welsh Government should be more proactively asking them to get their act together on this.

I think the labour market intelligence should be providing a base for them to work from. What's surprising to me is that it's not coming through the kind of labour market intelligence broader information that they should be working from. So, it is surprising to me that that hasn't been picked up through that broader work on which I would assume that they would base some of their work.

Therefore, left to their own devices, they're not going to grapple with this, and the Welsh Government needs to step in.

Well, I think that's certainly something that is worth pointing out to them, and I—

I'd say. Can I ask you about the employability action plan you submitted and why there wasn't anything more specific in that? Because you set five targets as part of the employability action plan. They're not SMART targets—the three of them that are specific are quite broad, so they wouldn't conform with what is normally thought of as SMART—and two of the five are simply asking people to set another set of targets. So, there are only three specific targets in there, and none of them really is related to this area. In your opening remarks, you said you don't think the Welsh Government is reacting fast enough, which I agree with. So, given the discussion we've just had about the void that there is and the inadequacy of the current labour market intelligence approach in addressing the emerging trends, why doesn't the economic action plan be more specific in trying to marshal some kind of response to this?

09:40

Because I think the first step is to make sure that we have the correct kind of information and that we do an intelligent analysis, which is why we set up the review with Professor Brown. So, I think we've got to get our ducks in line first. To start asking for something without having clarity in terms of where we want to get to, I think would have been a mistake.

But the trouble is, as you said at the beginning, this is a field that is moving very fast. We can get our ducks in line, which can take—. Phil Brown's report isn't due until January, and I dare say that'll call for more research, inevitably, as academics tend to do. So, if we're going to wait for us to have the perfect sight of what's going on, we're going to be waiting a very long time. Meanwhile, the world's going to be changing around us. 

Which is why we are not waiting, which is why we have set up the individual learning accounts to respond to some of this already. So, we're preparing the way for that change, and we're preparing for a time when we think that that'll be the direction of travel. We think that there will be a need to have people retrain in adult life, but we are preparing the way for that through doing these pilot projects.

If you want to ask the question you want and then come on to your section, David Rowlands.

Very quickly, you've mentioned the fact that obviously it's very hard to quantify the actual job losses, Eluned, and we understand that, but it's likely to be at least 10 per cent. But the 10 per cent is very likely to be in those levels around about the level 2 skills, and very many of those with regard to women, if we can talk about that. How are you going to—? Do you have any plans as to how you can get that level 2 up to level 4 or 5, which is where I suppose the other jobs will be, particularly with the restraints that some women have with their time, et cetera, for the extra learning in their adult life?

I think you're absolutely right, which is why, when we will be asking people to retrain, it will be with a view to starting out on a pathway where there is a clear line of career progression available to them. But I think you're right, we need to really build some flexibility into the system, in particular for women with childcare responsibilities, and I think we have to consider things like transport issues and how difficult it is for people to get to workplaces and how we can get those jobs that are closer to home, for some of those women in particular.

Okay, fine. I'm now moving on to an entirely different area with my questions, and it's with regard to connected automated vehicles as such. Now, I'm a little sceptical that these will come on board as quickly as they're saying, because there's huge public scepticism with regard to these vehicles at the moment. What assessment has the Welsh Government made of the impact of panel of experts on CAV on employment in sectors such as freight and public transport? Obviously, if they have automated vehicles, drivers and that are going to lose their jobs. So, is there a need to prepare reskilling and redeployment for that particular sector?

I think this touches a little bit on Ken Skates's area in relation to transport itself, but I do take the point on board that, if we go in this direction, then we do need to think about the impact on skills. I think one of the things that we're doing is to look at the apprenticeship frameworks and the transferability of the pathways within those frameworks, so there's an opportunity for us to redirect those apprenticeships without creating brand new electric vehicle apprenticeships or whatever. So, I think that's an area. Is there anything you'd like to add to that, Rachel?

No, only our direct working with employers. I think the timing's key for trying to map out what are the skills needs and getting to that proof of concept and then working directly with those employers in terms of their readiness. That's our key next step.

Do you think there are enough skills within the Welsh sector to encompass the changes that are going to come about?

Well, it's quite interesting, I've visited a lot of further education colleges in the past few months, and they always take me to show me where cars are refurbished and whatever, and I look at these cars and think, 'You're not going to be working on cars like this in 10 years' time'. It's very interesting. I always ask, 'Right, where is your EV car? What does this look like? Are you preparing people for the change that's coming?' Now, let's not forget that there will be the kind of combustion engines that we are all using now on the market for a long time. We're all going to have to get them fixed, so that's where the bulk of the work will be for a long time. But—. So, that question is a question that is being answered. So, in Gwent College, for example, on Monday—. They are working now on electric vehicle models, so that preparation is starting to happen.

But I think that there are broader issues around this. Certainly, when I was doing work in trying to develop a rural development plan, I really got into this area of: are there opportunities for electric vehicles, particularly in rural areas, where public transport is difficult and expensive? Are there opportunities for us to use a more flexible form of transport? I spoke to Tesla on quite a few occasions and tried to get them to put in charging posts around rural Wales, for example. What was interesting, speaking to them, was, you know—. They were saying, for example, that one of the things you need with autonomous vehicles is that you need white lines at the side of the roads—and, actually, you don't have those a lot in rural areas—because they need to be reading the roads. So, if we are going to go down this route, we need to make sure that local authorities have the budgets available to make sure, in those rural areas, that those white lines are painted, for example. So, there are a lot of things that we perhaps haven't thought about but that we need to be thinking about as well, in terms of how these vehicles work in practice and what you need to put in place to make them effective. 

09:45

You spoke earlier on about weaning the bigger businesses off funding from the Welsh Government in order to upskill their workforce, and I perfectly agree with you on that. It's time that they took a part of that. But do you have a strategy for making sure that these companies now that are in the automotive business are ready to upskill, to make sure that the skills are there for this new technology?

So, I've started now on a round of discussions, starting with some of the anchor companies, with the broader employability agenda in mind, just asking them, 'Look, what can you do for us in relation, for example, to helping getting disabled people into work? What can you do for us in terms of helping to get the economically inactive into work?' So, those conversations are quite interesting, but they also are aware, and that's an issue that I discussed with them—'How are you preparing your workforce for the future?' That's why—you know, some of the conversations I've had have been quite interesting and not as negative as I expected. They are not looking to lay off people in some call centres, for example, as I was concerned that they might, because what their plan is is to upskill those people so that they can take more sophisticated, complex phone calls. It's a different world from the basic skills that you would expect, that perhaps have been the case in some of the call centres in the past.

Minister, what action has the Welsh Government taken to upskill the farming sector? I'm particularly thinking about precision agriculture.

Well, I think there's probably a lot of work to do in relation to precision agriculture. I've asked my officials to look at what specifically we can be doing in relation to rural skills, and I am hoping that we're going to come up with a proposal in the next few weeks on that area.

Is that something that you have discussed with the Cabinet Secretary for Energy and Rural Affairs? 

Not in detail, but that discussion is something that, in the next few weeks—. As I say, we've got a plan to come up with some proposals for rural skills development.

Can I say that I think that the key point here is not just in terms of the application in rural areas on farms, which is the response we've had from the Welsh Government—traditionally, officials want to think about this as a farm technique—it's also about how we can develop skills to develop the software, develop the robots ourselves, so we create the industry here rather than importing it from China and America? And that's where the Welsh Government seems to be blind on this.

09:50

I'll take that on board. Thank you for that; I think that's really useful. One of the biggest problems that I think we have in relation to that is making sure that, for all of these things in rural areas, what you need in relation to digital technology is you need some good coverage, in terms of 5G and in terms of broadband technology, and then I think we've got to appreciate that there are still gaps in some areas. So, that is a problem that we have to address as well. We're on it, but it takes time.

What I found quite worrying to read was about the policy statement on skills from 2014 and the fact that this was supposed to be a 10-year strategy. But the plan expired in 2017 and has been removed from the Welsh Government website. There was supposed to be some sort of review and evaluation to be conducted in October 2017, but as far as we understand, that hasn't been publicised anywhere. I'm just wondering if you can shed some light on this and what's happened to it, and whether you can tell us whether the employability plan actually supersedes it. It seems odd to me that you'd have a 10-year plan on one thing and then introduce something else with another 10-year plan without finalising the first 10-year plan. So, I just wanted to understand where you were coming from.

If you look at some of the points that were in that plan, they have actually been implemented, they've been delivered. So, a move towards more regional skills, the need for more intelligence in relation to what the regional demand is, so we set up the regional skills partnerships. So, a lot of the work has been implemented and has been superseded. I think, if I'd have come here and said, 'We're just going to carry that plan on', then you'd have said, 'Well, hang on, what about digital? What about automation?', so we have had to update the plan.

But the fact is, you haven't given us any evaluation. You've said you've done some of those things, but we've not seen an evaluation of any of that work.

A lot of the schemes involved in that were funded by European social fund work, and those are available. So, the assessments of a lot of those schemes are available and I can make sure that you get a view of those schemes, if that would be useful to you. 

But can you just tell us whether that's defunct now and whether the employability plan is the new skills policy agenda? Because, of course, we don't want to pursue one line of questioning if that doesn't prove to be worth while.

I think, in developing the new employability plan, we took account of what was in that skills programme before, took up the bits that, perhaps, hadn't been implemented to the extent that they should have been, and drove them forward, but added the fact that, actually, we need to adapt to what you have recognised is a very, very fast-changing environment.

