Cynulliad Cenedlaethol Cymru

Good afternoon. I'd like to welcome you to the Economy, Infrastructure and Skills Committee meeting this afternoon. I'd like to welcome Members and members of the public watching in.

I move to item 1, and we have one apology this afternoon from Hefin David, and, also, in accordance with Standing Order 34.19, I have determined that the public are excluded from the committee meeting in order to protect public health, but this meeting will be broadcast live on Senedd.tv. And we have already agreed that, if there are IT issues, Joyce Watson will act as a temporary Chair. If there are any Members who want to declare an interest, please do so—I always get this wrong—please say so now. Thank you. 

Thank you. In that case, we move to item 2, and there is just one paper to note, and that's the letter from myself as Chair to the Minister for Economy, Transport and North Wales with regard to our session two weeks ago on transport. Are Members happy and content to note that paper? Thank you. 

In that case, I move to item 3, and I'd like to welcome James Prices, who's the chief executive officer of Transport for Wales. I'm very grateful to James for coming back to committee, because James was due to be in two weeks ago, and I really appreciate your efforts, James, because you persisted with the IT issues, but they ultimately failed. I'm not quite sure why they failed, but they did fail, but we're very grateful to you for coming back to today's session, so thank you for that. 

Thank you for the opportunity. 

So, if I can perhaps start, James. Well, perhaps just first of all to say that item 3 is with regard to public transport. And we took some evidence two weeks ago, and the Transport for Wales element will be conducted in this session over the next hour to 45 minutes today. 

So, James, perhaps it would be useful if you could first give us an overview of how the pandemic has affected passengers and services, but perhaps also, you could include how you think long-term behavioural changes in terms of public transport and public perception of transport also plays a part in your overview as well. 

Okay, thank you. I will try and be brief on this, because I suspect a lot of what I will say you've heard from others already frankly, or read into yourself and had researchers looking at things as well. So, clearly, fundamentally, we've been affected in a fundamental way in the same way as all other operators have been. As we came into the COVID situation, we were talking to UK Government, the Department for Transport, Welsh Government and industry operators elsewhere, and everyone's view was that it was going to be a significant impact, but the impact was not going to be as great as it turned out to be. So, people were talking about maybe there being a 60 per cent reduction in usage. That was very quickly revised to an 80 per cent reduction, and it quickly turned into a 95 per cent reduction in usage of services in March, and that, compounded with refunds on tickets and refunds on season tickets, equated to a complete evaporation of revenue for the service. 

We can talk about the consequences of that, I guess, later, but if we roll forward, over the last, I would say, three weeks, we've seen a very slow and gradual return of numbers, and the truth is, as of today, we have, on average, numbers that equate to about the maximum number of people we can carry without breaking 2m social distancing rules. That's on average, so that will not be the case everywhere. But, we're carrying about 12 per cent of passengers—so, an 88 per cent reduction. The reason that we can only carry 12 or 13 per cent of passengers at the minute is that we're only running 65 per cent of trains, and that steps up again at the beginning of July to about 75 or 80 per cent of trains, when we will be able to carry around 20 per cent of normal passenger loading. And I suspect that we'll go on to talk about how we might deal with that as well, because we've got plans for how we could deal with that. 

I'm just interested, James, in that. I think you mentioned, if I've got this right, that you had capacity at the moment in terms of—

On average, I would say, yes. You could cut the figures a number of different ways, but our figures are up to about 12 or 13 per cent of what they were before COVID. If you apply average figures around 2m social distancing with the percentage of units that we are able to operate at the minute, that would equate to 12 or 13 per cent. So, I think it's distributed—

Sorry, it's my fault for not following this, but the figures—clearly, it's not 12 and 13 per cent up before COVID.

No. Sorry—we have 12 to 13 per cent of the number of people who we had before COVID, which compares to 5 per cent probably a month ago. 

Right, okay.

So, five in every 100 before—a month ago; 12 in every 100 now. 

Okay. I think I follow. And then, in terms of—did you mention that there'd be a step change coming up in the next few weeks?

Yes, at the beginning of July—between the first and second week in July, we're stepping up services again to be between 75 per cent and 80 per cent.

So, when will that be, because we're in the first week of July now, so, is that next week?

It's around 7 July. I can write to you with that date, but it's around that date.

Okay, so you're stepping up services—by how much, again, did you say?

It's going from about 65 per cent now to circa 80 per cent. And these are 80 per cent of pre-COVID figures. 

That's in terms of your services that you're running— 

That's right, yes.

—and then, how does that correlate again with the expected passenger numbers?

There are no forecasts for what we think will happen with passenger numbers. No-one really has any forecasts based on this. We're looking at what's happening at a UK level, and we seem to be maybe two to three weeks behind what's happening in England. England is breaching 2m social distancing too frequently for my liking, particularly on commuter services. But we still have some headroom to go, and the things that we've been doing to try and avoid that situation is: No. 1, we've been working with businesses and large employers to understand when they're thinking about bringing people back to work and if they are thinking about bringing people back to physical work places. And then, No. 2, talking to them about how we can stagger start times, because, if you think—and this is all based on 2m social distancing—if we ran a full service, which will be very tricky, we could carry 20 per cent of the number of people we could before and if we can spread that peak by two or three times—so, in Wales, our travel-to-work and travel-from-work peaks are very 'peaky' if that makes sense—and if you compare that to a London setting, that would be spread over a two-or-three times longer period. So, if we take 20 per cent capacity in one hour and spread it over three hours, we can take 60 per cent, and the rest of the people work from home, actually, that starts to become a more manageable exercise.

So, that's the basis on which we're trying to work. We're also trying to get into a place where everyone can book tickets. That's not as easy as it sounds, but we think we can probably do that. And we haven't taken the decision that we will do that either, because, for people with season tickets, et cetera, obviously, that's a different way of working. But my personal opinion is that everyone is having to work in a different way and we should protect the travelling public by putting in preventative measures before they board.

On that, you mentioned 20 per cent, is that 20 per cent of an overcrowded train already?

So, it's 20 per cent of the numbers that—. So, that is a very good question. So, if you took account of that, it would be lower than 20 per cent, yes.

Right. Okay. Helen Mary Jones. Oh, you've just muted, Helen Mary.

Sorry, I hadn't unmuted myself.

So, if we can start a discussion about transport then, James, if that's all right, about safety. Just generally, how safe is it to work and travel on Welsh rail services at the moment? And what steps are being taken to enforce the social distancing rules?

Okay. So, I hope it goes without saying that we're trying to make it as safe as it possibly can be and, not being a medical practitioner, I guess I can't really say how safe it is. But what I can say is that we have taken all the steps possible to make travelling with us as safe as it is to do anything else in society.

So, the type of things that we have done: if you go and look at stations, you'll see that they're marked out in the same way as best-in-class supermarkets would be. On trains themselves, and actually on some of the buses that we're working with, we've got the Travel Safer campaign that's been rolled out, which is all about encouraging people to act safely. Seats have been cordoned off, basically, to encourage—. It's still encouraging, because people could ignore the cordon and sit on them if they wanted to, but we're encouraging people not to sit where they shouldn't, to maintain social distancing. We've increased touch-point cleaning quite significantly. We have hand sanitisers at stations. We've got a lot of messaging about not travelling. We've introduced something we're calling JourneyCheck—I think it's called JourneyCheck—which allows people to see how busy their train might be before they go to the station. That’s for where you can't book a ticket. And as I said, we're hoping to be able to move to all-booked services in the near future.

And we won't stop there. So, we're also looking at whether there's anything we can do around air conditioning systems, for example—to have those cleaned as they go along. We'd like to consider more engineering controls on trains, more Perspex screens and the like. However, there are some other issues that have got to be offset against that: crashworthiness and the protection of passengers from other issues.

At one level, I would say this, wouldn't I, but I honestly think that everyone in the whole team and through the supply chain is doing everything they possible can to make it as safe as it possibly can be.

Thank you. In contrast to the advice that's been given in England, our Minister told the committee that he doesn't want to see people discouraged from using public transport. Do you think that's the right approach?

I think, on balance, it is, yes. I guess we just need to keep on eye on that. Why would I say, 'On balance, I think it is the right thing to do'? So, as bad as COVID-19 is—and it is really bad, and lots of people have very sadly lost their lives, or as we're learning now, have been left with physical and emotional scars from it—the things that will follow if we all get back in our cars with internal combustion engines are just as certain and worse. So, if we do nothing about climate change and we believe in the figures that we've all talked about before, that's going to kill a far greater number of people in the end, and nitrogen oxides, of course, are killing lots of people already. So, I think, on balance, the view is—and this is, I think, shared by quite a lot of the transport industry in some of the papers that have been written—if we do nothing to redress the natural fear that people will have that drives them to the private car, we could set climate change, NOx and the move towards more sustainable travel back by a significant amount.

But, clearly, we also need to make sure that we're not putting people in danger by having too many people on a service at any one time. I'm hoping, and I guess it is only hope, because lots of the things we're planning to do, like booking every service, JourneyCheck and encouraging people to behave properly, I'm hoping that all of those things can go together and we can continue with our long-term plans to invest in transport, so that when we are past this—and I guess we must believe that we will get past this—we can go back to encouraging people to travel sustainably.

