Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith

Climate Change, Environment, and Infrastructure Committee

20/01/2022

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Carolyn Thomas AS Yn dirprwyo ar ran Joyce Watson
Substitute for Joyce Watson
Delyth Jewell AS
Huw Irranca-Davies AS
Janet Finch-Saunders AS
Jenny Rathbone AS
Llyr Gruffydd AS Cadeirydd y Pwyllgor
Committee Chair

Y rhai eraill a oedd yn bresennol

Others in Attendance

Ceri Davies Cyfoeth Naturiol Cymru
Natural Resources Wales
Clare Pillman Cyfoeth Naturiol Cymru
Natural Resources Wales
Dean Medcraft Llywodraeth Cymru
Welsh Government
Gian Marco Currado Llywodraeth Cymru
Welsh Government
John Howells Llywodraeth Cymru
Welsh Government
Julie James AS Y Gweinidog Newid Hinsawdd
Minister for Climate Change
Lee Waters AS Y Dirprwy Weinidog Newid Hinsawdd
Deputy Minister for Climate Change
Syr David Henshaw Cyfoeth Naturiol Cymru
Natural Resources Wales
Steve Vincent Llywodraeth Cymru
Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Andrea Storer Dirprwy Glerc
Deputy Clerk
Elizabeth Wilkinson Ail Glerc
Second Clerk
Marc Wyn Jones Clerc
Clerk

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

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

Cyfarfu’r pwyllgor drwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:16.

The committee met by video-conference.

The meeting began at 09:16.

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

Bore da ichi i gyd a chroeso i Bwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith Senedd Cymru. Y cyfarfod cyntaf, wrth gwrs, inni ei gynnal ar ôl toriad y Nadolig. Felly, blwyddyn newydd dda ichi i gyd. Croeso i'r Aelodau i'r cyfarfod ac rŷn ni wedi derbyn ymddiheuriadau gan Joyce Watson, sy'n methu bod gyda ni y bore yma, ond mae Carolyn Thomas yn dirprwyo ar ei rhan, felly croeso cynnes i Carolyn, sy'n ymuno â ni y bore yma. Mae hwn yn gyfarfod dwyieithog, wrth gwrs. Mae yna wasanaeth cyfieithu ar y pryd ar gael. Gaf i atgoffa cyfranwyr hefyd bod dim angen ichi reoli eich meicroffonau? Mi fydd hynny'n cael ei wneud gan y technegwyr ar eich rhan chi. Ac ar gychwyn y cyfarfod, gaf i ofyn os oes gan unrhyw un unrhyw fuddiannau i'w datgan? Nac oes. Iawn, diolch yn fawr.

A very good morning to you all and welcome to the Climate Change, Environment, and Infrastructure Committee at the Senedd. This is our first meeting after the Christmas recess. So, happy new year to you all. Welcome to Members and we have received apologies from Joyce Watson, who's unable to be with us this morning. Carolyn Thomas will be substituting, so a very warm welcome to Carolyn, who is joining us this morning. This is a bilingual meeting, of course. Simultaneous interpretation is available. May I remind participants that you don't need to control your own microphones? That will be done remotely. And at the beginning of the meeting, may I ask whether there are any decelerations of interest? There are none.

Jenny, sorry, did you want to come in?

I think, perhaps I need to just say that I'm a shareholder in Awel energy and also that my partner works for Bute Energy.

Okay. Thank you for that. I think you've inadvertently switched your video off in trying to probably unmute yourself. There we are, we can see you now. Carolyn.

Chair, can I just declare that I'm still a Flintshire county councillor? Thank you.

Wrth gwrs. Ocê. Diolch yn fawr iawn ichi am hynny. Fe fyddwch chi'n ymwybodol ein bod ni fel pwyllgor yn flaenorol wedi penderfynu petawn i'n colli cysylltiad â'r cyfarfod, mi fyddai Delyth Jewell yn dod i'r adwy i gadeirio tan fy mod i mewn sefyllfa i ailgysylltu. A dyna ni, felly.

Of course. Thank you very much for that. You will be aware that we as a committee have previously decided that if I do lose connection, then Delyth Jewell will step into the breach and take the chair whilst I seek to reconnect. There we are.

2. Craffu ar Gyllideb Ddrafft Llywodraeth Cymru 2022-23 - sesiwn 1
2. Scrutiny of the Welsh Government Draft Budget 2022-23 - session 1

Mi symudwn ni ymlaen at yr ail eitem, sef i graffu ar gyllideb ddrafft Llywodraeth Cymru ar gyfer 2022-23. Fe osodwyd y gyllideb, wrth gwrs, ychydig cyn y Nadolig, a rŷn ni y bore yma, am y ddwy awr nesaf yma, yn mynd i glywed tystiolaeth gan y Gweinidog a'r Dirprwy Weinidog newid hinsawdd ar y gyllideb ddrafft fel, wrth gwrs, mae'n ymwneud â'u portffolio penodol nhw. Felly, croeso i Julie James, y Gweinidog Newid Hinsawdd. Croeso hefyd i Lee Waters, y Dirprwy Weinidog. Ac yn ymuno â nhw mae ganddom ni Dean Medcraft, sy'n gyfarwyddwr cyllid a gweithrediadau; Gian Marco Currado, sy'n gyfarwyddwr yr amgylchedd a morol; John Howells, sy'n gyfarwyddwr newid hinsawdd, ynni a chynllunio; a Steve Vincent, sy'n gyfarwyddwr seilwaith economaidd. Felly, croeso i bob un ohonoch chi i'r cyfarfod yma.

Fe wnaf i gychwyn, efallai, os caf i, drwy ofyn ichi, Weinidog, jest cwpl o gwestiynau cyffredinol cyn inni fynd i edrych ar fanylion penodol. Sut bydd eich Llywodraeth chi a sut y byddwch chi yn asesu, yn monitro, ac wedyn, wrth gwrs, yn adrodd ar yr effaith y bydd eich penderfyniadau gwariant chi'n eu cael ar leihau allyriadau carbon?

I think we're ready to move on to our second item, which is scrutiny of the Welsh Government's draft budget for 2022-23. The budget was laid a little before Christmas and, this morning, for the next couple of hours, we'll be taking evidence from the Minister and Deputy Minister for climate change on the draft budget as it relates to their specific portfolio. So, a very warm welcome to Julie James, Minister for Climate Change. I'd also like to welcome Lee Waters, the Deputy Minister. And joining us we have Dean Medcraft, director of finance and operations; Gian Marco Currado, director of environment and marine; John Howells, director of climate change, energy and planning; and Steve Vincent, director of economic infrastructure. So, a very warm welcome to each and every one of you to this meeting.

I'll start, perhaps, if I may, by asking you a few general questions, Minister, before we look at specific details. How will your Government and how will you assess, monitor and report on the carbon impact of your spending decisions?

Diolch, Llyr. So, this is very much part of our net-zero action plan. It sets out the carbon budget—carbon budget 2—and it's, obviously, completely vital to track and drive its implementation. So, we've got a comprehensive system to monitor delivery, including the legislation that we have, the indicators, and an in-detail monitoring system, as well as independent progress reports from the Climate Change Committee and, obviously, scrutiny from Senedd committees, such as your own and others as well. We've got annual emissions data that we already publish through the greenhouse gas inventory release every June. That's available both to the Senedd and to members of the public, and in addition we intend to publish performance indicators to accompany and support the statutory progress report at the end of each budget period. So, just to be clear, that means a publicly accessible document is produced every five years, in line with the statutory reporting requirements, and the next one is due to be produced this year. The performance indicators are developed to provide the monetary information that delve deeper into why we've seen the emissions response that was observed within the greenhouse gas inventory that I just mentioned, and how the decarbonisation policies have performed in relation to expectation.

We also want to track individual policies, so that they enable both implementation—i.e. if you pick a policy out of the net-zero plan, you can see whether we've actually implemented it—and then they also track effectiveness, so, is the policy in place and is it doing what it said it would do on the tin? We also track general progress towards targets and budgets on an annual basis as part of the well-being suite of indicators, because we have a well-being of future generations indicator on greenhouse gas emissions as well. So, quite a comprehensive set of various bits and pieces that pull together, but basically the net-zero plan is the fundamental document, and if the committee's tracking progress on what's included there, then you'll be seeing what we're seeing.

09:20

Okay, yes. Thank you for that. Clearly there are some sectors that maybe haven't seen the reduction in emissions that we would have wished to see of late, and I'm thinking of industry and business and agriculture particularly. Can you tell us a bit about how this budget is going to accelerate emissions reduction progress in those particular sectors?

For sure, Llyr. So, this is a really complicated mish-mash, if you like, of devolved and reserved matters, and that's one of the big issues for us. So, for the things that we have the primary powers for, obviously we'll be making sure that everything is implemented there, and we build on the work we commissioned as part of the chief economist's report in the 2021-22 draft budget package. And that's got the 10-year Wales infrastructure investment strategy in it, and I'm sure the committee's noticed that the capital budget's been built up on the back of that. And the whole point of that is to have a different attitude to infrastructure investment and the emissions caused by the sectors that we do have some responsibility for.

We also of course have a really clear interaction with the UK Government. We're having a conversation with them as we speak. In fact, it's an ongoing conversation. I chaired a meeting only this week of the emissions trading arm of that, where we're about to consult on a new emissions trading scheme across the whole of the UK. The emissions trading authority is the four Governments together. The conversation on Monday was entirely about what the cap for emissions ought to look like, how fast it should be driving industry towards net zero with a carbon pricing mechanism, and whether the scope should be extended to include, for example, buildings, which it doesn't include at the moment, or housing, which it doesn't include at the moment. So, that's very much an ongoing conversation with the UK Government as well.

We're also obviously putting some pressure on the UK Government to shift some of the things it does in terms of the infrastructure that it has. So, a complicated answer, I'm afraid, for what's a complicated piece of work, but just to say that, obviously, we're very clear that what we want to do is provide some leadership in terms of the bits that we do have significant controls over, to make sure that we're demonstrating that it can be done as well as that it ought to be done.

And those areas where you have competence, of course, those are disaggregated across different departments within the Welsh Government as well. So, could you tell us a bit about how you're going to embed this process across all portfolios and not just within your own?

Sure. So, we have a list of things that are obviously in this portfolio, and one of the reasons for having this portfolio is to bring together a range of things that would otherwise have been, in previous iterations of the Government, disparate across the Government. So, just to do a small little list, we've got, obviously, social homes, we've got the national forest for Wales, we've got the circular economy, we've got active travel, we've got the rail and transport networks in this portfolio, which we're obviously monitoring as well. But there are also a range of boards in place at official and ministerial level. So, we have a climate change portfolio board that provides strategic governance for the development and delivery of climate policy right across the Government. It's chaired by the director general for our area, Andrew Slade, and it's got all the officials from across the Government that have contributions to climate change. So, literally every portfolio; there isn't a portfolio that's not affected by it. So, we are making sure that—and I'm sure the committee will be doing this as well, Llyr—we track the climate change pieces of the budget across all portfolios and make sure that they're all stepping up to that as well. So, we do have cross-Government mechanisms, but absolutely one of the reasons that this portfolio was put together was to bring some of the really big pieces together for the first time. 

09:25

Okay, and the monitoring system that you mentioned earlier will capture across Government everything that needs to be recorded, I'm sure. Many of us were at the Conference of the Parties 26; could you tell us a little bit about how, maybe, that has influenced your budget?

Well, not so much influenced afterwards, but influenced certainly in the run up to it, because obviously we accelerated the publication of the net-zero plan in order to get it published before COP. And obviously the entire focus of that was on what we hoped COP would deliver and what we thought we could do. So, in that sense, the entire budget prep was predicated on that. So, the whole of the budget prep for the Welsh Government was running in parallel with the production of the net-zero plan. 

We did have—and we'll share it with the committee—one or two little moments of conversation, shall we say, between myself and the Minister for finance, because we wanted to publish the plan in advance of the draft budget, and there was a little bit of to-ing and fro-ing about what could and couldn't be said in terms of that. But it absolutely influenced the draft budget all the way through. So, I don't think the committee could see very much change after COP26 because it was very much predicated on what we hoped to see and what we thought we were showcasing for Wales to the world. But it's completely influential in terms of how the budget has been constructed. 

There we are. Okay. Thank you. Carolyn, you want to come in on this. 

Yes, please. Could I just ask: do you do an impact assessment for biodiversity on every spending decision? So, whether it's transport infrastructure so that they don't put top soil back down, and that's better for biodiversity, or I know that the twenty-first century schools now, going forward, have got to have regard to biodiversity, but everything, really—buildings for care homes, low-carbon housing. So, really, just some input on that, please. 

Yes, absolutely. So, again, the whole point of the portfolio is to get the impact on both the climate and the nature emergencies to impact across all spending decisions by the Government. It's very much the central part of what we're doing. In terms of that, these things are very easy to say, Carolyn, as you know, and quite difficult to do. So, one of the things we have been doing, as I'm sure the committee is aware, is we have been doing the proverbial deep dives into various parts of Government activity. Sorry, let me just shut my phone off a minute, I can hear it buzzing away in the background. Excuse me.  

Sorry, Llyr, I've got rid of it. Let me just finish and I'll bring Dean in. 

So, just to say that we've been doing those deep dives, Carolyn, to get together a much better understanding of what we're talking about in terms of impact. So, we can do the assessments, but we want to be sure that what we're doing is right. So, my colleague Lee Waters has already done a deep dive into trees and the barriers to tree planting across Wales, and into renewable energy and the barriers to renewable energy development across Wales. And in an exclusive, Llyr, for your committee, I can announce that I'll be doing one into biodiversity shortly after the February half-term as well, in conjunction with Natural Resources Wales. 

Excellent. Okay, well we look forward to hearing back from that. 

All right, thank you. I was coming in to save the Minister, who I thought was losing her voice. I think it's important, from the budget perspective, that we do an overall impact assessment on the budget and, as we go into the financial year, we present to the Minister programmes and projects and then individual impact assessments are done on that basis. So, this is an overall impact assessment on the budget at this stage and then the individual ones as we go forward. So, I think that's important for the committee to understand. So, the detail on specifics is not done quite yet. 

No, and that does make sense, I'm sure. Yes, thank you for that, Dean. Okay, thank you. We'll move on now, then. Delyth. 

Diolch, Gadeirydd. Forgive me, sound technicians, I have just learned from bitter experience that if I try to unmute myself, we will do it at the same time, so I just wait. 

Could you please talk us through how the Welsh Government is ensuring a just transition in terms of your approach to do with climate change, and particularly in line with the principles of the Well-being of Future Generations (Wales) Act 2015? 

09:30

Llyr, I think Lee is going to start us off with that, and then I'll join in at the end. 