I don't want to probe it too much, but I think it is worrying if you make these announcements and then nothing seems to follow through. There's an expectation that there would be an evaluation, there's an expectation that there would be follow through. You mention that there is individual analysis, but that's not what you committed to in 2014. So, if you could send us more information on that, it would be helpful, because if we're going to have trust in a new employability plan, what's to say that, in another three years, you won't decide to scrap this employability plan and start something new, and then say to us, 'Well, we decided we needed to do that'? We've got to be able to see the data and the analysis to know why you've done that, and at the moment I don't feel qualified to be able to—.

Yes. I'm happy to pull that together, because all the individual employability and skills programmes outlined in that will have evaluations. So, if we can pull some of that together and show you that they have been evaluated. I think the key four themes in the policy statement—on jobs and growth, local needs, skills that employers need, skills for employment—have all been continued as key themes in the employability plan. But as the Minister said, the key things, the big challenges that weren't there at the time, in terms of Brexit, automation and decarbonisation, we've had to flex and look at that in order to adapt some of that so the key themes are continued. But in terms of evaluations of different programmes, we can pull some of that together to show you how they have been evaluated.

Just in terms of the higher skills, the chief economist at PricewaterhouseCoopers made the argument, which was endorsed by the vice-chancellor of Swansea University in his evidence, that we should also be looking at the postdoctoral level and the doctoral level, because there aren't enough PhDs in machine learning and in automation being funded. There is a huge skills gap at the top end, and that supply just simply isn't coming through. So, I'm not sure if you've looked at that, but I think there's a strong case in looking at that to see if we can tie in some reciprocal agreement that, in return for funding, those people stay within the Welsh public sector or within Wales, because there's a huge international market for these people; they could easily be snapped up by overseas. There's a real opportunity for the Welsh higher education sector to be involved here. I'm not sure if you've thought of that, but if you haven't, would you?

09:55

I haven't thought about that, and I think it's a really good point, and maybe we could look into that. Is that okay?

I just want to return to Bethan's question. It does seem as if that statement has fallen into a black hole, and then you've picked another one up and taken off with it. I'm absolutely certain, as you said, Eluned, that there were many things achieved under that. Wouldn't it be just a good idea to round it all up and let us know exactly where you feel that ended and the achievements in it? And then, obviously, you're absolutely right; you had to move on and things have changed. But just to give us a round-up of where you feel that you've achieved things—or maybe not achieved them.

No, I think that's fair enough, David, and there are things where we haven't achieved, which is why we've rolled them into the next programme. So, we will get something to you on that.

Minister, can I thank you for your time this morning, and Rachel? We're very grateful. Thank you very much.

4. Papurau i'w nodi
4. Papers to note

Whilst we're just waiting for the Cabinet Secretary, can I just—? We may as well just move to item 4, and there are a number of papers to note. There's one that does need an action; we've got a letter from the Petitions Committee, who've written to us. The Chair of the committee, David Rowlands, has written to me and the committee and asked about action in regard to Carno station. Can I suggest that I write to the Cabinet Secretary and ask about how the new franchise enables campaigners to campaign for new stations? Is the committee happy and content with that?

I think the point they're making, Chair, is that overall they've taken away funding for stations out of the budget, and that therefore means that the Carno station is not going to go forward. I think that's the whole—. They wanted to know whether we could have them in and ask exactly what's happening to the funding for stations. I think that Ken, in all fairness, has covered that to a certain extent with regard to the franchise and that, but I think Carno lies outside that, so—.

Okay, well, we'll write to—. Thank you for your letter to me, and I will now write to the Cabinet Secretary. Or we could just have a conversation between the three of us now. [Laughter.]

Is there anything I can answer now, if that would save paper?

We could do. We could save a few trees there, couldn't we? Right.

3. Ysgrifennydd y Cabinet dros yr Economi a Thrafnidiaeth—Awtomeiddio ac Economi Cymru
3. Cabinet Secretary for Economy and Transport—Automation and the Welsh Economy

Okay. We move to our next item in regard to our final session in regard to automation and the effects on the Welsh economy, and I'd like to welcome the Cabinet Secretary, Ken Skates. I would be grateful if you could just introduce your colleagues, or ask them to introduce themselves for the Record.

Sure. It's great to be here this morning. I'll ask James and Mick to introduce themselves.

Good morning. James Davies. I'm the executive chair for Industry Wales, which is the voice for manufacturing at the Welsh Government, responsible for aerospace, automotive, electronics and software. I'm 32 years automotive, truth be told, starting in south Wales. I stayed with the same company under Rover Group, Llanelli Radiators, Calsonic Kansei. I looked after their European operations, and then I moved to Japan, with most of the last seven years in their corporate activities, looking after one of their product divisions.

I'm Mick McGuire. I have been the director for sectors and business, and I'm now the director for business and regions in the new economic action plan department.

Great. We've got a limited time this morning, so I hope you don't mind, Cabinet Secretary, if Members interrupt if you're not quite getting to the point. If I could ask you initially, in bullet-point form if you like, what's your list? What are the biggest threats and the biggest opportunities with regard to automation and artificial intelligence, in a brief summary, if you like, of a list?

10:00

I think, first of all, people talk too often about the threats, and there are figures that are bandied about in an alarmist way, for example 700,000 jobs at risk of being lost, without actually looking at the huge opportunities that could come from automation. The big challenge for the economy of Wales has been, and will continue to be, the relatively poor rate of productivity that we have. Automation can actually contribute to us improving—massively contribute to us improving—our productivity rates. I see that as a central benefit of the move toward automation.

In terms of threats, it's been found recently—I'm sure that Members have the report themselves—by the Organisation for Economic Co-operation and Development just in March of this year that, actually, it's only 14 per cent of jobs that will be lost through automation—that are likely to be lost through automation. A further 32 per cent will change. So, the figure is not as drastic as some have led us to believe, and, indeed, when you look at the 14 per cent, that is actually a manageable number of people. What we are going to see, and what we need to make sure we're doing—this is the reason why we've got the change in direction through EAP—is we need to make sure that we move people from transactional activities to service-based activities. So, for example, we know through the ageing population demographic change there's going to be more opportunities in the field of health and care and leisure, so we need to make sure that people are re-equipped with the right skills within certain foundation sectors to ensure that we have that transition of employment that's as smooth as possible. And at the same time—sorry, Chair—at the same time, my keen interest is in ensuring that we capture and exploit new and emerging digital technology as fast as possible in order to drive productivity change. 

And in terms of that transition you're talking about in terms of employment, what are the timescales, then? When's it going to happen?

Well, it's already happening. And this is another thing that alarmists sometimes wilfully ignore, that, actually, we've been living in an age of automation for some time. What's changing now is the pace and the scale of the change and how obvious it is. In many respects, automation now is far sexier than it was in the past. In the past, it might have involved the move from human cashiers to humanless cash systems in supermarkets. Actually, in the future, what it's going to involve is a move from driving our own vehicles to being present in mobile work and leisure pods, so it's actually more obvious, it's far more like sci-fi becoming reality now. So, that's the difference.

And in terms of the scale, and in terms of the pace of change, well, it will depend by sector. All of the evidence points to the more immediate change happening in areas where there is a high prevalence of low-skilled employment rather than in manufacturing where the change will come later, and the reason the change will come later is because of the cost of implementing automation changes and because of the relative complexity of implementing the change that's required.

In terms of those low-skilled areas of activity—and I know Members have met with certain experts from within the retail sector—actually, we stand ready to capture a lot of reshoring of employment opportunities, because within the call centre industry, for example, it's going to be that lowest level of skilled employment that will see the greatest loss of jobs, whereas actually, above that, we're going to see an increase in the number of jobs that are created within the call centre industry as people wish to communicate more with human beings. And it's at that tier—the top two tiers, actually—where Wales is an exemplar on the global stage in terms of companies like Admiral, like Moneypenny. These all have growth forecasts that will see further employment opportunities created. Why? Because they're at the upper end of the employment hierarchy when it comes to financial, professional and secretarial services.

So, I'm optimistic about the future, but we can't be complacent, and that's why we've developed a new economic strategy that's designed to supercharge those industries of tomorrow, but also futureproof areas of the economy that need to transition in the age of automation. I don't know whether James or Mick would like to contribute at all. 

Just very briefly, I was going to comment on big data. So, one of the things that drives this change is the access to big data. In manufacturing, automation has been going for about 60 to 70 years, and in a lot of areas, in banking, it's been going for 40 to 50 years. But big data is the thing that is absolutely accelerating the pace at which it happens. And big data, for example, simply, if it can be understood and analysed, will accelerate innovation. Areas like precision medicine or precision agriculture are crying out for—. The information is already there, what causes the problem is already there, but we don't know how to analyse it, understand it and then decide what to do about it. So, the companies and countries that understand the big data and use it better will succeed and see it as an opportunity, and countries that don't will fall behind and be less successful.

10:05

I'll just bring, if you don't mind, Lee Waters in in a moment for some more detailed questions and then bring you in, James. Can I just ask, though, another very brief question overall, really? Is the Government prepared for the speed of automation?

