|Dai Lloyd AC|
|David Melding AC|
|Dawn Bowden AC|
|Gareth Bennett AC|
|Jayne Bryant AC|
|Joyce Watson AC|
|Mike Hedges AC||Cadeirydd y Pwyllgor|
|Simon Thomas AC|
|Francois Samuel||Llywodraeth Cymru|
|Griffin Carpenter||Sefydliad Economeg Newydd|
|New Economics Foundation|
|Kevin Hammet||Llywodraeth Cymru|
|Lesley Griffiths AC||Ysgrifennydd y Cabinet dros Ynni, Cynllunio a Materion Gwledig|
|Cabinet Secretary for Energy, Planning and Rural Affairs|
|Lisa Dobbins||Llywodraeth Cymru|
|Prys Davies||Llywodraeth Cymru|
|Rebecca Evans AC||Y Gweinidog Tai ac Adfywio|
|Minister for Housing and Regeneration|
|Yr Athro Richard Barnes||Prifysgol Hull|
|University of Hull|
|Marc Wyn Jones||Clerc|
|Martha Da Gama Howells||Ail Glerc|
|1. Cyflwyniad, ymddiheuriadau, dirprwyon a datgan buddiannau||1. Introductions, apologies, substitutions and declarations of interest|
|2. Ymchwiliad i dai carbon isel: yr her||2. Inquiry into Low Carbon Housing: the challenge|
|4. Papur(au) i'w nodi||4. Paper(s) to note|
|Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o'r cyfarfod||Motion under Standing Order 17.42 to resolve to exclude the public from the meeting|
|3. Ymchwiliad i effaith Brexit ar bysgodfeydd yng Nghymru: sesiwn ragarweiniol||3. Inquiry into the impact of Brexit on fisheries in Wales: introductory session|
|5. Cynnig o dan Reol Sefydlog 17.42 i benderfynu gwahardd y cyhoedd o'r cyfarfod ar gyfer eitem 6||5. Motion under Standing Order 17.42 to resolve to exclude the public from the meeting for item 6|
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 09:15.
The meeting began at 09:15.
Bore da, good morning. Can I welcome Members to the meeting? We've had no apologies and no substitutions. We are expecting people to be coming later. Can I ask people to set their mobile phones to silent and turn off any other electronic equipment that may interfere with broadcasting equipment? Are there any interests under Standing Orders? No.
This is a continuation of our inquiry into low-carbon housing: the challenge. Lesley Griffiths AM, Cabinet Secretary for Energy, Planning and Rural Affairs, and Rebecca Evans AM, Minister for Housing and Regeneration, can I welcome you both to the meeting? Can you introduce yourselves for the record and your officials? And then, do you wish to make any opening remarks, or can we move straight to questions?
I'm very happy to move straight to questions. I'm Lesley Griffiths. I'm the Cabinet Secretary for Energy, Planning and Rural Affairs.
Rebecca Evans, Minister for Housing and Regeneration.
Francois Samuel, head of building regulations.
Prys Davies, decarbonisation and energy policy.
Lisa Dobbins, head of housing decarbonisation.
And Kevin Hammet, working in the decarbonisation team.
I'm afraid you're going to have to decide who these questions are asked of rather than us trying to decide who to ask them of.
If I can start with the first question. How do you intend to leverage future funding in this area to deliver transformational change where innovative methods are being considered and discussed? And how are Arbed and Nest going to be funded after Brexit? How do we get more low-carbon houses? How are we going to get the money for it? And without the European money, what's going to fill that space?
Okay. It's very clear that, obviously, Welsh Government can't do this on its own, so it's very obvious that we need to leverage as much funding in as possible from the private sector. I think, also, we don't hold all the levers around this; some of the issues are obviously reserved, so it's up to the UK Government as well. We need to get as much funding from them as we can. We need to look at investors, and also individual householders. So, there are a variety of places where we can get that funding from.
I think one of the things you need to do to make sure that funding comes forward is make sure that there's trust in the system. People need to know that they can trust the measures that we are promoting and that they're appropriate. So, you'll probably be aware of the Each Home Counts review, which the UK Government are doing. I wrote to Claire Perry about this because we weren't involved in the review. I didn't have a particularly satisfactory letter, but, again, we can certainly pinch the evidence that comes forward from that review looking into industry standards. So, I think it's really important that we build that trust. We're doing it through Arbed and Nest as well. You mentioned that.
You ask about Arbed and Nest funding post Brexit, and whilst, of course, it's significant funding that we get from Europe—it's about £24 million—it's only about 20 per cent of the funding that I've committed to those two programmes. So, it's not as if we're relying wholly on European funding, but, of course, European funding post Brexit is a matter for the whole Government, right across Government, that causes concern, but you must remember that we were promised we wouldn't lose a penny. So, we're holding the UK Government to that.
If I could just add, from the perspective of social housing, all of our 222,000 social homes will be required to meet the Welsh housing quality standard by 2020, and that includes achieving an energy efficiency standard utilising the standard assessment procedure of 65 or higher. So, that's equivalent to a band D energy performance certificate rating. As you know, we invest over £100,000 in WHQS every year, in addition to the £500 million that is being invested by the landlords themselves. This work includes work on roofs, doors and windows, and installing energy-efficient boilers, for example, so improving the energy efficiency of those homes, and, as I say, all homes will reach that standard by 2020. I think at that point, or certainly before that point, there'll be a conversation to be had with registered social landlords in terms of how we further improve, and I know that some RSLs are already doing some quite innovative work looking at how they can retrofit their properties to bring them up to a much higher rating than D at the moment.
Thank you, Minister. Can I come back to an answer the Cabinet Secretary gave that it's only £20 million? I know a number of people, including several of us in here, keep on asking you for more money for Nest and Arbed, rather than less. So, a loss of £20 million, what would that mean in terms of how many fewer houses would be dealt with?
I wouldn't be able to work out the number, but I'll go back. What I was trying to say was, it was a smaller proportion of the funding—it's about 20 per cent. But, we were told we would not lose a penny, so we will continue to press the UK Government to make sure that we get every penny that we would have had, had we stayed in Europe.
Diolch yn fawr, Cadeirydd. Wrth gwrs, rydym ni yma fel rhan o'n hymchwiliad ni i dai carbon isel. Ac yn nhermau'r llwybr datgarboneiddio, mae Pwyllgor y Deyrnas Unedig ar Newid yn yr Hinsawdd yn awgrymu y bydd angen cyflwyno trydan a gwres carbon isel—
Thank you very much, Chair. Of course, we're here as part of our inquiry into low-carbon housing. And in terms of the decarbonisation pathway, the UK Committee on Climate Change suggests that we will need to roll out low-carbon electricity and heating—
Ocê—unrhywbeth i chi, Gweinidog. Llwybr datgarboneiddio. A ydy hynny'n dod drwodd?
Okay—anything for you, Minister. The decarbonisation pathway. Is that coming through?
Ocê. Jest i redeg ei fod o'n gweithio. Ar y llwybr datgarboneiddio. Mae hynny'n dod drwodd, ydy e?
Okay. Just to test that it's working. The decarbonisation pathway. Is that coming through?
Fel rydw i wedi ei esbonio eisoes i'r rhai oedd â chyfieithu, mae Pwyllgor y DU ar Newid yn yr Hinsawdd yn awgrymu y bydd angen cyflwyno trydan a gwres carbon isel ar raddfa fawr ymhell—
As I've explained already to those who had the interpretation service, the UK Committee on Climate Change is suggesting that there will be a need to roll out low-carbon electricity and heating on a large scale well before—
Jest yn dod i'r darn pwysig o'r cwestiwn—bob tro.
Just coming to the important part of the question—every time.
Ie, tri chynnig i Gymro/Cymraes, fel maen nhw'n ei ddweud. [Chwerthin.]
Fel rydw i wedi ei grybwyll eisoes, mae Pwyllgor y DU ar Newid yn yr Hinsawdd yn awgrymu y bydd angen cyflwyno trydan a gwres carbon isel ar raddfa fawr ymhell cyn 2050 os ydy Cymru'n mynd i gyflawni ei chyllidebau carbon. Felly, beth y mae Llywodraeth Cymru yn ei wneud o ran cyflwyno hyn ar raddfa fawr?
Yes, three tries for a Welshman, or Welsh lady, as it were. [Laughter.]
As I've already mentioned, the UK Committee on Climate Change is suggesting that there will be a need to roll out low-carbon electricity and heating on a large scale well before 2050 if Wales is going to meet its carbon budgets. So, what is the Welsh Government doing in terms of putting this into place on a large scale?
So, I took a paper to Cabinet last week, around our pathway to 2050, and how we'll get there with our carbon targets and with our carbon budgets. And, obviously, decarbonising our homes means there's going to have to be lots of changes in the infrastructure of the power and gas sector, the way we heat our homes, our retrofit delivery programmes, innovation, further regulation, enhanced standards—it's a very, very large package. I think we're doing a huge amount of work already in those areas, and we will be consulting on our pathway, and I think we'll get more ideas and more evidence and more science to give us further proposals.
In addition, Rebecca's brought forward the innovative housing programme, and the decarbonisation of existing homes, we're looking at how that can be achieved through that scheme also. I'll let Rebecca say a bit more about the IHP. But I think the UK CCC, certainly in the discussions I've had with the chair, recognise the importance of that programme.
I chair a cross-Government ministerial task and finish group around decarbonisation, and we had a presentation—and I may have mentioned it before in this committee—from Fabio Sferra, who works for Climate Analytics. I think his presentation was very stark, and he showed us that, if we want to achieve our targets, we are going to have to be significantly upping schemes, like Arbed and Nest, and our energy-efficiency programmes. So, whilst we think we're putting significant funding in—and I do think it is significant funding—we clearly need to up that in order to make sure that we do hit our targets.
I think the other thing that was a very stark lesson, and I think we all need to take this on board, is that whilst there's a very positive reaction to this agenda, one of the things he told us was that we need to be very careful that the houses we're building now, we won't need to retrofit 25 years down the line. Of course, technology is always changing, but it's really important that we get that right now.
Rwy'n sylweddoli bod yna gwestiynau eraill ar yr un thema, wedyn, cariwch ymlaen.
I realise that there are other question on the same theme, so, proceed.
Shall I add something on the innovative housing programme, because Lesley did refer to it? She's quite right that the UK Committee on Climate Change has actually encouraged the UK Government to take a similar approach in terms of innovative housing. Part of the purpose of that programme is to be able to increase supply, but also to speed up delivery and to do so in a way that recognises the importance of moving towards low-carbon and zero-carbon houses, or potentially even homes that produce energy. I know the committee's familiar with the homes as power stations project that is currently being delivered in Neath.
I'd just also add that this very much falls in with the work that we asked Lynn Pamment to chair as part of the review of the future of affordable housing here in Wales. We've asked that review to look at how we can increase the pace and scale of delivery and set even more stretching targets in the future, but then also to do so within the context of climate change and our responsibilities there, and taking all of the advantages of the kind of innovative programmes that I know the committee have heard about in the evidence that you've heard.
I'd like to follow up on this issue of scale, if that's possible and if you've finished, Dai. We've heard from Chris Jofeh of Arup that the retrofitting is going to have to be something like 40,000 homes a year if we're going to meet our 2050 climate reduction targets. Obviously, not all of that will be Government, but the social sector certainly would be, and even trying to get private householders to retrofit, there's probably going to have to be some sort of incentive—access to interest-free loans or some grant funding for the cost, as was done with boilers and that. So, what's your view of the scale that's required and how soon might we get to a level where we are retrofitting in that sort of quantity?
I think Chris is right. Obviously, Chris is chairing a group that Rebecca and I have set up to advise us. I've met with him and certainly I think his assessment is pretty accurate. I mentioned the presentation we had from Climate Analytics, which told us the same, but, equally, we have to work within our budget. But certainly, when I have my regular meetings with the Cabinet Secretary for Finance, he's very well aware of the pressure on this part of the portfolio and the need to do more. But, are we going to be able to do it immediately? No, I don't think we can, from a funding point of view alone.
I was going to just refer to the Welsh School of Architecture at Cardiff University, which is undertaking some research for us in terms of what's known to work in terms of retrofitting in all types of houses, because, as committee knows, what works in one type of house is completely inappropriate for another: some things will need to be delivered at the scale of a single house; other things could be done on street or community level. So, there are lots of different things that can be done—no one size will fit all. So, I think that work, which will be with us over the course of this summer, will help us identify more clearly the way forward in terms of retrofit. That research will be used by the decarbonisation advisory group, which Lesley referred to, to provide us with a programme of actions that can be taken by all stakeholders, including those owner-occupiers as well as by Government as well.