And I guess the final thing I should say is that obviously there is also the opportunity to encourage people to walk and cycle for shorter journeys, in the open air, when we know that that's much safer in any event and it's better for them from a physical activity perspective. 

Thank you, that's helpful. My next question sort of feeds into that, really. So, looking at providing safe and effective socially distanced rail services when we come out of the lockdown, have you got sufficient rolling stock capacity to do that, to provide safe and effective socially distanced rail services, and how are any shortages being addressed?

So, I guess it depends how many people we need to move and whether people do change their habits from before and spread the peak, as I've talked about. Clearly, if they don't, based on any measure of social distancing, we will not have enough capacity, and frankly there's very little that can be done about that in the timelines that we're talking about, unless COVID is forever, in which case we need to reset things and think in a very different way.

Yes. That's a reasonable answer, I think. My next question is very specific; it arises out of some of the evidence that we received last time. The RMT said to us:

'We've got problems at the moment with Transport for Wales with Axis cleaners.'

Can you tell us any more about what those issues were and how they've been addressed?

I can, yes. You may or may not have seen a press release. I'm beginning to lose track of time in these lockdown conditions, but I think the press release was just this morning from RMT, so you may not have seen it. So, the background to this lies in a, kind of, outsourcing campaign that was conducted across the privatised rail industry in the late 1990s and early 2000s to get people off of the train operating companies' books, and what would be viewed as ancillary services, which the RMT would arguably correctly say are not ancillary services because without these things you cannot run a service, were outsourced with worse terms and conditions. So, that's the backdrop to it. In Wales, Arriva, and I think even before Arriva, had outsourced both cleaning and at-seat catering.

The issue for the unions involved—and I guess the issue for the staff concerned—is quite often those staff are husbands or wives or partners or children of people that they work alongside in the same train or in the same factory unit, and yet they're on different terms and conditions, arguably doing the same job. So, that's the fundamental challenge.

RMT had entered into a dispute with Axis, which is a supplier to KeolisAmey, working for Transport for Wales. So, we're quite a long way away from this, but obviously not happy with the position that we have ended up in. I think that the truth is we had hoped—but I'm not attributing any blame at all—that RMT, KeolisAmey and Axis would have sorted this out for themselves. That didn't happen, largely down to finance, and what we have agreed to do—and this wasn't an urgent, knee-jerk reaction; we were working on this in the background—we have agreed that, in the same way that we brought catering staff into Transport for Wales—that's into Transport for Wales proper, not into KeolisAmey—we have agreed with RMT to start a four-month process to work out exactly how we will do that.

So, this morning, RMT have announced that the strike action—I think the technical term would be 'has been suspended' because they will reserve the right to bring it back if we don't adhere to our word. I don't think there's any danger of us not adhering to our word, but we do need to work through how we do it in a way that is affordable and achievable. But I'm confident that we will do that; we've done that with catering and we'll adopt a very similar approach for cleaning.

Thank you, that's helpful.

Vikki Howells.

Thank you, Chair. I've got some questions around the implications of the pandemic for the future development of the rail franchise and metro. As you can imagine, I've got constituents asking me whether these planned changes are going to go ahead, and there's a lot of concern about the impact that the pandemic has had on future development. So, the kinds of things that I'm looking for some assurances on are the roll-out of the planned rail service enhancements, the procurement of new and refurbished rolling stock, and a few others, but I'll let you answer those two first.

So, I guess, in headline terms, the approach that we are adopting, as I've said before, is that COVID is not for ever and we will go past this point. And on the basis that people have talked about metro schemes and improving transport and lack of investment for decades, it's our kind of strategic view that it would be wrong to put things in the bin that will be needed in 10 years' time because of a problem that, hopefully, will only last for maybe two years, albeit with a long tail of cost and social consequences for people.

So, our overall plan is to try and continue to do as much of what we announced as we possibly can, however—I'll come on to some good news in a minute, so don't worry—however, we do need to be cognisant of the finances involved. So, I started off by saying that, basically, all of the revenue has evaporated. If we look at a mid-case scenario, we might have a gap over a 10-year period of £300 million to £400 million in the finance that we had available to us before, as a consequence of COVID. So, there's a short, sharp reduction this year and next year, and then a gradual recovery of revenue, but the view is, even for the five or six years beyond that, that we could still be trailing below the amount of revenue we might have expected to get. I think there are things we actually could do in Wales. So, with a properly integrated transport system, encouraging people out of their cars much more aggressively in the future, I think there's a lot we could do to address that, but to be prudent, we have to think about that long-term financial planning.

However, I think the good news—and there's a load of good news—is that, No. 1, the Welsh Government have agreed that we should continue with the metro scheme. We stepped down construction for about 48 hours after the Prime Minister made the announcement that no-one should go to work, because that seemed the right thing to do. We had to work through how we could safely reinstate work within both Welsh Government and UK Governments guidelines, which we did. If you go past the Taffs Well site, you'll see that's been continuing to work. So, metro continues, I think that's the headline approach on that, but there may be some slippage in the timelines of the final delivery of it, mainly because of knock-on effects of suppliers from elsewhere, but those slippages will not be significant in the overall scheme of things, and there's likely to be a marginal impact on the price as well, but it's looking like a marginal impact, not a significant impact. So, those are good things.

I guess another good thing, looking at the new rolling stock that's been ordered, is that it has all been ordered, so this is both a good and a bad thing. It has all been ordered and we've gone past the point of cost-effective break points in those orders. So, whatever we wanted to do, it's almost reaching the point where cancelling it would cost more than receiving it, so I can't see a world in which new rolling stock is not brought in on the Valleys lines.

And there have also been some other positives: we instigated a programme on the so-called 769s, for example, which have been the bane of my life since I started in this role, constantly being told that they were ready and constantly having failures of them. We instigated a programme about four months ago where the whole supply chain is meeting every week and is being properly project managed through—and I mean literally the whole supply chain—and the good news is that they are being delivered almost on a production line now. If anyone went past Canton, you'd see quite a few parts up outside, painted up ready to go. The immediate issue that we will face, though, is linked to driver training, and actually this is a significant issue for the whole of UK rail. So, driver training is required for driving a new class of train, and it's also required periodically for any drivers to maintain their competence. Because of the 2m social distancing rule, no driver training has taken place in the UK since probably the middle of March. So, there's a big backlog in driver training, and that is going to impact on our ability to introduce 769s and to introduce mark 4s as quickly as we want to. However, it's looking like they can still all be introduced this calendar year, and it's also looking like we can keep hold of older rolling stock for a few months longer, so that isn't actually an issue. So, I would be more upbeat, perhaps, than I've been before. 

Other things that we've talked about doing a long time in the future—so some big investments in stations. Just to be honest, we are looking at those again, because we've got that £300 million to £400 million gap. What we're not saying is, 'How can we not do these things?' What we are asking ourselves—and I think we need to be challenged very hard on this—is, 'Can we deliver some of those improvements, the same improvements, at a lower cost?' And if you look at the costs that are normally incurred—and this is not a criticism of Network Rail, it's just a historic position—if you look at the costs that are incurred on Network Rail premises for doing things that—. I'll give a non-evidenced example that is made up for the point of it, but if you asked for a carpenter to come and fit a door in your house, maybe that might cost £150, if you do that on a railway station, you're probably looking at £1,500 to £2,000. So, the question we need to be asking ourselves is, 'Why does it cost so much, and can we do the same at a lower cost but in a sustainable and socially acceptable way?'

Thank you. Very useful full and frank answers there. So, just to focus on the core Valleys lines in terms of the delivery of a modernisation there, and also the transfer of core Valleys lines to Welsh Government ownership, could you just give us a quick update there and whether things are on schedule? 

Yes. I think some really positive news on that is that the Valleys lines did transfer to us. It was such a big deal and we only got it over the line I think two minutes before it all ran out of time, but I can't remember the date on which it happened, so we might need to write to you on that, but, that was, from memory, in March on the date that it was meant to transfer it did transfer.

We took the decision because of what was happening with COVID and some of the frankly dreadful news that was coming out at the time, that we wouldn't make anything of it at all, even to the extent that we didn't write—I think I could be criticised for this—but we didn't write to local residents immediately on the basis that they would continue to write to Network Rail and Network Rail would immediately pass it to us for us to deal with. We didn't think that it was the time to be celebrating anything, but the good news is that it did transfer, the staff transferred, the service transferred, and no-one noticed. And if I compare that to the transfer, originally, of rail services and autumn, I think it shows that we learnt quite a lot about being prepared from some of those examples of before.

Thank you. Just one final question, then, just to find out whether the pandemic has affected delivery of any wider Network Rail infrastructure work, and if so, what impact this had on rail services now as well as future plans?

The answer is it will have impacted quite a bit. I mean, we're still working through the detail of all of that. I'm hopeful that none of that is significant because Network Rail will be using the same mitigations that we are using, and we're challenging Network Rail. But there will be challenges, but I don't think they're challenges that run into years, I think they're challenges that look like months. And to the extent that there are cost challenges for Network Rail, I guess the thing we need to remember is that the Network Rail asset is still a Network Rail asset; it's owned by the UK Government, the Prime Minister has been making some very strong statements about spending an awful lot on infrastructure. So, from my perspective, we need to make sure that Wales get its fair share of that money, not just to ensure that we can deliver what we were going to deliver before, but ensure that we deliver a whole lot more.