I share your optimism, Cabinet Secretary, but I'm not sure I'm quite as optimistic as you are. You quoted the OECD figure of only 14 per cent of jobs being displaced, but when we look at the Welsh economy a lot of those jobs are here. The Confederation of British Industry Wales pointed out to us that the three largest employers in Wales are Asda, Sainsbury's and Tesco, and retail is going to be hit in the first waves of this. Also, back-office functions are going to be hit and, as you said, call centre roles. So, amongst the—

Can I just finish my point? So, amongst the first wave of impacts, it is going to be hitting areas where we are vulnerable—

Well, that's the evidence we've had, and that's what a lot of the academic evidence shows too. That's certainly what PricewaterhouseCoopers' report—. Clearly, none of us knows any of this for certain, none of us knows, but we do know that there are vulnerabilities in areas where we are likely to be susceptible to this.

Just in terms of Mick McGuire's point on big data, which I think is a crucial point, in terms of the economic action plan, there are criteria there for support being predicated on a range of options, one of which is automation, which is welcome, but in terms of the practical help that manufacturing in particular but others need to develop the capability to install sensors to gather the big data and then to interpret them, what practical help are we making available to employers and industry in Wales to be able to capitalise on those big data changes that Mick McGuire rightly identified?

Well, that's already been happening. We can provide a raft of examples of companies that we've supported in that regard, but the EAP is designed to not only encourage businesses to invest in the right areas but also to encourage businesses to come to us with challenges that we can then fund collectively for those businesses and then use the calls to action as the vehicle by which to draw down the big pots of money that come from the Grand Challenges at a UK Government level. Can I just introduce James?

Obviously, I come from an automotive background, coming back to Wales in this particular area for sustainable employment in Wales, and I regard these as things that are, of course, threats until we turn them into opportunities. So, we need to develop excellence in these areas, there's no doubt about it. Collaborating our academia and local businesses, particularly the small and medium-sized enterprises in this area is very important, but I already see significant programmes on my return here that are just doing that—the SMART activities and the ASTUTE activities are actually bringing some of the academics and data scientists into the real world in small operations up to Tata as well. They are actively progressing, seeking the data, farming the data, analysing the data and driving it through to real opportunity. Of course, we want to maintain that momentum on it, and we want to reward and acknowledge that collaboration between business and academia to ensure that we are embedding that in the improvement for it. But I do see evidence of that continuing, and to me the EAP has left it open enough with the priority areas and the calls for action to ensure that we can reward and support where it is necessary in those particular areas.

And in terms of the support that we are offering at the moment and in terms of how we are capturing opportunities that come from the UK industrial strategy, Mick can run through the Life Sciences Hub Wales and compound semiconductors, but I think we are incredibly well positioned, especially relative to other parts of the United Kingdom, in terms of being able to get further support from the Grand Challenges and from other elements of the UK industrial strategy. It's worth saying that the EAP was specifically designed to dovetail with the UK industrial strategy, and I had many, many discussions with Greg Clark during the development of the UK industrial strategy in an attempt to make sure that that was shaped in a way that would contribute to further economic growth in Wales. But, Mick, if you would—

Specifically on the big data point, which was the nub of the question, I spent an hour this morning working in the building next door here, which used to be called the life sciences hub, which Members will know has been repurposed as a care and health hub. Two of the biggest care companies in the world have said they believe Wales, through that care hub—these are Johnson & Johnson and Pfizer—offers the best opportunity for research and development, in their opinion, in Europe, and both of them are coming here to work to develop and expose that. And why have they said Wales is better than anywhere else in the world? For a number of reasons, all connected to big data. The Welsh genome project is something that they're interested in, but primarily it's the willingness of the national health service in Wales to share and explore its issues with industry and academia to accelerate, using the big data—the patient data—better patient outcomes and more cost-effective healthcare solutions.

10:10

Thank you. I'd better come on to some other Members as well. Joyce Watson.

You've answered quite a lot of what I was going to ask, but I'd like some detail about the scale of support that's available from your department from the economy futures fund to support automation. So, we've talked about the fact that it's there, but what is the scale?

Automation runs across everything that happens in the economy, and therefore the scale of support will run across everything that's available from not just the economy futures fund but across all funds that are administered by the department.

Okay. That's really good. And will there be any specific support for sectors where we've heard already that some, if not all, of those jobs might find themselves fully automated in the near or not-so-near future?

Well, this is interesting. Yes, absolutely. That's why we're developing the enabling plans for those foundation sectors, particularly with regard to retail and care. In care, we believe there will be a significant growth opportunity. With retail, it's closely linked to place building and the future nature of the high street. We don't know, and nobody can second-guess what new products and services will emerge that will enable us to redeploy people, particularly people who have relatively low levels of skills. That's why we're now focused very strongly on the foundation sectors. But it's not just about discrete support for those sectors that may face the biggest change. What we're also looking at doing is supporting businesses themselves individually and collectively as groups that face major challenges, but which still have a sustainable future if they're able to embrace automation.

If I can, Chair—if we talk about innovation as well as artificial intelligence, I think that is critically important as well.

We don't seem to have mentioned innovation yet, but probably one sector that's experiencing large-scale innovation is the construction industry. So, is that identified within your thinking?

It is. Construction offers an opportunity again for growth in terms of employment numbers. What I should say about innovation is that we do have that national campaign now—Be The Spark—which is designed to plant innovation-driven entrepreneurship at the heart of everything we do, bringing together the key stakeholders, the key partners, to ensure that Wales is a more innovative creative place. I do believe that innovation and automation are inextricably linked insofar as innovation will drive the practices that will lead us to further automate systems and procedures.

And specifically on building the innovation, which clearly has a huge impact on all of our lives and on decarbonisation and the environment, officials have been working very closely with the Department for Business, Energy and Industrial Strategy on industrial challenge funding opportunity to bring an advanced building centre to Wales, which would embrace the office of the future, the factory of the future, and the houses of the future, as an innovative, fast-learning and developing continuous improvement in construction projects.

This is another example of how we're trying to take advantage of UK industrial strategy opportunities. I think somebody gave evidence to suggest that we were not as well placed as Scotland. That is not the case. We are well advanced, in our view, of other parts of the UK in terms of already having recorded major successes, in terms of UK industrial strategy opportunities, and in terms of automation and advanced manufacturing.

10:15

Just briefly—you've touched on it, actually, Ken, that the advantage of automation is that, to a certain extent, it can negate the factor of cheap labour, which has obviously been enjoyed by the far eastern countries. So, are there any discussions going on with companies that may have located to those areas in order to bring them back here, then, from the point of view that we are open for automation?

Absolutely right, yes. The reshoring opportunities are considerable, particularly in terms of customer service and finance. We're actively engaged in discussions with a number of businesses with a view of bringing back jobs, and in doing so raising the quality of employment as well. That's why fair work is so important and integral to the economic action plan.

But we're also looking at how we can support businesses in the transition from low-level skilled employment to higher level skills. I was recently at DMM in Snowdonia national park. They produce climbing equipment—they're one of the world's best companies—and it's a remarkable sight, it's well worth the committee taking a look, if you have time, because it demonstrates how automation can contribute not just to improve productivity and the quality of products, but also how it can contribute to employment growth. Essentially, what we're going to be seeing at DMM, and many other companies like it: the removal of people from heavy presses—not particularly attractive employment, where you're pressing a button, and a whopping great press falls down on a chunk of metal—and instead, they're going to go move from automation through to actually making sure that the machines are operating correctly, and maintaining machines, analysing the product, and taking part in continuous product improvement mechanisms as well. So, actually, employment numbers there are set to increase, and not just increase, but improve in terms of quality.

Thank you. Good morning. Witnesses have made a series of proposed recommendations to us that we might make to Welsh Government. If I could just test your views on a few of those.

Firstly, how do you feel about the proposal that the Welsh Government should develop asset maps to understand the private and public sector strengths in Wales and identify key influences within businesses in Wales and outside?

I think the key there is outside. Asset maps that would only consider Wales would not consider some of the major developments that can contribute to our growth that are outside of Wales. I'll give you one example: Deloitte's office of the future is based not just outside of Wales but outside of the UK, but it's helping to inform the company here in Wales about working and the future of work, automation—. I believe it's based in the Netherlands.

It is, yes. Creating asset maps may not be necessary, given that we're already creating the regional plans that will identify strengths on a regional basis, and also those areas of economic activity that require further attention—the businesses that contribute to our strengths and businesses that are looking relatively weak at the moment. So, to some degree, that's already happening, but it's through the lens of the regional place-based economic development that we now wish to see take place. 

If I could just add specifically on the question of the asset maps—they were carried out five or six years ago by the sector panels, but they were very much sector, not regional driven, and your question was a spatial question as well. So, actually, what we now need to do is to take those sector maps, which are sectoral, and then turn them into asset maps that are regional. And that's what we've charged chief regional officers with doing—to develop that asset map into one that works regionally.

And I think the point of your question is well made, because it is regionally that clever clusters of companies talk together and work together and generate the innovation that we were talking about. Because, actually, at its heart, this is all about innovation. Whoever uses artificial intelligence and the big data and technology to inform better ways of doing it tomorrow will win, and those who don't will lose. And your point is absolutely right: it will happen regionally, not necessarily because there are various assets widely dispersed.

Clearly, there are cross-cutting issues between regions as well. And in utilising asset maps, once you have the understanding and the data, how do you avoid the tank traps of corporatism and ensure you're doing this with business and communities?

That's all about engagement, not just engagement between Welsh Government and business; it's about engagement on a regional level as well, making sure that we've got the right regional economic development vehicles in place to ensure that (a) we're diffusing innovation, (b) we're sharing best practice and (c) we're ensuring that the support available not just from Welsh Government, but also from local government and other parties such as the development bank, is easily accessible and understood as well.