I think also, David, you make an important point: we will probably have to incentivise private landlords, so we need to look at how we do that—probably more financial than legislation, I would say.
I accept the huge challenges here—there's no simple, quick, easy and cheap answer, that's for sure, and it's also intergenerational. So, I just wonder how you're using the Well-being of Future Generations (Wales) Act 2015, because we need to plan for this 30-year programme now, don't we? And if we're not, in the next 10 years, retrofitting 40,000, we're going to have to make that up later in the programme. We need a long-term way of managing that, even if any sensible intergenerational plan will leave a lot of room for adaptation as you go along. So, are you thinking along those lines? Are you going to be bringing a long-term plan to us?
Yes, we're certainly looking at that and the Future Generations Commissioner for Wales and her office work with us on this. I know because representatives from the office on some of our advisory groups are certainly helping us with this. If you look at it, housing accounts for about 15 per cent of our emissions, so if we are going to reach our targets by 2050, it's certainly an area that we have to accelerate. You've quite rightly realised the challenges that we've got. But I think because there is this joined-up approach and because the majority of people—I'm sure you've seen this from the evidence you've taken—support this agenda, the will is there, hopefully. One of the officials said to me this morning that everybody wants to run, but it's about making sure that we get it right and perhaps taking a little bit longer to ensure that we get the plan. So, having that long terms plan that you referred to, up to 2050, I think, is really important.
Can I come in on the private rented sector, which David Melding just mentioned? We talk about the private rented sector in the same way as we talk about call centres, in that they're all the same, but the private rented sector is not all the same. You've got the high-end private rented sector, which has rents of £800, £1,000 and £1,200 a month, which is likely to deal with this without much of a problem because they want to increase their rent. But then we've got the bottom end. I think of the terraces in Plasmarl when I think of this, but I'm sure everybody can think of areas in their own constituency where there are lots of old houses that have been bought up by developers, often from many, many miles away, who rent them out at £450 or £500 a month. You're talking about retrofitting them; some of these houses would benefit if the windows fitted and they would benefit if there wasn't a continual draught through the door. What's going to be done about that bottom end of the market where very poor people are paying substantially more to make their houses cold than people in this room are paying to make their houses hot? What are you doing to actually support, incentivise, fund or whatever—or legislate—for those where they are major users of electricity and gas for generating heat? Most of it is being wasted outside, and very poor people are ending up paying a disproportionate amount of their income in order to make them warm. What can be done at that bottom end? I've got no problem with the top end—that will sort itself out, no different to owner occupation—but it's the bottom end I'm asking about.
We recognise that the majority of landlords in Wales are actually small landlords in the sense that they own and rent out one or two properties, potentially a home that has been left to them by a family member or their personal circumstances have changed and they decide to rent out their own property and so on. Whilst we do have several very large landlords with huge portfolios, mostly they are small, and that does mean that many of them don't have the kind of funding that they need to be investing in their properties. So, the Welsh Government has put in place a £40 million fund that is available to local authorities, which can then provide that funding to the private rented sector in order to either bring empty properties back into use or to bring homes that are substandard in the way that you've described up to standard in order to enable them to be rented. Also, we have shortly coming into force the 'homes fit for human habitation' part of the legislation, so you would hope that there wouldn't be the kind of desperately poor quality of housing that you might have referred to in your comments there. Certainly, I think there is more to do in terms of the private rented sector, and we're fortunate there because we do have levers with that sector in a way that perhaps we don't so directly with the owner-occupiers.
I'll just comment back on that. Yes, a number of these only own one or two properties, but many of them own one property because they've inherited a property that they can't sell because of its standard. The only way they can get money from it is by renting it out. These really are the places where we need to ensure that those properties are brought up to standard.
I think that fund that we have established is doing some of that work, alongside bringing empty homes back into use. I should have said as well this is a recyclable fund, so the money can be reinvested time after time in the same work.
Can I just say—? I'm sure colleagues are aware, but we don't have the powers to legislate around energy efficiency. We only promote it.
I know, because we wanted to bring that in in the housing Act that either you or Huw Lewis brought in before, and we were quite quickly told we couldn't do that. David.
I think the most challenging group to probably help, in terms of retrofitting, are those owning homes in the Valleys in particular. These are pre-1919 homes, largely, and they're often occupied by home owners who are on average or below-average income. Now, not for a moment do I think that a home owner in my position, on way above the average income, should have access to grants and to subsidised loans, but clearly there's a large group of people who own their properties but do not have a very large income. Now, if they were in the social sector, obviously, in any coherent policy, they would be covered, and I just wonder whether you have any thoughts, in this 30-year programme, on how we may get to that group.
Can I just add a tiny bit to what David said? A number of those are also disproportionately elderly and on a fixed income because they're elderly.
I don't think we've looked particularly at that group. But it is certainly something that we're going to have to do. I think you're right. If you look at that kind of middle—well, it's not even the middle, is it? It's people like pensioners who are on a fixed income.
I was just going to say, it's people in work who are also—. Because, obviously, Nest is means tested, so, again, you're targeting—. I personally think that is the right group for Nest to be targeting, but you're right, it's about looking at people who wouldn't fall in that category—how we help them. So, yes, certainly, if we are going to reach our targets, we're going to have to look at groups like that.
Just to reinforce that point, I think the particular focus of our interventions to date have been on the social housing side, and then from a fuel poverty angle. Going forward—and this is what we want this advisory group to look at—we know that we need to start to look at the able to pay, the private rented sector and, almost, the different segments they're in, to get a better idea of how we plan and go out from our current focus into these areas, if we're going to meet out targets. So, it's absolutely something that we need to look at.
Just to add to that, I think there are lessons that can be learnt from previous attempts at trying to assist owner-occupiers, particularly those that are asset rich but cash poor, and the example I give you there would be the Green Deal—the UK Government's Green Deal scheme. A significant amount of time, effort and investment went into a scheme that, unfortunately, wasn't successful. And there are barriers. But there have been lessons to learn for anything that the Welsh Government wishes to take forward. One of the barriers, not least, is that these home owners quite often feel they want to hand down their property to their children, to their family. So, the ideas of taking charges on a property for work is a barrier. It's not to say that effort shouldn't be put into it, but we do need to learn some lessons.
I think something that synthesises well with this is our house conditions survey, which is being undertaken. We should have the results by November, although we'll start to get some indicative findings coming through over the summer. And that will give us a really clear understanding of the quality of the homes and the scale of the challenge that we are facing, although I think instinctively we know that the news isn't going to be good—it's not going to be happy reading in terms of the work that needs to be done. Lisa's leading on some of that work.
The plan is—. We're doing the work with Cardiff University, which is actually looking at what types of action you need to take in relation to certain types of houses—whether it's solid wall or whatever. Then, when the data on the house condition survey comes through, we're going to undertake a separate piece of work, which is actually going to synthesise. So, what we'll actually have is an understanding about where the housing is that we have most problems with if you look across Wales and, therefore, what you then might do to those types of properties to actually sort the problems out, both in decarbonisation terms but also in quality terms. Because I think it's important that we do the two things together rather than have to do things separately.
This is a good place, hopefully, to ask how this might play out with private individuals, and home ownership in particular. Because as has already been intimated, it's a major investment for most people, and when they buy a home, they really don't have a lot of spare cash to do the extra work on it, which is why we're trying to close this gap. In what ways can you intervene and stimulate the market itself to prepare more of the higher quality, higher performing homes, really, and use market tools and, possibly, also, in time, Welsh Government tools like your own land transaction tax to make the market more attractive for the initial capital investment to buy these homes that perform better, rather than relying on a catch-up game, which is the situation that we're in at the moment?
I recently launched LENDERS, which is a new and very exciting way of people looking in terms of how to secure their mortgage. We do it through Help to Buy, and it's the only place that's doing it in the UK at the moment where people can look at what they think they can afford, but then take into account the energy performance of that home. So, by going for a home that has a better energy performance certificate, they're able to have a larger mortgage. That will hopefully stimulate thinking amongst people in terms of, 'What house shall I buy? Oh, I can have a larger mortgage if I go for an energy efficient home, because it recognises that my bills will be so much lower.' So, in terms of the customer, we're taking that kind of action. Then, stimulating the market otherwise to start building these kinds of homes, of course we have the innovative housing programme, and for the first time this year, we've opened it up now to the private sector, so they're able to bid for the innovative element of their programmes, to take out some of what I think they perceive as risk for them. I think it's particularly exciting for the SME sector, because they traditionally have been a sector that will embrace risk and take actions and routes that haven't necessarily been proven. So, it's an opportunity for them. This window shuts next week, doesn't it?
On 12 July.
On 12 July. I think we've already had plenty of interest, and we're expecting some really good programmes to be coming out of that. I hope that there will be at least one programme of scale, really, because our projects thus far have been quite small. So, we need to scale up now.
Can I also say—? Rebecca and I have set up the decarbonisation advisory group that's chaired by Chris Jofeh, and if you look at the people that you've taken evidence from in this inquiry, we've used a lot of those people on our advisory groups—you know, to grab the expertise. And that's one area we will be asking them to give us advice on, on what changes are going to be needed in the private market going forward.
I assume that's a ministerial advisory group, so giving advice to you as Ministers. Is it something that you might publish or release or make more widely available?
We could do. We're expecting them to give us some advice in probably about a year's time, but certainly, depending on restrictions, I don't see why we wouldn't be able to publish the findings.
Because that, in turn, might—. It sometimes is useful to give an indication of where the Government's thinking, because, as you say, some of the more innovative sectors might be looking to come to you with plans. They might ask, 'Well, I can do this; can you help me with this?'
That's right, and I think it will be beneficial. Rebecca and I meet regularly with the Home Builders Federation, for instance, so I think it would be information that we could share with them also.
Just to go back to the point about Help to Buy and lending, because as you, I think, hinted at, there's a gap sometimes between what the lenders are prepared to lend, either because the house itself is a little bit perceived as risky—though it wouldn't necessarily be so, because after a period of time it would probably be cheaper to run—but either because of that perceived risk, or because the purchaser is asking for a little bit more than the lender would normally look to lend to them, because they're looking at this long-term cost. So, as well as your own scheme, are you having discussions with lenders about how they may change their attitude towards lending in this way?
We are, and we're particularly looking at how we can encourage them to take a more positive approach to lending on off-site manufactured homes, for example, and timber-framed homes. Many of them are being positive, especially in the RSL sector, where they lend on the portfolio of properties, rather than on individual properties. So, they're taking what they're learning from lending on portfolios and understanding the risks there, and then moving more towards being able to lend elsewhere.
Because even in the private sector—. We've had evidence from Scotland that timber-frame is much more popular in Scotland than it is in Wales for some reason, and yet we have timber, and we have, hopefully, the skills to do it. Is that something that you, working with the advisory group, can possibly ramp up a little bit in Wales? Because I think you're missing a bit of a trick there.
Officials are in regular contact with the lenders, mortgage providers and so on, having these discussions about innovative housing and how we can get to a more positive place in terms of ensuring that people are able to access mortgages for those properties. That's ongoing work and it's very alive at the moment.
Yes, it does. Thank you, Chair. Sorry I'm late; I was stuck in traffic on the A470. Anyway, here we are. I just wanted to ask a couple of questions around delivering new homes at scale, and whether you could expand on the benefits and perhaps the drawbacks of off-site manufacture.
Off-site manufacturing has huge potential for us. We are, as I say, funding many of those projects already through the innovative housing programme, and we would expect to be doing more in future. Some of the benefits include the fact that you can do this in all weathers because you're in a factory environment. One of the challenges, though, is that it does require a different set of skills to be working in that environment as well. So, there's work going on, I know, with the skills sector to ensure that we are able to meet those challenges as well. So, there is a mixture of benefits and challenges that we have yet to deal with.
So, to what extent, in terms of what you're aware of, is that being embraced by the private sector? Are we ready for mass roll-out on this sort of thing or is it still very much that they are looking at and thinking about it?