Thank you very much indeed.

Thank you, Vikki, and apologies, in my haste, I left out Joyce earlier on in the session. So, Joyce, you've got two areas that you want to cover. If you do your first subject area, then I'll come to Helen Mary, who wants to pick up on some other issues, and then I'll come back to you, Joyce, for your last section. Joyce Watson.

That's fine, and, anyway, it all flowed nicely, so—. I'm going to talk money, or lack of it, perhaps. But anyway, I want to look at the Welsh Government's financial support for Transport for Wales, and particularly for the emergency measures agreement that was announced by the Welsh Government, and what the terms of the Transport for Wales emergency measures agreement are, and how, if at all, they differ from those that are in place in Scotland and England. 

Okay, so—I'm trying to think of the best way to start. We have worked closely with the Welsh Government, and we've worked closely with the UK Government; probably less closely with Scotland, but we've been in touch with them on a weekly basis. The reason for the UK Government link is, obviously, we run services into England, and we're accountable to the UK Government for some of those services, as well as to the Welsh Government for the majority of our services in Wales.

We got a package of support from the Welsh Government that fell into two halves. The first half of the support enabled us to provide 80 per cent of the downturn in revenue coverage to the operator, but we backdated that by a month. So, I think that it would be true to say that the operator had to put their hand in their own pocket a little bit for that, but the amount of which they had to fund would have been relatively low.

Then, we moved into a second part of support, where Welsh Government, through Transport for Wales, is taking full revenue and cost risk. So, in this world, which is exactly the same world that the DfT finds itself in, the operator is acting in—I don't know the right term to use; they are doing exactly what we asked them to do, and we are taking the cost and revenue consequences of that. So, it's moved into a pure concession model.

The second round of support is structured in three phases. The first chance, or opportunity, for that to end is the end of July. The second end point is the end of October. Then, there is a legal opportunity for it to run a further three months after that, but that is the legal opportunity rather than the political opportunity at this point; i.e. there is no Welsh Government agreement for it to run past October.

What we are turning our attention to—and I won't go into very much detail on this because it will be commercial in confidence for the operator, more than for us, actually, and probably share-price sensitive as well—. What we're turning our attention to is what happens beyond the emergency period, because we need to run services—I was going to say 'forever', but that might sound a bit grand—we need to run services for as far as we can see in the future, not just to be focused on the next three months.

There's a whole host of different ways that that might pan out, but what I can say to the committee is that we have, at the forefront, the impact of that on the customer and on the people who use the service. That, combined with value for money for the taxpayer, will be the two things at the top of our list for delivering. At some point in the near future, I'd be really happy to be scrutinised on the emerging things of what we are doing in that.

Okay. So, you've answered the second question, so that's good. You've pre-empted it: how long it will last for. At the moment it's July, possibly October, and maybe into the future.

So, how has the £105 million additional funding that you have so far been used? You've partly answered that in terms of keeping the service running. Are there other ways that that money has been used as well?

So, the answer is, 'No, not really.' The full cost of this is to keep the service running. It may be that we do not use that full sum of money. The full sum of money was based on a reasonably pessimistic view of how much revenue we would get in and how much cost there would be. We are actively looking to not increase revenue, because there would be a social distancing issue, but we're actively looking to ensure that we don't incur costs where we don't need to. I would like to hope, but I can't guarantee anything, that we may bring it in a bit below that figure, rather than anything more than that figure. But, it's only being used for keeping services running.

So, you've got the money and you've used it in the way that you have, in terms of direction for use of those funds and control over the use, do you have any control over the way that you use those funds—that's you, Transport for Wales—does KeolisAmey have any control, or does all the control reside with the Welsh Government?

KeolisAmey will have no control, in effect, in this world—and that's not an aggressive comment. They are receiving full revenue and full costs coverage. So, it's like going to a garage and asking them to service the car and them telling you you that you might need a spare tyre but you saying, 'Actually it's legal, I don't want one.' So, it's entirely up to us.

I guess, ultimately, the power is with the Welsh Government, but obviously Welsh Government has delegated that to Transport for Wales. So, from an operational perspective, it is Transport for Wales that are taking those decisions, obviously in conjunction with and talking to Welsh Government, to get policy steers. So, for example, I've had conversations with the chief medical officer to try and understand best practice cleaning, best practice social distancing, et cetera, et cetera.

But, the remit is for Transport for Wales to use the money that, frankly, we asked for. Myself and the board are accountable for how we spend that money to provide the best service that we can in the situation we find ourselves in.

I'm assuming that, within that, there is a fee that Transport for Wales receives. So, if that's correct, I'm also assuming, then, that there are performance management standards attached to that.

You're quite right. Transport for Wales Rail Services, KeolisAmey, are receiving a fee for that on top of the costs. That is set between 1.5 per cent and 2 per cent. Personally, I would like it to have been less than that. The reason for it being set at that level is that's the level that the UK Government set, and we were struggling to negotiate anything other than that. At the beginning of the period, we did not have the upper hand—not that it's about having an upper hand—but we are now in a more stable position and are able to exert more control. But, what we have not done is to provide support that is more generous than any other part of the UK has done. Transport for Wales, as in the Government side of things, doesn't have a fee for operating that, obviously, because we're not for profit.

Okay. If I can ask an additional question, we're talking about trying to run a service, we've talked already about the need for that service and that it's inclusive—and I'm sure Russell will have had the same things in his postbag that I've had in mine. In some areas, of course, due to the way that operations are happening at the moment, some trains aren't stopping at all because of short platforms. We talked just now about how to spend money more usefully, to do things a bit cheaper—I'm just taking liberty because I happen to have the microphone—is it the case that you're looking at perhaps some investment that will help if you need to increase those platforms, with a minimum cost to doing that?

So, I'd like to be able to say 'yes'; I think the honest answer at the minute is 'no', on the basis that the forecasts that are coming out of the UK Government are suggesting that the time it would take to introduce those types of changes is longer than we will be dealing with the COVID problem. So, I'm not happy where we've reached in terms of having to leave out stops, but, hopefully, the rationale for having to leave out stops is clear, which is that we can't achieve social distancing on that small number of stations.

I guess, though, what would be—. And I'm beginning to question the supply chain and my team on this. There is a very valid set of questions that says, 'Should we be building a more resilient network for the future on the basis that maybe COVID doesn't go away, or on the basis that we just have to live with it, or on the basis that we get something else that's similar in the future?'

Just finally, on the same theme, because I might as well finish it off, I've been told that it's social distancing that's causing the problem, and I accept that. If that social distancing came down to 1m, does that make a difference? If you don't know the answer, can you let us know?

So, it will make a difference, quite a significant difference. I guess I need to take an action, if someone can remind me, to write to you on those stations, which ones it would make a difference for, but it will make a significant difference. So, if you go to 1m, depending on the type of train you're talking about, you'll go from 20 per cent to maybe 40, 45 per cent, maybe even 50 per cent capacity, in some instances. And the same would be true on platforms, et cetera.

Okay. Anyway, I'll come back to the questions that—

Yes, thank you, Joyce.

—Russell was expecting. I'm going—. The next set of—

Joyce, do you want me to give you a break? Helen Mary wanted to come in with the second set of questions.

That will be fine, yes.

And, if we are short of time, Joyce, if they can be consolidated, that'd be helpful as well. Helen Mary.

Yes. Just to come back to the safety issues, James, if we may, what's your view about the effectiveness of Welsh Government guidance that's been issued for operators and passengers on public transport? And do you have any perspectives on how that might need to change and develop in future? We've already touched on the 1m versus 2m stuff, for example.

So, we've been working closely with the Welsh Government on this, and, as I mentioned earlier, we've had direct engagement with the chief medical officer as well. I guess my reflections on that were twofold: No. 1, there's a lot of work and a lot of thought that's going into that; but, No. 2, maybe the science isn't as clear cut or as strong as I might have thought, from looking at some of these briefings from the outside. And there are always different views on these things and these people in, frankly, very difficult situations are having to make different judgment calls. But I think the guidance for us has been pretty clear. We have been able to operationalise it. We've been given the opportunity to talk about risk assessments, and, if something is being asked for that might have a bigger negative impact, through an issue that hasn't been considered, that has been taken on board. So, I think that the process has been pretty good, actually, and that process is ongoing. I guess the longer term issues will probably be around if the virus stays with us for a long period of time, and how do we handle a new normal, and what does a new normal look like. Because—this is just a personal perspective—all the mitigations that we're putting in place: 2m social distancing; only being able to carry 13 per cent of people, that doesn't feel like a new normal that could be sustainable for a decade. We would need to think in a very different way. We might need to think about having opening windows on new trains. We might need to think about having sneeze screens fitted as standard above the seat rests. We might need to think about having a different configuration of seats.

There are some more urgent things that we might be able to use COVID for as well, if that's not an unfortunate turn of phrase. So, maybe we could do away with ticket-vending machines and gate lines and move to touchless ticketing, so people don't have to have touch points, which, of course, would have the benefit of moving towards the integrated ticketing that people have talked about for 20 years, probably, but we haven't been able to do it, because people are so ingrained with the systems that we've got today. There are some challenges with that around people who don't have access to a phone or don't have access to a card, but, increasingly, there are ways through some of those things.