10:20

I'm glad you added the second one there, because, when we look at these things, assets are one thing that may hold us back from a disruptive approach. The thing that is really required is a collaborative approach on this, so we use the assets that are possibly going to be very valuable in the future, starting with our skills and also the raw materials that we have within those bases, rather than just something that we've had there for a very long time. It's a very disruptive world, and I think the strength of the chief regional officers will be that they start to bring these stakeholders together and, potentially, with stakeholders who are outside, to challenge the view that's been there before. Precision is required in this area.

I think you also emphasised there the importance of human capital within this.

The second related question: how do you respond to the recommendation made to us that the Welsh Government should look at the start-up community and also existing businesses and identify barriers to adoption where industry 4.0—the fourth industrial revolution—doesn't challenge businesses but challenges business models?

Absolutely. Couldn't agree more. We're doing that partly through the Be the Spark initiative, but also through the development of the tech and enterprise hubs that we're funding that I announced recently that will be positioned strategically across Wales and also through the work of the development bank and, of course, Business Wales, and Business Wales working more closely with the development bank.

But in terms of working practices, and leadership practices as well, the economic contract is designed to improve leadership within the workplace, designed to make sure that business leaders are futureproofing their own enterprises, and designed to make sure that they are carrying out practices that contribute to higher levels of not just workplace health and well-being, but work-based placed skills as well, making sure that there is a focus on skills levels and re-equipping people with the right skills for the future. James.

The issue for us here is that we have this excellence here of start-up—there's no doubt to me on that—and, as a large corporate guy, I'm really always amazed at the enthusiasm and passion for them to start up.

It is the growth model for me that we continue to use the economic action plan on to ensure that the level of development of the owners and the leaders of our organisations can see how they go from micro to small and small to medium, and this is, I think, the ability of the EAP. Occasionally, that means we need to be outside Wales to bring in, when you talk about the disruptive business models, new stakeholders and new primes, which, traditionally, have not been there to ensure that those start-up or growth companies can engage with people who have real access to the market and that's above and beyond Wales itself. That will drive excellence. Wales has been very top, very good.

I just wanted to ask, on the start-ups, just as we had a session on skills earlier with Eluned Morgan and saying how you identify skills so that you can transfer them into different sectors, how you are identifying potential ideas for start-ups that would benefit the Welsh economy. On another committee that we've been on, people are sometimes forced into starting a small business, because they've lost their job due to various reasons, or that is the only alternative and they may start a business that might not fit—well, there's no harm in it, I guess—but not fit the idea that we want to shape for the future. So, I'm just wondering how you're dealing with that, giving them new ideas that perhaps they hadn't thought of but they would be capable of doing.

I'll take that. Yes, largely through—. Particularly business start-up leaders, they benefit from collaboration, they benefit from co-location with other entrepreneurs and that's why we're creating the hubs—to make sure that they're able to work together to identify new opportunities and—

But you tried that before with the techniums and some of them failed, so I just would want to be sure that they were different enough.

Yes, these are very different. These have a focus on business development and exploiting tech in particular. So, we're doing it through that, in part, but also I'm not entirely convinced that it's for Government to identify and then to feed people ideas. The best business ideas come from entrepreneurs themselves, and so the key for us is in creating an environment in which would-be entrepreneurs have the support, the motivation, the encouragement and the opportunities, the facilities—such as hubs, such as space within higher and further education institutions—to be able to take their ideas into development and make sure that they can exploit them. So, it's all about—

10:25

But I was just wondering, if it was identifying growth markets in a specific area, it would make sense to try not to make them start a business in something—I wasn't saying that—but to steer them in the direction of that area.

This happens also with Business Wales, and, actually, it will happen more so with the closer working that's going to be taking place with Careers Wales, but Business Wales are able to provide to possible start-up companies information and intelligence on where market trends are going. So, whilst we wouldn't plant an idea in a businessperson's mind, what we will do is provide the intelligence that can inform them of whether their idea is going to be something that could be successful.

That's fine. We're a little pushed for time, so I'll come to you and then Lee straight after. Mark.

How do you respond to the recommendation made to us that the Welsh Government should pressure test what a productive community, rural or otherwise, might look like in 2050?

It would be incredibly costly. We're already modelling, and I think the difference between pressure testing and modelling is not as great as some might believe it is, because we're already modelling the office of the future, the building of the future. There's a lot of development taking place with the advanced manufacturing research institute that will test certain elements of what's being proposed, but I'm not entirely convinced that the cost of pressure testing what a community might look like would actually reap the sort of benefits that some believe it would.

And we get help from industry. So, industry would model it with sophisticated models that might be 55 per cent, 75 per cent accurate and, slowly and surely, as they improve the accuracy, they would then actually prototype, and the cost of prototyping a community, as the Cabinet Secretary says, is enormous. So, industry would absolutely be modelling this, improving the model to better understand the issues and then developing buildings in line with that. So, I think it's something that will come, but it will be a long time before it's cost justified.

It's interesting that all our youngsters these days are really using game theory. The automotive industry is using game theory with simulation models for safety right now, and this is a perfect example of trying to simulate a model of a proactive community. Using something like game theory would be very interesting for the academics and the start-up companies to get involved in. It seems to be a very successful commercial model as well, if they do it online.

The final recommendation I'm going to sound you out upon is the proposal that the Welsh Government should investigate or trial the introduction of universal basic income.

I love the idea, but there's a big difference between an idea and how it could play out in practice. Numerous reports have now been published that demonstrate, actually, the benefits are not that great. The idea sounds fantastic and it was something that I think was around back in Richard Nixon's day, so I think he tried to pilot it, but, actually, in practice it doesn't produce what you would wish for. The pilot programme in Finland has been brought to an end. The OECD have said that actually it could contribute to widening economic inequalities, rather than closing them, and that it may not reduce poverty rates. The Trades Union Congress-commissioned report demonstrated a whole number of concerns that would have to be addressed and also found that the system is tolerant of long-term joblessness. Now, we don't want people to be out of work on a long-term basis. It's not good for the economy, but, more significantly, it's not good for individuals' emotional well-being. That same report also found that complex means testing would still have to be incorporated into a benefits system, and, actually, what the OECD have found more recently is that the system that the UK Government is seeking to introduce, if it's introduced correctly, with the right degree of support, could actually offer more benefits in the long term than the implementation of a universal basic income.

So, whilst I'm not closed to the idea of it, I would say that the theory is more appealing than what, in practice, we see emerging from this particular intervention.

10:30

Right, thank you. We are a bit pushed for time. Is that okay, Mark?

I'm glad you mentioned the Finnish experience because, as you say, the test was the extent to which this would incentivise unemployed people to go into work, and, on the basis of their findings, after two years, they're looking at alternative means—incentives, carrots and sticks. A lot of this isn't devolved to Welsh Government, but will you be keeping an eye on the alternatives that might be trialled?

I've been caught up in the wave of positivity here. Obviously the response is very encouraging, but can I just give a counter-blast of reality check? 

Well, optimism needs to be tempered. 

So, the public services boards that each local authority has set up have had to submit a well-being report as part of the future generations Act. Not one of the 19 well-being reports submitted by local authorities has identified automation as a risk or as a future tool for success, which I find deeply disturbing. In terms of the opportunities, it seems to me there's a real danger from the fragmented, silo nature of all governments that a lot of opportunities could slip through the gaps here. The UK Government has announced the establishment of an office for artificial intelligence. What can the Welsh Government do internally to marshall the forces to make sure that we are fully seizing the opportunities and there is an engine room within Welsh Government to try and co-ordinate all this and make sure we're seizing the opportunities?

The idea of an engine driving it sounds great, but in practice what you end up with is a silo mentality developing within—

Well, no, actually. That's the whole point of EAP. That's the whole point of the cross-Government working that's taking place on economic development now. It's moving away from that silo mentality. 

But AI isn't just about the economy, is it? It refers to health, education, and Government isn't working like that. 

That's exactly why I've got a cross-Government delivery board being established. That's a cross-Government delivery board for EAP, of which automation is a crucial part. I would agree entirely that it's across Government, but what I'd also say is you can't have one silo, one unit responsible for something that covers all parts of Government, because what will happen is it will become a policy board. It would become a policy unit. It would not administer any particular change that we require now. Instead, we should be working horizontally, right across Government, and that's why I'm setting up the cross-Government delivery board for EAP and making sure that automation is at the heart of everything we do across Government. 

Okay, that's great. So, what about the other elements of AI, then? How is that going to be co-ordinated?

That's all part of the EAP as well. That's going to be configured into the cross-Government delivery. 

Well, let's look at edtech, for example—so, the application of AI to schools. How is that going to be part of the EAP?

That's going to be part of the EAP because we're going to have members from across the Government, every department, on that board, making sure that the delivery of EAP aligns with the delivery of services across all departments, and that includes new technology within the education department.

I'm not convinced that if you had a single unit responsible for AI and automation within Government you would deliver the change that's required, or that you would capture the hearts and minds of all people across Government. You would end up, as I said earlier, with a policy unit. You would not end up necessarily with demonstrable change.

Okay. So, how is this board going to work to make sure, then, that the full opportunities across the piece are going to be harnessed, not just simply in terms of your action plan? 