Back to Llyr's question about our reflections on COP, I think Julie and I both had powerful conversations in COP about the impact our actions are having on people in other countries, and that certainly reinforced for both of us the importance of just transition from a global point of view, but also the message I've been making clear throughout is that, from a domestic point of view, there is a bunch of stuff that's imperative we do to deal with climate change, and we need to design them in a way that brings benefits to people as well as asking people to make changes. And I think those two things go very well together. So, for example, on the work around timber planting, the emphasis is as much on how do we create green jobs and a Welsh timber industry, and use timber for Welsh house building, as well as looking at how we sequester carbon from the timber. I've also mentioned previously how we're looking at, in procuring electric buses, for example, how can we do that in a way where the manufacturing is rooted in Wales so that we're creating supply chain benefits in Wales.

So, that's, I think, two examples there of things where we're looking through those two lenses. Because, for us, tackling climate change is as much about social justice as it is about environmental responsibility. They are two sides of the same coin, and I think both in terms of winning hearts and minds and bringing people with us, it's important that we talk about those benefits, but also in terms of then using our spend to make sure that we are doing the things we came into Government to do, at the same time as addressing Wales's medium and long-term needs.

And Llyr, just to add to that, COP26 was really useful to the Welsh Government in some ways in forming and reforming various alliances that we'd made. So, just to say that at COP26, we agreed to work with the Scottish Government through their just transition policy forum, so that we can pick up and learn from the various things that that forum has. That's a much wider forum than just Scotland and Wales, it has to be said, but Scottish Government formed it. So, Lee and I both signed up to a variety of collaborative things at COP, and that was one of them. 

Thank you for that. Firstly, in terms of that forum, is that principally looking at it from a global perspective or from a domestic perspective, or is it a mix? And also, in terms of particularly what Lee was talking about—sorry, the Deputy Minister was talking about—in terms of getting public buy-in for this, rather than just doing this work and people not knowing about it, but taking people on that journey, what's the balance in terms of how that can be quantified from a budgetary perspective, I suppose, but in terms of public attitude for change? Is that something that you're able to quantify at all? It's a difficult question, I know—a philosophical question, rather. [Laughter.] 

Well, it's an interesting question. For example, the work around transport where we are committed through 'Llwybr Newydd' to achieve modal shift as a guiding principle of all our transport work, then the behavioural change side of that is crucial. And I'll be completely honest with you—the department's never had to that before, and the department doesn't quite know how to do it. So, that's a journey and that's something that we are working towards, but that is critical. So, we are looking at designing, for example, around the metro, around the 20 mph speed limit, around active travel work, how we have the nudge element as well as the provision of the infrastructure. And also, in terms of the initiative we announced on giving everybody a free tree. That's as much about public engagement and attitude changing and giving people an individual sense of feeling towards nature and making them think about the impact of their own behaviour, what they personally can do, as it is about carbon sequestration, because we're talking there of a maximum—we've budgeted for about 0.5 million trees. That's nowhere near our target of 86 million trees by the end of the decade. In terms of the overall net-zero work, that's a trivial contribution in the grand scheme of things, but in terms of behaviour changing, attitude changing, it is perhaps the most important part of it.  

So, we're looking to see—. We have to do both of these things in parallel. How we quite quantify that hearts and minds and changing attitudes is more complex, I guess, but evaluating it and looking at how we measure it is part of the work we're doing as we're building it.

09:35

And again, Chair, if I can just add one other thing in terms of the Scots' model, so just to say to Delyth, it's both hyperlocal and global. So, this is about just transition for the global south, not exporting deforestation, making sure that in future carbon budgets we look at carbon footprints abroad as well as at home. You realise the current one only looks at our at-home footprint, which can give you a false glow of, I don't know what, optimism. So, it is about all of those things, and then that goes across into all kinds of things: procurement, strategies, working on a food chain supply that transitions justly and so on. But it's also really prosaic things like making sure that people currently employed in pretty polluting industries that we want to see phased out get access to good skills transition. So, that kind of thing. So, there are all kinds of examples around Wales of nearly post-industrial processes. Well, those people are often earning a good wage in communities where otherwise there aren't good jobs. So, making sure that there's a good transition, working alongside our economy colleagues to make sure that that skills programme is in place for lifelong learning and that people have the opportunity to do that who are mid career and so on. So, it's quite a complex picture and it's why we wanted to work globally with people to pick up learning from elsewhere as well as share what we're doing.

Thank you. The pace of change we need and that you aim to deliver nobody would argue is not challenging, so I wondered if you could tell us how the Welsh Government is going to focus financial resources to stimulate investment from other people, particularly the private sector, to support our net-zero ambition?

Thanks, Jenny. It's a very important point, because we certainly can't, as we've just said in the last answer, actually, afford all of this by ourselves. So, the 'Net Zero Wales' plan highlights the actions we're taking, but also very importantly the plan highlights the roles of others like the UK Government and businesses, councils, other partners across Wales. Also, some of the levers are not devolved to us and remain the responsibility of the UK Government. So, as I said in answer to an earlier question, one of our roles is to make sure that we snap at the heels, if you like, of the UK Government. Certainly, in the inter-ministerial groups that I attend, we're forever bringing up the need for the UK Government to go faster, deeper et cetera, and you'll see that they're currently facing some legal action from some of the non-governmental organisations on some aspects of their plan.

We also have a whole series of funding and investment advice available for our businesses through the SMARTCymru programme, for example, which offers financial support to develop implementing commericalised new products, processes and services. The Development Bank of Wales is evolving a whole series of mechanisms to encourage businesses to embed decarbonaisation planning. We've got housing retrofit solutions and energy generation support aimed at building capacity and capability. We've got a whole series of research projects under way to inform development of potential support areas. I've already mentioned the 10-year Wales infrastructure investment strategy, the whole point of which is to strengthen the link between infrastructure and tackling the climate and nature crisis. We've got a whole series of things in the promotion of the circular economy. So, the circular economy is a whole lot more than just waste recycling, this is a whole series of projects, 180 projects across Wales at the moment, and supporting 80 repair and reuse hubs and community recycling facilities.

We've also been looking at how we can make sure that we embed all of this in our normal grant process. So, just to give you an example—apologies, Chair, from my own constituency—I recently attended the opening of an all-weather tennis court in my area, funded partly by the Welsh Government and so on. But I was really interested in talking to the tennis club, because as part of a piece of the grant application process, they'd been asked to have a look at their overall energy. So, they'd swapped all their light bulbs to LEDs and they'd done a number of other things, and they were delighted both with the reduction of their carbon footprint, but also with the reduction of their electricity bill. So, just trying to embed it in things like that—a very small grant to a small local social club has actually got the whole club talking about the need to do this in their wider lives. So, it was a really interesting small microcosm of what we're trying to do here.

Can I just add? The two deep dives were focused on this question. So, the renewable energy was very much about how do we stimulate investment from the private sector, how do we lever in investment, and how do we stop the wealth that's generated from leaking out from Welsh communities was very much front and centre of that. And similarly, in a more contentious example, around the tree planting strategy, and this is—. It may be worth exploring this a bit more, because this is where this concept of levering in private investment gets sticky in terms of the previous question Delyth was asking about bringing people with us.

Clearly, to meet our ongoing commitments on tree planting, as recommended by the UK Climate Change Committee to achieve net zero, we need to increase our annual tree planting fifteenfold. Now, we are not going to be able to afford to do that simply by using public money. That is a significant, at least £20 million—sorry, it's much more than that, that's a figure off the top of my head, but at least £20 million; I'm sure it's more than that—annually of public investment, and, on top of that, significant additional private investment. Now, how we choreograph that in a way that doesn't see the wealth generated and the benefit generated exported, so we continue this extractive economic model that Wales has been plagued by for centuries, is a key policy challenge, and one that we are grappling with at the moment.

I met yesterday with residents of Cwrt-y-cadno in northern Carmarthenshire, who at the moment are viscerally reacting to proposals by the Foresight Group to take over a farm and plant that largely with conifer. And that is causing real tension locally. And that just goes to show that doing this, and levering in private investment, the detail of how we do that is so important, lest we alienate people and push people back from the policies that we all need to see to achieve on climate change. 

Now, what we are doing, and we're close to the end point of this, is we've set up, as a consequence of the deep dive, a group on financing to look at how we can draw in external finance in a way that avoids these pitfalls. We've got an excellent group of people working on that, including Professor Gerry Holtham and Karel Williams and those involved in the deep dive themselves. And they'll be publishing a set of recommendations of how we can do this in a way that does not work out to be counterproductive. But it is—. You know, it is tricky. 

09:40

Sticking with the renewable energy deep dive, which is one of the things I wanted to ask you about, the advice services that you plan to set up in that deep-dive paper, are they in place yet? Because, obviously, with the rise in energy prices, there's going to be huge numbers of people thinking, 'How am I going to address this massive cost in my budget?', whether it's personal or business.

Well, in your deep dive, you talk about having advice services that individuals or public bodies—. So, you know, school X, the school governing body won't have a clue how to go about it; they'll need to get advice. 

Well, I think it—. I'll ask John Howells to come in on this as well, because we discussed this at length in the deep dive, because some of those advice services are in place and some of them are not. So, we have the Welsh Government energy service, which has proven to be an excellent initiative in helping local authorities. One example is the Egni co-op, working with Newport council in having significant solar deployment. So, the roof of the national velodrome in Newport, for example, is covered in solar panels because of that partnership, and because of, to be fair, courage and leadership shown by Newport council, working with the third sector. But that individual consumer personal advice simply isn't there at the moment, and if we are going to achieve a fivefold increase in renewable energy, which is what we need to achieve to achieve net zero, then we do need to help individuals navigate that minefield of what is the best thing to do for them and their families. But maybe we could ask, Chair, with your permission, John Howells, just to say a bit more about that. 

Bore da. Yes. Well, the focus of our advisory efforts has been through the Welsh Government energy service, focusing on the target to decarbonise the public sector by 2030. And given the demanding nature of that target, I think it's understandable that we've been focusing on supporting local authorities with their work on vehicle fleets, the complex issues around decarbonising public buildings, which is an issue shared by all local authorities. There are some encouraging signs now, based on joint working through Ystadau Cymru. The Welsh Government energy service is also supporting the health service with its decarbonisation efforts; there's some encouraging work happening in that area. But the Deputy Minister's right, the big challenge that we're now turning to is: what are we going to do about advising individuals in their homes about how best they can decarbonise? We've just published a consultation on the future of the Warm Homes scheme, which asks a number of searching questions in this area. We haven't yet decided on the best way forward, because it's quite a demanding area. We are active in relation to the most fuel-poor families at the moment through the Nest scheme. That won't remain the same moving forward. So, there are lots of questions being considered in this area. We haven't yet got the new pattern in place.

09:45

—just briefly? I've had a series of meetings with Ofgem and UK Government Ministers about the current energy price for consumers, which has not had a climate change focus, it's had a, 'Goodness, this is costing a lot' focus, and it is one of the really big problems that we have. So, for many years, we ran a scheme, Arbed, which just replaced very old gas boilers with more efficient gas boilers and that was very beneficial in the sense that you did use less gas and people had their prices brought down, but clearly that's not a sustainable climate change policy.

But, at the moment, we have a really big problem. The gas thing is skewing it in some ways, actually. We have a big problem because most of our houses are not fit for really energy-efficient electricity devices to be put in them. So, there's a big problem with aligning the fuel poverty agenda, making sure that we have a just transition, as Delyth mentioned, so that we don't load this on to the shoulders of the least able to pay, but, at the same time, we get the decarbonisation that we want. So, nobody's pretending we've solved that conundrum yet and the consultation that John just mentioned on the Warm Homes programme begins to ask some of the very difficult questions about how on earth to get into the place we want to be, which is, let's be really honest, a long way from where we are right now.

Yes. The last point from Jenny on this, because I know Janet wants to come in on renewables.

Okay, so, just to go back to the big ticket institutions, my own health board seems to be well advanced and the education sector in the area I represent, so how are we going to get—? I know that the education Minister has put several millions out there to help people decarbonise their buildings, but do you have the capacity in the budget to ensure that all these public bodies are going to get good advice so that they're not coming up with solutions that turn out to be not fit for purpose?

So, just very briefly then, Chair, on that one: not for this budget scrutiny committee, but, at a future one, when we're looking at the supplementary budget, you'll see that there are some MEG-to-MEG transfers in order to assist, for example, health boards to decarbonise hospitals. So, I'm sure that will come up in a future one. But we're clearly in discussion across the Government about how best to use our funds to get the decarbonisation of, as Jenny calls them, the big ticket items, under way and to get the funding out to hospitals and others who require them in order to be able to start that decarbonisation journey.

Can I just add—? Just relating Jenny's question back to Carolyn's question around biodiversity and mainstreaming it, because that's the challenge we have, isn't it: how do we make this stuff business as usual? If we're going to approach this simply as, 'How do we get extra money to do x?', we're never going to get there. We simply do not have the resources available to us to do all the things that we want to do to tackle climate change. It's almost an infinite question, the things we could be doing and the pace at which we should be going.

So, our task is to prioritise and the real challenge is to get, to give Jenny's example, health boards, and, to give Carolyn's example, housing developers, to be doing the things that are climate positive as part of their normal operations, and that is a big shift in the way that society thinks and acts and behaves. And it's Government's job to be a catalyst in that, but not to do all of that. I just think we just need to be upfront about it. It's a continuous pattern of questioning: 'Have you got enough money to do this in the budget; have you got enough—?' No, we haven't got enough to do all the things that we want to do. So, it's how do we be smart about it, and how do we prompt others to be so as well.

Briefly from John Howells then, and then we'll come on to Janet and her questions.

I really just wanted to reinforce the Deputy Minister's point. This won't all be achieved by this budget. I'm encouraged by the response from the NHS to the decarbonisation challenge utilising the health service capital budget. Cardiff and Vale University Health Board are planning on a replacement for the University of Wales Hospital, which will be a net-zero development. So, that's happening from within the NHS budget, and that's the pattern that the Deputy Minister's referred to. This needs to become part and parcel of business for every single Government department, not just the climate change department. 

09:50

Yes, absolutely. Thank you for that point. Okay. Janet, you've been very patient. Where are you? There you are. I couldn't see you then.

Thanks, Chair. Good morning, Minister, and your team. As Wales Environment Link have determined, with £4 million being put into marine energy, followed by £10 million for the following two years, there's a concern that some projects could potentially be going into sensitive marine habitat areas and could actually have an impact of putting marine wildlife at risk. So, with this in mind, and given that the deep dive was mostly aimed at identifying barriers to scaling up projects, could you outline what discussions you have undertaken to review how you can better embed marine habitat protection in any future spend, so that decision makers are aware of the possible trade-offs? 

I'll let Lee talk about the deep dive, obviously, as he led it. But, just in terms of marine, Janet, we're actually about to undertake with NRW—. And I think, Chair, you've got NRW coming in shortly after us today—

We've agreed with NRW that we're going to do an end-to-end look at marine energy consenting processes, with a view to making sure that we have the most efficient and effective consenting process, because we want to capture especially innovative potential global industries for Wales. But obviously we want to do that whilst protecting our extremely beautiful and pristine marine conservation areas and so on. So, we're running in parallel with that the whole issue around whether we should extend the marine protected areas and what we should do with that, and we'll be doing that very shortly. That's very much in our mind, Janet. But I'll let Lee talk about what came up in the renewable deep dive, and just to be aware that we're about to conduct that piece of work alongside NRW. 