So, I've probably veered off the question, but I think the exchange has been good. We're getting what we need. For me, the big challenge would be what happens if this is for the longer term—how do we make this work if this is for the longer term?

I think Joyce will come back with some questions on that. To bring you back to the here and now, in our previous evidence session, which you weren't able to join, we heard support for mandatory wearing of face masks on public transport, from both the unions and from the bus operators, with this feeling that, even if the evidence wasn't clear-cut on medical grounds, it would help with people's confidence in public transport and people feeling that public transport was safe. Does Transport for Wales have a position on this?

So—

If you could just be brief, James, because we're a little short of time.

So, 'no' is the very brief—. We don't have a position on it. I understand both sides of the argument. Personally, I would veer towards just because someone feels they're being safer, if they're not being safer, then that's possibly a dangerous thing, but I know people will argue strongly on both sides.

That's helpful. And then, if I can just ask about the cross-border stuff, and I'll leave the rest, Russ, if that's okay. So, face mask rules and, potentially, social distancing rules are different on different sides of the border. Is that a problem for your services?

So, face mask rules, we've managed to work through it. We thought it was going to be a significant issue; it's turned out not to be such a significant issue—to date, anyway. The big concern was around groups of customers and the way they interact with each other, i.e. people being very upset that someone was or was not wearing a mask. So far, that hasn't been an issue.

Social distancing, I think, is a whole new ball game, and, if the two nations have got different rules, I think we will have to run at 2m into England, because, if you think about it, coming into Wales, what are we going to do—boot half of the people off the train at the border? Because that would be the consequence.

Yes, we might not recommend that as a committee. [Laughter.] Joyce Watson. Just unmute, Joyce, sorry.

Right. Because we're short of time, I'm going to just ask you very quickly what impact the pandemic has had in your development of your wider role and the additional responsibilities that you were given for bus policy, active travel and aviation.

Okay. So, if I can answer that in two halves, the first half is that our board strongly believes that the pandemic strengthens the reasons already given for wanting to bring that into Transport for Wales and having a single place of accountability, a single place of joined-upness and planning right across Wales. So, the board strongly thinks that, because of the direction towards the private car and the need to counter that, putting those things into Transport for Wales, there's a stronger argument for.

At the same time, Welsh Government has obviously been snowed under with additional work, and, therefore, some of those things have had to be—and I understand and support this—put on the back burner, because they are non-urgent and non-life-threatening matters. So, where we are is that there's a process to bring bus into Transport for Wales. It's not with us yet. I think it's—. We're beginning to support Welsh Government and local government, actually, on it. It's probably likely to arrive with us in August time. There's a wish from the Welsh Government to actually accelerate active travel coming to us, but I think roads and aviation are likely to be put back—put on the back burner for a while, anyway.

I think that actually answers it all.

Thank you, Joyce. And, James, if I could ask you a question—it's not particularly COVID-19 related, but—a manned or womanned presence at stations, is that important to Transport for Wales, to have that manned or womanned station?

That's a big question. I guess it depends what type of station it is. So, if it's a heavily used station, and one where people might need advice, guidance, help, support, then I think the answer would be 'yes'. If it's a more lightly used station, or a station that is used by commuters who know where they're going and don't want to ask anything, then maybe not. So, there's probably not a one-size-fits-all for that, and, equally, as we look into the future, there may be more—and we'll have to work very closely with union colleagues on this—cost-effective ways of providing people at stations by collaborating with local cafes, local shops, et cetera, et cetera, so that we can share costs, and then we can have more people on more stations. 

So, how do station agents fit into your business model going forward?

This is probably worthy of a whole other session, but station agents are a group of people—there aren't actually very many in Wales, but there are a group of people who subcontract, at the minute, to KeolisAmey. You will know this, and they make a margin on the tickets that they are able to sell. The honest answer is I don't think there is a proper strategy for how they fit in, and, depending upon how we respond to the COVID crisis and how we come out the other end, and what business model we choose to adopt, I think there could be a different approach to ticket agents. In principle, I think they should be part of a mixed model of how we run the network.

And station agents—you mentioned that there aren't many across Wales, but how have Transport for Wales supported those particular agents throughout the pandemic? Because presumably they're self-employed, they have lost business themselves, and obviously they need support as well. 

So, it's probably something I need to write to you on. We have had discussions about it and we have done certain things. So, the basics we will have done are to defer rental payments, work with businesses and Welsh Government to make sure those people can access the wider Government support that is available. I don't believe we have been able to take the £105 million, if you like, and provide that proportionally to those ticket agents, but I'll take an action to look into that and write back to you. 

I'd be very grateful for that, because I'm aware some station agents provide a very valuable service, because the ticketing system across the whole country is complicated and, at my own station office in Newtown, for example, the station managers there have always produced a very good service, because they know the best combination of tickets to buy and offer a good service. So, if you do write back, I'm particularly interested to know how station agents fit into—

So, the independent station agents—yes, no problem.

Absolutely. I'd be very grateful for that. 

Okay, is there anything else, James, that you would like to add that's not been drawn out in questions?

No. Thank you for your time.

Well, we really are grateful, and we'll give you a transcript of the proceedings, of course, as well. But we're very grateful for you coming back and making the time this week as well to come back to us. So, thank you to James Price.

We'll take a short five-minute break and we'll be back at 14:30 for our next session.

Welcome back to the Economy, Infrastructure and Skills Committee, and I move to item 4, and we have a panel in front of us from the hospitality and tourism sector this afternoon. Apologies have been received from Sara Jones, who was representing the retail sector.

But before I do, can I just say as well a happy sixtieth birthday to Helen Mary Jones, who had her birthday on Monday? So, many happy returns. Pen-blwydd hapus.

Diolch.

So, if I could ask our witnesses perhaps to introduce themselves for the public record, if you could go ahead.

My name's Andrew Campbell, and I'm chair of the Wales Tourism Alliance.

My name's Nigel Morgan, professor of tourism management, and I'm head of the School of Hospitality and Tourism Management at the University of Surrey.

And I'm David Chapman, the executive director for UK Hospitality in Wales—UK Hospitality Cymru.

Okay. Well, thanks so much for being with us. I'm sure you're all very busy people and, like us, probably entering lots of virtual meetings like us as well, so we really appreciate your time with us this afternoon.

Members will have a series of questions, but if you could just give a very brief overview of the challenges facing the hospitality and tourism sector, and what you think are the most pressing—your highlight issues, the most pressing concerns in the short term. Who would like to address that question, if not all of you? Who would like to go first?

Happy to go first.

Thank you.

Okay. It's been a very tough time for the tourism sector. Ninety-seven per cent of businesses shut down on 23 March, and 80 per cent of staff furloughed. So, absolutely no income at all, and that came off the back of a very slow start to 2020. The virus was making its impact on the world, so people were starting to work at home, the international arrivals were dropping off, and it's been particularly exasperating because we've lost two bank holidays, we've lost the Easter, we had some terrific weather and we lost trading opportunities through that. So, it's been a very, very bleak time.

We're very grateful for the financial resources, which I'm sure we'll probably come on to, and it's just about trying to move this industry forward. The announcement from the First Minister 10 days ago was very welcome, to restart things on 13 July. But if you ask me what the most pressing issue is, it's to get all the sectors open, it's about getting the dates for everyone. We've got dates for many of the sectors, but not for all of them.

And if I can ask Nigel and David, if you want to come in. I'm particularly interested if you could focus on what are the most pressing issues that need to happen, going forward.

I've spoken to Nigel earlier, so I'll go next. I don't want to repeat what Andrew has said; it goes without saying that I'm completely supportive. I think we've got to look at the short, medium and long-term needs of the industry.

A short-term need of the industry is getting things open, getting the different businesses open, and it's got to be done in an orderly, safe and clear way. But it does need to have some sort of guidance on that, to be able to get businesses shaped up and ready to go, to bring our staff back to the best level that we can, to have training for them to handle the new situation, and to make our customers as safe and welcome as possible.

Medium term, we need a further package of support. We've had a great package of support to begin with. We really do need a package of support to get us through what will be an extraordinarily difficult winter.

And then we need some longer term rethinking about where the industry goes, and I'll come on to that a bit later. But essentially, the foundation sector offers us a fantastic opportunity, and we should be able to magnify that through the difficulties that we've experienced in the last few months.

This crisis has shown exactly how important hospitality and tourism elements are to the Welsh economy, in every community. We need to embody that in economic policy, and we need to push ourselves to the top of the tree, so that we can look after the communities that we've served so well over generations again, once we get back on our feet.

And David, how do you feel about the grasp that the UK and Welsh Governments have of the issues affecting the industry?

I don’t think there's any doubt whatsoever. I can't speak very much of the UK industry. Our colleagues in London are working really closely. It's the first time, in fact, our industry has been as influential, I think, as it is at central Government level, if you like—UK Government level. Before that, we were probably knocking and looking through the window. Now, we're really at the centre of Government. I think that was one of reasons why we got so much support at first, because the understanding was there.

In Wales, I can't have any criticism of the Government for its consultation and assistance with us. They've brought the industry in on every occasion. We sit on a taskforce. We work really closely with Government to try to get the industry issues across. I think there is an issue about alignment that I think all of us would see, because it will lead, possibly on Monday, to difficulties between the situations in the two Governments. On 6 July when we open, if everything goes well, we'll open the roads again, and we'll see some discrepancies then about how we're positioned with that.