It's going to work because I've got the most senior officials from all departments that are going to be present on that board, making sure that we identify the opportunities and the challenges not just that are captured within the economy, but right across Government, and making sure that calls to action, and the principles that sit behind those calls for action that have led us to develop them, are given due regard by all departments, and that all of us are moving in the same direction in terms of being able to capture the opportunities for automation and AI and, indeed, other areas of activity that we all need to address, such as fair work, such as making sure that we decarbonise. If we had single units that were responsible for, let's say, fair work, decarbonisation, automation, AI, we wouldn't have the sort of horizontal cross-Government working that's required.

Okay. So this board, as you said, is going to be looking at many different aspects. So how do you make sure the AI aspects in particular, given the importance that we've just discussed, are properly harnessed?

In the same way that we'll be making sure that all of the calls to action are properly harnessed. I don't want to give priority to one call for action over another, because they are all contributing factors to our productivity and to making sure that we, as I said earlier, supercharge the industries of tomorrow and that we futureproof all businesses, where possible, and also make sure that we futureproof the public sector. And that's why it's so important that we've got a cross-Government delivery board that is chaired by a Minister, making sure that we get the change that's required right across Government.

10:35

A good example, practically, would be the one that you questioned: how do we facilitate edtech? A good example of how that could be facilitated by the board would be that it would be for the education industry to articulate what their ambition was for edtech and it would be for the economy department to bring the innovative SMEs and the clever companies along to try to create and innovate new solutions, and, the more they work together collectively and collaboratively, the faster the pace of innovation, change and improvement will be.

Okay, I understand that, but that's there just for the industrial application of it, isn't it? In terms of the service transformation—so, how do you transform the way we do schools—that wouldn't really fall within the remit, unless there was a business looking to do something. How do we unleash the potential within the public sector of capitalising on the changes AI can bring? That's not going to be done by the policy board.

Okay, so, crucially, it's the economy where automation and AI will be most significantly felt in terms of—

Let me finish my point—in terms of the actual contribution to the wealth of the country. However, education, health and other service areas will be major contributors to our long-term wealth and well-being, and, therefore, it's absolutely essential that we have the right people sitting alongside those who lead on economic development to be able to identify and then exploit those emerging technologies and new working practices so that we can ensure that there is reform within the public sector, whether that be in education or whether that be in health. Actually, the life sciences hub is a perfect example of how it's being repositioned, reprofiled, to make sure that we contribute more to new, emerging practices insofar as health is concerned. I think that demonstrates how we are now crossing departmental and subject boundaries.

And education and universities are absolutely closely entwined with that.

Okay, just briefly, I buy that up to a point, but, just for example, the example I quoted to the First Minister the other day, namely the amount of time it takes to recruit a nurse after a nurse hands their notice in—I think, from memory, it's something like 56 days. Through digitisation, it's possible to shave about 20 days off that, saving around £13 million. That kind of change is not going to be driven by industry coming up with an idea—it might be, but it may not be. So, where's the lever going to be for pushing the public sector to explore possibilities for using AI to free up resource? I don't think, from what you've said, it's going to come from that board.

If you could briefly answer that, because we've got to move on to other points.

Okay. I take that that's a specific challenge. That is one that relates to administrative practices within the health system. What I think we can do, though, across the Government delivery board, is test against, and make sure that those who are administering human resources make sure that we test against, their delivery at the moment the opportunities that could come from adopting technological solutions to, at the moment, burdensome, bureaucratic solutions. Granted, we're not setting up a unit, but I think it's more important that we have officials across Government discussing, exploring opportunities that technology provides rather than have, within one unit, if you like, an engine that's operating, but where that engine isn't driving the whole of Government or the whole of public sector reform. Because that's what I'm afraid a single body, a single unit, siloed somewhere—even if it's planted within the First Minister's office—would probably become.

We've got three section areas that we want to cover. I've got David Rowlands leading on one, Hefin on another and Vikki on the last section. So, if you can cover your subject areas within four minutes, I don't think we'll have any more time for supplementaries. David Rowlands.

Okay. We've talked about the level of skills in the workforce in general and their ability to take on board automation. Perhaps we ought to bear down a little bit on the ability of Welsh Government and the staff resources that you have and the financial resources that you have in order that you could take on the task of guiding on this automation sort of thing. First of all, the quality of any ship is its captain, so could you clarify who will lead on automation within the Cabinet?

Automation is something that crosses right across Government, so having a single lead on it makes no sense. In a sense, what we need to do is approach this on a collegiate basis, and that's what we're doing. Of course, that cross-Government delivery board, through the EAP, will contribute to enhancing and amplifying the knowledge and awareness and deployment of that knowledge across Government, but this is something that should be shared by every Government Minister.

10:40

Yes, well, I fully appreciate that, but someone has to collate all the information once each of the Ministers has given their part of the information and their input. Someone has to collate it and act on it, don't they?

We have specific leaders within Government, within the civil service, when it comes to discrete subject areas such as, for example, digital, advanced manufacturing and materials, or the automotive sector, for example. So, that's already happening, but, in terms of the broad theme of automation, it's something that should be co-owned by everybody.

Okay. What do you honestly think that your level of expertise and the capacity and awareness of your staff is at this moment to—

It's excellent. It's excellent. I've found that, often, critics outside of Government aren't actually aware of what Government is doing and aren't fully aware of what programmes and projects are operating. It struck me recently when I was asked whether Welsh Government would look at the model of the AMRC in Sheffield and replicate it in Wales. Well, we started doing that two years ago. And that's a perfect example of how, sometimes, Government can face criticism from people who don't actually know what's happening, or are poorly informed or misinformed. The level of expertise is excellent, because it's supported by people like James, and the key is collaboration. It's about Welsh Government working with business, Welsh Government working with academia, Welsh Government working with venture capitalists, working with other stakeholders, on the basis of Be The Spark. That's how we get the best possible expertise emerging.

Okay, so you're confident that you do have the strength and the depth. That's fine.

And the innovative technology solutions will emerge from industry. Government's role is to facilitate and applaud and support and encourage and accelerate.

Yes, absolutely. Okay, I think that—. The next part of my question was about a cross-department basis, but you've obviously covered that and following on from these questions as well. Thank you. So, thank you.

Hefin, we've pulled back a minute, so you've got at least five minutes.

Sorry, Chair. I need to be at the active travel board before 11 o'clock. Sorry.

We will certainly be done by 10:50. Are you okay with that, Cabinet Secretary?

Yes, that should be just about okay. I've got to get back up into Tŷ Hywel, and then I've got to get to the active travel board before 11:00. So, I'm against the clock. [Interruption.] I'm walking. 

With regard to connected and automated vehicles, how do you see the future developing, both in terms of the development of the technology and the development of demand for such technology?

Nobody knows the answer. What I can give you is my impression. I think we're going to see, once the change happens, and the change may take longer than some believe, but, once it happens, it will happen at a great pace, and what we'll see is a move away from car ownership and cars being a form of mobility to cars becoming mobile leisure and work spaces that are operated on a semi or fully autonomous basis. Once that—

It depends on a number of factors—the regulatory environment in which we can operate. It depends on the willingness of consumers and customers to actually adapt—and we don't know how many people want autonomous vehicles yet. There has been no real empirical evidence provided to show that the vast majority of people—. So, what we need to do first of all is figure out how we deploy autonomous vehicles and connected vehicles, and then ensure that we can meet market demand. I also—

So, has the Welsh Government done any research, or is it planning any research into this?

Well, that's the whole point of the Tech Valleys initiative, working with academia. And it's worth saying that a vast amount of work is already being done by academic institutions, not just in Wales, but further afield. Cardiff Metropolitan University has just announced that it's opening a Cardiff school of technology, which will contribute to this understanding.

Can I just focus on some of the specific issues that were raised, then? We accept that there's uncertainty, but one of the big issues that was raised in the evidence session we took was that security in this field is a bit iffy and the fact that the technology that is associated with cyber security is not developing at the same pace as this automated vehicle technology. So, there's a risk, and there's a risk of things like cyber terrorism. So, what kind of safeguards are there?

10:45

This is why I'm really excited about this particular field of work, because the development of autonomous vehicles is related so closely to an area or a sector that Wales has immense strength in at the moment. So, actually, I think we could be at the forefront of—. We may not be assembling, necessarily, autonomous vehicles, but what we can do is provide the components, and particularly the interiors of autonomous vehicles, where we have huge strength and capabilities, and we can also provide the security systems that can ensure that they can operate smoothly and safely.

Sidewalk Toronto is a great example of how you can test and model things. We're keen to make sure that we use the Tech Valleys initiative, and I've gone on record already as saying I'm keen to look at how we can use newly constructed trunk roads in order to test—

So, might you pick an area of, say, Bargoed, to do a test area?

I think I'm on record already as identifying one particular proposed road, the Flintshire corridor, which could be utilised for testing. I'm open minded at the moment, because I want industry to come to Welsh Government and to identify what is required, rather than for us to build and then hope that they come.

And, finally, if you're going to regulate this effectively and legislate, you're going to have to work with the UK Government. What action has been taken there?

Yes, it's UK Government that takes the lead on this, but we are fully engaged with them on potential legislation. In the first instance, I think it's going to be safe to say that it'll concern autonomous and connected vehicles using high-speed roads and then other areas of activity such as car parks. But we're fully engaged with UK Government both at a ministerial and at an official level as well.

Thank you. Just one question from me, considering the impact of autonomous vehicles on public transport. Some of the evidence that we took last week suggested that they could have a negative impact on that and upon active travel as well. I wondered what your thoughts were around that and what Welsh Government could do to seek to mitigate that.