The volume house builders still, I would say, are largely of the mindset of building the kind of houses that they've always built and the kind of houses that, for the large part, the market wants them to build in terms of what consumers expectations are. I think there's lots to do with consumers in terms of opening up people's eyes to the potential of off-site manufacturing, of timber frame homes—all of these things—and the benefits these can bring them in terms of energy efficiency of homes, but there's lots of work to do with the volume house builders, I think. I can see Francois is dying to come in on this.
Not dying, but thank you, Minister. [Laughter.] Just to add to that, that's our perception, really, of the traditional volume house builders—that they've yet to take to off-site manufacture with any vigour, but what we are seeing is new players entering the market. So, for example, Legal & General have established factories in Leeds aimed at volume production of off-site manufacture. So, I think there may be other organisations spotting the business opportunity in a way that perhaps the national house builders haven't yet.
Yes, and it may take them to start it before others will pick it up. Yes, I can see that.
Can I just move on, then, to the Cabinet Secretary's and the Minister's paper, which says that Welsh Government will have a clear vision of the models it wants to support for social and affordable homes by March 2019. Can you give an early indication of what your thinking is around this?
So, our way forward, we think, will be determined by several important pieces of work, one of which is the innovative housing programme. So, we'll be having independent assessment of the projects that we have supported, in addition to the quarterly reporting that we already have back and the close relationship we have with each of the projects that we've supported thus far. We hope that some of the projects that we'll be agreeing in the second tranche will be actually learning from the first set of projects and then taking them to the next level. So, I think there will be lots there in terms of pointing us in that direction moving forward as well. And alongside that, of course, is the housing review, which is being led with specific focus on affordable housing and social housing. But I think there will be plenty to learn from that in terms of the market housing as well. So, taking all of those things together alongside the house condition survey and all the other pieces of work that we have ongoing at the moment, I think will start to give us a good idea of the kind of projects we want to support in future.
So, although the innovative housing programme has supported a huge range of different programmes, actually the point there is that we can start to narrow it down to say that there are potentially two, three or four different kinds of projects where we say, 'Well, these really work for Wales. These are the things now that we can scale up.'
Okay. Sorry, I don't know whether Francois wanted to say something because you were looking at—
No, no, sorry. I was listening with interest. [Laughter.]
I've got one or two things to say on building homes to scale and off-site manufacture and just the ambition and enterprise, really, in the house building vision. I think everyone who looks at this—and reflecting on the last 40 years or so, both the major parties of state have been in office for fair chunks of that time, so I am not making a partisan point, but I think we have to conclude that the market has not succeeded in delivering appropriate levels of scale to meet housing need. That's my view. I was just looking yesterday at the historical figures for house building, and in 1954 we built over 19,000 homes in Wales, most of them social homes. So, the Government has had a big part to play sometimes in driving the market, but in the 1960s we were building 15,000 homes a year, and we even reached that figure sometimes in the 1970s. So, I think we do need to have some idea of where you stand with the Holmans report and the basic recommendation there—although it's called an alternative prediction, but I think, let's face it, it was a recommendation—that we should set the target at something around 12,000 and, again, as I referred to retrofitting earlier, I could see that in the long-term programmes. I wouldn’t say, 'Ah, you're not building 12,000 by 2020 or something', but by the mid-2020s, I think we have to have some idea where we're getting to, and therefore the sort of ambition we could be trying to see in terms of the new types of manufacture, which, of course, were used in the 1950s quite extensively also.
So, in terms of understanding housing need, Members will have yesterday had a list of the sub-groups and the work streams that will be sitting underneath the housing review, to inform us ahead of the debate that we'll be having on housing in the Plenary session next week. One of those work streams is indeed understanding housing need, so looking at the previous report, looking at current figures, current trajectories, expectations and so on, to try and update those figures in terms of understanding what the housing need is for the future.
Well, I look forward to that more substantive response next week, then.
Can I just make a supplementary to that, David, because I think you're absolutely right? In the 1950s and the 1960s there was large-scale house building, but a substantial amount of that was council house building, which you particularly alluded to, David. The drop-off for council house building in the mid-1970s is where the drop-off for house building took place. Is there any intention to try and go back to large-scale council house building? We've got some small developments of 20 or 30. That's not 1960s and 1950s council development; 1950s and 1960s council development were in the hundreds or in the thousands.
So, one of the pieces of work that we pledged to do in 'Prosperity for All: the national strategy' is to work alongside councils to get local authorities building again at scale and pace, which we haven’t seen, as you say, for many years. So, one way in which we could do that is through work on the borrowing cap, and we're in discussion with the Treasury in terms of raising the borrowing cap. We would prefer to see the borrowing cap removed, but we are working in terms of increasing that borrowing cap for local authorities in Wales. But also, we have, I believe, around £17 million unallocated in that borrowing cap at the moment as well, so we're looking to see how we can fairly distribute that in a way that does allow local authorities who are ready, willing and able to build to carry on doing so.
Yes, and I completely agree. If the market is not providing or meeting the level of need, then we're going to need to see more Government intervention by way of either directly allowing councils to build homes—I have no difficulty with that, particularly, but it's not terribly common in European countries to do it that way, and they use different co-operative and housing association models, but, clearly, we’ve got to do something. I think, if the Welsh Government were to set a long-term target that has to fall somewhere between 12,000 and even 15,000, sometimes to sort of start to catch up, I think you’d find there’s a substantial consensus for that. At least if we get a realistic assessment of need, we can all then start to work towards it and leave some of the asperity behind, and who's been building what, and our current levels—I won't rehearse those.
Anyway, if that is going to be the direction of travel, and, obviously, in terms of the standard—and we don’t want to have to retrofit these homes in 20 or 30 years—and reflecting on past building trends, when we were building at real scale, the small and medium-sized enterprise sector was really important. It seems to me that we're going to have to see that again, because the large house builders—we don’t want them to get even larger, and I just do not think they have the ability to respond in a more community setting, on smaller sites, and with the sort of flexibility that we need. It also fits into the concept of the foundational economy, and building is just a fantastic economic activity for local communities; it retains an awful lot of the wealth generated within that community. Anyway, do you want to update us on any progress with the construction alignment group that you are proposing for the SME developers? Who is going to sit on that?
Okay, I'll just start by going back to something that you said. I know that you've got a strong interest in co-operatives, and I certainly share that interest as well. Welsh Government has provided ongoing funding to the Wales Co-operative Centre to work with RSLs and others who are interested in setting up co-operatives. So, we have some really good projects already taking place at the moment and some really good resources for people who are trying to consider whether a co-operative would be right for them.
One of the issues is that it does require lots of hard work and heavy lifting at the start, but, actually, the benefits, when you start to realise that you are really building communities, not just houses, are really, really there to be seen as well. So, we are doing lots of work in that particular area, which I think is really exciting.
You mentioned SMEs, Welsh Government recently held an event for SMEs in the housing sector in Llanelli, and it was there I was able to launch the £40 million stalled sites fund. That's a fund that will be of particular interest to SMEs that can access funding to unlock sites that they would like to build on, which have stalled for whatever reason. It could be cash flow for the business, because we know that that's a big issue in terms of where cash flow lies in those particular projects for them, but also it could be about remediation that might be needed on the plot of land as well to make it a viable project. So, that fund was really well received, and, again, that's recyclable funding over the 15-year period of that programme.
That sits alongside the property development fund, which started off as a £10 million fund, but was so well received by small businesses in particular that it's a £30 million fund now, and, again, that is to allow SMEs access to relatively easy finance to start building homes. It's a popular project that I think is making a difference in terms of the number of houses that we are able to build.
And then the construction alignment group? You've announced it—is it up and running yet? Who is on it?
It was announced by our colleague Ken Skates, the Cabinet Secretary for Economy and Transport. It's a group of officials right across Government. I don't know if any of our officials here sit on it.
So, it's up and running. Obviously, it's a resource for all Ministers, but it was set up by Ken. Francois is on it—I don't know if you want to say any more.
Yes, Minister. Thank you. It's a group that's intended to sort of ensure that all departments of the Welsh Government involved in construction are aware of developing policies, programmes and activities. The term 'silo working' is bandied about occasionally, and perhaps that's one of its objectives. But it's essentially a communication and engagement mechanism to ensure that, as I say, all departments are aware, and consulted and engaged with on various policy and programme developments.
So, how is it going to fit into other programmes like the Valleys taskforce, for instance, and other areas of Government activity to ensure that house building and retrofitting is seen as a vital part of that and the policy behind that, skills development, SME encouragement—? How is that going to work?
Well, I would imagine that those sort of topics would be brought to the group. The agenda is developed for each meeting of particular relevant topics of interest or activity that's going on. So, the things you talk about would be legitimate subjects for discussion.
And, as you say, it's more to communicate and know what's going on, rather than bring forward proposals that lead to more integrated policy development. Is that right?
No. If it's to tackle silo working, it is about ensuring that there is co-ordinated activity and supportive activity for various policies.
It's about developing policy. But one area I know that we've asked the group to look at is in relation to timber building as well, so that just picks up the point that Simon Thomas made before.
Will you be making any statements on the recommendations of the group, then? Because I generally think it's a good thing to do and we would like to scrutinise it a bit and encourage it.
Well, we'll certainly speak to Ken Skates about it. Perhaps we can send you a note, Chair, on the way that's going forward.
Chair, can I suggest the point of the Valleys taskforce? We recognise the important role that housing plays in helping people in the Valleys to achieve those things they've set out—better jobs closer to home, skills to do them, and their community, and so on. So, that's one of the reasons that I sit on the Valleys taskforce now, because housing plays such an important role there.
At our last meeting, we had a really exciting presentation from Rhondda Cynon Taf and Welsh Government officials on a piece of work that we're doing together to develop plot shops for house building to support the self-build and custom build sectors. This is about local authorities identifying plots of land that are ready to be built on, so that they would be offered up on the basis of them being ready, so they would have had all the planning permissions already undertaken. Prospective buyers would then be able to choose a home from a pattern book, so you just need to give that to your builder with the choice of pattern of which house you want to build, so making it as easy as possible for people to custom build and self-build in the Valleys, and also to use those infill sites that haven't been built on for whatever reason. So, that's a really exciting piece of work. It's currently still in development but shows huge potential.
Can I come in on this? It's not just the Valleys. The local development plan looks at sites of 10 or more houses, doesn't it? There are a lot of sites that small builders want that would build one or two houses on the infill sites that you identify. You're talking about doing it in the Valleys? [Inaudible.] that the Cabinet Secretary here. How about asking local authorities to identify sites that are not part of the local development plan but which are suitable either for self-build or for infill? We can all think of areas near where we live where there's a gap where one or two houses could quite happily be built, and would actually be of benefit to the community if only because it would cut down on anti-social behaviour there—so, actually identifying some of these sites that would benefit self-builders and small builders. A lot of the very small builders build one, two houses at a time, then move on to the next one. A site of eight houses is far too big for the small builder, but one or two—build it, sell it and move on to the next two. There are a lot of small builders that could actually generate an awful lot of houses.
Yes, that's an area we're looking at, and I was going to pick up on a point that David Melding raised about SMEs. Having been in the housing portfolio in a previous life, they're a very important part of us delivering on our targets—the 20,000 affordable homes target, which I was, actually, the one who kind of set but Rebecca's now taking forward. I think the point you're making, Chair, around these very small plots of land and looking at LDPs, because you'll be aware—. We've now got pretty good coverage of LDPs right across Wales out of the 22; I think we're up to about 17 now. There are a few that still need to be looked at, but I think these very small plots of land will help outside of the LDP, so it's a piece of work we're doing at the moment with local authorities.
We've talked about innovation. I want to talk about skills, and I want, if you will, an expansion on how you expect the regional skills partnership to take forward the work of responding to the challenge of the skills and knowledge gaps.
Obviously, skills are very important in relation to this agenda. The regional skills partnerships are absolutely at the centre of our Welsh skills policy. I know the Welsh Government works very closely with the three RSPs so that we can identify and address key employability and skills needs right across Wales. The Construction Industry Training Board give us a lot of intelligence around the labour market. That then provides clarity to the RSPs on the future skills that are required and, obviously, the training that the sector would need.
I think it's fair to say that there are skills and gaps around the energy performance. So, we really do need to address those, and that's a piece of work that we're looking at. Obviously, I'm very happy, and Rebecca the same, to work with Eluned Morgan around this part of the agenda.