And Andrew, can I ask the question to you, sorry, in regard to: have both Governments got a grasp of the issues affecting the industry?

Yes, very much so. David and myself sit on an emergency tourism group each week, and that's been well attended by the Deputy Minister for Culture, Sport and Tourism, and Eluned Morgan also sits in on the call. We're getting a direct line straight to the heart of Welsh Government. So, the consultation is good. I'd like to pay tribute to all the people who work for Visit Wales and Welsh Government who've worked tremendously hard. They do listen to what we say, it is an influential group. They also sit—have done this morning—on the UK tourism industry emergency response group, with a direct line into the Department for Digital, Culture, Media and Sport. So, that's been good to get the Welsh voice heard there. We've also had calls through the Secretary of State, so there has been that joined-up approach. So, yes, we've had good consultation—can't fault that at all.

So, the bottom line from both of you—David and Andrew—is that you think both the Welsh and UK Governments have got a grasp of the issues affecting the industry. 

Yes, absolutely. 

Okay. Thank you. And Professor Morgan, did you want to come in on any of the questions I've asked? 

Yes, thank you, Chair. I think in terms of the medium and short-term priorities, we've got to focus on reopening, resetting and then an action plan for recovery. But if I can just take a moment to maybe put the industry into a little bit of a wider context, without repeating what Andrew and David have said. I think we won't have an Airbus-style announcement of job losses because our industry is made up of small and medium-sized enterprises, located often in peripheral economies, but I think because we don't have that opportunity to have that big headline announcement, perhaps we are not getting an opportunity to elevate the importance of the industry as much as we could. And I'm actually seeing some reference to the importance of the industry that is underestimating the value. 

Two years ago, the total value to the Welsh economy was £9 billion. That's £25.5 million a day. Now, as Andrew said, the lockdown has coincided with the start of the tourism season, which actually was predicted to be really successful. We've seen over £100 million from Welsh Government and private sector in north Wales alone. So, the pandemic has obviously resulted in the immediate shutdown of almost the entire Welsh tourism sector, with staff being furloughed. And this is where it gets really important, because the latest surveys suggest that a quarter of all those businesses do not expect to survive more than three months, and a further 25 per cent are worried about the next six months. 

I've been involved in doing some economic modelling and an impact assessment, and the figures we've estimated—and we say that this is a conservative estimate—is that Wales is currently losing £25.5 million a day from its tourism economy, which actually equates to £2.5 billion over the 100 days of the lockdown period. I think what we've got to bear in mind is that that lockdown has coincided with 100 of the most—. If you think that the Welsh economy in tourism terms has got 180 most profitable days, the 100-day lockdown has coincided right in the middle of that. 

I know I've perhaps gone on a little bit about the statistics, but I think it's really important that we recognise that the industry is responsible in some areas of Wales for a quarter of the economy. So, I think in terms of planning to reopen and then beyond that, in the medium term, how we have a national action plan to recover is hugely important for Wales. 

Thank you, Professor Morgan. I'll come on to Helen Mary Jones to dig into some of the detail that you've outlined. Helen Mary Jones. Just unmute.

Sorry, Chair, I thought it was Vikki Howells next on this section.

Do you know what? You are right. 

I think you're back on the last section.

I'm not doing very well on our agreed order of questioning at all, am I? You're quite right. My apologies. Vikki Howells. 

Thank you, Helen Mary Jones, and thank you, Chair. Just some questions then for the panel, please, to try and obtain your views on the Government business support as it has stood to date and in the future as well. So, to begin with, what are your views on the speed of the Government response and the level of both the Welsh Government and UK Government resource that's been allocated to date?

Shall I go first? 

Yes, please, thank you.

Well, it's been very timely, the speed of the measures. They came out very, very quickly and all credit to people doing that furlough scheme particularly, I think we all recognise it's an absolute life-saver, and the other financial measures that have been rolled out have been very, very helpful. They haven't covered absolutely everyone, and I think that's been well-documented, and we continue to have conversations about where the gaps are and, as the process has gone on, has evolved, we're trying to actually square those off and we're in continual conversations with Welsh Government through our Friday meetings in giving that feedback back.

My issue, I think, with regards to the financial measures is an issue of communication. Not everyone belongs to a trade association. I represent a trade association, 7,000 businesses, and many tourism businesses belong to trade associations, but not all, and I think the challenge has been to get the information about the financial measures out to those people who don't belong to any affiliated organisation. I think the Wales Tourism Alliance would be very much in favour—and we've had this conversation for many years about statutory registration. It was something that was mooted in the Development of Tourism Act 1969 that all businesses become registered, and it's never happened, and we have conversations about whether it should. And all around the world, businesses, if you want to go into tourism, you have to be registered. We haven't done it here in the UK, although Northern Ireland has done it lastly.

I think it makes complete sense when you've got a public health emergency like we have now to actually suggest that we look at having statutory registration, because if all businesses were registered and we had a handle on every business, then we could actually contact them and tell them about the financial measures, because I speak to people and some people haven't heard. I know that sounds absolutely crazy because we do live in this very digital world and everything, but there are people still being missed. So, I think it's time that we actually considered the statutory registration scheme to actually try and cover everyone.

I think, as David said, we are concerned about going forward. It's about keeping the businesses alive for next year. This is about survival; next year is about recovery; the following year is about profitability. So, it's a three-stage process and we've got to get people going. And the reason for the imperative on the dates is the fact that 60 per cent of tourism income is made during the six weeks during the summer holidays. So, if we don't get those dates and we don't cash in on the next six weeks, it's going to be very, very bleak and it's a cliff-edge situation that we're all in.

I could go on and talk more and more about some of those financial pressures. We are very mindful, Vikki, of the fact that, coming out of a winter period where we've had little income, in March we're going to have businesses facing a VAT bill; we're going to have businesses facing a rates bill. And that's where, even if we have the survival of businesses now, they could fall off the edge at the beginning part of next year. So, again, the Wales Tourism Alliance would call for another rates holiday and a possible deferment of VAT as well as—I know the other gentlemen would say—a reduction in VAT. I've taken up enough of your time, I think. We'll move on to the next.

That's fine. Vikki, do you want to ask your next question and maybe David and Nigel can pick up on your first question if need be as well?

Yes. In fact, my next question was going to look at the level of awareness among businesses, which Andrew's just covered really well. So, Nigel and David, if you'd both like to speak to that as well as your view of the Welsh Government and UK Government's support to date, that would be really useful.

I think all I would want to add, because I don't want to take up too much time for the committee, is that I think this was a really completely new scenario for both sets of Governments, and the way that, although there is inevitably a gap between the UK Government and the Welsh Government being able to work, given that you have to work out what the Barnett consequences are and other things before you can actually operate—the speed and the efficiency of the Welsh Government in operating the financial support that it did was tremendous. There was another example, I think, where one of our support measures went through the Development Bank of Wales—that really wasn't before this crisis equipped to do anything of that magnitude, and they adapted and did really well as well, from what we could tell from members. So, I think at that front end of the crisis, great efforts were made, which protected, really, thousands of jobs in Wales for us, so that part was great.

I think what it's done is highlight what is ahead of us now and what we have to deal with, because with the rapid implementation of that support system, it's a life-support system economically for the industry. The problem now is that the furlough arrangements are going to end; we are having to look as an industry at what the needs will be without knowing when we're going to be able to reopen, so that puts big pressure on to management to try to make sure that the businesses are still in position to be able to take up what the customers want and that means they're going to have to inevitably look at quite serious numbers of redundancies. That's a real worry for us, because when this happens, it's a very hurtful process for the people who have to do it and the people who receive it, and I may be saying the obvious, but I think there's a serious well-being issue here that we need to look at. We're interested in looking at the across-the-board consequences of this issue, and I think there is a serious well-being issue that we need to look at regarding the potential for what is going to happen in the next few months. We must make every effort to try to support and to assist those businesses to be able to look after as many members of staff as possible—some of which are family, some of which are friends, because that's the nature of our industry. And I think if anything, today, I really want to make it clear there's a need for unity around—from the industry and Government—around making the very most of all support to help the industry get to this position and to keep as many people as possible employed in it.

If I could just finally add—I mean, I think David and Andrew have given very comprehensive answers to the question. To add one extra dimension, I think the real challenge is going to come when the furlough scheme comes to an end. The other thing that we perhaps don't often think about is the fact that there are some jobs that would have been created at the beginning of the tourism season that never actually were filled, so we've not only got redundancies, but we've got jobs that weren't created in the first place. And tourism is the largest sector for job creation for 16 to 24-year-olds in Wales, so young people are already arguably disproportionately affected by the fallout of COVID, and tourism is going to have that double whammy for young people.

Okay, thank you. I've got two final questions. I'll try and wrap them up, really. Don't all feel as though you need to answer them, but I'm just interested in where you think the gaps are in the current business employment support schemes. And all three of you have mentioned the challenge of when the furlough scheme comes to an end, so just to see if there was anything else you wanted to add to that in terms of what sort of new and additional Government support measures you might like to see, then. I don't know who would like to start. David?

David.