Yes. So, that was one of the outcomes of the deep dive, and I don't think Janet fairly characterises the deep dive as being oblivious to the biodiversity elements and simply looking at scaling; we were careful to talk about the climate and the nature emergencies. We face dual emergencies, and we can't trade one off against the other. If you look at some of the detailed agreed actions in the deep dive, they were about looking at the evidence of marine impact and trying to speed that up. So, for example, we are going to be looking at evidence on maps of marine areas upfront, so that the developers don't have to do that individually each time. Yes, so that's—. Yes, it's—[Inaudible.]—and the licensing and the policies are all aligned. That allows then developers to be able to come in and quickly decide which areas are right to develop in and which are not right to develop in. So, I don't accept the premise of the question, I'm afraid. 

Anyway, my next question's on coal tips. Minster, last week, I called for a statement from the Welsh Government, given that the devolved administration may have refused repair funding for the Tylorstown and Llanwonno coal tips, because there was not a business case for profitable land development. Now, whilst noting the capital investment in this budget to support essential maintenance going forward, can you clarify how many tips with stability issues have not seen reclamation schemes funded because of this, the technicalities around the business case requirement, and whether the need for profitable land development will continue to be a requirement? 

Well, it's not a requirement. And you're going back, I think, 10 years or more in that report, Janet. So, just to be absolutely clear, it's not a requirement. What we've been doing with the coal tips is we've been funding the investigations to make sure that the coal tips are stable and not likely to move. It's completely indefensible that the UK Government has refused to work with us to provide the funding to support the long-term remediation and repurposing of coal tips in Wales. The tips are obviously a legacy of the UK's industrial past. The idea that the UK Government had the prescient knowledge to understand what was required in financing for a legacy industry at the point of devolution is clearly nonsensical. The UK Government has had an opportunity to show it would stand behind the communities whose efforts created the huge wealth for the UK, and in particular the south-east. Instead, it has decided to turn its back on them, so I'm not taking any lessons from anyone about how to protect our communities on that.

In the meantime, we have funded the investigation and first-stage look at what needs to be done to the coal tips. Gian Marco will, I'm sure, remind me, but there are some 2,000, approaching 3,000, coal tips that we've had a look at. Some 700 or so of those have been looked at in more detail, and some 80 or so—he'll tell you the exact figures, Chair, in a moment—are ones that we want to have a lot of regular monitoring on. These things are not simple to do. I have to say, I was very struck, in various meetings with various experts on coal tips and Coal Authority people, that it's very hard, even in Wales, to always identify what is a mountain and what is a coal tip, because a lot of them are planted over, they've been familiar to us for some 40 or so years—it's quite difficult to tell. So, some really good investigative work has been done to just make sure that we've identified them all. We've got a lot of problems with coal tips in private ownership where we need to work with the private owners to make sure that they have the right schemes in place, which we're taking extremely seriously indeed.

Wales has 40 per cent, by the way, of the residual coal tips of the UK, so way more than is a sort of geographical or population spread, so the UK Government's standing on this is just incomprehensible, quite frankly, and absolutely appalling. Let me pull in Gian Marco to just tell you the actual numbers, Chair. I've remembered them in ballpark terms, but I don't have the exact detail.

09:55

You've done very well, Minister. It's 2,456 that we've looked at, and as you say, that's been quite a piece of work over the last 18 plus months to get that information. It's a very complex picture in terms of ownership et cetera. Of those, 327 are in the higher rating. It doesn't mean that they're necessarily riskier; it just means that they need to be looked at more often and need to have inspection more often. And in terms of the budget, Ministers have set aside in this budget nearly £45 million to do the maintenance work. But as the Minister alluded, if we're looking at the full bill for reclamation over the next 10 years or so, it's probably around £0.5 billion, so this is a significant issue in terms of dealing with it. I hope that was helpful.

Yes, very useful. Thank you, Gian Marco. Delyth, I know, had previously indicated she wants to come in, and I'll bring Huw in after as well. So, Delyth first.

Diolch, Gadeirydd. I have a great deal of sympathy with the Welsh Government on this point. I appreciate that, as you've been outlining, the question over who is going to fund that longer term work is going to be outstanding. Evidently, work needs to be under way now, and you've just been outlining what you've been doing over 18 months or so. What is the balance like in terms of—? Is there anything that you would like to do now that isn't just the essential maintenance work that you'd like to be able to put some of that work in place that you're not able to do? And again, is there a way of being able to—? I know you won't be able to exactly quantify something like that either, but can you help us get an appreciation of how much you're not able to do from a budgetary perspective that would be not just putting the essential—? Improving safety in the immediate term, but—. Where is—

I do know what you're getting at. We've put £11.5 million into funding the Coal Authority to undertake the third round of inspections, jointly with the local authorities, researching and trialling the technology to assure appropriate technical solutions and to support the longer term monitoring of coal tips. We've commissioned the Law Commission to undertake a review of the legislative framework, and, as you know, we're committed to introducing a coal tip safety Bill in this Senedd term. We're working with the Law Commission to understand what about the current regulations is not fit for purpose, and what we can do to put that right. That is to do with the rights of private sector landlords in particular, their rights and responsibilities and what can be done about that, and whether local authorities can or can't interfere in that, and who's got what right to enter what piece of land, and all that kind of stuff. So, we'll be doing that.

There is no issue at the moment with not being able to do things that are essential for safety or anything else. We are absolutely committed to making sure that our communities are safe and protected and that the inspection regime carries on, and we will always continue to do that. This is much more about what can be done profitably to long-term remediate the land, turn it into housing, turn it into parks, turn it into other things, which obviously requires, as Gian Marco just said, somewhere between £500 million and £600 million. If we can't get the money out of the UK Government—an absolute disgrace, as I said before—then we will have to find other innovative ways of starting at least to do some of that work. But to be absolutely clear, there is absolutely no way that the Welsh Government is going to allow the UK Government's stance to compromise the safety or security of any of the communities. So, I just want to put that reassurance out there.

It's been really interesting to see how new technology has enabled us to have a better look at what's going on inside the tips. It's very fascinating, Chair; if the committee wants to have a presentation, I'm sure that that could be arranged. It's very fascinating to see what can be done. This is about making sure that there's nothing shifting inside, that the settlement ponds are there, that there aren't any unexpected underground rivers going on, there aren't any unexpected supersaturated moments, and so on. We've done our best as well—. I'm sure the committee will come onto flood budgets shortly, but we've also been working very hard after the Tylorstown slide in particular to make sure that we have the right response in place if there is an incident, to make sure that we can have as much alert as possible, and then also to have the right response on the ground if that should happen as a result of what are obviously increasingly difficult climate events.

10:00

Thank you, Minister. I'll bring Huw in now, and then we will need to make progress then, because I know we're up against time. Huw.

Thanks, Chair. I actually put my hand up on the tail end of the marine section that Janet was on. I'm happy to pursue that, and deal with that now, if you want me to.

Okay. Minister, rather than bounce about all over the place, if I can take your minds back to marine, and this interplay between marine renewables and the way we want to sustainably exploit the marine resource against the need to properly map, have the good data and the management of sensitive sites as well. Can I just ask you a couple of things here? They relate to some of the evidence that we've had before. It's the adequacy of the funding, not only for mapping and data and management of sensitive marine sites, but also the ability to do that to enable sustainable exploitation of marine renewable energy as well, because the two go hand in hand. Is it sufficient—? Well, let me just put that to you: is it sufficient within the budget?

That's one of the reasons why we want to do the end-to-end piece on marine consenting, Huw, because we want to be—. I'm sure, again, Chair, you're going to come on to NRW and its various pieces of funding. Apologies, but in answering Huw's question, I'm no doubt anticipating a later enquiry. But you'll know that NRW's funding in the budget looks flat. They've done a zero-based budget baseline review, as they call it, for us over the last couple of years. Unfortunately, that didn't line up with our budget processes at all adequately, so we are committed to working with NRW to go through that baseline review to make sure that we've set out absolutely plainly what the Welsh Government's priorities are, what the programme for government requires them to do, and so on, and that we do a number of end-to-end kind of processes, and evidence-based, resource-based planning with them. So, marine consenting is one of them, and as I said earlier in response to the question, that isn't just about the process of getting consent to put your renewables in; it's about all of the what happens about the environmental impact assessments and the marine impact assessments and all the rest of it, and how we can make sure that they are all fit for purpose. And fit for purpose isn't just fastest; it's most effective, most protective, et cetera. So, 'We're in the process of doing that' is the answer, Huw. I can't tell you right now, because that's the whole purpose of doing the review.

We're also, for example, through the digital centre that I'm sure Lee will tell you about later on, doing a contaminated waste review end-to-end process with NRW, with a view to getting them to undertake those reviews right through all of their processes over the next several years. We're about to do that with them and do a knowledge transfer piece with them to give them the ability to do that so that we can agree between us, first of all, what their set of priorities are for the Welsh Government, and then secondly, that they are adequately resourced to carry out those purposes. That was a complicated answer to what you might have thought was a relatively straightforward question.  

10:05

I anticipated that that might be the answer. I think the committee would welcome the fact that you're going to look at this in a thorough way, about satisfying—. Because this isn't just an NRW issue. The reason I wanted to come in now, Chair, was the interesting response that we had from Ministers earlier on that some of the solutions here are not fully going to fall within, 'Put a grant here, put some funding here'; it has to do with other sources of funding. In which case, Minister, as part of that analysis, are you going to be looking at some elements of cost sharing and cost recovery, bearing in mind that renewable energy people are saying, 'We want the go-ahead, we need to get on there; environmental protections are taken care of, but we want to get on there as fast as possible to help Wales achieve its ambitions on renewable energy'? So, to load additional burdens on them might well be resisted, yet we're looking at some of the evidence that we have already that's been given to the committee that the options, for example, of NRW working with the Joint Nature Conservation Committee and Welsh Government, identified a need for a fivefold increase in funding to have an adequate programme on marine monitoring. Well, who are you going to be asking to fill that gap, I guess? Sorry, I know you're going say, 'That's exactly what our look is going to do', but are you then considering others contributing to it?

Yes, of course. Of course that's part of what we're looking at—what is the ask of the renewable developers. And, obviously, we have a whole series of different types of renewables with marine. We've got some real innovative prototypes who are not making any money at all and are going to be put off by being asked for money by us to do anything, and, obviously, there, we're talking about trying to capture a global industry. That's a very different funding model to if we're talking about large-scale floating wind in the Celtic sea, on the Crown Estate's land and so on. That's a different kettle of fish. It'll be horses for courses, I'm afraid, Huw. So, yes, we expect the big renewable developers with accepted ways of generating energy to contribute both in community funds and others to marine environment protection and to energy transmission and so on, but part of what we'll be doing is working out what does that look like, how does the split look like and so on. Both Lee and myself have met with Crown Estate's people, for example, and so on, to discuss exactly some of those difficult questions. But I don't have an answer for you yet. 

Just to very briefly add, it's the right question, we don't have a flippant answer to it and we are working it through. That is exactly the right balance to strike. Because the industry will say, 'Well, de-risk it for us. You take away the pain and then we'll bring in more investment', and we're saying, 'Well, if we're going to de-risk it, why the hell should you get all the benefit from it?' So, it's a tension and we're working it through.

Okay. Could I ask just a very brief follow-up, because it covers the whole of marine then? If you extend it beyond the renewables now and the sustainable exploitation of marine renewable resources, extend it into the wider issue of mapping data, the fact that we have—. And this isn't a criticism of you, Ministers; it's a fact that you can reflect across the whole of the UK waters and internationally as well. We have so little that we've actually done the analysis on in order that we can have proper marine mapping, proper identification of what a fluid marine protected area is and so on. Is part of your analysis of this going to be looking at how do we move towards a situation where we lever the funding in, and the resources in, by hook or by crook, over a period of time, to do that thorough analysis of what is out there in our seas, on the seabed, so that we know what we're doing when we decide to do any sort of initiative, any project or whatever, in the future? Because we're only scratching at the surface of this, aren't we? The scale of resource we need is massive. 

I think that's exactly what the deep dive identified, and that's why, if you look at the recommendations, we're working with NRW to try and consolidate the evidence gathering we can do, so that we're doing it once and we're doing it well. To go back to Julie's answer, that is exactly what this end-to-end study is designed to look at. It's from the point of view of the developer, of the consumer. If you want to get consent for a project, what are the gnarly bits that are holding you up and how do you work through them and break through them. Consenting and the evidence base is a part of it. So, we're working on it, Huw. It's the right area of challenge, but we don't have a simple answer, other than, 'This is what we're doing about it.'

10:10

Just to add one last thing, Huw, and to show you the sort of innovation we're talking about. Again, in talking to the Scottish and Canadian Governments, with whom we we're in a kind of competition at one level to get some of these industries to come here, it's evident that they have a system of getting the trial equipment to do some dual purposing. For example, if you've got one of the tidal flow things being installed—as we have, experimentally, in the Menai straits, for example, and other places—in Scotland, they've got live webcams on them and they're actually monitoring live, in real time, and I watched it happening, what happens with shoals of fish, what the seabed looks like around it, and so on. So, there are lots and lots of different ways of getting that mapping and monitoring going that maybe weren't originally designed for that, but absolutely serve that purpose. So, it's about finding all of those kinds of innovative solutions and, frankly, learning off people who are already doing it. We might be in competition with them, but we can also learn and share.

Okay, thank you, Minister. Janet, I know you previously asked whether you could come in on marine, so we're on marine now; is there anything in addition that you'd like to ask?

No, no, no, I think Huw's made some really valid points, and those are the concerns that have been raised when we meet with our conservation groups.

Yes, okay. Thank you, Janet. Right, we'll move on, then, to decarbonisation of housing and I'll invite Jenny to ask on this.

Going back to the infrastructure finance plan, how much is the allocation to support the housing retrofit programme for this coming year, 2022-23? And, how many houses do you think you'll be able to improve in that timescale?

We've got £50 million this year and £50 million the year afterwards, Jenny, to commit, deliberately done on a multi-year basis to give some certainty for the pipeline for the retrofit programmes. As you know, we've been going for the whole-home approach, so the whole of the purpose of the optimised retrofit programme is to look at what technologies are suitable for the whole house, so it it isn't just about sticking an air-source heat pump into an otherwise leaky house and hoping for the best. So, this is a whole issue around making sure that your heat doesn't wastefully escape, that the smart technologies are installed so that you can control energy use better. There may be multiple interventions over the course of years to make sure that the right changes are made, so you may need to insulate the house first, you may need to bring it up to the Welsh housing quality standard if it's private sector, and so on, to do that.

We're also, obviously, hoping that the £100 million will line up with our Warm Homes programmes. As John outlined earlier, we've got a consultation out on that at the moment, so that the retrofit helps get people out of fuel poverty, effectively, by making their homes more effective and efficient. And then, over the next three years, as we get the learning back from the retrofit programme that we've got, we start applying it into our grant systems and so on, to spread it out into the non-social house sector. So, we're unashamedly using the social house sector as the guinea pig, if you like, because we can de-risk it for them and we have access to more houses as tenants vacate housing and so on. We've been working with our registered social landlords and our councils to do exactly that.