If I can, Chair, without the skills—. We know that the average age of a person in the building industry at the moment is over 50. So, you're talking about 10 years' time that we could have a real shortage of people working in this industry. And that could be further compounded, because if you break down who is actually in the industry, considerable amounts of those are currently from the European Union and have access as free movement through that. So, we could be hit with a double whammy anytime soon, in losing the people we have and access to meet further needs from that ageing population.
So, the question has to be: how ready are we? What preparations are we making, because we will never ever succeed in delivering innovation if people haven't got the skills?
There are two parts to that question. So, looking firstly at an ageing workforce in the construction industry, it's really important that you make it attractive so that young people come forward. When I was a teenager, an apprenticeship was something that was very sought-after. That then went away, but we've brought that back in now. And I think, certainly, in this sector, when you're looking at skills gaps, you can work with FE colleges for instance to bring forward apprenticeships. I remember when I was the Deputy Minister for skills, looking at solar panels was an area where it was identified as a gap for electricians, so they added a module. So, it's important that you work with colleges, for instance, to get at those skill gaps.
The second point around EU nationals, you'll appreciate, in my portfolio, and not just in this area, that's a massive issue for me. So, certainly, I'm working with my UK counterparts; I'm in London tomorrow for meetings around the agriculture and fisheries part of the portfolio. However, it's the same right across many sectors who rely on EU nationals and, unfortunately, we are seeing a drop already in the number of people who are coming here looking for work. So, in relation to readiness, that's a huge piece of work right across Government—myself, the Cabinet Secretary for Finance, the First Minister, we're always speaking to our counterparts around the workforce to make sure that we've got that free movement of people that are going to be needed in so many areas of work in Wales.
But if I can, if we're going to look at—and we will be—delivering housing manufacturing in a different way, and possibly in factory settings, then, we clearly have an opportunity that I feel we ought to take, and that is in educating our young people at this stage about the reality of construction rather than the perceived image that is currently out there. I know they might not be in your portfolio, but you did mention the construction alignment group that Francois sits on. Are those discussions taking place now, well ahead of the game? And, in terms of within the training colleges, are new technologies being invested in to make sure that we are ready to deliver on scale the numbers of houses and the types of houses with a skilled workforce?
There are two challenges there, in the sense that we don't yet know the type of house we'll want to put all our efforts into in the future, but perhaps it would be useful if we asked Eluned Morgan to provide committee with a bit more of a detailed note as to the work that's going on in terms of promoting careers in construction and addressing the other concerns that have been raised.
And if I can have a final question, because we are the environment committee as well: if we're going to build different types of houses, and we're going to be building them with different types of materials and meeting our obligations under the future generations Act, are we going to be very mindful of where we're sourcing our materials from, particularly if we move more towards building with wood, perhaps, and that we're not displacing people from somewhere but we are actually sourcing these materials from sustainable woodlands in this country?
Hannah Blythyn recently made an announcement on the forestry strategy, and in her statement she did recognise the importance of ensuring that we do have supplies of timber for Welsh-build housing. I recently attended the wood build conference, and spoke there as well, and met with Confor, actually, to have discussions as to what more we can be doing to use Welsh timber. I think there's a bit of a myth that Welsh timber isn't up to the job of house building, but actually there's some good work going on at the University of South Wales, Bangor University and elsewhere to explore how Welsh wood could potentially be treated to bring it up to the kind of standard that might be needed in terms of supporting house building in the future. I know this is something that our innovative housing programme is looking at as well. I don't know whether Lisa has got something to add to that.
Yes. Last year, we actually funded—I can't remember exactly off the top of my head how many schemes—several schemes that are actually using Welsh timber, as part of that trial about how we address some of the challenges. So, for example, the active homes Neath scheme, which has already been referred to, which is building out some of the issues from SOLCER, is also looking at local timber. I think Members are probably familiar with the Tŷ Solar project down in Pembrokeshire, and there have been further schemes built around that. So, it's very much trying to put policy into action and learning what the issues are.
I think there's a challenge of supply though. I think that we all recognise that the supply that we need, in the kind of volumes that we need, isn't there at the moment. I know discussions are going on in terms of the future of the industry, which Lesley and Hannah are involved in.
And just finally, if you will, Chair, if we're talking about reducing our carbon footprint, and we're talking about doing that in our own homes, the starting point is in the build. So if we're importing—and I really seriously hope we're not—that wood or material, we're actually adding to the carbon footprint in the first place, before we even start. And I just want to put that on the table, as much as anything—when we're considering reducing our carbon footprint, that we're really considering every single aspect of that build.
I think that we do have to look at it holistically, but it certainly is the case that a lot of timber is imported at the moment, because that's seen as the kind of quality, and it's reliable in terms of always being available, whereas it's less so, I think, currently in Wales, although I know that there is a desire to much improve the situation.
Thank you, Chair. I just wanted to talk about building regulations. There's a difference of opinion as to whether a change in building regulations is required to support a transition to more energy-efficient housing, and we've had some evidence in this committee that regulatory change will force developers and house builders out of the Welsh market and focus on England. What is your assessment of that?
If I had a pound for every time I was told this—and, representing a border constituency, I get it a lot. I think we have to recognise that house building costs are influenced by a number of factors. So, you've got land prices, you've got planning conditions, and, of course, building regulations are part of that picture too. We are having a review of Part L building regulations, and this is something that we'll look at, and the consultation proposals will of course be accompanied by an impact assessment—and certainly look at the evidence you've had. For us to have better housing performance in Wales is something I think we should aspire to. I don't think it should be seen as an obstacle; I think it's a real opportunity. I don't know whether you picked up, Chair, last week, that Lord Deben—John Selwyn Gummer—who is Chair of the Committee on Climate Change, said,
'Energy efficiency is a social issue. No house should be built to condemn people in the future to having to pay a great deal for their energy',
which I thought was really pertinent. So, I think this is a real opportunity. So, whilst I accept there is a range of views, I'm very happy with the way that we're going, and I think it's really important we have that review of Part L.
You mention the review of Part L and you've stated in the paper that the way we manage competing priorities is going to be critical to delivering improvements to the building regulations. Does that mean that Part L changes could be diluted or delayed?
That's certainly not the intention; we have to manage competing demands—that's the role of being a Minister, really. We've obviously got work coming out of the Hackett report following Grenfell and that's given us—again, it's a huge challenge for officials. So, at the moment, I'm recruiting in the team so that we can get Part L reviewed. Because I've been trying to get Part L reviewed going on for about a year now, so we are looking at our capacity in order to do that, because, clearly, the Hackett report is also—whilst it's not our report, there's a huge amount of work involved in that too.
Just finally, how would you respond to the recommendation that building regulations should be changed so that all new houses in Wales should be built to Passivhaus standards?
Certainly, Passivhaus represents a way of achieving very low-energy demand and emissions. I think the examples of what a tightly controlled quality assurance approach can deliver are absolutely growing. I think that that part—you know, we are taking people with us. It's not just about housing; I think it's also around public sector buildings, schools and other non-residential buildings. I think the question is: how well prepared is the building industry in relation to that? That's a conversation that we'll both have with the Home Builders Federation. I think it's fair to say that the sector has had its fair share of criticism in this area and they do recognise that they need to have a different approach and their track record of being able to change course is not always as good as it should be. I think it's fair to say that we both want to see a step change in that, going forward. And I go back to the Hackett report—I think that Dame Judith Hackett's report said that what's designed is not always what's built, and I think that's a really big lesson.
I would add as well that Passivhaus is one way of achieving low-energy and carbon-efficient homes, but, actually, there are other kinds of models that we are exploring at the moment. The innovative housing programme does support a number of Passivhaus models, but as a suite of projects that we're looking at.
I suppose it goes back to what I was saying right at the beginning with the presentation we had from Climate Analytics. It's about making sure that we're not building houses now that, in 20 or 25 years, we will need to retrofit. It's about getting it right.
Can I just add to that as well? One of the important things about the innovative housing programme is that all the schemes that are funded—it's done on a completely open-book basis. So, actually what it means is that we really get to understand what the costs are of building those individual types of homes. Under IHP, we're also building, as the Minister says, five different models of Passivhaus, some of which are strict Passivhaus schemes, but some of which are variations on them—again, to understand the issues and the challenges and the costs and all the rest of it. So, I think the open-book costing is going to be really valuable in finding out whether and challenging, actually, whether there is a truth about 'this type of housing costs more to build' and why.
Yes. The Cabinet Secretary just made the point that what is designed is not always what is built, and you made that point in the context of, particularly, innovative housing, but I'm much more concerned about the fact that we're not even building housing—our standard homes, if you like—to the standards they're supposed to be built to. There's increasing evidence that building regulations have been captured by the industry and inspection is not up to standard, running everything from Grenfell across the piece, really. So, there's—. Well, first of all, do you share my concerns that perhaps we're not rigorous enough, even in our just general building regulations at the moment—that they're not being built to standard—and, if you do share those concerns, how do you ensure that (a) we have a more rigorous and independent building inspection regime, and (b) that that is then sufficiently skilled to deal with the new challenges, which are the challenges of climate? We talked a lot about heating homes in this context, but I think, today, we think about homes that are designed not to survive some warmer summers that we're having, particularly city homes and flats and things like that—we're simply not designing for this; we just retrofit air-conditioning in. So, there are a whole range of issues there, but the central issue of building regulations: independent enough, rigorous enough?
At the beginning of the session, I was talking about building trust in the system and how important it is that, if we are going to encourage particularly private home owners to engage in this agenda, it's really important that they trust what we are advising as Government, and obviously the sector. I think we've got very high standards. You'll be aware we've got the Part L review and always building regulations are being monitored. I think what Judith Hackett said is correct and I think, certainly around energy performance, it's very pertinent. So, monitoring is done, obviously, at local authority level. I'm going to ask Francois to come in.
Okay, yes. Thank you, Minister—
Just to add, we've had evidence that even current energy standards are not being met. That's the point that—.
And we'd agree with that. That's the sort of evidence that we're seeing. What Hackett has done is shine a light on a system that she says is broken. She's particularly concerned about high-risk buildings and fire safety, but the read-across to every other part of the building regulations is equally relevant. The Minister for housing, in her statement in response to the Hackett final report, committed to bringing forward actions towards the end of the year. One of the things I think we'll want to look at in Wales is whether we deal purely with fire safety or whether there are in fact general benefits that might be made to the system to improve its robustness. So, that is something we'd want to look at.
Just to ask: is that something that the cross-departmental team that you were talking about earlier—is that something that might come across that working party or whatever the—?
All review work that we do with the building regulations engages with every department in Welsh Government that's involved in construction investment, particularly.
Just to add one other point on this quality issue from a retrofit perspective as well, for the new Arbed and Nest schemes, we're also in the process of procuring an independent quality and audit agency to independently check the work that is being done by contractors. That is something that we can actively control and assess ourselves, but once it goes beyond that point then we're into an area where we have fewer levers as a Government. But we need to understand how we can influence others, including the UK Government, to have the appropriate level of assessment and checking of quality.
We've certainly had some shoddy retrofitting by energy companies just to meet their targets and they've left some homes in a very poor situation. I'm not saying the Welsh Government's schemes—I mean other schemes that I'm aware of.
Yes. Just to look at it from the other perspective then, in terms of—. Because we've talked about ensuring that we're meeting the standards, but then who sets these standards? You're talking about review of Part L, but a lot of the discussion and the very fact that we're using the German word 'Passivhaus' shows that a lot of this is done—. Or it might be Dutch, I don't know; it sounds German.
It's Indo-European. But the very fact we're using it shows a lot of this thinking does happen at a European level; a lot of the standards are set at a European level. Sometimes, they're not quite right for us in our climate, which is why you've got to experiment with some of these. I understand that. But there's a lot of drive that comes at that European level. Now, obviously, we have touched on Brexit, but we're leaving the European Union—how do we ensure that the standards we are setting here are keeping pace with the best technology, the best thinking and so forth? Have you got anything in train to ensure that that continues, in whichever shape or form we leave the European Union?
Well, our decarbonisation group, which is going to advise us on the retrofitting programme and so on, certainly is looking at not just what works here but what works internationally. I'm sure that in due course we'll have to be ensuring that we do keep up to date and in step, where we need to, with developments across Europe and always looking to the best quality, the best reassurance and regulations and so on.