I'll start with this, because it's something I've been really enthusiastic about trying to propagate within our discussions for a good couple of months, really. I think the position is that we know that resources are finite—I think that's the beginning bit—we know that Welsh Government hasn't got the capability of being able to give this industry what it needs to be able to maximise the number of people that can work in it over the next few months. That's a serious issue. What we need is on two fronts, really: we have to make a strong argument to Welsh Government for getting the biggest percentage of resources possible into our industry to make that work; the second one is that we're already making plans to help Welsh Government to build a case to go to UK Government for, to illustrate the unique needs of the Welsh hospitality and tourism industry, and our unique position within SMEs and communities in Wales. Now, that's the trying to provide the funding for it. I think what we need to do as well is to recognise that this is, as Andrew said, a two-year stage process. We need some help to get us through the immediate. Now, the August opening will be huge, but also, you know, there's a winter coming up and we need to cope with that. Each business will have a different requirement because some businesses will be able to do better given their situation and what they offer than others, and so we need a tailored support package to look at how we deal with that. An extension of furlough for a little bit longer would help take away some of the uncertainty—possibly take away some of the uncertainty over the redundancies that we could be facing. I think a system of smart grants where companies will be able to come to you to say, 'For this month, because of the nature of my business, I could do with a bit more support. I don't necessarily need it every month, but the way that my business plan works, I would like a little bit of help here.' And I think that could be something we could work up as a short-term measure with the resources that are available.

As we go into the next year, you've mentioned the business rates, I really think it's important that—. Our businesses paid ridiculously unbalanced business rates for the last two or three years. That's because we're property based in many circumstances. The business rates system has been surpassed by the nature of modern commercial activity, so that the internet businesses and out-of-town businesses, which are disproportionately larger in the economy than they were, are disproportionately smaller in terms of the revenue that they raise through the business rates system. That has to change—everybody recognises that, I think. But this is a genuine chance to do a much bigger reform—root-and-branch reform of the rates system, so that we can have not only a level playing field, but a springboard for us to be able to get out there and show what the industry can do in terms of capturing fantastic careers for young people, building brilliant new offers and businesses, attracting the world to Wales, making it a cultural and an iconic destination. All of this can be done with the right sort of support. So, business rates is an integral plank of that. We need to look at that as a big, new investment in the foundation sector—make it all work. We've got a new hospitality skills board with the tourism involved. We've got the chance to be able to bring great new careers, change perceptions, influence people about how our industry is so important. That needs investment—we're talking about that at the moment. 

And then, finally, I think it needs to look ahead to 2022, and the chance when we can actually grow and put money back into the economy, because that is one of the few—I think one of the few unique elements about our industry is that it's generational. It's been there for so long that you would, and your families, would know it going back, and they may have visited the same premises. We're not going anywhere, you've not got to worry about giving us a start-up grant and then see that we move to another country because that's not how our business operates. We will come back and give a tremendous amount of support into the UK and the Welsh economies once we're back on our feet, and so this is a bridging loan for the future; it's not a bail-out, it's not a handout, it's a support package that, if it's done right, will maximise the number of livelihoods we can keep alive and enable us to bring more and more and more in in two years' time and grow the economy.

And if I can ask Nigel or Andrew, if you want to come in—we're a bit short of time, but if you can be succinct. I mean, our committee exists to scrutinise the Government and we want to be making recommendations to Government following your evidence. So, what is it that you believe that we as a committee should be recommending to the Government in terms of business support for your sector? 

If I could come in and be really succinct. Just to follow on from David to say that obviously tourism is rooted in every sector in every corner of Wales. So, if you look at Gwynedd and Anglesey, 90 per cent of tourism employs the local people, so we are talking about an industry that underpins the economy in so many peripheral areas. The thing I would just add to David's call for Wales to reach out to the world is I think it's time for Wales to reach out to Wales. Actually, only 14 per cent of visitor spend in Wales comes from Welsh residents. I would really like to see a campaign selling Wales to the Welsh. We are, actually, the least likely to take domestic holidays at home. Only 32 per cent of us will do that, whereas 65 per cent of trips in Scotland are taken by Scots. So, I think that, in terms of acting locally and bringing tourism recovery in the very short term, we can also do some campaigns that sell Wales to our fellow Welsh citizens.

Nigel, are you suggesting that Welsh Government does that, rather than the industry itself?

Well, I think that it could be something that Visit Wales takes up, Chair. I have actually been saying this for a number of years—that, for whatever reason, we don't actually holiday enough at home. Lots of other countries are actually looking at COVID and the recovery from that to promote more sustainable local tourism.

Okay.

I'm not saying that we don't chase the big international, high-ticket markets, but a small shift in the dial in terms of people spending locally will make a huge impact.

Andrew, I'll come to you on that, but can I just ask before that—to save some time as well, Andrew—a question that I wanted to raise? A number of constituents have raised with me that the next round of funding for the economic resilience fund, or the bursary fund, was requiring businesses to meet a certain list of criteria, which they're pointing out wasn't the case when it came to those receiving funding through the business rate relief grant. I'm wondering whether that's a concern that members have raised with you or not.

Yes, very much so, and particularly, Russell, the issue about VAT. Nigel mentioned that we're a community business, and so many businesses are very small businesses. The criteria that you mentioned—there's often the mention of VAT, which really rules a lot of people out. We're talking very much about freelancers. We're talking about self-employed people. They just keep falling through the cracks because of some of these criteria, which is unfortunate. So, I would agree with that. You're getting some noise from your constituents; I am, also, from my people as well. We try constantly to talk about that, and I even sent an e-mail into Welsh Government today from a small business that is pleading the case and putting all the detail there. So, as much information as we can put in—we hope that it's going to be better.

Just going back to Vikki's question as well, I think that what needs to happen with all these financial packages is that we measure what we've done. We've put all this money out. We've put the grants out. Businesses prefer grants rather than loans, quite obviously. There's a number of our businesses that haven't gone for loans; they don't want to increase their level of debt. But I think, overall, we need to monitor how effective they've been.

It's very easy to be wise in hindsight, and what I think is concerning to all of us in tourism is the number of businesses who are not going to reopen. They're doing the maths. They're thinking, 'It's going to cost me more to open rather than not open.' I think with some of those grants that came out of local authorities, it would have been good to have said, 'You're only going to have the money if you open your business.' It would have been a helpful thing to have committed people in that way. Things like that, you know. To do the evaluation of what we've done, I think, would be very helpful going forward.

One thing that came on to the horizon before this all happened was the UK tourism sector deal. I think we need to go back and revisit that. I think Wales needs to engage in that to see whether we can get any financial advantage from it.

Did you have any further questions, Vikki.

No, thank you. All finished.

Okay. Andrew, just to check as well: in terms of your answer to my question about the concern that some have with the criteria that are required, presumably the Welsh Government is bringing forward these criteria because they've got a limited pot of money, and they want to focus their support on businesses who may have not received any funding at all. So, I understand the logic. So, what can the Government do when they have perhaps potential criticism that says, 'Look, there are too many criteria here. We want to be supported in the same way as businesses were with the business relief grant, who didn't have to meet any criteria at all'? How does the Government navigate around that?

I think it has to review what it does, Russell, and I think it has to take away some of those criteria. I think we need an engagement between us more and Welsh Government. We're very happy to do that, to feed the information in. We do that. To give a case in point, bed-and-breakfast people have been unable to get money because they pay council tax rather than them being subject to business rates relief. That's caused huge angst. We do feed that information in, but we need to try and make sure that we do change the criteria.

But, you're telling Government this, and you were telling me earlier that the Government have got a grasp of these issues, but it sounds like you're telling me that they need to listen a bit more to some of your members. I'm just trying to gauge your attitude towards the Welsh Government funding in terms of business support. 

Yes, it appears a little bit like a juggernaut—that the whole financial institution does take a little more time to work through. But, I suppose my succinct answer would be 'yes' to your question.

Okay. Joyce Watson.

Good afternoon, all. I'm going to ask you around your expectations once restrictions are lifted and what you think the consumer confidence is going to look like, if you can, and the level of demand as those restrictions are eased.

Who would like to go first? Nigel.

Shall I go first on this one? I think that's a really, really difficult question to answer, if I'm totally honest. There are a number of barometer surveys now running UK wide, some in England only and some in Wales. Attractions in England have been open for longer and the response has been quite different.

So, one of the things that I do in addition to working at the university is I'm a non-exec director of Visit Surrey. Some of our members there have been totally overwhelmed with the numbers of people flocking to their sites. They're largely open-air free attractions like national parks and AONBs. But I think the difficulty is that there is not that consumer confidence to visit some of the paid attractions at the moment.

I think it's quite difficult to look at consumer confidence. I think the message has got to be both to communities and to consumers that businesses are following protocols and adhering to health guidance—Public Health England in Surrey's case and, here in Wales, Public Health Wales, obviously. So, I think there is a job to do to build reassurance amongst consumers.

I guess the other thing just very quickly to add is that there's a difference between how different markets are reacting. So, the evidence seems to suggest that younger people are more willing to re-engage. Tourism traditionally has perhaps tried to target higher spending consumers, who tend often to be older market segments, and there might be more consumer resistance there on safety lines at the moment.

Anybody else want to add anything?

I think it's about the conditions as well. People are used, at the moment, after three months and some good weather, to being able to sit in their gardens and drink a drink with their family that they've got from a supermarket delivery, say. We are going to go into a time when they don't know what the pub and the hotel is going to be like when they go there. I think that's the uncertainty we need to get through first of all, to encourage them to sample that.