We're also pulling across the learning from the innovative housing programme, so, obviously, we've built new houses with the innovative housing programme, but we've also trialled a lot of different technologies, which we can now start to apply across the piece. And very shortly, we'll have the first set of learnings coming out of the optimised retrofit programme so that we can start to scale them up. And on the innovative housing programme, I know you're—. Anticipating what I suspect is a supplementary question, we'll be bringing Part L of the building regulations forward and we've done quite a lot of learning from the IHP programme about what the stages will be to bring new housing builds in the private sector up to scratch, and we'll be coming forward with those regulations. Lee is going to be taking those regulations through shortly, we hope.

It's around 4,500 homes a year being supplied through Nest, and on the ORP, we absolutely don't know, we've let the social landlords come forward. You know, I don't want to give you an average per house, Jenny, because some houses need a lot more retrofit than others.

10:15

No, no. That, I understand. But I'm just trying to get a sense of the mountain we have to climb. I mean, with a 50 per cent increase in fuel bills, there's going to be a lot of very, very cold people. So, how are you going to encourage and support the private sector to invest in decarbonisation, as most of the coldest houses are in the private sector?

Yes. So, there are two different aspects to that: so, the first is encouraging private rented sector landlords to bring their housing up to standard, with the various leasing programmes and so on that we have. So, basically, give your house to us and we'll bring it up to standard for you. You accept the local housing allowance as a return on your investment during that time, because we very seriously don't want people in the PRS with the worst of the housing, which we know are in city centres and constituencies like yours, and, indeed, like mine, to come out of the PRS while we do that. So, targeted schemes to get landlords to come on board with that.

We've been discussing with the UK Government their somewhat blunt tool of just saying that you can't be a private sector landlord unless your house has an energy performance certificate E rating at the moment and then coming upwards, because we do fear that that would cause people to simply just come out of the sector, which would be really problematic for us. And then, the whole point of ORP is to figure out what works and then to put a grant scheme in place to allow owner-occupiers to access grant and loan schemes to bring their houses up.

We will at some point—and please don't say as this isn't established Government policy—but we will have to consult on whether there should be a carrot and reward in terms of council tax and so on, for people who do bring their properties up to EPC A, because, at the moment, and extraordinarily in my view, the market doesn't reflect that. So, if you bring your house up to EPC A off your own bat, you'll reduce your bills, of course, and you'll reduce your carbon footprint, but you won't necessarily get a premium on your house price, which I find quite astonishing. So, trying to make sure that the market moves in that direction will be part of what we'll need to do.

If I may come in here, there was a suggestion from a previous inquiry in our predecessor committee that the land transaction tax might be used to facilitate some of this, in that if you brought your house up to a certain standard before you sold it, then you would be offered some relief. Or, if you brought it up to standard after buying a house, then you would have some sort of rebate. So, I'm glad that the Government's actually actively looking at these kinds of incentives—I think they're very much needed. I know that Huw and Carolyn have asked to come in on this, so I will allow you both to come in, but we are really up against time, and we're hoping to have a short break as well in a moment. Huw first.

A really brief one, thank you, Chair. It's simply to say a genuine heartfelt thanks for the allocation—small in the overall budget—to tackle the remediation work with the local authority in Caerau. But, in relation to the budget, I want to ask the bigger question: is Caerau—what we've seen with the 2012-13 community energy savings programme and Arbed 1 scheme—is this the scale of the problem, or are there other issues in Wales that we should be aware of? And, if so, how does that relate to the budget? Are you going to have to find more to deal with other issues in other parts of Wales, or is Caerau a one-off?

Well, so, Huw, we will deal with it as it comes up. There's a big learning point there, and I'll bring John in as well, perhaps, on this. But there's a big learning point here, which is, you don't put schemes in place without really thoroughly understanding what effect they're going to have. And a one-size-fits-all apparent silver bullet never is. So, filling your cavity wall with foam is great for some houses and absolutely catastrophic for others, and we now know that.

So, one of the real big points of the ORP programme is to de-risk that, to actually try it out on the various types of housing, get the learning from it, and then, obviously, discount things that have caused condensation and horrendous problems, and push things that really do bring houses up to standard. So, absolutely. And, again, I'm sorry for the politics of this, but the UK Government programmes have left legacies all over the place that are less than optimal, shall we say. We make sure that our programmes are backed by guarantees, so that if it does go wrong, you have recourse as a result of it. So, we're talking about, I hope, a very, very seriously diminishing number of people who were caught up in the first iterations of this, but I'll just check with John that I'm not garbling two things together there.

No. I think the importance of learning from our experience in this area is so important. I think it's fair to say that the latter stages of Arbed, way beyond the 2012 investment, were able to benefit from that painful learning experience. It's now really important that we harness the learning through the ORP, using experienced social landlords to distil the lessons that individual home owners can then grab a hold of as they tackle the challenges in their own homes. There's a particular complication where Government funding is involved. I think we're all going to be faced with these challenges as we address our own heating needs, moving forward.

10:20

Thanks. Just quickly, it's regarding getting raw materials for new builds, particularly glass and timber and how you're able to address that. I know it's pushing up the spend profile significantly and causing delays. And also, the labour shortage for skilled workforce like tradespeople, plumbers and electricians. So, looking at how you're addressing that, working with maybe councils and private suppliers. Thank you.

So, very briefly, Carolyn, we've allowed additional grant applications to go through. They're about 30 per cent up, so we're very aware that it's slowing the pace and scale of the social house building programme that we have, but we have been allowing RSL councils to get increased SHG, as we call it—social housing grant—and so on, to make up the difference.

In terms of trades, one of the discussions that we've been having is about how we can get economies of scale, so get people to come together in groupings. I should say, Chair, as well, that we've been doing that on the decarbonisation agenda as well. So, we've got a delivery partner, Sero Homes—some of you may have heard of them—working with us on the optimised retrofit, looking at innovative ways of funding collective energy schemes, for example, and so one. So, Carolyn we're just working hard to try and bring the overall cost down and to see whether any kind of Government-scale procurement can help with any of it.

Lee and I also attend and occasionally chair the housing construction forum, which we've only recently done, to just talk through with the industry where they are with some of those issues and so on, and whether there's anything we can do in terms of pipeline. So, we are working really, really hard to try and work on some of that. There's absolutely no doubt at all that it's impacting across the piece on both cost and scale.

The last thing to say, Chair, is that the co-operation agreement, as I'm sure everyone knows, includes a new company that will come to bear in this area, and we are still in discussion about exactly what the remit of that might be, but allowing apprentices for rare skills, hard-to-recruit skills and so on, and global procurement pressures are definitely on the radar for some of the things that that co-operation agreement company might be able to undertake. 

There we are. Thank you, Minister. We've covered a lot in our first half of our scrutiny, but such is the size of your department that we have to come back for another session. [Laughter.] So, we'll take a short break and we'll reconvene for 10:30. So, if Members could be back slightly before then so that we can go back into public session at 10:30. Diolch. So, we'll now go into private session and we adjourn the meeting.

Gohiriwyd y cyfarfod rhwng 10:23 a 10:30.

The meeting adjourned between 10:23 and 10:30.

10:30
3. Craffu ar Gyllideb ddrafft Llywodraeth Cymru 2022-23 - sesiwn 2
3. Scrutiny of the Welsh Government Draft Budget 2022-23 - session 2

Croeso nôl i'r Pwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith. Dŷn ni'n craffu ar gyllideb ddrafft y Llywodraeth, a'r Gweinidog Newid Hinsawdd, ar gyfer 2022-23, ac mi wnawn ni barhau â'n cwestiynu. Felly, fe wnaf i symud yn nesaf at Janet Finch-Saunders. 

Welcome back to the Climate Change, Environment, and Infrastructure Committee. We are scrutinising the Government's draft budget, and the Minister for Climate Change, for 2022-23. We will continue with our questioning and move next to Janet Finch-Saunders.

Minister, your programme for government committed to introduce extended producer responsibility reforms and a deposit-return scheme for drink containers. Now, I also note that the funding for this includes proposed support for local authorities, who will need to adapt. So, my question is: how involved have local authorities been with the DRS discussions to date? I also note the digital DRS trial that occurred here in Conwy has taken place. I just wondered if it's a route that you wish to pursue. Do you consider it successful? And, given that the 2021 great British beach clean found 18.7 caps and lids per 100m of beach, are we any closer to a decision on whether, when you do implement a DRS scheme, that that will accept lids and caps? Because they are a major part of marine litter.

Thanks, Janet. We've got quite a big budget allocation for this over three years: £151 million revenue and £160 million capital for waste and resource efficiency over the three years of the budget term, reflective of the importance that we put on this. Obviously, one of the big things that we want to do is bring the business recycling regulations in, which will see non-domestic premises start to recycle in the same way as we do in homes, and there's a big carbon saving in that. We're already saving 400,000 tonnes of carbon dioxide a year by the municipal recycling that we do.

We're absolutely looking at extended producer responsibility and DRS schemes. One of the big issues for us—. I mean, obviously we're consulting with the councils; I meet very regularly with all the councils, the cabinet members and with the WLGA officials on a range of things to do with the portfolio, but one of the big issues here is about who pays for stuff. So, some of the councils have put an argument up, and I absolutely see that, that basically you're taking stuff out of what is very efficient kerbside recycling to put it into a possibly less efficient deposit-return scheme. But, of course, the manufacturers pay for that. So, there is a big issue about why the taxpayer should pay to recycle products that are being produced willy-nilly by producers when lots of viable alternatives are there. So, this is about, of course, making sure that we can efficiently recycle a product, but it's also about making sure that the people who produced the product in the first place are paying a fair share of the cost of recycling and reusing. So, just to put that on the table. So, we're still working towards that.

We're also very keen on the 'reuse' part of this agenda, so making sure that people produce things that can be reused and not just recycled, because we know that keeping things in use is one of the better ways of doing it. Encouraging people to have the right kinds of bottle caps and tops, so made out of the same kind of recyclable plastic. Many people push the cap into the bottle, for example, and we want to make sure that it's still recyclable. I'm sure Members will have noticed the change in milk bottle caps over the years as those manufacturers became aware of what happens if you have unrecyclable caps pushed into the bottles, as many people do. So, yes, absolutely, that's part of it.

We're still working with the UK Government on banning various forms of single-use plastic as well. There's an ongoing discussion with the UK Government at the moment about how that's to be achieved in terms of the United Kingdom Internal Market Act 2020. Chair, I won't go into that because, as you know, there's ongoing litigation in place on that, so I don't want to go into that too much, but just to say that there's an ongoing 'discussion' with the UK Government about quite how that works. But it's clear that all the nations of the UK want to ban at least some single-use plastics. We'd like to go rather further than the UK Government does at the moment. Scotland, of course, already has its regs in place and is looking to see whether they can implement them. So, just to say that we're very much on that.

The whole issue about not having microplastics in the marine environment is about, as well, the labelling of them. I'm not sure that very many people understand what oxo-biodegradable means or one of the various other terms. We'd very much like to get to a labelling regime that means you don't have to have a PhD in recycling in order to figure out what the little triangle on the bottom means. So, again, we're working very hard with the UK Government as well to make sure that we have fit-for-purpose labelling schemes that make people able to do the right thing, as many people, obviously, want to do the right thing.

And just to add at this point, apropos of not much, Chair, that it's lovely to see 10, so nearly half of our Welsh councils right at the top of the UK recycling awards. So, great to see that as well.

10:35

Thank you. I just wanted to go back to what we can do more, though, on the recycling, because, in places like Cardiff, we're still co-mingling the glass with all the other recyclables, which obviously means that it contaminates the paper and the cardboard and makes it less valuable. So, how can we get all local authorities up to the level of the best, by using the methods that have been trialled in places like Conwy, to ensure that we're all doing at the maximum, because the climate's future is at stake?

Absolutely, Jenny. So, obviously, we encourage all councils to go to the Welsh Government blueprint. We know that the blueprint produces the best results. I have just written to the councils who are at the bottom of our league table in Wales, inviting them to a lovely, cosy meeting with my good self in which they can give an account of their actions, and I hope be persuaded of the error of their ways. So, I'll report back. I'm sure the committee might want to have a similar conversation with them. I'm very happy to provide you with a list of the people we've recently written to.

There we are. Okay, thank you. We're going to have to move on, I'm afraid, Jenny, so I'll invite now Carolyn to lead us through a series of questions on transport decarbonisation.

Living part time in Cardiff, I had a word with Cardiff councillors about the co-mingling of waste, actually. They said that they are looking at separate glass collections, which is really great and positive.

I'm just going to move on to active travel. I know that active travel schemes can be particularly labour intensive and quite difficult to deliver, so you need specialist technical officers to be able to do that: drawing up the schemes; producing TROs, the traffic regulation orders; public consultation—if there are any objections under a TRO, that's got to be formally dealt with; and going out to tender, et cetera, to deliver them. So, just one question regarding that. Would the Deputy Minister look at having an apprenticeship scheme, because we're short of this technical expertise? And also, regarding multi-year funding, because some of the really great schemes that we could deliver for active travel can take more than one year. So, I see that the funding now is over three years. So, just a question on that, really, please.

Just to acknowledge Carolyn's expertise in this, having worked at the front line of local authorities trying to implement our policies, so I listen very carefully to what she has to say. I think her idea of an apprenticeship is an excellent one, and I'd be very keen to look at that, because she is right that one of the major challenges we have is not about funding. We've put a significant amount of funding in, and even though that's going to dip next year a little, it's going to go up further in subsequent years. It's still significantly higher than what it was five years ago, for example. The challenges we have, as she rightly points out, are about capacity and about capability. So, there are a number of things we're trying to do about that, but I think her suggestion is a very constructive one and would definitely help us.

So, we have set aside, of the overall £75 million spend this year, a core grant that every local authority gets. It's been £300,000 minimum this year—it depends on the size of the authorities—going up to £500,000 next year, and that is designed, deliberately, to give local authorities development money so that they can start preparing a pipeline of schemes, because we know how challenging it is to deliver schemes within a financial year. Particularly, the more-needed schemes involve complex land ownership, involve all sorts of different permissions and studies that need to take place, and restricting people to doing things in one financial year results in poorer schemes. So, it's in our interest, and that's why the mapping exercise is over a 15-year horizon, broken down into three-year funding cycles. So, how we pull that off remains the challenge that we're focusing on.

The other thing we've done is we have got Transport for Wales to take over the role of implementing the funding, from the Welsh Government officials, and they're implementing regular stage gate checks. So, again, this is trying to break the schemes down into elements that can be done one step at a time, which allows us then to do things over multiple years. So, that is absolutely what we're trying to do.