Because the Commission will be setting new standards shortly, I understand, on energy efficiency, not just in homes but also buildings more generally, which is perhaps something that we haven't— well, to be fair this inquiry is about homes, but it's something that we haven't really talked about a lot in Wales. But there's a lot of thinking going on about sustainable cities at the European level and designing whole buildings and whole street schemes that work together in unity and this sort of thing, and it's—. We just don't have that kind of level of discussion very often. To be fair, one or two people do.
Thank you. I'll treat that like you treat most of the things I say in Finance Committee, as a statement rather than a question.
Fair enough. [Laughter.] We're here to make statements sometimes as well.
I think it's a very pertinent point, and we want to make sure we don't lose that expertise that we get right across Government, really. It is going to be a gap, definitely, that we're going to have to fill.
Can I just add something to that? The Brexit negotiations are, obviously, continuing at the moment. The position of the UK Government and the devolved administrations is that we are currently implementing directives that are required to be brought in. Recently, there was a revision to the energy performance in buildings directive last month, which has brought in new requirements about standards, about things like primary energy. We will be transposing them as part of this Part L review. Once we're out of Europe, there is nothing to prevent the Welsh Government—because we're talking about a devolved matter here—from setting standards with reference to intelligence that it gains from Europe. As far as the standards are concerned—and these are the European standards that we utilise in our standards—BSI, the British Standards Institution, is very clear, and the Construction Products Association is very clear, that we should remain part of that. So, the drive is—. Because they need to sell products in Europe and, likewise, we want the common systems of measurement here. So, I think you'll find that that will continue past Brexit.
Thanks. The question's to do with land transaction tax. We know there's work going on relating to potential relief schemes. Could you give us any more information on that and also about the time frame for that work?
The initial work to consider whether there is a need for a tax-based intervention to complement the existing levers concluded there probably was a likely case for further action in order to drive residential energy-efficiency improvements, particularly in the able-to-pay sector. But we've decided that, really, we need to have more targeted grants in the first place rather than changes to the land transaction tax. But what I've had discussions with the Cabinet Secretary for Finance about is to say that, if further evidence does come forward that supports changes to taxation being a much more productive way to drive energy efficiency forward, then we would undertake a piece of work then.
If there are no more questions, can I thank the Cabinet Secretary and the Minister for coming along this morning, and their officials? I think that there are perhaps two things I would like to say—firstly, that, in many respects, we're all on the same side in this in wanting to improve the quality and quantity of housing, so I hope that came across in our questioning. And the second thing is that we will be writing a report at some stage, but I think that it's really, again, meant to be constructive rather than destructive, and that we really are keen on improving the quality of housing in Wales and increasing its volume. So, thank you very much.
We're slightly ahead of schedule—are people happy to go to item 4, the papers to note? Are we? Any matters arising from those?
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o'r cyfarfod yn unol â Rheol Sefydlog 17.42(vi).
that the committee resolves to exclude the public from the meeting in accordance with Standing Order 17.42(vi).
Cynigiwyd y cynnig.
And can I move, in accordance with Standing Order 17.42, that we move into private session?
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 10:28.
The public part of the meeting ended at 10:28.
Ailymgynullodd y pwyllgor yn gyhoeddus am 11:00.
The committee reconvened in public at 11:00.
Good morning. Can I welcome our witnesses to the meeting of the Climate Change, Environment and Rural Affairs Committee? If you could introduce yourselves for the record, and do you want to make any opening remarks, or are you happy to go straight to questions?
Happy to proceed.
Yes, happy to proceed.
Sure. Griffin Carpenter. I'm a researcher with the New Economics Foundation.
I'm Richard Barnes. I'm a Professor of law at the University of Hull.
Thank you very much, and thank you very much for coming. If I can start with the first one: is the UK Government’s categorisation of fisheries management and support as a policy area requiring a UK-wide legislative common framework correct? Does there need to be a UK-wide common framework, or could we have individual frameworks for Wales, Scotland, Ireland, and England?
There are a couple of general remarks. I think fisheries management is fundamentally based upon co-operation, whether it's within the UK, with the UK and EU or other states. So, there has to be some form of co-operation. I would take the view that there has to be a reasonably firm basis for that co-operative framework, either in legislation, and possibly supplemented by guidance and frameworks for that. I think, within the UK, we have a current framework that is kind of loose and informal, and I think there's probably a need to consolidate that, particularly because there is a risk of conflicts and differential approaches towards management arising, which we ought to try and avoid.
Yes, I agree with that, just adding a bit to it—I guess we have a couple of conflicting facts here. One is that fish swim around—they don't have passports—so you're going to have some sort of overarching framework. That's not to say where that framework exists; it could be EU-wide. Ideally, you want it on a sea-basin level. But then we also know that local knowledge is very important in fisheries management. So, there is a discussion, of course, about what decisions are made in Westminster and in Cardiff, but I would actually focus on sea-basin-wide decision making for the stock, and then local management, especially in a place like Wales where shellfish are such a bit component. That's really about local management.
Okay, thank you. How can the interests of the Welsh fisheries industry be represented in the framework development?
I think this is quite a challenging position here. I mean, there's clearly scope for the fishing industry to contribute towards the formation of policy and for decision making. That already exists to an extent within Wales and other areas of the UK, with the inshore fisheries group and advisory groups. So, I think at the very least that needs to continue. Within the common framework, it's not entirely clear how that would proceed, going forward. There are, for example, options to continue existing co-operative arrangements between fishing industry and, say, for example, the Welsh Assembly Government. There may be options to make, for example, ad hoc appointments to the common framework, to bring particular expertise in to support decision making and to advise upon that, and more generally I think there can be consultation on the development of the measures within a common framework going forward. I think perhaps of less concern, given the nature of Welsh fisheries, is some form of involvement as an aside or contribution to international delegations. That's an increasingly common practice within international fisheries, where you try and secure support from stakeholders by having them associated with the negotiation delegations.
Just to add on that about how the industry is represented within the Government, because I think something that's coming under increasing recognition is that there's no one fishing industry. At the sector level, there's aquaculture, there's processing, there's the catching sector, and, increasingly, because of Brexit, we're realising that these different groups have different interests and you need to hear from all stakeholders. Too often, we say 'fishing' and we think 'being at sea with a net catching fish', but that's only part of it. So, I think, in the Welsh representation to these groups, you need to think about that as well: which parts of the industry you're working with in which capacities.
If I can add to that, one of the critical issues, though, is that some parts of the industry are better able to engage and co-operate because they simply have the resources and capacity. And particularly with what you might call low-impact or smaller scale fishermen, their ability to do and co-ordinate that is much more restricted, so they tend to be marginalised in these processes.
I just would like to know your assessment of the current governance model in terms of European fisheries policy, which then does allow local flexibility, which in our case with shellfish means it's outside the policy. Do you think it's fairly functional at the moment, that model of governance, and therefore is that sort of the model of central core policies being set and then adaptation allowed or areas excluded from that that don't need to be managed commonly? I mean, how robust is the current system, and is it something perhaps we should replicate only on a UK basis?
I think that's quite interesting. I've been thinking about the options going forward here to kind of accommodate some degree of co-operation and to try and manage fisheries between a central and a devolved level, and it seems somewhat ironic if we're coming out of the EU that the best model for that would be to try and look at something like an EU-type legislative framework where you have, for example, the higher level parameters and standards and objectives set within legislation but then the choice of means to actually achieve that are left up to the local administrations. So, effectively, we'd have some form of directive-type legislation perhaps being used to facilitate this.
Now, the challenge with that, I think, is (1) how you formulate the higher level objectives there and where the precise balance between centralised and devolved competencies lie, and then what measures and checks are in place to ensure compliance with that.
Something that's maybe a bit concerning about how it currently works—and thinking ahead to how the UK will manage fisheries internally—is that there's a sense of unfairness between different countries, sometimes. You hear, 'Oh, this country doesn't enforce EU legislation to the same degree', and fishing is definitely an area due to its remoteness where it is felt very strongly that, you know, 'We don't know what the Spanish are doing at sea' et cetera and you can kind of see that replicating itself within UK administrations if one administration is known for taking enforcement very seriously and one is not and one for having more stringent environmental measures and one is not. So, that would certainly be a concern about how the current system's working and you can kind of look ahead and see that happening in the UK as well.
Yes, I want to ask about governance as well but from a slightly different perspective, which is that I think I heard Michael Gove this morning again on the radio saying that, when we leave the EU, we'll be an independent maritime nation or whatever particular choice of words he was using at the time. But it's clear that we will not have the common fisheries policy but there's also the intention to withdraw from the London convention. So, where does that leave the UK waters in terms of international obligations, then? Where would we sit and would we need to recreate a set of conventions or obligations or are there sufficient international legislation and agreements to maintain that?
You'd better start on that.
I think there's been a lot of discussion about us being an independent coastal state. We are an independent state, it just so happens that we've allowed our fisheries to be managed by the European Commission for the most part, although we've contributed towards that. So, there are existing standards under international law, under the United Nations Convention on the Law of the Sea, the UN fish stocks agreement for shared and straddling stocks and a range of other international agreements that set out a broad framework for fisheries management. They require fairly high degrees of co-operation. They set the objectives, for example, for maximum sustainable yield, they place upon states obligations to conserve and manage fisheries but also to take into account, for example, wider environmental impacts. So, these existed prior to Brexit and they will continue to exist after Brexit, the only difference being, I suppose, that the UK will be responsible for implementing them itself rather than having to do that through a mixture of its own and European laws.
Now, these are broad framework measures, and what they don’t prescribe in any great detail is how the day-to-day conduct of fishing activities ought to be, and this then will require additional law making at the domestic level. I think we're aware that there would be a regulatory gap if the common fisheries policy ceased to have effect in March next year, and so we're having the transfer—the 'cut and paste', I think they call it—of EU law into domestic law to fill that gap. The critical issue will then be how that develops going forward. But I think what's quite interesting, though, is that there is scope to go above and beyond these standards, and to improve upon these standards within domestic law. I know the Welsh Assembly Government has done this with, for example, its Environment (Wales) Act 2016 and other legislation, which actually articulate some quite sophisticated ecosystem-based approaches. I think there is scope to do that going forward.
Yes, I think the point is whether or not we can rely on international law to fill the gaps. We're actually much more ambitious in how we see co-operation with our neighbours here. So, there will probably be some form of sharing access to each other's waters that takes place and there might be some exchange of fishing quota and other opportunities. So, for example, the London convention is about access to each other’s waters in the 6 to 12 nautical miles. So, that would, of course, require new legislation, if that's what we wanted. I think, inevitably, there will be a new legislative framework at the international level because we're quite close to our neighbours, but also our fisheries have developed over 40 years, and that’s quite hard to reverse, even if you wanted to.
So, does that, in effect, mean, because we already have these international obligations, and we already have, or at least we talk about high environmental standards, and, as you say, we have Welsh legislation that aspires to even higher standards—that we're not likely to see huge flexibility in fisheries policy, and what we should be looking at is how you best design the administration of these obligations in order to manage our stocks in a sustainable way? Or are there opportunities—? We'll probably have other questions around some of this, but I'm just looking at the broad picture at the moment. Are there clear opportunities that might present themselves?
I think in terms of opportunities international law doesn’t prescribe precisely how the fishing is allocated. So, there may be space to change allocations of fishing, and there are opportunities, as you’ve mentioned, to adopt different types of management measures. There are quite some radically different options that we can look at going forward. I think within international law there's a general requirement to set total allowable catches, and to implement quotas to an extent, and I think our ability to vary that is probably limited because of the law of the sea convention or because of what our neighbouring states are doing. We ought to have fairly compatible or consistent approaches. Historically, there have been huge numbers of conflicts because people have done things differently. So, that constrains us a little bit, but I think, at a kind of operational level, there are some interesting opportunities going forward—conservation credits, allocations based upon environmental contributions, moving away from the historic allocations. That kind of level of detail I think is where the most opportunities will be to shape things differently.
I would agree. I'd say, by and large, there are many more opportunities here than things that need to remain fixed. I'm going to attempt a poor analogy, but how I see international law is that it's mostly about the size of the pie—so fishing that is sustainable, so maximum sustainable yield is roughly agreed internationally—but then, within that, how you split the pie amongst the different fisheries and stakeholders—how you eat it, I guess, how you fish it, and all of these things vary from country to country. So, I would say that international law—and I'll rely on Richard for most of this—it seems to me is not very prescriptive in most aspects of fisheries management. So, I would say, to a large extent, it’s a blank sheet of paper that we're looking at.