Okay, sure, it could have an impact on active travel, were it not for the attempt to change behaviours. We're more mobile through vehicles than we ever were in the past, but equally there is now a concerted effort to make sure people are walking and cycling more. The additional £60 million that we've announced for active travel, alongside renewed support for training courses and safety courses, I think will help contribute to behavioural change. But the behavioural change that needs to take place now cannot then be undermined by any attempt by the market to persuade people then to ditch active travel and use leisure and work pods to get from A to B, no matter how long that journey might be.

So, whatever happens in the short term, in the longer term, I think there'll have to be strong focus on ensuring that people identify active travel as something that is good for their health as well as good for the environment. I think there could be an impact on public transport. I'm keen to see the work that's being carried out on the Swansea bay metro consider all forms of transport, including robotic taxis as a form of mobility. We don't yet know the full extent to which public transport is going to be impacted by autonomous vehicles. We don't yet know for sure the full extent to which current manufacturers are going to be impacted by the move to autonomous connected vehicles. But what we can probably safely say is that many businesses within the Welsh supply chain stand in a very strong position to capitalise from autonomous vehicles.

Why? Well, because it's predicted that the roll-out of autonomous vehicles will lead to lower levels of car ownership but higher levels of usage of vehicles. That means that component parts of the interior will wear out faster, because, essentially, you're just going to strip out the interior every five to 10 years and renew it, because cars will also have a greater degree of longevity. We have a number of major businesses in Wales that are particularly strong in terms of supplying components for the interiors of vehicles at the moment, and that's why I think we've got a very strong opportunity, a very good opportunity, to capitalise from autonomous vehicle manufacturing. I don't know, James, do you have something to say?

10:50

I have eight seconds but, yes, I do. [Laughter.] Interiors go from the pod to the car to the taxi to the bus to the train to the plane. The personalisation of our interiors, in an informed way—a predictive way and a proactive way—is a perfect one for us to go with. With the fact that it's got an MRO basis with it, it will continually require updating and changing on an ongoing basis. It's a great part of the industry to go for.

I'll leave you with something that might be a bit of a scary thought: it may well be that you, in the future, will be sitting on your made-in-Wales gaming chair in your lounge, and you will be able to call for a robotic taxi, and the chair will lift up and take you out, and you can move from that into a train and into a plane.   

With that, Cabinet Secretary, I will let you get on your bike to your next meeting. [Laughter.] Can I thank you, Cabinet Secretary? If you or your officials do feel that there is something else that you want to add in note form, then we would of course welcome that.

Thank you for your time this morning. We are grateful.

If Members can just hold fire for a moment, we'll take a short break and we'll be back at 11 o'clock.

Gohiriwyd y cyfarfod rhwng 10:51 a 11:04.

The meeting adjourned between 10:51 and 11:04.

11:00
5. Gwrandawiad cyn penodi—Comisiwn Seilwaith Cenedlaethol i Gymru
5. Pre-appointment hearing—National Infrastructure Commission for Wales

I move to item 5, in regard to our pre-appointment hearing for the national infrastructure commission for Wales. I would like to welcome Mr John Lloyd Jones to the committee this morning in regard to this pre-appointment hearing. Mr Jones, would you like to make any opening comments?

Well, thank you very much. I must say, I feel slightly outnumbered here at the moment. It is quite a strange process this, because I have been through an interview panel, been recommended to the Minister, but, of course, I understand this is now part of the scrutiny process. So, I think that has considerable merit because, right from the very beginning now, you can ask me how I can see the infrastructure commission developing, but, of course, I must stress at this point that these are my initial thoughts as chairman, as an individual. I'm very conscious that a very strong part of this is actually putting forward a team. So, please, if the team moves slightly away from my individual views, you will appreciate why that is happening.

11:05

Well, thank you for your opening comments. Of course, the role of our committee is to ask you questions, and we will then report. That report will be available tomorrow. In regard to your nomination for the post, I note it's for a one-year period only. Would you have preferred it to be for a longer period?

I take what I am given. There is very strong merit in an appointment for a 12-month term. Obviously, I hope that if I am appointed and the appointment is a successful one, I would not turn down a further extension to it. But, at the moment, I'm perfectly clear and it's acceptable that my appointment is for a 12-month period.

Would it have not been better, from a more strategic point of view, for it to be a longer term period?

Mr Chairman, that decision is outside my hands. That is with the Minister. That is the terms of the employment. That is what I'm prepared to accept.

Thank you. How do you envisage working with and being accountable to us as Assembly Members, and being accountable to the National Assembly for Wales?

Well, again, this is something that needs to be worked out within the remit. I am struggling a little bit with the concept of independence and accountability. Exactly what side of the line should the balance lie there? Obviously, in my previous job at the Countryside Council for Wales, I was well used to appearing in front of Assembly committees. I think it is a very strong part of the openness of the Welsh Government and the way the Assembly operates. If my position is confirmed, then I look forward to working with you over the next 12 months in whatever capacity you desire.

Thank you, and I note you relay what you said in one of your answers to one of our questions—that you are

'struggling with the concept of a body which is both "Independent" and "Accountable".'

What do you mean by that?

Well, how independent is independence? Is the independence compromised by the accountability? The reason I ask this is that I was very conscious, when I was chairman of CCW, that the one thing you did not compromise on was the science and the evidence, because once you started compromising on those, where do you draw the line? Sometimes you had to give advice to Ministers that was politically difficult. I have no fear about that; I'm used to doing that. But if the evidence points in one direction, then that direction is what we will take. If that means that our accountability comes up against our independence, then we'll work it out as we go along.

Are you perhaps suggesting there's a struggle between the two organisations? Because, of course, there's the Welsh Government and there's the National Assembly for Wales, as two separate organisations.

Not at all. I'm merely raising it at this stage because it is something that needs to be worked out within the terms of the remit letter.

Thank you, Chair. Thinking about the way that the commission will operate, how would you intend to harness the expertise of the commission's other members to add value to the arrangements that are already in place to make decisions on infrastructure.

Right. Well, at the moment, as you are well aware, the commission consists of me. Over the next six weeks or so, we will be interviewing the other 11 to bring it up to this full complement. Now, I'm very conscious that, actually, what you want is a range of expertise. There are internal dynamics that need to be worked out, because you are very conscious of putting together a team. Any of you that have been involved in team sports will know full well that, actually, a team does not consist of the best individuals; it's how a team gels together. And that is what I'll be attempting to do during this appointment system.

Having said that, of course, we will not be working in isolation. There are all kinds of players out there, like Ofwat, for instance, who are making major decisions on investments within the water industry; local authorities are there. But we will be working on a slightly different timescale to all those bodies. We'll be working in a five to 30-year timescale, which makes it slightly different, but I am very anxious that we keep a very close eye on what is already happening and what others intend to happen, even though they may be operating in a slightly shorter timescale than we will be operating in.

11:10

Okay. Clearly it's important to have a range of expertise on the commission, as you've said. That could also lead to differences of opinion and different areas of priority and so on. So, how would you overcome that, as you said, to work as a team, so that you can operate in a consensual manner to achieve the board's objectives? Could we be confident that, in order to do that, it wouldn't mean that you would not be looking for that wide range of voices on the commission?

Right, well, as I said, it's not only a case of assembling 11 experts; it's how those experts gel together. Now I'm—oh I'm going to be careful what I say here now. I'm not trying to sing my own praises, but very rarely—. No, I'll say it perfectly—. If we had a vote on the CCW, I would consider that to be a failure of chairmanship. I think that if you've got an organisation like that, then actually as much as possible you move by consensus, and consensus by its very nature means that some people have to give—in fact everybody has to give to a certain extent. But what is important is to keep the integrity of the organisation together.

Can I ask a supplementary on that, just to probe little bit further about consensual working? Does that mean that when you're choosing, if you were choosing 11 people, that you would be looking at people with a similar mindset?

No because dynamics don't work like that. I think it would be an act of cowardice to try to appoint people who you thought were going to be your yes-men. Successful bodies don't work on that basis. Successful bodies work on an internal tension that is manageable and becomes a positive force rather than a negative force. But, obviously, if you're going to make progress on anything, you have to have differences of opinion that are expressed openly and that everybody has their chance to explain and then you arrive at a consensus that hopefully everybody will stick to, because if everybody has an opportunity to argue their case, then that is how you arrive at a consensus.

Good morning, John. Could we just look at the role and remit of the NIC? The commission is being set up as a non-statutory body. Would it be a stronger and more independent body if it was placed on a statutory footing, as was actually recommended by this committee?

I read the recommendation and I read the Minister's response to it. The problem, as I understand it is that, to set up a statutory body, we would need primary legislation and therefore it would take more time. I think that what the Minister said was that it was his intention to set up the body initially as a non-statutory body and then to consider whether it should be a statutory body further down the line. I think that is an acceptable argument.

In reality, we'll be working within the political agenda and mindful of the Welsh Government's Acts and also the Welsh Assembly scrutiny process. So, to all purposes, I don't think it makes, at this stage, any difference at all in practical terms whether this is a statutory body or a non-statutory body, although I'm mindful of your reply as a committee to the consultation exercise. I think it's to do with the fact that the statutory bodies have greater legal protection. In other words, once they're set up, it takes more time and energy to get rid of them. Well, the way to get around that is to do the job in the first place so that people don't want to get rid of you.