10:40

Thank you. Just regarding road maintenance, I looked at the budget, so there's £500 million going to trunk road agencies over three years and they've got funding for ash dieback. There was funding for councils to maintain the rest of the infrastructure, which was £20 million over the last few years, a grant that is not continuing this year. I'm on the Local Government and Housing Committee as well, and councils' capital funding has reduced by £49 million, and there are pressures to put that capital funding into lots of really great schemes that are being match funded by Welsh Government, such as council house building, twenty-first century schools, creating nursery provision, care facilities—really good. So, that budget is really stretched, and the backlog of maintenance of pavements and roads is building. I have noted over the last few years there has generally been a bit of an underspend in that budget, and it's really difficult for highways officials when they're going out to tender each year. They need to plan their highway asset management programme going into the next year, so if they get an underspend in that year's budget, it's really, really difficult and they need to plan ahead. That funding is desperately needed, not just because of general wear and tear over the years, which is happening, but also because of flooding. So, we've got the impact of flooding on the infrastructure, subsidence, land slips, and the impact on bridges as well is creating an issue. So, is that something that could be looked at perhaps? There's an extra budget coming through, so could you look at that in your department, please?

I'll ask Steve Vincent to come in in a second, but I think Carolyn very succinctly sets out the range of challenges we're facing and the range of pressures there are for scarce capital budgets. It is just worth repeating that we do not have the funding that we need from the UK Government for transport. If the rail formula properly reflected our population share, we'd be getting £5 billion from the HS2 scheme, which would allow us to do a range of necessary transport measures, and we simply don't have it. So, we are trying to do more than we can with the funding that we have, and so we have to make judgments and priorities.

Carolyn is right that the £20 million that had been available for local authorities for road maintenance isn't there next year, and that's a shame, because it has been useful. But beyond that, that's one of the reasons why we are doing the road review, to look at how we can reallocate funding from building new roads, which adds to carbon emissions, to looking after the roads we have better, recognising absolutely her points about maintaining the asset. And as we maintain, look at how we can change the design of roads to favour active travel, to prioritise bus lanes, as well as then reallocating money for public transport. So, her point is a sound one and it is something we are looking at.

The other micropoint she made about the way that funding is managed end of year, so that we are able to spend things well, is also absolutely on point. Steve and I were just discussing this yesterday, how we can start building up a proper pipeline of schemes on the shelf that can be spent in the event there is underspend—so, valuable and useful schemes, strategically important rather than just, 'Right, boys, what can we get out the door in the next two months?' Sorry for the gender-specific term there, but you take my point.

I could see your disapproval, Julie.

So, you're right, and we need to do better on that, and we're on it, but we simply can't magic money out of the air that we don't have. I don't know, Steve, if there's anything you want to add.

Can I come in, Lee, just before Steve comes in? Just to say, Carolyn, in terms of the overall position of the MEG, the main expenditure group that we're scrutinising today, the Welsh Government has—and, obviously, in my view rightly—prioritised both health spending and local government funding. So, in real terms, both health and local government have done better out of the settlement than this particular MEG, and I think that is the right way around. We've prioritised, effectively, delivery over strategy. So, just to put that major point on the table and say that I entirely agree about the point of the end-of-year sudden rush of expenditure, and that that's wider than just transport. We will be looking to see what schemes can be made shovel ready, as it's called, throughout the year to make sure that we don't have that problem in the future. 

10:45

Can I just respond to say that there's a £1.6 billion backlog of roads, footpaths and bridges? This is something that I've always pushed for and been passionate about. Infrastructure is one of our biggest assets, so I really wanted to make that case here today. I understand, you know, as well, about cuts to budgets, but I just wanted to make that point. It will be an issue, going forward. 

Also, when you're looking at the national construction company, as per the co-operation agreement, could you look, perhaps, at extending it so it covers maybe highway maintenance and construction, as a thought, and take that forward?

Moving on, I've got a question now about—

Sorry, Carolyn, can we just bring Steve in, just very briefly on that last point?

Thank you. Just to add to the point that the Deputy Minister made about the roads review, we're also undertaking a review of our asset maintenance and renewal programme. And just to give that assurance. Budgets are always tight, we do prioritise, they're monitored on a monthly basis and, if things change, we can actually move money elsewhere. I think the other point that you made was about additional, new money coming in. Again, we do have a long list of priorities to enable Ministers to make decisions as to where they would want to put that. 

Okay. Thank you. I'll continue with lobbying throughout the process, as I do. 

Just moving on now to decarbonisation of transport, specifically the basis on which the Minister believes allocations are sufficient to ensure net-zero plan targets for bus and taxi—. Just the concerns about no dedicated fund to decarbonise the bus fleet. I know, from talking to bus operators, that they do have concerns about electric buses, regarding the charging of them when they're on certain services, and they've raised with me that the Euro 6 technology is very efficient in that way. So, just really a question about it. Buses in general seem to be the most polluting—I think it's 50 per cent in the new net-zero plan. 

The Euro 6 buses are better from an air quality point of view than current diesel buses, but from a carbon point of view, they're no better at all because they use a lot of energy. So, we do need to be getting to a situation where we have an all-electric bus fleet. Our ability to do that and the pace at which we can do that is clearly constrained. We have amended our target, because our previous target was not deliverable. I didn't see any great merit in having a target that sounded good but couldn't be achieved. So, we've tweaked that to something I think is still a stretch but is absolutely something that we need to be focusing on.

Part of the judgment about that is how do we finance it. As you've previously noted, we're back then to the problem of the bus industry. We're dealing with a commercial, highly fragmented, privatised industry, and we're trying to corral them in a certain way. They're heavily dependent on public subsidy, as we've seen through the pandemic, where the Welsh Government has saved them from going to the wall. So, we're trying to leverage those relationships to try to make sure we try to what we call aggregate demand.

We've set up a specialist group with a six-month timeline to look at how we can bulk buy, in effect—how can we bring together all the orders across the bus industry in the public sector to make sure that we are buying electric buses, and to see, as we buy them, how much of that manufacturing can be in Wales. We've pulled it off, to a degree, with train manufacture. We have CAF in Newport, where we're assembling the trains; the bulk of the train is made in Spain and then finished off in Wales. Can we do that? Can we do better with buses? I don't know if we can, but if we don't try we certainly won't. So, there's an expert group working through that at the moment. Again, Steve, I don't know if there's anything you want to add. 

Just to add the point about finance and the budget allocation, I think for the next year this will be at £25 million, and then the next two years it ramps up to £80 million. That will give options then in relation to what the Minister just said. 

10:50

Okay. Jenny has raised her hand. I'll invite Jenny to come in and then we might need to move on then. If Carolyn is insistent, maybe briefly, but Jenny first. 

Thank you. Two questions. One is: Cardiff recently launched some electric buses that were part-funded by the Department for Transport. I wondered how competent other local authorities are at drilling into that potential source of funding, because obviously we need to decarbonise the whole bus fleet.

My second question is: have you got any grant or loan scheme for taxi drivers? Because, as you know, they've had a terrible time during COVID, and they haven't got any spare resources. Is there any scheme they can go to to upgrade their vehicles to electric or, at least, much cleaner than the old vehicles?  

I don't think it's quite a question of competence of the local authorities, to be fair; I think it is a question of capacity, and I think it is a question of grid availability for the charging infrastructure. I've been to visit the Cardiff Bus depot and seen the fleet they have. I've even had a go on them; they're lovely and they're quiet and they're smooth, and definitely something that we want to see more of. But Cardiff Bus depot on Sloper Road, Jenny, is fortunate in where it's positioned vis-à-vis the grid, so they're able to have a significant charging infrastructure onsite there. Most other parts of Wales aren't as fortunate. So, that grid availability—back to the renewable energy deep dive—is a recurring theme that's limiting our decarbonisation ambitions. That is definitely an issue.

Then back to the question Carolyn was touching on on active travel. The capacity of local authorities to be able to do all the things they want to do and we want to do is also a recurring theme, and that's why working at a regional level is so important. We are working very closely with them genuinely now on designing a bus strategy and White Paper for the next bus Bill, to properly co-produce a bus regulation system that will work with Transport for Wales. Getting people to work on a regional level and a national level, where that makes sense, is a key theme of that. And again, you gave another good example of how that manifests itself as being important. So, I think that's part of the answer to the question. There is some finance from DfT—Cardiff and Newport have been successful in levering it down—and we've been funding Carmarthenshire, for example, directly for the TrawsCymru network, where they're going to be hosting a depot, which we're building with them, to host electric buses for the cross-mid Wales route. 

On your point on taxis, there is a scheme this year—a try-as-you-buy scheme for taxi drivers to give it a go, which is giving us really useful data. There's a question in my mind, at least, about the sustainability or the sensibility of that in the future; given how tight resources are and given that the market is already moving, is that the best place for us to put our funding, in that sort of scheme, in the future? I'm discussing that at the moment with officials; I haven't made my mind up about that yet. 

Llyr, can I, sorry, just for completeness—? I promise I won't take more than a minute or so. Just to say that we also have around 800 vehicles across Wales in collection and recycling of waste. So, we've also rolled out an ultra-low emission vehicle programme for them, and also an electrification programme. So, just for completeness on the transport point.

That's a very important point to make. Thank you, Minister. Carolyn, did you want to conclude on this? 

I hope you're looking at hydrogen as well for those. That would be really good. We've got two hydrogen hubs in north Wales being built.

I held a cross-party group on public transport, and they're just concerned about getting people back on post pandemic. Currently, 15 per cent of people expect they will use public transport less after the pandemic, and 23 per cent are undecided. So, they asked if Transport for Wales could do a marketing campaign, and could you allocate some money in the budget. Thank you.

TfW have one planned. We've paused it because of, obviously, the omicron variant. It's a global phenomenon, people's reluctance to get back on public transport. That obviously has significant financial implications for the budget in how we have to support the bus industry, given that passenger levels are 40 per cent of what they were pre pandemic. So, yes, TfW are planning a campaign in the spring. 

There we are. Thank you very much. Okay, we'll move on to our next area, then, of questioning, which is flooding, and I'll invite Janet Finch-Saunders to kick us off. 

Thank you, Chair. Having campaigned on this, because in my own constituency, there are parts that become flooded very regularly, I'm pleased that the Welsh Government have looked to facilitate independent inquiries into significant flooding events, because, speaking with local authorities themselves, it's ineffective to rely only on delayed section 19 flood investigation reports. Are you able to provide this committee, Minister, with any clarity on how the independent review of reports into extreme flooding, set out in your programme for government, will be funded, as this is not clear in the budget expenditure line table? Have discussions begun about a timetable for delivery, and what commitment can you provide with regard to stakeholder involvement?

10:55

Thank you, Janet. The budget includes a total of £136 million revenue and £102 million capital for flooding over the three years of this budget term. We don't currently have any firm costings associated with the independent review. As it happens, I'm discussing it with Siân Gwenllian at 1 o'clock this afternoon, so, unfortunately, the committee is just slightly previous to the discussion, but obviously, we'll keep the committee informed as that goes ahead. The work will obviously be supported by the WLGA, the flood committee, FCEC—some official will remind me of the exact acronym; flood, something and erosion committee it is, I believe, I'm sure Gian Marco will tell me—and by NRW. All these committees have the same four words in them in a different order to confuse the hapless Ministers, but I'm sure that Gian Marco will be able to put that in. 

Just to say, Janet, that we will be having an independent review of the section 19 NRW reports for last winter as a learning exercise. We've also conducted a review through the committee already. We're also in the process of doing a regulatory review of flooding regulatory ability, because, as in so much that has come back from the EU, we basically have a group of regulations, some of which are enforced by Welsh Government, some of which are enforced by NRW, some of which are enforced by local authorities, and what we're doing is a review to make sure that that is fit for purpose. I think we all suspect it isn't, and that we need some, as my granny would say, 'shiggling about' of who does what to who. The water companies also have some responsibility in this area, and so on.

At the moment, it's a little bit of a patchwork quilt, and we've been doing quite a bit of work to just make sure that all of it is aligned to the right responsible agency, and that they work seamlessly together, and that we have the right emergency procedures in place, as well as the ongoing regulatory arrangements. The independent report will contribute to that. It won't be enough on its own to do that, but it will play its part. There are more than 50 section 19 reports for the winter in question to be reviewed, and some of them aren't finalised yet, in fact. So, there's a piece of work to be done there for sure. Once we've got the terms of that finalised, and the appointments made, Chair, we will, of course, write to the committee and let you know where we are with that. 

Thank you very much. Does Gian Marco wish to remind us what the acronym stands for? We're testing him now as well.

Flood and coastal erosion committee. 

Diolch, Gadeirydd. What proportion of spend on flooding would you say is likely to be on fixing what goes wrong, and what proportion do you think will be on preventative spend?

I absolutely can't answer that, Delyth, because it kind of depends what goes wrong, doesn't it, really. What we have done is that we're working really hard with the local authorities to make sure that we have all of their schemes coming forward. We've funded a range of, in particular, coastal defence programmes over the last year or so. I visited a really splendid one in Bridgend where they're restoring the old Victorian pier with really modern construction methods, but preserving its Victorian beauty. So, a really good scheme there. There are numerous around Wales of that sort.

We've been looking to make sure that the local authorities, with NRW, and the water authority, have a pipeline of schemes in place, not just for coastal erosion, but obviously for all kinds of riparian problems—so, culverting, bridging that's fit for purpose. And then, just to say that we're also very keen indeed on getting away from the hard concrete-type of culverting to natural systems. There's a brilliant one on the River Tawe that I go on and on about, as does Mike Hedges, whose constituency it's in, where we've got basically an enhanced flood lagoon with reed beds. There are really good biodiversity results from it as well as protecting the Tawe from flooding lower downstream. And we're very keen to move to those kinds of natural solutions as opposed to the concrete at the edge of the river to make sure it doesn't come up type of scheme that we see, although those will continue to be necessary in some built-up areas, of course. But where we can get away from those, we certainly will want to do that and to allow the rivers, for example, to have natural sloping reed beds at the side of them and so on, rather than the hard edging that can cause real problems in unexpected events.

So, we've been working with our local authority partners and with the water authorities very hard to make sure that those schemes are coming forward and that they can be adequately funded and in the right order. So, it's hard to answer. Obviously, some of those schemes will be fixing problems that have occurred, where we know there's been a problem in the past with brush going down into culverts or whatever, and making sure that they have the right screening available and so on, and others are just ongoing protection measures where we know that there's danger of flooding off the back of the new maps that we have for climate change.

11:00

Yes, there was a logical flaw in the question that I asked. [Laughter.] Chair, I did want to ask one further thing, but I'm aware of time, so I'm happy for us to move on.

This isn't something that would be directly in your budget, Ministers, but flooding is one of the these issues where there will be less tangible impacts as well. What work happens cross-departmentally to ensure—to work together in terms of, if there is a severe flooding event, and it's likely that there will be health impacts and mental health impacts? What is the process, cross-departmentally, for something like that, to make sure that adequate resource is put in as one of the less tangible impacts of something like a really bad flooding event?