Diolch yn fawr, Gadeirydd. Roeddwn i'n mynd i ganolbwyntio ar y sefyllfa parthed Cymru, ac, wrth gwrs, rydych chi wedi rhannol ateb y cwestiynau yma yn y cyd-destun mawr yn fan hyn. Yn wastad, mae materion pysgodfeydd wedi eu datganoli ers bron i ugain mlynedd rŵan ac, wrth gwrs, efo'r Bil ymadael, fel rydych chi wedi ei grybwyll eisoes, efo'r pwerau yn dod yn ôl i Brydain, mae fel petai ein pwerau ni dros ein pysgodfeydd, dros ardaloedd amgylcheddol, ac amaethyddiaeth, hefyd wedi eu rhewi mewn 24 o feysydd am y saith mlynedd nesaf wedi'r bleidlais yn y fan hyn ynglŷn ag adran 11 fel yr oedd hi ar y pryd—adran 15 rŵan—o'r Bil ymadael Ewrop. Felly, mae gennym ni broblem—wel, mae'r Llywodraeth yn mynd i fod â phroblem yn nhermau trio gwneud unrhyw beth i ddylanwadu, dywedwn, ar bysgodfeydd am y saith mlynedd nesaf. Ac fel rydych chi wedi ei grybwyll eisoes, mae'r diwydiant pysgodfeydd yma yng Nghymru yn dra gwahanol i wledydd eraill yr ynysoedd yma, felly mae yna gwpwl o gwestiynau bach sydd yn dilyn o hynny.
Beth ydych chi'n weld ydy naill ai'r cyfleoedd neu'r heriau, yn dibynnu ar sut rydych chi'n edrych ar bethau, sy'n wynebu pysgodfeydd Cymru o ganlyniad i Brexit? Sut ydych chi'n credu y gall polisi Llywodraeth Cymru fanteisio ar unrhyw gyfleoedd i ddiwydiant pysgota Cymru ar ôl Brexit, o gofio bod unrhyw bwerau sydd gennym ni yn y maes rŵan wedi eu rhewi am y saith mlynedd nesaf? A sut y gall unrhyw drefniadau fframwaith ar raddfa Brydeinig yn y maes yma naill ai gynyddu neu leihau y cyfleoedd yma i bysgodfeydd yng Nghymru i'r dyfodol? Diolch yn fawr.
Thank you very much, Chair. I was going to focus on the situation in terms of Wales, and, of course, you’ve partly answered this question in the larger context here. The issue of fisheries has been devolved for almost 20 years now and, of course, with this withdrawal Bill, as you’ve already mentioned, with powers returning to Britain, it's as if our powers over our fisheries, environmental and agricultural areas have been frozen in 24 areas for the next seven years following the vote here on section 11 as it was—section 15 now—of the EU withdrawal Bill. So, we have a problem—well, the Government has a problem in terms of trying to do something to influence, say, fisheries for the next seven years. And as you've already mentioned, the fisheries industry is very different in Wales to the other countries in these islands, so there are a few questions following on from that.
What do you see are the opportunities or the challenges, whichever way you see that situation, facing Welsh fisheries as a result of Brexit? How do you think the policy of the Welsh Government can capitalise on any opportunities for the Welsh fishing industry after Brexit, remembering that any powers that we do have in this area have been frozen for the next seven years? And how can any framework arrangements on a British scale either increase or decrease these opportunities for fisheries in Wales in the future? Thank you very much.
There's a lot there.
Do you want to begin or shall I?
You've done your share. Yes, there's a lot there, and starting with the opportunities and the challenges, I guess I'll start with Brexit because that's the discussion at the moment although, certainly, we could equally have been having this conversation had Brexit never happened, and of course it's an industry where there are always opportunities and challenges. But, the main ones I see are around the sharing of the resource, so basically how much of the resource, quota or otherwise, that comes to Wales; exclusive access to waters; and new legislative frameworks or policies. Those would be the big three opportunities. And risks, of course: tariffs, non-tariff barriers, uncertainty for businesses. EU labour, not so much an issue for the Welsh fleet or industry. Certainly in fish processing it's a very big deal, but there's not too much of that in Wales at the moment.
So, taking those forward a bit and focusing on the opportunities, I think the main thing that the Welsh Government should be doing over the next few years is strategising and planning, because the thing is most of these opportunities are really of indirect relevance to the Welsh fleet. We'll talk about zonal attachment more perhaps, but, basically, the species that Wales would receive from that—herring, nephrops—you don't really have the fishery for that right now in Wales. So, a lot of these opportunities require a lot of forward investment, a lot of local decision making around where there are going to be processing plants.
As you may be aware, most of the fish that's landed through Milford Haven goes on the back of a lorry to the Belgian market, so to have wider society benefit from that you need to make some really big decisions, and ones that aren't being made right now; they're not being made for a certain reason. So, we can sit around and say, 'Wouldn't it be great to have a processing industry? Wouldn't it be great if Welsh consumers ate more shellfish?' but they don't, and there's a reason why that is. So, you're kind of fighting the current, and that takes a lot of strategising to make sure that, okay, we've established that there is a market, we've established that there is an appetite there. I know some of this work is ongoing; I'm part of various groups that are contributing to this. So, one's called 'Brexit day one readiness', which is essentially looking at that—how could we seize the opportunities?
And then on the risk side, what happens if the flow of fresh products to the EU stops? What are the opportunities for Asian markets that are developing? What are the opportunities within the UK? So, that requires a lot of forward planning and, of course, there's so much uncertainty. At the back of your mind I think it's always about being Brexit-proof. So, could this processing plant that we're thinking about developing, could it survive with or without the EU market? Because ideally you want to pursue options that can maximise returns regardless of the outcome there. I suspect we will have some sort of free trade agreement reached with the EU, but you don't want to plan on that, especially not when 90 per cent of the exports are going in that direction.
What else can I say? The frameworks increasing and decreasing. I think that one of the main issues here, and certainly one of the main ones that I work on, is fishing opportunities, which basically means quota in most cases, but sometimes, effort-based management as well for inshore shellfish stocks. And this is already a responsibility of the devolved administrations. So, if we wanted to say, 'Let's give more quota to this part of the fishing fleet'; if we wanted to say, 'You need to land a certain amount of your quota within Wales', that's already the case. We could pass laws on that tomorrow if we wanted to, so this is definitely a key area of policy that's regardless of Brexit. And, in fact, if you've had a chance to see the White Paper—it's one-hour old now—it talks about honouring current quota allocations, but then any quota that's gained from the EU could be allocated differently. Yes, they call it a quota reserve. I think this is extremely problematic, to have every opportunity conditional on Brexit—so, if we gain more quota, then we will help the small-scale fleet out. Well, okay, that's not going to help them, and certainly not in the next couple of years. It's going to look like maybe beyond that, who knows? So, I think that we shouldn't rely too much on new frameworks and use existing powers, which are there and have been ignored, but, okay, we have the spotlight on fisheries now, so let's use that to make legislative change.
I could say I agree with everything. A couple of other points though, I think, to add to this. The EU withdrawal Act doesn't specifically deal with fisheries; it just deals with regulatory powers in general. It's meant to be time-limited, as you've indicated, and there is an existing tension within this because the way in which the agreement of the devolved administrations is to be secured isn't entirely clear. And, then, obviously, what happens if they don't. So, there are issues with that going forward.
I think the mechanism at the moment is, if there isn't agreement, then Westminster will step in. Now, that's effectively—. It's a legal power that now exists. So, I think, going forward, clearly it's incumbent if you're wanting to represent Welsh interest, that a high degree of political pressure and scrutiny has to be placed upon any steps that are being taken to introduce new legislation or to change existing legislation, or to make use of existing legislation to take forward fishing issues. That's absolutely critical.
I think one point that Griffin stressed here though is the idea of local expertise. Fisheries management is quite complex, it's quite difficult, and, actually, by making the case that it's best done at a local level to avoid conflicts, to prevent things from unravelling, presents quite a strong case for retaining these kinds of powers. So, I think that's vitally important.
I think, just to emphasise though, it's having a clear idea what the priorities are for fishing within Wales going forward, and if that's seen to be the trade issues and ensuring, for example, that there's free flow of exports of shellfish, which is critical, that that is protected whatever. On that point, one of things that I think is quite difficult is that there is a clear tension between the UK and the EU on that point, that fundamental point of principle. The EU will not see fisheries as a separate issue. The UK is trying to separate these out. We won't know about what's happening until October at the earliest, possibly December, and that doesn't leave much time to actually deal with this. But I think making sure those trade issues are protected is critical.
Grêt. Diolch yn fawr. Dau ateb bendigedig, mae'n rhaid imi ddweud. Rwy'n sylweddoli bod y cwestiwn ychydig bach yn hirwyntog ac yn gymhleth, ond dau ateb bendigedig. Diolch yn fawr.
Great. Thank you very much. Two wonderful answers, I must say. I realise that the question was quite long-winded, but very nicely answered. Thank you.
We've heard from other evidence as well that access to market for us is going to be more important than access to quota potentially. And this is more of a political question, as I think you're well able to analyse the situation. The Irish sea is north Europe's Chesapeake bay when it comes to the highest quality shellfish. I love eating it, and I know several of us here do, but you're right, there isn't a great domestic market. The Belgians, the French, the Spanish—it's a massive part of their cuisine, their higher cuisine. How vulnerable is that market really going to be? Are they going to chop off their noses to spite their face and not have this wonderful resource available to them? I think, when it comes to it, they're going to allow us access, aren't they?
I wouldn't be so sure of that because the people making the decisions aren't always the restaurants, or whatever.
Yes, you're probably right about that; yes, for sure.
I'll start with a couple of general comments, anyway. There's a question about who has more power between the UK fishing industry and the fishing industries of other countries. And it's not extremely significant in economic terms on either side. You know, the UK fishing industry has been flexing its muscles over the past years, with the protests and everything else, and we haven't actually seen the full extent of what the EU industry has planned for this. We know that blockading ports in France is not unheard of, and they haven't pulled that card yet. So, I think that we actually haven't seen the show of force on the EU side yet. So, I would be worried about when that takes place. I'm not an expert in non-tariff barriers, but the people who are experts, who I talk to, are extremely worried about this. Because it's not always about whether there's a choice to put a measure in or not; it's not the EU is trying to kick up a fuss—they might be doing that, they probably will, but some of these will just naturally come up by extent of not having our legislative frameworks line up with each other. So, this is what we're looking into at the moment. But of course, as you've heard from the live shellfish exporters, any marginal delay makes all the difference. And so I would just be worried about unintentional non-tariff barriers; that isn't the EU saying, 'We want to prevent your lovely shellfish in our restaurants', but it will come up just from the extent of the chaos that's around this.
I don't know whether it's relevant to the question, but I think, regardless of what the markets demand, there will still have to be regulatory mechanisms to facilitate the movement of goods across borders, whether they're frictionless borders or not. It's clear, once we leave the EU, we will be a third state, and if we want to export our seafood products to the EU, we will have to comply with a whole range of regulatory standards that are applicable in the EU. And that effectively means those will become applicable down the supply chain—so, the way in which these are caught, processed, inspected, will have to be in accordance with EU law. I think that's probably quite an important consideration. So, there is that aspect, which is slightly different from access to waters, but I don't think it's entirely separate.
Thank you. It's one of the curiosities of the way this place works that we're having you before this committee today, when we debated your report in Plenary yesterday. But all these issues did come up at that stage, I can assure you, including access and trade, and the very narrow margins that the shellfish industry—which is 90 per cent of fishing in Wales—operate on, in terms of time, and getting to market, and all the rest of it.
But one of the things that we do have access to at the moment in Wales is the—to get the right title of it—it's called the European maritime and fisheries fund now; it was the fisheries fund. That's about £20 million, which we can invest currently in the industry—it's been used to improve safety on boats, it's been used to improve aspects of tracking, and so forth. As we leave the European Union, clearly, that source of funding does dry up. The Cabinet Secretary here in Wales has acknowledged she will probably need to invest more in fisheries in Wales, in order to make it sustainable and competitive. But do you think there's a need for a UK fund to replace the EU fund, first of all, and how would you see such a UK fund being allocated? Because, once again, even though we don't have a very developed fisheries industry, actually, if we're looking at the figures, if we get about £20 million, we're getting nearly 10 per cent of the UK allocation. So, we're getting more than Barnett, as the Welsh jargon goes. The same for agriculture, of course, but it just reflects—it's not the same scale, it's a much smaller amount, but it's still considerably more than we'll get under any UK kind of allocations.