11:15

With Government, obviously, we understand as politicians that more emphasis and more scope is given to a statutory body, or at least people take them more seriously quite often. So, I'm just wondering if you think that it's non-statutory and you're happy with that, what that means in terms of the perception that would give the public. I understand, obviously, that this has been co-ordinated as a Plaid Cymru and Labour budget deal, and my concern would be that we don't want it to be something that's short-lived and part of only a two-year budget thing—that it would be set up for the long term. So, do you envisage that it would be something long term, because my worry is that, if it's non-statutory, it may be something that could be expendable in the longer term?

Right. Well, at the moment, of course, we must remember that our remit at the moment is that we are a non-statutory advisory body to Government. So, our future is very much in the quality and the usefulness of advice that we give to Government. I would like to think that the decision is out of my hands, and in all probability it may well be out of my timescale that, if this body is successful, it does give useful evidence to Government, then it is in everybody's interest—the Welsh Assembly, the Welsh Government and the body's long-term interest—to turn it into a statutory body. But we are very much in a suck-it-and-see process at the moment.

One of the omissions identified with regard to your remit, John, by this committee, is the social infrastructure. At the moment it seems that you will only get involved with social infrastructure if there is an interaction with the economic and environmental infrastructure as well. What are your thoughts on that? Do you think the remit should be extended?

At the moment the remit is, as you know, on the economic and the environmental. Put those two together, in whatever context, it's bound to have a social impact, which you have to bear in mind, but in all honesty, I think our remit at the moment is enough of a challenge. Of course we will take into consideration social issues as well. The classic example of this, which we're all aware of: most families now are two-income families. You can devise an infrastructure for one partner, but if the other partner doesn't benefit in one way, then it is going to cause a problem. Just one example of all this, and I know it's a simple one, but the biggest diversification that ever happened in my farming life, which has crept completely underneath the wire, is that farmers' wives either now go out to work or they have on-farm income. When I first started coming home, they spent so much time feeding the workforce there was no time for them, but now even farm—. Farmers now: it's a two-income household in the majority of cases. So, you have to take that into account, of course you do.

Thank you. What do you understand is meant by the 'five ways of working' under the Well-being of Future Generations (Wales) Act?

Well, basically, it is to do with collaboration. It's to do with the fact that, very much, you're looking at the future generations and a new way of collaborative working. Yes, I'll look very carefully at that, and that has to be one of the mainstays of how we go about this job.

And what do you think the implications of the seven well-being goals are on the way we decide on infrastructure in the future?

That's difficult to say at this stage without having a very strong look at exactly what we want to look at. I have some ideas in mind of the various fields that we should be looking at. One is obviously artificial intelligence; the implications of that are quite wide ranging. We know that there is one certainty in the system, and that is an ageing population. What will be the infrastructure needs of an ageing population? Another would be, for instance, we're talking about ecosystem goods and services—a clunking, horrible phrase. What do we mean by that? How can we use the science to enhance natural systems? Because one of the things I'm very keen on is that, for too long, we've actually seen science as the cause of the problems rather than the cause of the solutions.

So, looking at those subjects, and looking at them within that context, is the way that I think we should be looking at this. But, again I stress, these are my initial individual thoughts; these are not the collective thoughts of the commission, because at the moment, the commission is kind of, well, 0.5 of me because I don't even know if I've been confirmed at this stage.

11:20

Have you read the future generations commissioner's challenge to the Government on the M4, and what do you think its implications are?

Well, the M4 is a decision that's already been made.

It's outside my remit at the moment. The remit is quite clear, it does not—

With respect, that's not my question. Have you read her challenge, and what do you think—

No, I haven't. Can you tell me what the challenge is, then?

Well, I would expect you to understand the nature of her challenge, given the job you're about to take on, because I think it's a fairly far-reaching judgment based on her interpretation of how the future generations Act applies to future infrastructure.

No. Remember, I applied for this job in April; I was told that I was the preferred candidate in the middle of May. There is a limit to the amount of background reading I can do up to this stage.

Let Mr Jones finish the answer. Mr Jones, do you want to finish your answer? Sorry.

Yes. So, there is a limit to the amount of background reading I can do at the moment. Obviously, in the run-up to the appointment system, and if my job is confirmed, then my reading load will go up exponentially.

This was her submission to the public inquiry in February last year, which I think, as I say, is a very significant interpretation of her understanding of what the Act means for infrastructure, and the way that different goals are weighed against the others. And her conclusion of the Government's decision to go ahead with the M4, which I appreciate is outside of your remit, was not based on a full understanding of the Act. You said earlier that when you were chair of CCW, it was your role to give sometimes uncomfortable advice, based on the science and the evidence.

So, let's put ourselves in a future scenario, where you're chair of the commission, and let's take the M4 out of it because, as you say, it's before your time. Let's say there's another road scheme, like the M4, for example. And in the case of the M4, Natural Resources Wales, the successor body to CCW, has objected to the public inquiry on the grounds they believe it's illegal in terms of habitat loss, and the future generations commissioner has objected on the grounds it's not legal because it's not in keeping with her interpretation of the Act. If you had two judgments like that from statutory consultees who say this is not legal, and our scientific advice, in the case of NRW, is that this should not proceed, how do you weigh that against pressure from the business-as-usual brigade to say that we should have economic growth?

Well, let's put it like this: the role of the commission would be to give advice to Government. If the evidence points directly that something shouldn't go ahead, that is the advice that we will give, but ours is not an executive decision. There is a difference between giving advice, which has to be based on the evidence, which has to be based on the science, but it doesn't of necessity mean that that advice will be accepted. Although, within the context of the infrastructure commission, as I understand it, if the advice is not accepted, then the Minister responsible will have to explain why they're not accepting that advice.

Yes, indeed. So, finally, what I'm trying to get at is what due regard will you give to the longer term decision making that the future generations Act framework has imposed on us and the need to tackle longer term trends, like climate change, versus the short-term pressure for economic growth. Where do you see the balance between those two things?

11:25

Well, I came across a very interesting question that actually was posed to the Minister by one of the consultees and it said, 'We would like to ask the Minister: what does he want—economic development or sustainable development?' And I thought, my goodness, we're back in a time warp here, because I thought that battle had already been won, that economic development is not sustainable unless it's sustainable development.

Can I just add another thing on this? Because you said about interpretation. As you know, I have been accepting contracts for the last eight years from the Infrastructure Planning Commission. We are dealing with a new Act—it's the 2008 Planning Act. We actually welcome—I know it's a strange thing to say—judicial reviews on decisions, because it clarifies the legal system. I'm a proud boaster saying that, in the Countryside Council for Wales, I only ever had one judicial review taken against me in 10 years. But, actually, now, on the Planning Inspectorate, we find that judicial reviews are extremely beneficial because they clarify the legal interpretations of the Act.

Thank you, Mr Jones. You've talked a little bit about the setting up of the organisation and the staffing, but what are your key priorities in the new role?

We have to get, within a set time frame, the commissioners appointed. And, excuse me, I'm not being presumptious by saying 'we'; I'm just clarifying the whole set-up.

We then have to have—you know, what's the staff complement, what's the budget, where's the location? Now, this is my own personal viewpoint, but I think that if you are setting up a body that is trying to co-ordinate or has an input from various sections of Government then you have to have it pretty close, in the initial stage, whatever, to where Government is, because that's how it's going to work properly. Because it is a big challenge. It's a big challenge even with the Welsh Assembly and Welsh Government that departments actually co-exist and work constructively together.

Get the organisation up and running as quickly as possible, get a settled budget, get settled commissioners, get the settled base in the first instance, and get to work.

And what should be the commission's priorities after that's been done?

Sorry, I didn't quite catch—?

What should be the commission's priorities after that piece of work has been done?

After that piece of work, to do a scoping study to—say, three months up to the beginning of the following year—'Right, let's have a real think about this. Where do you think are the subjects we could follow to add value, by looking at who's doing what, what's there already, where are the gaps, who do we need to talk to, how do we engage with the wider debate, how do we get the message over that we are there?' And, interestingly enough, again, I picked up from the consultation exercise that somebody said that it's very important that that exercise is not undertaken in order for the commission to justify its existence; it's there for people to know what it's about and how they can engage with it.

Thank you. Good morning. As you know very well, the needs and priorities of different parts of Wales can differ, sometimes significantly. How would you ensure that the commission engages with all parts of Wales, particularly on high-profile or controversial issues?

Right. Well, though I said it should be based close to where Government is, that does not mean that we are not engaging within the wider debate. I think it is very important that we engage with the various economic forums, that we engage with local authorities and that we engage with the private sector as well and that we also engage with other statutory bodies that have remits on their own infrastructure investments, like Ofwat. That is going to be a challenge, because, if we're going to get local authority reform over the next three or four years, they may well have an awful lot to think about themselves, without looking at the wider debate, but we have to be aware of that and to make the appropriate considerations and changes. In CCW, we operated a peripatetic role: our council meetings were held in different parts of Wales, and we had a whole series of local offices throughout all of Wales, though our headquarters were based in Bangor. Being based in Cardiff does not make you Cardiff centric. You have to be aware of all of Wales, and maybe the needs of rural Wales are slightly different to the needs of urban Wales, though some people say that's a bit of a fallacious argument, because it's very difficult. Where you are there is another thing that needs to be taken account, which is that lots of the infrastructure needs actually straddle the border between Wales and England, and we have to be very mindful of that as well.

11:30

In that context, how do you reconcile the national infrastructure role with local enterprise zones, with Swansea and Cardiff city deals, the north Wales growth deal, the north Wales growth board and then, alongside that, the Welsh Government's own growing regional economy agenda with local priorities and regional priorities focusing local minds and regional minds, but at the same time the need for interconnectivity within Wales and across the border?