Yes, so, we conducted an exercise, a proper emergency exercise, where we went through a whole fake incident, but a very realistic fake incident, and we actually went through the entire thing, from the first alarm all the way through to the end. We did that with all of the partners on the ground and then we did it with Cabinet colleagues and the Welsh Government as well, just to make sure that absolutely everybody knew what their role and function was, who was going to do what to who, who was scrambling what service and so on, and that includes health colleagues and others to make sure—. It obviously includes the local authorities who would be having evacuation centres and all the rest of it, so the whole shebang. So, we did all of that immediately after the last storm last winter. So, we've run through the exercise. I mean, plans never come out the way you expect on the ground, but I think we've got a good grasp of who's supposed to do what to who and whose role it is to alert who and all the rest of it.

And so, Delyth, I think we're as well prepared as ever, but I'm going to touch a lot of wood and do all kinds of things my superstitious granny used to do, because, to some extent, you're in the lap of what exactly it is that's happening on the ground. But I believe we've got the blue-light responders and our local authorities and water companies in as good a place as it's possible to be going forwards. We've learnt a lot of lessons from what happened over the last couple of winters and, as I say, we've done those exercises.

Okay. Diolch yn fawr iawn. Thank you. We'll move on now then to Huw.

Thank you, Chair. And, Minister, we're going to turn to NRW just for a couple of moments here. In your letter to the Chair of the committee, you noted, and you touched on this today, that you're undertaking an exercis examining the allocation of NRW resources against its statutory functions, which have to be carried out, and also the programme for government commitments. And you've also said in evidence today as well that you do agree with the budget allocations in the wider budget and the focus on, for example, protecting public services, the health service and so on. So, we get all that, we don't need to reprise it, but do you recognise—? Let me put it this way: what is your take currently, as you go into that examination of resource, on the resources available to NRW to carry out both its statutory duties as well as programme of government commitments?

So, Huw, it's really easy to answer that question, actually. We asked for the baseline review because we recognised the kind of mission creep, if you like, and we want to put ourselves back in a position where everybody understands what it is that NRW is expected to do with its baseline budget, and then what the funding arrangements for anything additional we ask them to do are as we go forward. Because you'll be very well aware, I'm sure—and I know you're going to talk to them in moment—that the baseline budget is exactly that, and then we add all kinds of things to it over the course of a year. So, they've just had a big flooding allocation, for example, and other things going forward. What we want to do is have a much better mutual understanding of what that baseline is actually expected to cover, whether it's adequate for its task. So, that's the whole purpose of the baseline review, and we're just going through the process of testing that, and, as I said, we've talked about the end-to-end reviews of various things as indicative services and so on. And then we're also, of course, scrutinising what the additional funding for various add-ons is. We're also in the process of finalising the remit letters to NRW to make sure that we're all on the same page in terms of what we're asking them to do, going forward, and obviously NRW also gets grant aid and various other things from other pots of money as well, which we need to take into account.

And then just to be open and transparent with the committee, this is a fundamental review. So, at the moment, NRW receives the receipts from the sale of timber, for example, and from letting out land for renewable energy. One of the things we'll be looking at is whether that is a fair way to fund a public service organisation, or whether those receipts should come back to the Welsh Government and we should take both the benefit and the risk of them. So, receipts go up as well as down. At the moment, timber sales are pretty buoyant, but they're not always—these receipts fluctuate. And also, I've been very upfront with NRW in saying that I don't want their need to derive money from assets to be the only policy that pertains on the ground. So, we think that it would be—. Our view is that it would be better if the Welsh Government took both the reward and the risk of that and that we just funded properly NRW to do the things we want them to do. But that's an ongoing discussion, very much, and the leadership team at NRW and myself and Lee have had a number of conversations already with our officials and theirs on some of these things, and they're by no means resolved. I wouldn't want to put that to the committee to think that that's what we're going to do, because we're not there yet. We have a number of discussions to go through, and before the start of the 2022-23 year we will have got to a point where we know what we're talking about and we can do the adjustments. 

11:05

Okay, that's helpful. It's a fundamental review. It's not just looking at baselines and what should be delivered; it's a fundamental review of how NRW, in its entirety, is funded from different sources, and what else can be drawn in from other sources as well, and you've touched earlier on about cross-Government as well, and wider buy-in from potentially other players. But can I just ask you, then, on that basis, looking at the budget allocations as they currently stand, what areas, Minister, do you think currently are not resourced adequately? We see some of these popping up already. Some of them have been mentioned already—issues around flooding, prevention et cetera, et cetera. But let me ask you about things such as environmental protection, whether it's—. We've touched on marine already, so let me park that. But riparian, river quality et cetera, et cetera—their regulatory function and their ability to enforce. What is your take, currently, as you go into this review that will last this year, about areas you are concerned on which NRW is unable to adequately carry out its statutory functions?

It's more complicated than that, I'm afraid. It's not that we think you can't do enforcement or you're not able to attend every incident in water pollution, for example. It's much more that we want to make sure that they are able to manage their resources to meet day-to-day work, but also to meet crisis points. So, we can't be having NRW having to phone me up on a Monday to say, 'We've had four river incidents over the weekend; I need 25 quid to get somebody out on a bike to have a look at them.' That's clearly not what we want, so we've got to resource them adequately to include what we know will be an average number of incidents that they have to attend and all that kind of stuff. So, that's partly why we're doing the review. We already know that we needed to give them more flooding money, and I've already mentioned that. So, we've given them an additional £1.6 million from the flood budget already, so we're already doing that. We're about to do a biodiversity deep dive, as I said. Part of that will be: what is NRW's role in that? Do they need extra resources? Do they need to organise themselves on the ground more differently? And so on. So, it's hard to answer individual questions while we're in the middle of it, Huw, is the honest answer. When we've done it, we'll come back to you and we'll explain where we're at.

Okay, sorry—I understand that. You can understand it's a little bit frustrating for the committee, because we want to help as well as challenge Government, and the fact that it's parked into, 'We're going into this—

Could I just ask—? One aspect is the transparency of the process you're going through, so that this committee is able to be informed by what you're informed by what you're doing, what you're looking at, what you've decided the important baseline aspects are, and where resources should follow. But can I also ask you: is this going to be based on outcomes as well, as opposed to outputs? So, for example, if I refocus back on to, for example, river quality, water quality within rivers, which is a big—. It's not just a controversial issue at the moment, it is a critical issue in terms of biodiversity, and not just water quality in some abstract way. On that basis, will it be that the baseline is, for example in that area, 'We will turn around the problems with water quality'? That's part of the baseline, not just how much money you are spending on it.

11:10

So, absolutely outcomes, but, of course, to get the outcome, you've got to have the right processes in place, and the right resources in place. So, absolutely outcome based. But these are difficult questions, aren't they, to ask? So, NRW I'm sure will be able to mount a pretty good summation for you of where they are at the moment with that baseline review, because they've done the first bit. We're in the testing-what-they've-done bit now. But the questions are relatively straightforward to put; they're not easy to answer. So, for example, is NRW adequately resourced to do its regulatory and enforcement role? Is that enforcement role as streamlined and efficient as it absolutely needs to be? Are they absolutely certain they're not doing anything they don't need to do? Are they absolutely certain they are doing everything they do need to do? They have to answer those—. Those are easy questions to ask, but much more difficult to answer. So, they've got to go through a process to make sure they can answer that. There's no gold-plating involved in any of the enforcement and regulatory stuff they do; they are able to adequately enforce and regulate in various areas. So, very complicated things, and one of the reasons we're doing end-to-end process reviews—and I mentioned that the Centre for Digital Public Services is doing a waste one with them as well—is just to make sure that they have got the most efficient processes in place in order to produce the outcomes for their kind of day-to-day work so that they can concentrate on all of the things that we are talking about in terms of enhanced service, increased nature biodiversity and so on. So, easy questions to ask, more difficult to answer. Lee.

Can I give a very brief example to reinforce what Julie was saying? So, on tree planting, for example, as part of the deep dive, we looked at this in detail. And this is our fault, in what we're asking NRW to do, but currently, or hitherto, the review, NRW had something like 43 people working on assessing different tree planting plans of some sort. We'd set them up with their role, which in effect frustrated tree planting, made it harder to do, and we had 43 people dutifully doing that. Through the deep dive, we've said, 'Well, let's streamline. Let's stop doing that. Let's try and get them to help encourage tree planting, not frustrate tree planting.' So, that's not a question of whether they have enough resource; that's a question of, with the resource they have, we've been asking them to do different things with it. So, no doubt there's always a case for more resource, but there's also a case for saying, 'Is the resource they currently have being targeted and directed in the right way?'

Okay. Before bringing Jenny in, can I just make one point, or ask one question? You mentioned the baseline exercise and then identifying what add-ons are required. Of course, we know from evidence that Natural Resources Wales have given to another committee in the Senedd that, for example, in relation to the agri-pollution regulations, they need at least an additional 60 members of staff to deliver what they call 'a minimum viable product' around their role in relation to those regulations. They actually need over 200 new members of staff to deliver their full role. Surely identifying the baseline and identifying any add-ons should be happening before you introduce additional burdens on them? 

So, absolutely, Llyr. And that's one of the difficulties, isn't it—always making sure that you understand what the baseline looks like, so that you can put the add-ons in place in the correct way? So, I completely agree with that. There's also the issue about—and I know you're very interested in this, so forgive me—should NRW attend every single incident, no matter how 'minor', how do they assess the cumulative impact of not having attended 15 minor incidents? So, there are more complicated things than just having a bloke on a bike who goes out to have a look at every incident. There's a whole issue about how that gets reported, how the cumulative effect is looked at, how that person traces it back through, who's responsible for this incident process. We've had a couple of issues in Wales over not being able to prosecute for lack of evidence for various things that have been highly politically controversial, and we certainly don't have time to discuss now, but I know we're all aware of them. So, we want to make sure that NRW is fit for purpose in the sense that it can rise to that challenge, but also that it's doing its day-to-day work in the most efficient way. So, on your 60 extra staff, 200 extra staff, are they extra, or are they people who were previously looking at tree-planting schemes who can now be freed up to do something else? It's that kind of exercise, isn't it, that we're really looking at?

11:15

I wanted to ask a slighter bigger picture, which is—. You mentioned that NRW at the moment's allowed to keep the receipts from letting out land for renewable energy, but they wouldn't be allowed to actually develop the renewable energy that otherwise is to the benefit of a foreign company in nearly all cases. So, I just wondered, in your fundamental review, what your attitude is to allowing NRW to undertake commercial activities on our behalf and keep the receipts. That would put the risk in their hands, rather than the Welsh Government's hands. It seems to me that unless we incentivise them to look differently at how we can maximise the resources that we collectively have in Wales, they're going to continue just to count trees.

So, again, that's quite a complicated question to answer. First off, in the co-operation agreement, we're in discussion on the formation of a renewable energy company for Wales, and it may well be that that goes some way to some of that. Secondly, it's all very well to say, 'Develop the renewable energy', but Lee's deep dive will show you the sheer upfront cost of having to do it, and there are sunk costs and all the rest of it. Where on earth would they get the seed funding to do that? So, it's a conversation that's ongoing. Thirdly, we have to make sure that we don't put perverse incentives to do the wrong thing into the system. So, you might get a nice new windfarm, but you're probably going to get quite a lot of tree removal in order to do that, and we just want to make sure we're incentivising the right policies. As I said, it's an ongoing discussion with NRW about whether having an incentive because they get additional funding is the right incentive, or whether it's actually the Welsh Government who should be putting that policy framework in place and then taking both the risk and the reward of it.

However, the fundamental of your question—how do we get the receipts of renewable energy back into the people of Wales—is very much part of what Lee was looking at in the deep dive and that we're taking through as part of the implementation group. It's not necessarily NRW, though, that will be taking that forward, although it might be.

Okay. Thank you, Minister. Just for avoidance of doubt, Natural Resources Wales are actually returning receipts, aren't they? I think they returned nearly £10 million last year.

No, no, you're right. Although they would probably decry the fact that they had to spend any income in year, as opposed to smoothing it out, maybe, over three to five years, which is another discussion, I'm sure, you're having with them, and another issue that we can raise with them in a minute. So, there's a lot that could be done and I'm sure we can add that at least they are being discussed.

Okay. We are short on time now, so I'm going to move on to Janet who's going to ask about environmental governance.

I've got it somewhere, sorry. I know that the budget will be allocated within the environment legislation and governance BEL for the development of permanent environmental governance measures. Given that the interim assessor has a two-year contract and that revenue funds will remain at £180,000 for this BEL, what steps have you undertaken to determine the size of the required allocation, and can you confirm what involvement the interim assessor will have in helping to shape the long-term governance measures that are badly required?

Thanks, Janet. So, the draft budget overall is £543,000 revenue over three years of the budget term. That's indicative for years 2023-24 and 2024-25, just to be clear. It's also part of the co-operation agreement, so it's subject to the discussions ongoing between us and Plaid Cymru on how some of that will work. But, basically, we want to work towards the establishment of that environmental governance body, the statutory duty and the targets to protect and restore biodiversity that certainly Delyth and I have discussed quite a lot of times in Plenary. We're still waiting on the outcome of COP15 and to develop those targets. So, we're definitely talking about a legislation.

The First Minister and the Counsel General and a large number of us—this portfolio bears the burden of the legislation for the Senedd, actually—are in discussion about quite where the committee, Senedd and Government time is coming from to get all of these things to line up. I know, Llyr, that you've made representations about the level of workload for your committee in terms of some of the legislation, and certainly other committee Chairs have done so as well. So, it's a little bit of a jigsaw to try and get them all in place and, as I say, it's the subject of an ongoing conversation on the co-operation agreement, as agreed, about the timing of it, but we're absolutely determined to put the environmental governance body in and to put the biodiversity nature recovery targets in, we just also have to make sure that they're fit for purpose.

On the question of whether the interim assessor will be involved, absolutely, we will want to pick up the learning, the level of casework, the kind of resourcing necessary, and so on, in putting the legislation in place to put the formal body in. We absolutely will, of course, want to do that.

11:20

Thank you. You mentioned biodiversity, that leads us nicely on to Carolyn's question.

First, can I just ask about funding for the national park—it was missed earlier—to deliver that within this year's Government?

The Clwydian range area of outstanding natural beauty. NRW have to deliver that within this year's—well, sorry, this term of Government.

Yes. So, there's a £3 million total budget in there for the delivery of the new national park. That's additional to the original baseline MEG.

Great, thank you very much.

Just regarding biodiveristy then, the UK Government has not provided EU LIFE replacement funding, so it's whether the Welsh Government will commit to a Welsh replacement scheme if no UK scheme is established. I'm really worried about the watering down of EU regs regarding biodiversity and the natural environment. There are quite a few, aren't there, like sites of special scientific interest and Ramsar sites, so I'm just really concerned about that, going forward.