I think it's a vitally important issue, going forward. I think, as we all appreciate, fisheries is a difficult business, and the margins are often quite fine. And so, if we're looking to increase capacity to change direction, that often requires a degree of external support. And that has been serviced reasonably well, I think, by the fisheries funds. As you've pointed out, Wales does relatively well from the proportion of allocations to the UK as a whole, although I suspect that reflects the importance of developing Welsh fisheries. But that won't change, and so I think that needs to be supported going forward, particularly if, as the White Paper indicates, there is a commitment to supporting the development of the UK fishing industry. That has to be combined with some form of grant system. My understanding is that the White Paper commits itself to some form of grant-making mechanism. At the moment, though, that is entirely vague and how that is going to be operated is not clear.
I don't have too much to add on that—I think some sort of EMFF-type subsidy or investment fund, depending on your ideology. I think there’s probably a couple of things we can improve on the EMFF. Uptake is extremely low. I think about 11 per cent of the fund is used right now and it ends in 2020, so there might be a rush of applications at the end. There are probably some being processed right now, because there's just so much paperwork. Basically, it involves fishers partnering up with some sort of friendly consultancy or something that can help to put plans together. I'm sure we can cut down on the amount of work being done there.
The other side is actually on the environmental side, because this is public money and, as we've been part of agricultural discussions, we know that public money should be used for public goods. That's not always demonstrated in fisheries projects. So, you can say, 'Oh, we need this sort of port infrastructure here.' Okay, so how does the wider taxpayer benefit? Sometimes, that connection isn't there. It's mostly done through the environmental space, which is that if you can prove the eco performance of fisheries, then we all benefit because we're all co-owners of that public asset. So, I think we could probably improve on the EMFF in that regard. But it's also just an information problem. So, I would hope that UK and Welsh funds would be more known, because there would be a more direct overlap between the stakeholders and those people overseeing the fund—that you could have meetings with those exact people in the room, whereas from Brussels it's not so direct.
In your view, how could that pan out from the Welsh perspective? Because if the suggestion is that there's some kind of bidding process, then you might, if that's run at a UK-wide level—. We have a very fragmented fishing industry in Wales; it's quite small and is mainly shellfish, which may not be as attractive to a UK Government that might be looking to, basically, keep the trawlers going, if that's that political take on it. Does that lead, in turn, to pressure to have any such fund devolved from the start, perhaps included in the allocation of funding, going forward to Wales, or would a challenge fund for fishing be successful? Or does the fact that we need to manage a lot of marine conservation zones in Wales—and perhaps this is an opportunity to do this in a more integrated way—mean that we should be just putting all that public goods money together in a particular package and argue our case with the UK Government for our fair share of that?
I think what’s critical, though, is that, if there is a fund, it's governed by quite clear principles, which decide what the priorities are going forward. That could map onto some of the things indicated in the fisheries White Paper—so, improving coastal communities and improving particular fisheries. So, I think there's probably a degree of lobbying and pressure to be placed upon the design of principles that are aligned with what the needs are going forward. I think that, with these types of funds, they're really geared towards development and not protecting the interests of existing large, commercial fishing interests. So, I think that's the sort of direction of travel: to make sure that, at that general level, those principles are in place, which you then can use for supporting the activities you want going forward. There is always a degree of bidding that goes into these, but then developing the expertise to ensure that the bids are done properly and supported and aligned with those principles is a way of perhaps at least securing, in a competitive environment, those. Politically, whether or not a fund would operate either at Westminster or it's divided then proportionally between the devolved administrations I don't know, but I think the principles approach is maybe the best way forward because it applies to both.
Thank you, Chair. I just wanted to ask you a little bit about legal frameworks and what obligation Wales would have under international law in respect of fisheries and how that's likely to shape or even limit the UK framework or Welsh fisheries policies.
I suppose, strictly speaking, Wales is a constituent part of the UK, so it doesn't enjoy—or it's not responsible for the implementation of international obligations directly. Those fall upon the UK. There is then the next step, which is how the UK facilitates or ensures responsibility within the UK for that. So, I think Wales is probably not directly concerned with what happens externally, other than the extent to which it is involved in negotiations—it doesn't have to worry about that. It's more an internal matter, I think.
Okay, because we've heard lots about the particular frameworks and the UK position and the Welsh input into that, so I'm just wondering whether there is anything more that we need to be conscious of in terms of having inputs into that.
I think there's a general awareness of what the international law requirements are upon fisheries and the direction of travel—for example, making sure that you're aware that there are provisions that seek to ensure that there isn't a dislocation of, for example, fishing interests for those who have habitually fished in particular areas. It might be a way of protecting fishing interests, being aware of how, for example, arguments and commitments to protect the environment can be used and leveraged or have to be balanced against fishing to ensure change. I think there are some really interesting ideas coming out of some of the FAO discussion about possible management mechanisms, for example pushing ideas of food security and using these kinds of frameworks to help shape policy or to leverage policy in the right direction. So, I think it's important to be very much aware of these, because they are useful tools.
Quite. Absolutely, yes. There's an interesting historical point here. I'm just back from Iceland. The President gave an opening talk and he said he wrote his PhD thesis on fisheries and the cod wars. He was talking about how Iceland managed to beat the mighty UK. One of the lessons from this was that they were very good at using foresight to see the direction of travel in international law, which at the time was saying that coastal states could expand their jurisdiction and claim exclusive jurisdiction over fisheries. So, they kind of gauged the temperature really well, aligned themselves with that, garnered a lot of sympathy with other states who had similar concerns, and that then allowed them to get legitimacy for their actions, it allowed them to get international support for their actions. Whilst politically and militarily they didn't have the strength the UK had, because they strategically aligned themselves with that approach, it allowed them to resolve the cod war successfully, shall we say.
Sure. So, the policy position really needs to be ahead of the game, doesn't it, in terms of that.
Very much so.
I just wonder if our version is going to be zonal attachment—let's look at that. It's obviously an issue raised in the report that you've co-authored. At the minute, we get about 1 per cent of the UK quota, but as you've heard, most of our industry is shellfish anyway. So, what would the potential be for a move to zonal attachment and how practical is that in terms of what is likely? I think anticipating major policy developments is a really apposite point to make in this regard, so is it likely to emerge as a UK policy? I infer from what you said earlier that it may not help us that much because we don't have the species in our waters that we then would have in the quota or whatever, if I've understood you correctly. Could you develop this area a bit for us?
Yes, I'd be happy to. Zonal attachment is the principle that a fair share to the resource of the pie is based on the biology of the species. If you have 30 per cent of the cod in your waters, that's what you should be allowed to fish. It hasn't worked that way. We've usually used a system of historic share. So, if, as a country or a devolved administration, you're fishing 10 per cent of the cod or 30 per cent of the cod, then that's what you should get. At the EU level, this is the big debate right now. The EU is saying that historical share is what's fair and the UK's position is that zonal attachment and biology is what's fair.
One side note on this is that it's important to know the historical development, because the Welsh fishing fleet, as you say, is shellfish anyway, but that's not, necessarily, by choice. This has to do more with UK legislation. But how we divvy out our share of the UK catch internally is also based on historical share and that's based on catch records. It used to be that the under-10m fleet, the small scale fleet, weren't required to. It was seen as helpful at the time that you don't need every fisher in the country to record all their catch notes, but it was, kind of, a poisoned chalice in the end, in that they couldn't show their historical catch record and were disadvantaged when the UK did fix quota allocations. So, a number of fishers currently would say that, yes, they're fishing shellfish in Wales, but, if they had the opportunity to fish quota species, they would enjoy that. And it's quite difficult right now—you would need to lease it from the quota holders, and those prices can be very expensive for the small-scale fleet.
So, can zonal attachment help? Well, zonal attachment would certainly increase the Welsh share. I guess there are a lot of different levels here, and I try to describe them in the report, but even I get confused sometimes. There are EU fishing vessels in Welsh waters fishing Welsh quota species. So, you could benefit from that. But, currently, that would go to the UK as a whole—it's a UK-EU negotiation. And then the question is how much of that would work its way through to Wales. So, if Wales only has 1 per cent of the UK's quota, any gain from zonal attachment goes to the UK, and Wales gets 1 per cent of that. So, lets say the gains from Welsh waters are 10,000 tonnes to the UK, then you only get 1 per cent of that, so that's not really fair either. Then there's this second question around how much should Wales get of the UK's slice of the pie. Again, is historical share fair? So, if you take zonal attachment, you can ask that question on a number of different levels. You would about triple the amount of quota going to the UK if zonal attachment was agreed between the EU and the UK. That's definitely a benefit, and it would be for the species that are already fished. So, if Wales gets 2 per cent of monkfish, then that 2 per cent would go up three times if the UK got that deal.
And then there's this question of within the UK. This is the question that hasn't really been asked until we did that report, which is provocative in some way, saying that if what is fair is based on biology, between the EU and the UK, surely that applies to the devolved administrations as well. And that's actually where there is a much larger gain. So, you get up to 20 times as much fish resource for the Welsh fleet if we extend that principle all of the way through. Now, the spices that would be gained are nephrops—so, langoustine, scampi—and herring. These are large industries, large-scale fleet usually harvesting them, especially herring, and the Welsh fleet doesn't target those right now. So, we leave those to Scottish and Northern Irish fleets, and Wales focuses more on some mixed demersals—skates, stingrays, monkfish and some haddock. There's a bit of a mismatch here, and Wales would definitely gain more of a resource, but what use is a resource if you can't actually harvest it?
There are a couple of options. Do you develop new herring and nephrops fisheries in Wales? You could. It could, maybe, employ 20 extra people, it would be a huge investment and it's not clear whether people in Wales would actually benefit from that. They certainly wouldn't eat the fish; it would still go onto the same markets as it does right now. Herring and nephrops are almost entirely exported, especially live nephrops, which, I assume, Wales would target. The other option is to use that gain and potential resource as a negotiating position—not just negotiating with the EU, but with the UK—to say, 'You're gaining from Welsh waters when you're arguing for zonal attachment. The herring and the nephrops in Welsh waters are going to the Northern Irish or Scottish fleets, so what does Wales get for that?' So, within the fisheries space—and, who knows, maybe outside the fisheries space—certainly it's a chip you would want to use to say, 'We want all the fisheries across the UK to benefit'. So, if you're benefiting from herring and nephrops in Welsh waters, for the Welsh fleet, it's probably access to markets. And that's very complicated now, all of a sudden, to negotiate. I suspect that the small-scale fishers, especially in Wales, would want more quota species. I think to diversify your resources a bit would be helpful, but that would involve more negotiation between the UK and Wales to reset or change the shares that go to the different administrations.
Could I add a point on zonal attachment? It's interesting as a concept because it seems to offer fairness, but it's one that you have to be very, very careful about because it changes over time. Fish don't stay in the same spot, and so whilst we might have benefits from zonal attachment at the moment, one of the real risks is that fishing pressure, but perhaps more importantly climate change, is significantly affecting the distribution of stocks, and so, if there are significant changes in where fish are currently located, then we risk losing out from that. So, it does require a high degree of science to support this, and ultimately it can lead to disputes as well. It's used within the EU-Norway framework, and when stocks collapsed and they then resumed fishing again, the location of the stocks had changed, but people were resistant to actually changing on the basis of historical zonal attachment. So, we always fall back to this idea that people resort back to what they had in the past, and ultimately it's because access to fish is largely driven by markets, customs, practices and what people want to catch. So, really, zonal attachment or relative stability are just starting points for, then, the negotiation of those, going forward.
Yes, just to follow up on this, because, as you intimated earlier, we're having this discussion but the White Paper has just been published this morning, and we haven't had a chance to look at it yet. One of the things that was mentioned, I think, in that, was the idea that we could negotiate this on an annual basis, which rather cuts across some of the things that you've been saying in terms of much more long-term, sustainable ones, and it cuts across what the EU is trying to do now, I think, as well, in terms of that.