I think one thing that that brings up is about the welcome that we're able to produce and the atmosphere that we're able to produce, and that is largely down to Government advice on the 2m and 1m rule. I think that will make a huge difference regarding the conviviality of the circumstance and the way that a pub becomes a little bit more like it used to be.

I fully understand the health arguments, and I'm not really getting into that area. What I'm saying, really, is that we know that, in both commerciality and atmosphere terms, the closer to 1m will make a huge difference to the 2m, and, something along the lines of, with 2m, even if we're open indoors and out, we can only get 30 per cent of revenue, which is not enough to be able to get a very tight-margin industry into profitability. If it goes to 1m, it's closer to 60 per cent or 70 per cent, which is much closer to break even.

But it also changes the way that people are involved and are interacting, and I think that is something we've got to try to promote and project. Because the alternative is, I fear, the public will look for a freer environment and maybe look for take-out drinks and sit out, wherever they may be, because the five-mile restriction is about to be eased. They can get in a car, drive anywhere, take a picnic in the back, and that's some of the more civilised, should we say, doing that. It's quite possible that there'll be other forms of gatherings that are not as regulated.

So, I think we've got a job to do—all of us have got a job to do. The one thing UKHospitality has done is invested a huge amount of time in developing a set of protocol guidelines for each business to help them get through this introductory position and give them the most advice possible that they can adapt to their own businesses. And getting that atmosphere, making that security, making the comfort right for the customer, is essential. I think Governments have got a role to play in that as well, about how we are the stewards. We're the urban farmers, we're the stewards of the civilised environment for entertainment, and we should be helped to make the experience a safer one and a more enjoyable one for all people, and I think that's part of the reopening.

If I could just say a couple of things, Joyce. I think community and consumer confidence is right up there with the dates, and I think the two things are connected. Businesses need to know the dates, they need direction—they need to do that for planning. But I think, also, if we have some dates out there, I think communities can get used to the idea of visitors coming back. So, it does actually have an unintended consequence or benefit if we could get that information out there. I've been involved in writing Government guidelines and David's been involved in it as well. It's good to see that stuff coming out. It's all about safe businesses, safe staff, safe communities. It's important that we message that to people. We've had a new 'We're Good to Go' campaign, which businesses can sign up to, and that's been taken up by thousands of businesses. And so, consumers are going to see, when they come to stay in a business in Wales, or come to visit a business, they're good to go, that they are following the safety guidelines. I think, when communities see that, then that's going to be very helpful. And the introduction of the pledge, which is coming on stream from Visit Wales, will also help. We've seen examples of that around the world—that visitors enter into an agreement about standard behaviour and respect for communities.

So, I think it's a sort of multi-layered approach about how we get over this. I'm speaking from north Pembrokeshire, and there's been some real sensitivity about visitors coming back into the area, and there has been all the way through this. It really is a concern to reassure communities, and a lot of work needs to be done, as David said, from just about everyone.

Yes, I understand that because I live in north Pembrokeshire, and that's where I'm talking to you from at the moment.

Oh, right. I'm in Goodwick, Joyce.

Well, I'm in Haverfordwest.

You're not next door to each other, are you?

Not far, but we're further than the 5 mile at the moment. Having said that, and the point you raise is really important because, on the ground, I get that absolutely. You've mentioned the 2m social distancing rule, so I'm not going to expand on that, unless anyone feels the absolute need for me to do so. I thought it was adequately addressed. But what does come with opening up businesses, whatever rule is put in—whether it's 2m or 1m—is the role that businesses are expected to play in the test, trace and protect strategy, particularly indoor venues. I just would like to understand how you feel about that, how you think that is going to work, and all the things that surround it, really—data protection, management—I'd be interested to hear.

I'll lead off again, if that's okay. It was interesting, because, from the UK call this morning, there is a data protection issue to work through with central Government with regard to collecting information from people who walk into pubs and all the rest of it. So, apparently, an announcement's coming out tomorrow about that. The theory of that is good. I think it's another part of the argument to open up sectors that we actually do get a handle on these people—that, actually, it isn't unsafe; it's probably safer. You're in north Pembrokeshire, Joyce. There are people free camping out here at the moment, and people are coming in and we don't know where they're going. So, I think to have this system in place is a very sensible thing to do, so it does strengthen the argument.

Anybody else got anything to add about concerns that businesses are expected to do this?

I think it's a little bit going back to what I was saying about this social contract-type feel that we need to introduce here. It's essential that the customers realise that this is for their safety and for their family's safety, and I'm pretty sure an awful lot of them are in that position. So, it shouldn't be a difficult thing for us to be able to implement, and, in fact, as Andrew said, it should be a huge step forward for us to be able to regulate things and to keep control over COVID if we're in that position.

One thing I would like to flag up as a quick example is that I feel that we could do more earlier about things like hotels, where you've got a residential audience, about opening up inside, because they're all registered, they're all being served. I think we could do that quicker than it looks like we're going to at the moment. Because, to have guests in a room with room service and being able to be served on the terrace of a hotel, which is often quite big, or the gardens of a hotel, but not have that interlinking part where they might be able to sit in a sound and safe, socially distanced restaurant and eat their food just seems to me incongruous with the capability of that establishment to be able to look after safely its staff. It could be a good litmus test for the Welsh Government to be able to start to ease some of the opening if they did that quite quickly.

Joyce, do you mind if Helen Mary just comes in? Helen Mary.

Yes, just very quickly on this issue of collecting data as part of the track and trace thing, I've had it raised as a concern to me from women's groups that, actually, that data will need to be protected very carefully, because women could be vulnerable to being stalked, traced or followed. I'm not talking perhaps about restaurants, so much—and it will be a different environment—but organisations that aren't used to holding—. So, pubs that aren't used to holding that kind of information will need to find ways to do so safely, not only in order to comply with the law, but in order to make sure that, for example, unscrupulous members of staff don't get hold of information that might compromise customer safety.

I agree with that. I think the other concern, Helen, is the fact that people may not give their true information—so, a number of Lord Lucans coming into pubs. I'm showing my age there, aren't I? So, there are those sorts of concerns, but also, interestingly enough, in the discussion this morning, it's not about when people come in and give the information, they've got to give the information when they leave, which, arguably, is important, really, because you know, actually, 'I'm leaving the pub or the restaurant now'. So, there are some discussions going on about that.

I'd like to understand, because we've seen localised outbreaks at the moment—. We've got a little bit of information around those as we've seen what's happened in Leicester. I suppose that's the most prominent one, but there have been cases in Wales. What role do you think that the hospitality sector might play in helping with it, carrying on from the same question that I had? I'd just be, again, quite interested in trying to turn this into a positive. You have that information, you get a localised outbreak; how do you think you'd be equipped to manage that?

Who would like to address that?

I think it raises an issue of the need for a recovery plan. I'm very keen that we do have those discussions, that we do have these things in place. So, I think it's a well-merited question. I probably think the hesitancy from my fellow guests probably highlights that we do we need to have something there that we can go to to know how it happens. It's so difficult, isn't it? Someone was saying to me the other day, this whole thing is like driving a car at night without any headlights on, and it's difficult understanding these things. But I think if there was some forward planning it would be good. But I also heard—sorry to keep going on about this morning's meeting, which must seem very boring—that because it is a UK thing, talking about the Leicester situation, a lot of caravan parks in Skegness take people from the east midlands, quite a number of them, and people with Leicester postcodes have been told they can't go, and the people of Leicester have said, 'We're coming.' So, there's a real issue there, that people aren't—. It's like stopping people and it's an extremely complex situation. But I think we need to have plans in place, and I think some recovery planning and contingency planning would be my response to that question.

I think it speaks again to the comment earlier about the need for a national action plan. A similar situation could happen in north Wales. If you had a localised lockdown in Manchester or Liverpool, that's obviously going to be the main market. So, we could be faced with that situation here, couldn't we?

So, when you talk about a national plan, you're talking about a UK-wide plan rather than a Welsh plan.

Sorry, I was talking about a Welsh national recovery plan.

Yes, and then you talked about people—this is why I asked the question—. That might not work with people coming across the border, of course. 

Sorry, I didn't mean to confuse the issue. I think we need a recovery plan here in Wales that focuses on, as I said at the beginning, beyond reopening—how we reset and recover in tourism. Lots of places around the world are talking about there being an opportunity now to re-evaluate and rebalance the kind of tourism that they want, and I think there's an opportunity for us to do that here in Wales. I'm fully behind the priorities of Visit Wales and the new strategy. It puts sustainability and well-being front and centre, and I think that's really important. But I wonder whether this also gives us an opportunity to look again at that, because obviously that strategy would have been developed pre COVID. I think we need an action plan to sit beside that now. 

That's interesting. Joyce, do you have any further questions?

This is just going to be a catch-all, really. I suppose two—one specifically to Nigel about the staycation information. I know, living in Pembrokeshire, that we get a lot of south Wales accents suddenly appearing in the summer, so they're not coming from Spain or France or anywhere, and they're very welcome, I have to add, just in case people think that's not the case. So, there are a lot of staycations, but if you have information that can tell us the percentage, so we have an idea, that would be quite useful, wouldn't it, for a strategy going forward? But if you think, all of you—and this is a big catch-all question—that in terms of moving forward, however long that might take, there are specific things missing from the Government's economic strategy that you want us to tell them about, although you seem to have that very much sorted for yourselves, but if you want us to make a recommendation to them, now's the time. 