Well, as are we all. Yet again, like-for-like money has not been provided, so we are where we are. We obviously continue to make representations at a UK level about making sure that these funds are there—they aren't there yet. At the moment, we are very considerably a penny worse off after leaving the European Union, and we're still sort of kicking up about it, really. We continue to be able to match fund existing schemes and the two successful NRW-led projects, which are the quaking bogs and the rivers for life, from the final round of the EU LIFE funding over the next three years are still available, so that helps going forward with that. The next three years, the nature networks programme, the national peatlands action programme, Natur am Byth and LIFE, will all continue to function as well, Carolyn. We're just in the process of finalising the budget allocations for things like the nature networks programme, local places for nature, the national peatlands action programme, and so on. So, when the final budget comes out, you'll see that they've had allocations made to them, and we'll want to make sure that, in doing the deep dive of biodiversity, we're able to respond to it.

So, once we've done the deep dive, we'll obviously have an implementation programme to go with that and no doubt there'll be some funding arrangements to go with that as well. So, as I say, we're going to be undertaking a deep dive in conjunction with NRW—we've discussed it with their leadership team already—and we'll be doing that at some point after the February half-term break. Not yet finalised, I will say, so it might shift around a little bit in terms of resourcing. And then, obviously, we'll want that deep dive to lead into—going back to the previous item—the environmental protection governance and the targets that we know that everybody wants to put in place. And those targets we want, of course, to be able to resource, we want them to be stretching, but deliverable and achievable, so they're a very important part of this piece of work as well.

The local nature partnership funding and the enabling natural resources and well-being funding has been really gratefully received. It's very important so that they can develop projects working with our communities and residents, and I notice that NRW has the nature and me campaign as well, so we just need to make sure that they work together, as well, and are not duplicating. But it's most welcome, the funding, thank you.

Absolutely, we are working very hard to make sure that everything we do with NRW joins up. We've had some really good meetings with the leadership teams there about doing exactly that, and Lee may want to come in and talk about—. So, this goes back to what we were saying right at the beginning of this session, doesn't it, about connecting people back to nature and making sure that we pick up all of the issues around that as well. So, part of the local places for nature programme is to do exactly that. And, obviously, these things all dovetail with the plant a tree programme and, indeed, we link up with the jubilee programme actually, as well, which we're very happy to link with.

There we are. Okay, well, that brings us to the end of our allocated time. So, can I thank the Minister and the Deputy Minister, and your officials, for the evidence you've given us this morning? There are a few other areas that we didn't manage to cover, but I'm sure we can pursue those by writing to you. You will, as always, be sent a copy of the draft record, just to check for accuracy. So, with that, can I thank you all for the evidence you've given us? Clearly, a lot there for us to mull over and consider, as we draft our report, as we're expected to do, of course, in relation to the draft budget for next year. Diolch yn fawr.

The committee will now adjourn until 12:20, I believe, when we will reconvene and pursue some scrutiny—our annual scrutiny session, actually—of Natural Resources Wales. So, we'll now adjourn the meeting and reconvene at 12:20. Diolch.

11:25

Gohiriwyd y cyfarfod rhwng 11:25 ac 12:30.

The meeting adjourned between 11:25 and 12:30.

12:30
4. Gwaith craffu blynyddol ar Gyfoeth Naturiol Cymru
4. Annual scrutiny of Natural Resources Wales

Croeso nôl i Bwyllgor Newid Hinsawdd, yr Amgylchedd a Seilwaith Senedd Cymru. Rŷn ni wedi cyrraedd eitem 4 ar yr ein hagenda ni heddiw, sef gwaith craffu blynyddol ar Gyfoeth Naturiol Cymru. Dyma'r sesiwn graffu flynyddol cyntaf, wrth gwrs, yn y Senedd hon, ac rŷn ni'n ei chynnal hi ychydig dros flwyddyn ers y sesiwn ddiwethaf, felly mae'n amserol iawn eich bod chi gyda ni heddiw. A gaf i groesawu, felly, Syr David Henshaw, cadeirydd Cyfoeth Naturiol Cymru; Clare Pillman, prif weithredwr; a Ceri Davies, cyfarwyddwr tystiolaeth, polisi a thrwyddedu? Croeso i'r tri ohonoch chi. Mae gennym ni rhyw awr a hanner wedi'i glustnodi, felly mi fwriwn ni iddi. [Anghlywadwy.]

Welcome back to this meeting of the Climate Change, Environment, and Infrastructure Committee at the Senedd. We've reached item 4 on our agenda, which is our annual scrutiny of Natural Resources Wales. This is the first annual scrutiny session of this Senedd, and we are holding it just over a year since the previous session, so it's very timely that you're joining us today. So, may I welcome Sir David Henshaw, chair of Natural Resources Wales; Clare Pillman, chief executive; and Ceri Davies, executive director of evidence, policy and permitting? A warm welcome to you, all three. We have around 90 minutes available, so we will make a start. [Inaudible.]

Ie, mae'n ddrwg gen i—mae'n rhaid fy mod i wedi taro rhywbeth yn annisgwyl. Mae gennym ni rhyw awr a hanner ar gyfer y sesiwn yma, felly awn ni'n syth i gwestiynau, os ydy hynny'n iawn gyda chi, ac mi wnaf i wahodd Janet Finch-Saunders i ofyn y cwestiwn cyntaf. Janet.

I do apologise—I must have hit the mute button. We have around 90 minutes for this session, so we will move immediately to questions, if that's okay with you, and I'll ask Janet Finch-Saunders to ask the first question. Janet.

Thank you, Chairman. Good afternoon. Yesterday, in the cross-party group on biodiversity, the Wales Wildlife Trust outlined concerns that we were spending less than 3 per cent of the flooding budget on natural solutions. Given that this budget provides additional revenue to deliver nature-based solutions, what discussions have NRW undertaken with the third sector to review how they can collaborate with you to push these projects forward, and at a much faster pace?

Hello, Janet. Good to see you. Yes, natural site management solutions are part of the suite of measures that we and other flood risk management authorities across Wales need to have in our armoury to tackle the flooding that affects communities across Wales. And as you say, they have multiple benefits. So, they're really good in sustainable management of natural resources terms. They create habitat, they improve biodiversity and all the rest of it.

As part of our budget, we do have some money in there for natural flood management schemes, and we will be bidding to Welsh Government, who also have a pot. But it's not the only pot that we're using for these things. So, close to home for you, you'll be very aware of the brilliant project in the upper Conwy valley—the Uwch Conwy project—where we've been working over many, many years with local landowners, the Wynne-Finch estate, and with the National Trust to explore really innovative ways of working in that upper catchment, way above Llanrwst and those areas that flood, to meander a river that was straightened for industrial purposes in the nineteenth century, to create again the flood plain. And we're seeing both the impact of that, in terms of water storage higher up the catchment, but also in terms of biodiversity gain. I was up there the other day and there were dippers and it was just fabulous.

Yes, I just wanted to say as well that we have been talking and including the environmental non-governmental organisations in the discussions around Dinas Powys, where you know that we're looking at a range of natural flood management schemes in the upper catchment in order to alleviate the flood risk in that area too. And just to add, really, to what Clare has said: in our remit letter from the Minister, it makes it quite clear that we need to consider natural flood management in all of the considerations that we make. So, we're doing that as we move forward through our capital programme.

Thank you. Yes, you mentioned the remit letter. I was just wondering, where are we at in terms of an updated or a concurrent—

12:35

Okay. Thanks, Llyr. Just after Christmas we received confirmation from the Minister for our final budget for this year, and just before Christmas we received the remit letter on flood-risk management for this year. We are expecting, as the Minister said this morning, to receive a term of Government remit letter in the next month or so that will sit alongside our budget and will give that real sense of prioritisation and it will be informed by the baseline review, programme for government, co-operation agreement, all those things coming together. And critically for us, also, alongside that term of Government remit letter, we're expecting a budget for next year, but indicative budgets for the two years thereafter, which—. We have discussed with you on a number of occasions, just how important that multi-year funding is in terms of being able to plan some of these big projects, really driving forward some of the work on biodiversity, peatland restoration, et cetera. So, we really welcome the move to multi-year settlements.

So, just for clarity, then, the term of Government letter or remit letter, will that replace annual remit letters, or will they still be drawn up—

I don't actually know the answer to that, but, sort of speculating, I would imagine that we will have a term of Government remit letter and then an annual remit letter that will, effectively, say, 'During this year, we'd expect you to deliver this, this and this.' In terms of the flood remit letter for this year, that's enabling us to progress major works to protect communities, to reduce risk and improve defences. It also enables us to further develop the pipeline of schemes, so that really critical forward look, and to deliver against those recommendations that we identified following the floods in 2020 in our flood review that was published in the autumn of 2020. So, you'll see stuff about the Llyn Tegid scheme, which we've just started, and it'd be great if some of you might come and have a look at, really important for that community, improving the works, which are historic—Telford, all the rest of it—and actually also bringing, potentially, real benefits to the town in terms of the work we're doing with the Bala Lake Railway to enable them to increase their offer as part of this. So, a really great scheme in north Wales. Also, Stephenson Street in Newport, that scheme, starting now, will reduce the flood risk to over 2,000 properties and again see improvements, wider improvements, that multiple benefit to the community, more green space and improvements to the Wales coast path there. 

Okay. Before I bring Carolyn in, I'm picking up quite a positive vibe around a bespoke remit letter for flooding. Is that something that you particularly want to replicate across other areas, or would it get a bit too complicated then?

I think it—. I think what the Minister was talking about earlier today was that real drive to get alignment between Welsh Government priorities and the NRW budget and business plan. That work is under way. It'll have that overarching remit letter, and what we absolutely want is clarity about what is expected, what is funded, and what level of service that delivers, because I think that that will really help—help us, help all the teams across Wales, but also help in relations with stakeholders and communities because it will provide that clarity. 

I think it would be better to have one remit letter. We've always had a strong flood relationship with Welsh Government, because we, effectively, bid in for capital funding from this pipeline of programmes that we'd work up with them. So, in a way, flood has always been slightly separate in that way. But it would be good, I think, to get to the level of granularity around levels of service that we have in flood across the piece. 

12:40

Diolch. There we are. Okay. Thank you for that clarity. Carolyn. 

Just going back to flooding, would that remit include enforcement of ensuring culverts, ditches, are kept clear? Will it make it clear who is responsible for those as well? Because I know sometimes that responsibilities overlap to local authorities, Welsh Water—a huge issue. And when—. The cost as well, because I know, when you're clearing these culverts, ditches et cetera, if the landowner will not take responsibility, you have to step in and issue a licence. When that silt and debris is removed, it's classed as contaminated waste and can cost several hundred thousand pounds to clear up. So, is that all part of it? Because I know that's really important to residents who have been affected by flooding in lowland areas.

I think, as the Minister said earlier, it is a complicated picture in terms of responsibility. So, our responsibility is for main river flooding and coastal flooding, and then local authorities have subsidiary river and surface water. But, when you're flooded, you really couldn't care less who is responsible, and the important thing is that everyone is working together, understands the relationships and the responsibilities and works well within them. So, with things like culverts, we have culverts on our estate, which, as a landowner, we would be looking at, and we have culverts as part of the 4,000 plus assets—flood assets—we have across Wales that protect communities. Equally, local authorities will have culverts, private landowners will have culverts, Network Rail and all the rest of it, and it is how you get all those flood-risk management authorities working well together in order to protect communities. 

They do pass the buck quite a lot, and I think enforcement on ditches leading to rivers comes under NRW's remit, as far as I understand, as—. I'm sorry, I didn't—. I'm still a Flintshire councillor—I announced that at the beginning of the meeting—so I do have some understanding of this, which is a—[Inaudible.]—issue.

Can I just go on as well, also regarding the remit letter? The designation of the Clwydian range in Dee valley area of outstanding national beauty into a national park, that's something that you're expected to take on, and I know from previous redesignations it can take up to 15 years, normally. But it's hoped that this will happen within this programme of government, and I've been told that there is a way of doing it. I was part of the previous extension, when I was chair of the AONB. Have you got the resources to be able to do this in this current programme of government? The Minister previously said that £3 million was being made available, so can you give me more information on that, please?

Thank you, Carolyn. On the specifics on flood, we will write to clarify, but I think it does depend on who the landowner is, in terms of enforcement. 

On the AONB, I should begin by saying to the committee that I live within the area that will be designated, so I will not be involved in the discussions and the decision making. Having said that, I can of course answer your question about funding. It was good to hear the Minister confirm that we were going to get £3 million for the new national park. It can be a very long process. So, the South Downs, which was the most recent one in England, took 10 years. We have worked really hard with Welsh Government to look at how you can get a programme that goes through all the right stages within the term of Government, and that is what we are working on. I don't know, Ceri, whether you want to come in and add at all on that. 

Yes, thank you. So, yes, the only thing that I would add to that, really, is that, as Clare has said, we've worked hard and we're looking at streamlining processes as far as we can, and we're working closely also with our sister organisations in England as to what they've learned going through similar processes there. The thing that we do need to be mindful of is that, often, these things end with a public inquiry at the end. So, that's a valid point that we would need to look at, as to how that was resourced and how—. At the moment, what we've costed up is what we believe will be the work we need to get us to that stage where we can make a recommendation. So, that's where we are, but we will need to figure that in. But, as we go through the process, obviously, those elements will become clearer, and what we've agreed with the Welsh Government is that there'll be frequent reviews of the process, where it's going, how it's looking, so that we can ensure that we are sticking to the timescales and dealing with issues as quickly as we can. 

12:45

I believe that Scotland were able to redesignate fairly recently on a shorter timescale, or within the five years. So, there we are. Okay, thank you. 

Thank you, Carolyn. I just wanted to ask about the new corporate plan. Clearly, you have or had a corporate plan, which was I think from 2018 running up to 2022. It's been rolled on to 2023, so I don't know if you can update us on when we might expect to see a new iteration. 

Absolutely, Llyr. So, as you say, the current or previous corporate plan—it is sort of current—was published in 2017-18 and ran up until 2022. Publishing a corporate plan every four years is part of our governance framework with Welsh Government. It must have been about this time last year that we started talking to Welsh Government about potentially delaying the corporate plan by one year to enable a new Government to come in, for the programme of government to be published, and of course, since then, we had the co-operation agreement as well. We also—. So, Lesley Griffiths commissioned from us in February last year this baseline review exercise. That also we knew was coming, and it was that, actually, we need to get all these things together. We're also in the fifth year of our well-being objectives, so we've got a review of them coming up. So, it felt right to delay by one year to be able to bring all those things together, and bring them into a new corporate plan.

So, we're starting that process now. It'll be informed—. Carolyn, you mentioned the Natur a Ni work that we're launching, that conversation with people in Wales, very much, actually, the sorts of things that Lee Waters was talking about: what people are looking for, what communities are looking for, to take that action themselves, what they need in the way of support and things from agencies such as ours. And we will be holding workshops and webinars et cetera with stakeholders during the course of this year. But that's where we are, so I would expect a new corporate plan to be consulted on during the course of the year and published probably March next year. 

Yes, just in terms of the business plan, one of your previous strategic points was to develop NRW into an excellent organisation that supports the communities of Wales. So, what work have you undertaken to improve community involvement over the past year, and noting local concerns here, for instance? Not to sort of—. Well, to be honest, I think there was reputational risk regarding the handling of Tan Lan embankment and the dredging of the Afon Conwy, especially with the Tan Lan embankment where farmers were told it would cost, for you to oversee it, £150,000 and then, of course, they've had works done. It's still not—. You know, it needs sorting. But what changes do you aim to make to improve community relations within your next business plan?