Also, if anything is going to continue to be renegotiated on this basis—say, annually—in effect that means those who hold the quotas will dominate any such discussions, and there's a kind of in-built conservatism, almost, in that. Is there any value in exploring what the Cabinet Secretary said yesterday in the debate, that there might be some quota released back to Wales? You just said how little that might be, in effect. There might be some resource released back but we might not be able to exploit it. We don't really understand how this works in the Welsh context, really, because we haven't done this policy for many, many years now. Is there any value in having some kind of moratorium approach to the way this is done at the moment in Welsh waters so that we, over the next two or three years, just understand what's happening better before we, perhaps, invest in a herring industry? We used to have a herring industry in Wales, but not any more. Do we do that, or do we simply go along with annual renegotiations, which basically means we'll never catch up, as far as I can see, from a Welsh perspective?
That's quite a difficult question to answer. I suspect there may be scope for an increased allocation, and the question is: what do you do with that? I suspect the obvious answer is, well, a moratorium possibly doesn't help anybody, unless the stock is at risk, and I think there will always be pressure to catch that. So, the question then is: are you able to make use of that, through, for example, leasing arrangements, where you retain that share of the quota but then allow others to harvest it and so at least secure some return for that in the short term?
I suppose the question I'm trying to get to is that we don't, in these early days, give up a resource, because we can't manage it—you know, we don't have the ability to exploit it properly now—or give it up in the way that quotas have historically been given up from the Welsh fleet, because of the reason you talked about, of the smallness and everything. So, we lost something like 88 per cent of our quota. What we could have had is just completely gone, and we almost can't get that back, not for some period of time, anyway.
Yes, I agree with that, and, in my judgment, I would say that fisheries have been accidentally privatised, which is that—. There was no discussion about this. It wasn't intentional. It was just that when quotas were brought in, they were allocated in a certain way—'2 per cent to you, 1 per cent to you'—and then year after year, it was the same. And now, 20 years on, 25 years on, you have a legitimate expectation that that will continue. And that has nothing to do with any law around fishing quotas; it's just what's been built up. So, I think my answer would be the same to all of these concerns, which is that you can do something like 10-year leases, if nothing else then just for the symbolism that, 'This is a Government public resource; we're allocating it to you, then it comes back' and maybe you then allocate it in the exact same way, but I think the symbolism is important there. And 10 years—you know, you need some planning as a business. These are expensive fishing vessels. You can't have this annual, 'Will I get quotas here or will I not?' So, I would advocate something like that, and not just for how quotas or leasing arrangements are done but also for negotiations with other countries—how much goes to Norway, UK, France et cetera.
I actually think it's a problem that the push right now is for annual negotiations between EU and the UK eventually and other countries, because if the UK's position is that, 'Our fair share is 70 per cent' and the EU's position is, 'Our fair share is 70 per cent', well, of course, you can't add that up and have sustainable harvesting. And the weakest voice in the negotiations is always the fish stocks themselves, so in order for both parties to leave that room and say, 'We got a good deal' requires overfishing. And this is exactly what's happened with what's called the 'mackerel wars' or the 'herring wars', which is where an agreement couldn't be reached. Iceland, traditionally, leaves the table and says, 'Hey, climate change, all the stocks are in our waters now. Our fair share is this high.' And so this isn't just hypothetical. This is actually what happens with the third countries. And people look at Iceland and Norway as a success in fisheries management—for their own stocks. Where there are shared stocks, they're just as problematic as everyone else in the complicated EU discussions. So, I think a fixed period of 10 years where we have that 70:30 split, or wherever it ends up being, is a good model.
I think certainly that putting this onto a statutory basis might help because the kind of informal nature of it at the moment is unhelpful. There's a lack of clarity about legal challenge to this, and so the scope to actually put it on that basis, as they've done in New Zealand and Iceland, might actually provide a bit more transparency.
There are two things, but I want to discuss one first. If we take back control, to use the phrase, is there a danger of monopolies ruling the waves in terms of the fact that we are now going to perhaps start a new control mechanism, an allocation that goes with that as a consequence and the danger of selling quotas—we've seen it in other areas—and these going to the highest bidder? That's one question. That's one area that's been going through my mind, and if you've got any comments on that—.
I think there are real risks associated with this. If we look at other countries such as Iceland, New Zealand, Canada, the general trend has been towards the consolidation of fishing activities and, in part, that's largely driven by economics and the way in which we're able now to use technology to catch the fish. So, I don't think we're going to change that easily, shall we say? But I think it's important that there are proper checks and balances placed against some of the risks of this, and I think what we need to consider within the fisheries Bill fundamentally is what kind of fishing industry we want and the shape of that. There are tensions within the White Paper. On the one hand, it talks about a diverse fishing industry, but on the other hand it talks about one that is being profitable and one that will generate resource returns. So, it's not entirely clear the direction of travel, but I think I would come back to the kind of first principles here. It's about ensuring that those are built into the system, that there are proper environmental principles, proper principles about how the resource is to be used. So, again, you can look at some of the domestic Welsh legislation as an example for this—how you actually operationalise your commitment to using what is a public good for the public benefit and to ensure that it's there for future generations. So, I think that's the most important step—getting in those proper public principles to ensure that any allocation is then checked against that.
My following question from that was exactly on where you are going. It's about managing the fisheries industry with the focus being on the ecosystem base. How could we apply that in practice, particularly because we have a specific legislative obligation under the Environment (Wales) Act?
Chair, if I may, I'll start just with a comment on the first question as well, about the danger of monopolies. Yes, certainly, if you have accidental privatisation, as I called it, that's what you'd expect. The UK is a little bit different in its quota management than, say, Iceland or New Zealand, where quotas are ITQs—individual transferable quotas—so they can be bought and sold on the market just like anything else. The UK doesn't have that, but we have a very active leasing market. Also, because of technology change and everything else, there tend to be fewer vessels. So, you can purchase a vessel from someone else and then get the quota that's associated with that licence. So, that tends to be how concentration has happened over time. The last point on that is that there's a lot of focus on these markets, and it's hotly debated by other researchers in this field, but a larger problem is just new entry—there's not a lot of young people getting into the industry, so it means that licences have consolidated over time. That's probably as big an explanation for why there are fewer vessels in ports around Wales as anything else.
An ecosystem-based approach to fisheries is definitely the direction of travel, and we should move there. We've tried to kind of fit the environment into our management systems, and that's been a big problem. I think there's a recognition now that we need to go the other way around. So, what does that actually mean? Well, it probably means a more varied approach to fisheries management, which is why I emphasise inshore fisheries in particular, because you need to pay attention to where there are spawning grounds and seasonal patterns in fisheries, and this needs to be really dynamic because it's not in the same spot every year. So, it requires a lot of information coming from fisheries, which is definitely a policy area that's been waiting for some movement. Fishers have been outside of the management system for a long time and, I think, are worse off because of that, and they're realising that, actually, decisions are going to be made, whether they're part of the conversation or not. So, I think increasingly that they actually want to be involved in these decisions, and using the information that they're seeing every single day in foreign management.
So, I think there are actually really neat and quite cool opportunities here about using data that is being gathered every day from fishers and saying, 'Okay, look, we're catching a lot of haddock in this area. There's a hotspot, spawning grounds, the sizes are quite small, we need to respond to that'. So, I think that's what ecosystem-based management would look like.
Thanks. Yes, we've talked a fair bit about Brexit. Obviously, we don't know exactly what the withdrawal agreement is going to be between the UK and the EU. So, to what extent do you think the outcomes of this agreement could impact upon Welsh fisheries?
I think I would come back to my earlier point here, that the critical issue is whether or not access to fishing is tied up with a broader trade agreement. I think, if I were involved in the negotiations, I'd be slightly concerned about trying to leverage fisheries too much because, I think as we appreciate, economically it's not a significant part of the UK economy. We've had recent stories coming out from BMW, Airbus, we have the financial service sector, all of which contribute considerably more to the economy and require some degree of access to markets and the free movement of people, goods and services, or something equivalent to that. So, I think, from a negotiation point of view, it's difficult to leverage fisheries out of that. Again, the concern, I think, generally speaking, is that access to markets is probably a benefit to the industry as a whole. Most of our fish is exported, and we import quite a lot. So, making sure that that is not impeded or is made more expensive, because that will then impact us at the end of the day as consumers, is a critical issue.
Yes, I agree with all that. Certainly, the trade is what would jump out at me. As I said, the general sense I'm getting from people closely involved in the negotiations is that there might be hope for a free trade agreement, but it's these non-tariff barriers that would disproportionately affect shellfish, and therefore disproportionately affect Wales. So, in my various reports on this, I see Brexit as both risks and opportunities, and how those balance depend on who you are and where you are in the supply chain. Unfortunately, for Wales, I think there are probably more risks than opportunities. Maybe we can address those risks, and that's fantastic, but not knowing anything about the shape of Brexit where we sit right now, there are certainly risks and we shouldn't be afraid of saying that word.
I'd like to follow up, Chair. In the public mood, and certainly in the debate about Brexit, I think there was this vision that we'd have a 200-mile exclusion zone, or up to the median line, obviously, and our waters would be our waters. But it sounds to me, because of how closely tied to the markets we are, which are in Europe, that we're going to have as much access given to the Belgian, French and Spanish fishing fleets as there is now, roughly—or at least it will take many years for that pattern to change dramatically. Is that a fair assumption?
I think negotiations ought to proceed on good faith, and I think a wholesale change of fishing practices overnight is not desirable for anybody, so I think some form of transition is likely to be the way forward, and I think that there may be negotiations around the margins about, for example, the nature of reciprocal access rights. So, I—
Then let me ask the question slightly differently, because you're quite right. Do you think, after the transition, that current patterns are likely to change significantly in terms of the access of our nearest European neighbours to our waters?
I would say 'no', for a couple of different reasons. One is that there's a difference between access and quota share, and they're often combined together, but they're actually a little bit different. So, are we outraged because the Spanish and French or whatever are in our waters, they're on our side of the line, or is it because their share of the resource is greater than it should be? In other words, if the shares better reflected our sense of fairness, then does the location of the catches matter so much? If it's a shared stock that goes between French waters, Belgian waters, UK waters, if you can correct the first one, the allocation of the resource, does it solve the second one? And I think this might be the way the UK Government's going, for a couple of different reasons.
To be fair, this whole time, whenever Michael Gove is pressed on this, he always says, 'We'll have the opportunity to exclude foreign trawlers'. And then, 'Okay, will there be foreign trawlers post Brexit?' 'That is our decision'. So, they're certainly not committing to that. In the White Paper this morning, what's interesting about it is that they actually say the UK fleet wants access to EU waters post Brexit. So, there's a question about how hard will the UK—sorry, will the EU—push to maintain access? But, even from our starting position, it seems to be that we're open to the idea of sharing waters. So, yes, I suspect that there will be near identical amounts of access to waters, but I think the hope from parts of the UK fishing industry—and it seems to be what DEFRA is pushing on—is that, if you fix the balance of the resource share, then maybe that issue isn't quite so important as it first seemed.
Which it could have done by negotiating the common fisheries policy better in the first place.
In the first place, sure. And to be honest, relative stability—so, how much goes to the UK, France and other actors—that was already talked about being renegotiated in the next round of the CFP. So, that conversation would start, let's say, in 2022. I know George Eustice has said, when he was thinking ahead to the next reform of the CFP, that that was going to be first and foremost. Relative stability hadn't been touched since 1983, and there are reasons for that; it was seen as opening Pandora's box. But it's just getting ridiculous, with climate change and everything else, that there's no relationship between the resource and the shares as they exist. And Ireland and the UK have complained that it hasn't benefited them, so we were expecting to revisit it. Who knows? With the different timelines we're working on here, maybe 2022 is when this conversation will happen, anyway.
I think the point going forward, though, is that it's going to be more complex to negotiate these matters in the framework of a wider trade agreement than it would have been within a limited context of the CFP. But we can't go back in time now.
Unfortunately. Can I thank you both for your very detailed answers to our questions, which have been very informative and helpful to us? You'll get a transcript of the meeting. Can I urge you to go through it, because sometimes—and it happens to me quite a lot—if you turn away when you're talking, sometimes odd words get missed out. So, please check that there aren't any gaps. But thank you very much. We're very appreciative of you giving of your time and coming to visit us this morning.
Thank you. Pleasure.
bod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod yn unol â Rheol Sefydlog 17.42(vi).
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.
Can I move a motion under Standing Order 17.42 to resolve to exclude the public from the next item? Thank you.
Derbyniwyd y cynnig.
Daeth rhan gyhoeddus y cyfarfod i ben am 12:05.
The public part of the meeting ended at 12:05.