By the way, if you want to hold back to the end of the session, to give you some time to think about that important question, then I'm happy to come to you at the end to pick up that point as well. But Joyce made some specific comments, I think, to Nigel, if you want to come in on that. 

Yes, thank you, Chair. You're absolutely right to identify south-west Wales as a honey pot for Welsh residents. It does attract a lot of people from Wales, the south-west. I think what you'll find is that there is relatively little traffic to north Wales and north-west Wales from south Wales, for instance. It's a tough nut to crack; I really don't know why we don't spend more time and money ourselves in Wales. You're actually more likely to go to Cornwall or the south-west than you are to another part of Wales if you're looking for a staycation. I don't have a magic bullet for that; I don't have an answer. I think what we could do is elevate that as a question for ourselves in conversation with Visit Wales, and say, 'Is there an opportunity for us to do more to persuade people to stay within Wales, as that could be the first point of recovery for the Welsh tourism industry?'

Just to move things on because I'm aware Helen Mary's got some questions as well, but Joyce's last question was an important one, but I'll put that to you again at at the end of the meeting. So, Helen Mary Jones. 

Thank you, Chair. Some of the questions that I've got build around the question that Joyce has asked about what needs to happen next. So, you've said that you think we need a—. I saw some support for Nigel's suggestion that we need a Welsh national recovery plan for our tourism and hospitality sector, and I just wonder if you can say a little bit more about what that plan ought to look like and how that ought to link to actions that you feel are needed from the UK Government. I don't know who wants to start. David. 

I'll try to. I think we've got to have a holistic view that is not simply a contingency plan, but a plan for investment and for a longer term re-evaluation of the industry. And I think that can still be done at this time with short-term benefits. I think one of the things we need to do is to recognise just how important we are to different communities. Nigel has raised a lot of stats; we did an Oxford Economics report, which is a good few years back now, but it indicated that in Gwynedd we were responsible for enabling one in four jobs, and the same sort of figure came about from Pembrokeshire, which is a really large portion of the employment market. 

And a lot of that is about the experience that the visitor will get around buying local food and other cultural elements of a visit. Though, I think we could do far more, given we now have foundation sector status, to link ourselves up with the food and drink element in Wales, to look at how we can bring together the agricultural and the hospitality communities in a stronger way than we have at the moment, to help support iconic products like Welsh lamb within Wales, to make sure that we're all doing our level best to point people to extending the stay when they're here, to point out what a fantastic country it is and where else they could visit, and what other things are going on, and to have an events base that could lead a chain reaction to a stay. 

I did a piece of work—I was chair of the cultural tourism partnership for a number of years—that looked at some events in Cardiff on that, as an instance, and I found—. Some years back, we did a really high-profile Ring cycle around the Wales Millennium Centre, but there wasn't any form of serious interlinking around that event to get visitors from all over the world that were coming for that to stay longer in Wales, and to look at other things that they would clearly have an interest in, like, for instance, the national museum or a trip to St Fagans, or whatever that could be have been incorporated. And I think we've got to be a bit cleverer about offering the whole range of fantastic opportunities, and developing those opportunities and supporting across the board. 

The circular economy is huge. The cultural significance of coming across the border is very important. Helping everybody upgrade the offer so that the stay is more valuable and more attractive to the visitor, but making use of that foundation sector. And I think the underlying principle of that is for us to say that this industry is the Welsh industry, it's the industry in Wales. And I think for years that's not been recognised and we've got to really get under the skin of that as a concept and to bring it together, I think, with the agriculture and food industries, which means that every community in every part of Wales has a fantastic opportunity for increasing its wealth and keeping its local people with a good environment and a good livelihood—all of the objectives we're all looking for, but that holistic solution.

That's really helpful. Andrew and Nigel, do you want to add anything to that?

Well, I think the key challenge going forward about what can happen—we've got to lengthen our season. We haven't even started yet. And we need all the help we can get from Welsh Government. I would actually double the budget for Visit Wales. I think they need to have more money, more resources; they're absolutely stretched. I think they could do with more help there. But it's just not about the money as well. We could have a relaxation of planning laws, for example, to change of use; we could have the licences being extended for 12 months in caravan parks, for example, rather than shutting at the end of October. We've got to keep people here longer throughout the year if we've got half a chance of surviving. So, that's where I would see the answers coming from.

And if there was one ask for a financial thing, just to jump in front of Russell's final question, the businesses that have done the 3 per cent—who are the 3 per cent? Ninety-seven per cent of businesses have closed. They're the ones who have diversified; they've got more strings to their bow. And I think our challenge going forward is to get businesses to be more diversified so they can do other things. These people who have survived are the people who can just actually jump onto another horse and just try and keep some income coming in and we need to really push that. And I think a diversification grant would be very useful so that you would only be able to get that if you were demonstrating that you were actually changing your modus operandi. And I think where else we could give help is by having business mentors to help businesses learn how to do things a little bit differently.

Thank you. Nigel, do you want to add anything to that?

Just very quickly. I think if you're looking for an example of a national recovery plan, Scotland have got a very comprehensive plan and I think we could look at what Scotland and comparable destinations like British Columbia are doing; they've also got a very good recovery plan that we could look at.

And Ireland.

And Ireland, yes. But just building on what David was saying around supply chains, I think there's a real opportunity there. Just to give one example, Anglesey's got a fantastic food tourism strategy. That could be held up as an example of good practice elsewhere. And I think in terms of developing a winter product in Wales, I absolutely 100 per cent agree with Andrew: we could be looking at lifting restrictions on winter operations. And helping businesses diversify and lengthen the season would be a short-term win. 

Okay, thank you.

I figure you've probably largely answered my last question, but this is an opportunity, perhaps, to highlight what the Welsh Government can do to support the industry. You've highlighted a whole range of issues. I was particularly interested to talk about relaxing the planning regulations and you talked about the need for a national action plan, a recovery plan, but if I ask you, in the final minutes of this session, just to highlight any areas of how or what the Government can do in Wales to support your industry.

Okay. I'll lead on that. I think we've said quite a bit of it before. I think it's about size, scale and ambition. We have to be at the top of the tree in terms of the industry being represented for its economic value. We put £39 billion into the UK. We are a real source of revenue from business rates and VAT, both of which we'd like to see reformed and reduced. But more importantly than that, it's a partnership between—

I'm sorry to interrupt, David. I was really keen on what the Government can do. Tell us what the Government can do to support the industry.

I think it needs a financial package, it needs tapered furlough, it needs a smart grants system, it needs assistance with the Westminster lever points on VAT, it needs to radically reform the business rates system, it needs to look at a clever sort of incentivisation for businesses to employ, it needs to help us reform the skills and the training area, and it needs to get behind a coherent food and drink, hospitality and tourism strategy that can make us the best destination in the world.

That was perfect, David. You've run off that so—. It looks like you've run that off a few times before as well, but thank you. And the same question to Andrew and Nigel. Don't repeat what David said—if you want to add to what he said.

Okay, I'm just adding. I think we should stay on the course that we are. I think all the industry and everyone in Wales is behind the very cautious approach. We're sending out a message to everyone that we're a safe destination, and there's marketing advantage to be gained in that. We just need some dates for the remaining sectors. I mean, that's my plea. It doesn't make us unsafe, it just makes us more focused, and I think that would be very, very helpful.

So, if I'm summarising what you're saying, Andrew, you're talking about dates and the need for dates and a clear road back for the hospitality sector in Wales.

Absolutely. And the caravan sites and the one or two other pieces. And the events industry as well, which doesn't get mentioned enough, really.

Yes. Okay. Thank you. Anything to add, Nigel?

Very difficult to add too much to what David and Andrew said—very comprehensive. I guess one thing I would just say is that recovery is likely to be lengthy. We've heard the industry's call, particularly about the three-winter scenario, and I think it's no exaggeration to say that, post COVID, we will be going into a different landscape.

I think tourism will be characterised by new business models; we'll see new products, markets, and new consumer behaviours as well. As Andrew says, there's no need to, in one way, radically change the priorities around sustainability and well-being, but I would like to see increasing emphasis on value and a move away from volume of tourism, which I think Visit Wales are already doing. It's about creating quality product; it's about encouraging higher levels of daily spend, so that we are more comparable with the English regions and Scotland. Actually, we're towards the bottom of the table of visitor spend per day in Wales, so we need more quality products for people to be able to spend their money on.

And I think Andrew's plea for more resources—I know it's a very finite resource that Welsh Government has, but Wales is badly under-resourced by comparison with Scotland and Ireland, working with the south.

Okay. Thank you all. You've really given us a lot of evidence this afternoon, and I think you've given us a lot of information that we can discuss as a committee in terms of formulating our report and recommendations to Government. So, your evidence this afternoon has been invaluable to us.

We will give you a copy of the Record of Proceedings, and, if you feel that you want to add to that, then please do so as well. So, that takes us to the end of the meeting. I'd like to thank you very much for your time this afternoon. We're very, very grateful.

Thank you very much.

Thank you.

Thank you.

Bye.

And that brings us to item 5, and, under Standing Order 17.42, I would resolve that we exclude members of the public from the remainder part of the meeting. Are Members content? Thank you.