If I told you that I had the solution to all of that, I'd be very suspicious if I were you. I think what needs to be at the moment is—I think the main role of a chairman should be to listen, and it's only by listening that you actually pick up these nuances, you pick out, sometimes, contradictions, different pulls in different directions, and, obviously, working with the National Infrastructure Commission and being very aware of what they are doing is going to be a very important part of this job as well.

If I can come back briefly, Lee referred to the well-being of future generations Act—that also requires local services to be designed and delivered with local people and communities, and often the wishes of local people and communities might not match with the priorities of Government or broader economic policy. What role can you or can the commission play in trying to reconcile those differences?

I don't think it's our job to reconcile them. I think it's our job to pick out the various strands and try to analyse what these various strands are. Obviously, you're going to get tensions between local needs and national needs. I'm very aware of that, because I spent nine years in a national park, and people would say, 'Well, this park is not national, it's owned by local people.' So, yes, there are always tensions there, but you've just got to work them out, and the best way to work them out is to actually listen to what people say, because, if you listen very carefully, sometimes the concerns they're expressing are not always the actual concerns. People are very good at dressing things up in a different way, and you actually need to get to, 'Right, what is the core of this problem?'

I'll give you a story just to explain all this. When we were implementing the habitats directive, I went to a small village called Crai in Brecon, and it was the night of the quarter-final of the European cup, with Manchester United playing. I thought, 'This is going to be a doddle; they'll be lucky to get about five or six people in there.' When I got to the village hall, there were over 200 people. Their concern wasn't at all about the fact that we were going to designate the upper reaches of the Usk as a special area of conservation. Their concern was that, historically, they had had the wrong end of the stick down the generations. They had lost their land: it had been taken via compulsory acquisition by the Forestry Commission, some of their land had been taken for reservoirs, some of their land had been taken for live firing ranges in the Sennybridge area, and some of the land had been used for burial grounds for foot and mouth. So, their concern was nothing about the SAC. Their concern was that, once again, as a community, they thought they were going to be picked on. That was the real cause of their concern.

11:35

We see that the job description will require within the role representation of the commission in the public and in the media, and, of course, we all know that media is changing. So what expertise would you be able to bring to that?

During my time with National Farmers Union, because it happened to coincide with the BSE scare, I spent a considerable amount of time doing media work, sometimes under complete stress. So, I'm used to that. I can't say I've been doing it a lot for the last few years, but there are some things that you never forget—how to deal with that. So, I'm confident in my ability, that I can deal with media. Social media, I think, will probably be a bit more of a challenge, but I've got younger daughters, so they'll help. But let's see. I'm well used to giving talks at conferences, representing CCW and NFU in national and Welsh conferences, so I've done that, and it wouldn't faze me at all to pick it up again.

Okay. And the other part, of course, is engaging with the public. I'd be interested to know who you see as the public.

Well, interestingly enough, looking at the appendix of who we should be consulting with, there was a list of people. Strangely enough, there was no mention—I would say this, wouldn't I—in the list of the NFU, the FUW, the Country Land and Business Association or any of the tourism marketing companies. The Ramblers were there, and the YHA were there—good bodies, nothing against them, but I just think: why this omission? So, the first thing to have a look at is, you know, 'Right, let's work out who we should be consulting with, and let's work out how to consult with them.'

Okay. If I can push this a bit further, you've mentioned what I would call the obvious consultees. I suppose what I'm really trying to get at is the consultees who might not be so obvious.

Yes, exactly. Exactly. One of the very strong consultees, of course, would be the private sector in its various guises, because you have to have a very clear understanding of how the private sector, how they, see their infrastructure needs. The difficulty about that is that they will tend to see their infrastructure needs within the immediate future, whereas of course we will be working within a five to 30-year timescale. So, there's a little bit of not only consulting here, but actually explaining the context of the consultation as well.

In that context, and I suspect this might be where you might have been going, what engagement do you believe would be necessary or essential with, for example, disability access groups or gender equality groups?

Well, I did refer to this in one of the opening questions. I said that one of the things that we know is going to happen is an ageing population, and the demands that the ageing population will make on the infrastructure. Now, that, again, you're going to get, as we all age—whether we like it or not, we are going to get more disabled. There is going to be a greater need for infrastructure that deals with people's disablement, and also a greater need, as much as possible, to keep an ageing population still active within its own community rather than increasing forever and a day the number of beds in hospitals. I think it's very difficult to underestimate the actual needs that there is going to be on society for the next 30 or 40 years. We need to be very aware of the problem, and, my goodness, we need to have some handle on the solutions as well.

11:40

And could that come from these groups—where, often, there is not only the expertise about what the barriers are, but also the recommendations on how best to tackle those barriers—disabled groups and other protected characteristic organisations?

Yes, but, and I say 'but'—the main remit of the commission would be to look at strategic thinking within the wider context of infrastructure. Lots of the problems that you're referring to actually could have local fixes that don't need a national infrastructure overlook at them. Again, I think it's something that we will be needing to explore—exactly what the breakdown is between solutions that can be fixed locally or solutions that need a wider remit within a Welsh context?

Can I ask Members: do any Members have any further questions? Bethan Sayed.

I wanted to ask a question. I heard what you said in relation to wanting to wait to set up the commission and to put forward priorities, but I didn't really hear if you had any ideas of your own in terms of what would be the first type of work that you would want to do in relation to the infrastructure commission. Could you give me an idea as to—you mentioned some things to do with health and disability, but what would be—?

I think what we need to be looking at is—when we're talking about artificial intelligence, that's a very generic thing, but what do we actually mean by that? One of the things I was talking about this morning with a relative of mine is that, within digital communications now, we like the innovation and we like the novelty, but are we giving sufficient weight to how robust and safe these systems are? The technology exists at the moment for you to operate your fridge from your mobile phone. Once the technology exists for you to operate your fridge from a mobile phone, unless that system is secure, the technology will exist to blow up your fridge as well. So, we'll need to have a look at the infrastructure needs: exactly what do we mean by artificial intelligence?

The other element is an ageing population. The other element may well be: we're talking in terms of waste management, but, hang on, what about waste retrieval? Why are we dumping lots of perfectly acceptable products because we haven't worked out a way of recycling them yet? Look at what's happening with plastics, which has actually crept up on us. Who was aware of all this? It took a David Attenborough film to raise people's consciousness of things like that. There must be instances out there of that type of society behavior that needs to be, not challenged, but quantified. By quantifying it, you can then work out, over a long-term basis, what the scale of the problem is and what the likely solution is.

With regard to energy, obviously, this week, we've heard discussions about the lagoon not being potentially chosen as a large-scale infrastructure project for Wales. What would you be doing in relation to those types of large-scale potential investments?

Well, if I am confirmed to this position—. I was likely to be one of the five examiners for the Wylfa project, because they have to have a five-man panel—or five-person panel, excuse me—one of whom it would be advantageous to be a Welsh speaker, which would be me. So, having seen the article in the Daily Post yesterday that the application has been submitted—all 41,000 pages of it—then I'd be extremely relieved if you'd just confirm my appointment to at least get me off that particular one. [Laughter.]

I was going to say that you wouldn't do that as well, because obviously that would be a massive conflict of interest if you were involved.

Heavens, no. I've already made it perfectly clear that, though the terms of employment is for five days a month—you know, we've all been in these public sector jobs, and, yes, five days a month is guidance. What I signed up to is to be paid for five days a month; what it actually entails will be considerably more than that. It doesn't bother me in the least.

11:45

There we are. I'll come to my last question, if no other Members have got questions. In that case, can I ask you, Mr Jones: how do you envisage the commission's working relationship with this committee developing?

I wouldn't expect any other answer. [Laughter.] And in the questionnaire that we sent, we asked you about the criteria that we should assess your performance against at the end of your term, and you answered, 'Progress made at the end of 12 months'. Can you expand on that at all?

Yes. I hope it wouldn't be 12 months from 11.45 a.m. on 7 July. I hope it would be a criterion of when the commission is actually set up and operating, probably after it's had a little bit of time to set up and work out exactly what its work stream should be. So, if the timetable that we have—the very loose timetable that we have in our heads about this—is that once the commission has actually worked out what it wants to do and it starts doing it, it will probably take us to 1 January; it's the 12 months from then.

Okay. Well, thank you, Mr Jones. Is there anything else you would like to add before you leave us?

Obviously, everybody who's ever been interviewed for any position, the first job they always ask is, 'How soon are you going to come to it?', or 'How soon are you going to make a recommendation to the Minister?', because the decision, of course, is in the hands of the Minister.

I'm pleased to answer that and say that our committee will be reporting tomorrow on the outcome of today's session.

Thank you very much for the very constructive way that all of you have conducted this particular bit of scrutiny. I do appreciate it. I have learnt from the process. I know now where some of my deficiencies are, and I will try to rectify it, and I will try to increase my workload and my scope and my reading so that, next time, with commissioners behind me, I can give a more valid corporate view. Diolch yn fawr.

We are very grateful for your time this morning. Thank you very much. Diolch yn fawr. 

6. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o weddill y cyfarfod
6. Motion under Standing Order 17.42 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.

If I move to item 6 and under Standing Order 17.42 I resolve that we exclude the public from the remainder of the meeting. Are Members content with that? Lovely. Thank you.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 11:47.

Motion agreed.

The public part of the meeting ended at 11:47.

Dysgu am Senedd Cymru