12:50

Thank you, Janet. It's obviously a really key area for us, and we really started to do some good work in terms of our relationship with customers and communities across the piece. A lot of what we do, let's face it, is contentious, and it can bring out different views within communities. Some people love tree planting. We also get an awful lot of letters saying, 'I don't want trees planted here.' So, we are at the sharp end, often, of environmental changes, and communities and individuals can find that difficult at times. So, investing in our staff's skills and capabilities in terms of engaging with communities has been key. Improving our customer-facing presence in terms of the advice that we give and the website, et cetera, has also been important.  

Also, I think that one of the key things that we've been doing much more of is working with those organisations and individuals who already have those relationships. We will often be coming into a community at a time of stress, or with something that they perhaps find difficult, and it's often about working with those organisations—whether it's local authorities, whether it's local charities, environmental NGOs or whatever—that have those relationships and building on that. So, you will see much more of that in the next corporate plan.

Sorry, I think that David wanted to come in.

Yes. It was just to add to what Clare has said, if I could. I think that there is a wider issue, if you like. When NRW was in some difficulty, the organisation would turn in on itself, really. What we have been doing in the recovery of NRW has been turning ourselves outward-looking, and doing that organisationally through setting up the areas.

Areas sit alongside the local authorities through the public services boards at the local level, so they are a lot closer to communities and are listening to communities. We are delegating to those local areas an ability to work with those communities and public services boards, rather than it all being top-down control by Cardiff, which perhaps will be a way of describing what was happening before.

So, the whole emphasis is about turning ourselves outward. If you look after the customers—the clients and the people we serve—and organise around them, much else follows. That's the mission that we are on at the moment, and I think we are making good progress. But there is still some way to go—there is no question about that.

Okay. Well, if I can just reiterate my point about the Tan Lan embankment, you have about 15 farmers who are very unhappy, and they really want to work with you. So, I would ask you, Clare, to look at that again, if you would.

I think that we are starting work on that viability piece with that group of farmers. It has been slightly delayed by the pandemic, I'm afraid, and we've apologised for that, but we are now engaging with them on the viability.

Absolutely. We will keep you and Llyr updated. I think that we wrote to you when we were doing some work in September, and we will keep you posted.

Thank you. Now, as regards your performance report, one of the two red measures in your performance report was around your ability to deliver water-related investigations. Now, while the increasing public knowledge of the reporting process noted in your report is welcome, what resource issues have you encountered in undertaking these investigations? And what legislation do you think is now required to make it abundantly clear that water companies themselves must take steps to address all recurring pollution incidents, and also to look to mitigate the risk of other potential incidents?

I'm going to ask Ceri to come in on this one because she has been working really hard on it. But, just to say, none of us are content with the state of the rivers in Wales. Let's be really clear about that. We are a country with amazing rivers—rivers that hold huge significance in terms of the value that communities place on them. They are sort of iconic to us as a nation. The stuff that came out about the quality of the special areas of conservation rivers earlier in the year, and the phosphate levels in them, and though, when we published the water framework directive figures, they did show slight improvement, I'm not content with a state where 40 per cent of Wales's rivers are in reasonable condition and 60 per cent aren't. So, we are absolutely focused on this—the board, exec team and staff. And I think it feels to me as if there's been a shift this year in terms of public awareness and interest, in terms of the focus that the water companies are now bringing to bear, to a sense in Wales that, actually, this is not something that can be solved by one party making a change. We were talking about catchment approaches to flood. We have to take a catchment approach to pollution too.

So, it's been a year of real focus in this area. I think we are making strides. I think it's important to remember that though many of the same issues that are present in England are in Wales, they're not analogous, and there are some things we've been doing differently for some time, and there are some things that are different in terms of the way we operate. But, Ceri, can I bring you in on this?

12:55

Yes, thank you. I guess what I wanted to do was to give you the assurance that the resources that we've diverted away from the investigations has been absolutely put to some of the new ways of working that Sir David mentioned. So, what we've been doing—. We've been undertaking our investigations, and you've been able to see the performance that we wanted to achieve but weren't able to. But what we have done with the resource is to put that to focus in on the storm overflow work, which has been of great public interest and concern, and also the phosphate in SAC rivers work, and then the follow-up work to that, which is the state of all of the rivers across Wales and the investigations that we do there. 

I think it's important to say that the investigations work that we do is absolutely important, which is why we've got it as a measure in our business plan, but what that does is it gives us the evidence that identifies where some of the failings are and some of the failures are. But we feel that, by diverting some of the resource into working on some of these specific issues, we will be identifying what are the causes and what are the problems in terms of those rivers.

So, important work is being done. Our chair, Sir David, works really closely with the chair of Ofwat to pull together the chairs of the water companies in Wales to refocus attention on what we can do quicker, what each organisation's responsibilities are, and then trying to move that forward in a much quicker way. And what you will be seeing towards the end of the month—and I know, and we welcome, that there is going to be a deep dive from this committee in February on water as well—is a route-map to better water quality in Wales, coming together from NRW and also including the water companies, Ofwat. We've involved the Consumer Council for Water in those discussions, and also Afonydd Cymru, and we're talking to our wider stakeholders to bring those in. You mentioned legislation and you asked what's required. I think one of the key pieces is the implementation of the agricultural pollution regulations, the new regulations that Llyr was talking about this morning. So, following that through will help us to ensure that the agricultural sector is playing its part in terms of reducing impacts on rivers through run-off from their land or discharges from their land.

But, importantly, I think, the other thing I would say is that the water companies, I'm pleased to say, over the last number of years, five years, of their performance cycle, both water companies in Wales have achieved the top performance level, because what they've done is they've started to take greater responsibility for things like incident reporting, following up incidents, taking action and putting things right at source. So, that's the kind of work that we're doing with the water companies and with the wider stakeholder groups who impact on water in Wales to try and achieve those improvements that we want, as Clare just said, because we can see that the slow progress that's being made on the water framework directive requirements needs to be moving at pace if we're to deliver the biodiversity benefits that we all need.

13:00

Thank you. There's a lot to take in from both Clare and Ceri's comments there. Huw wants to come in, and I think Carolyn as well is particularly interested in the NVZ stuff, but we'll go to Huw first.

Thanks, Chair. This is probably an opportune moment to turn to an area that's interesting us all on the committee and in some ways, you've neatly tried to pre-empt where you think some of our questioning is going to be going on this. You've seen the headlines today in the newspapers in England. That was part of your deflection comments there, which were very good I have to say. It's not analogous, I think you said, Clare.

The comments that have been made by whistleblowers in terms of the Environment Agency in England are that it's just not fit-for-purpose now in terms of a deterrent—it is not providing a deterrent. Do you understand when some campaigning organisations—whether it's to do with resource or the way you use those resources or the way you work in partnership with others—will argue that exactly the same applies in parts of Wales? And I refer you back to the Llynfi tributary incident. I point out for my constituents that it's not the Llynfi river in my constituency; it's a tributary of the Wye river that I'll be canoeing on in the next couple of weeks, by the way, so, I'll be keeping a close eye. People look at that and say, 'Well, was there a failure of enforcement?' because there was an inability to get officers out in a timely manner. How do you respond to this? And I welcome, by the way, what you're saying about the way now you're going to bring forward more plans, and we're going to look at this as a committee, but right here, right now, have we got a problem?

I'll ask Ceri to talk about Llynfi in a bit more detail, because it was an incident that struck us to the heart—that you had that level of pollution and we weren't able to take action against it. But, just really to respond to some of the wider points, I said not everything is analogous to England, but there are a lot of very recognisable similarities. But incident management is an absolutely crucial part of our work and the range of incidents that we deal with is broad: from floods to air pollution to fly-tipping, wildlife crime and, of course, incidents on our rivers. We record, on average, nearly 7,000 incidents a year, and we triage those in terms of potential impact. And our response, effectively, is risk-based and proportionate within the resources available. And that means that, in most instances—in the most high-level instances—we are able to get there and to act and to deal with them. I should say that we're seeing a rise in the number of recorded incidents—so, around 20 per cent over the last two and a half years.

Another thing that's worth saying before Ceri gets into the detail is that incidents, and the enforcement that can result from them, is, of course, absolutely critical as part of the suite of measures that we deal with in terms of environmental protection. A major pollution incident and enforcement are effectively the result of failure in the system. What we need to do is not just focus on the tail end of the process; we need to be right there at the start in terms of education, support, advice—all that stuff that actually stops this stuff getting into rivers in the first place—and working with industry, working with landowners, working with communities to get that state where, actually, it's not acceptable to chuck litter in a river and it's not acceptable just to use it as a drain. So, there's something for me about—and it came up in the earlier session—where you put your effort. Do you put it in the back end, when things have gone wrong? Or do you try and bring it into the front end in terms of educating, advising, and dealing with the thing before it becomes a problem? Now, the answer is, of course you have to do both, but it's getting that right balance that's important. Ceri, do you want to come in on the Llynfi?

13:05

Yes, a couple of key points on the Llynfi. It's hugely upsetting for us and all of our staff involved, the damage that's caused through incidents such as the Llynfi and the years that it then takes for the rivers to recover back to those levels. We are starting to see the signs of recovery there, but it will take years, without a doubt, for the river to recover to the same level as when the incident occurred. At the time, as Clare has said, we have to take difficult decisions and prioritise and triage our high-category incidents. At the exact same time as we had that incident on the Llynfi, we had two other high-category incidents, one on the Ebbw and one on the Rhymney. We'd already deployed staff to those areas, and therefore we found ourselves in a difficult position with no local staff to the Llynfi available, because they'd already been deployed in those two other rivers.

On those two other rivers, we are taking forward enforcement action. We've already issued enforcement notices and remediation notices in the instance of one, and there is still work on our enforcement response on the other. But for the Llynfi, we found ourselves in a situation where we were drawing on staff from wider afield. By this time, it was getting late in the day. Our ability to be able to take action, in terms of either what actually needs to be done to protect ongoing damage, but also to ensure that we've got good prospects of taking enforcement action down the line, is obviously difficult if we can't see where the pollution is coming from. In this instance, it was a case of not being able to get people there in time in the hours of daylight to be able to do that work. We did work as effectively as we could do with the reporting of the incident to get local samples taken by the reporter of the incident so that we could use that later, and then we got back there first light to see what had happened and what we could do. We've undertaken extensive investigations and statement taking and enforcement follow-up, but unfortunately we couldn't meet the burden of proof you need to take a criminal prosecution there.

But what are we doing about that? I think that's the question, isn't it? Because like all emergency responders, there's triage, prioritisation and difficult decisions. One of the things that we're doing right now is that we're consulting with our staff. We had a long consultation with our trade unions, and we're now consulting with our staff about contract changes and bringing more people onto our rotas so that we've got a bigger pool of people available to help us in all sorts of incidents—environmental, flooding, and also the ones on our land estate. That consultation is taking place right now, and we're hopeful that we'll be able to draw in more people onto our emergency response rotas so that we can respond. But, as Clare has said, those people have day jobs and some of those day jobs are in the prevention of issues occurring. They're in work that involves enhancing biodiversity to make the rivers more resilient to these knocks when they come in. So, it is a fine balance about drawing in people to deal with it at the back end, versus the preventative work we need to do at the front end.

For that reason, what we're looking at is innovation and technology, remote sensing—is there more that we can do with technology to help us in these situations that's almost equivalent to the police call for dashcam footage when an incident occurs that they're responsible for following up? So, we are working hard on that. We're looking at our systems and procedures to ensure that we're able to act as quickly as possible and that all of our staff who take part in those rotas, and the new ones who hopefully will come on following this consultation, are best able to deal with what's in front of them at the time, they've got better knowledge of the issues. There's a huge piece of work that we're doing. After every incident, we do a major debrief to look at what we can learn, and following this one, we are looking at those more strategic infrastructure points around the technology, the innovation. Can we work better with partners who may be located closer by, who could do some initial work for us that would be good enough to help us in both the damage limitation and also the follow-up? So, they're all areas that we're looking at to improve on, and it's work that we're taking really seriously to improve our performance on that.

13:10

Thanks. It's just to reinforce the point from a slightly different perspective that this is the board looking at actually how we do regulation. You can either stay with just checking, inspecting and prosecuting and all that, and that could end up being ticking the box and missing the point. But what does good regulation look like? Good regulation looks like having to do that, but also working with other colleagues, other partners, and that's why we initiated the work with Ofwat and other colleagues to try and get more focus on this problem in an integrated way. That's, if you like, a model of what we're trying to do across the piece of NRW in trying to become a more effective regulator; not losing our core mission, but thinking how we work with others to improve the state of things we're dealing with.

Llyr, can I just make an observation? It's not a question for a further comment. This is not a criticism of officers working with NRW at all. Everybody who comes into NRW has the best interests of the environment at heart; that's why they come to work with NRW. But you get the feeling that at the moment, they feel slightly under the cosh—not simply through resources, but public perception that they cannot respond. That stuff you're talking about has got to change the public perception of the way that NRW and partners do it. It's also got to change the internal mood music so that NRW officers feel that they are empowered to help resolve these issues, but also feel that they're part of an organisation that is now really on top of this. So, I welcome what you're saying in the approach, and the holistic approach to doing it, which has to include all tools in the toolbox, including enforcement, but also that wider thing, but there is a job of work to do here, because there's a feeling out there that we've been losing it over the last few years.

Thank you, Huw. I think we all concur with those comments. Carolyn, did you want to come in here on the NVZ issue?

Yes. Just following on from that, though, it does seem that there's a bit of a 'them and us' attitude as well. Working with partners, working with local authorities, and Welsh Water, if you educate regarding riparian ownership as well as land—. Regarding, for example, tree planting as well, our message is 'plant more trees'; brilliant. But then a landowner will come along and cut down 200 trees, and then they get in touch with NRW and there is no enforcement of it. I spoke to the landowner, and the landowner said, 'I thought because they're not mature trees, it's fine.' It's that education, that understanding.

I spoke to a ranger when there was damage being done to a site of special scientific interest. I contacted NRW and we've not been able to get NRW down there to get involved. NRW have the powers, don't they, to enforce, but he doesn't. So, it's just, I think, about working together, more about the education, et cetera. That landowner who was damaging the SSSI, which was a swamp—that's why it was designated thus—had issues with his land; he said his land was getting boggy, so he wanted to drain it. It's just about working together. The ranger said previously, when it was the Countryside Council for Wales—the three agencies—then there was a special wildlife officer to deal with these sorts of incidents then, so is that something that is needed that you might look at in the future?

I'm sorry, because I went off the point, but regarding NVZs, again, these new regulations will probably need more officers, more resources. How do you think you will be able to handle these new regulations regarding NVZs? Thank you.

Thank you, Carolyn. There was quite a lot in there. On NVZs, it came up this morning; we have put in clear advice as part of the baseline review that we will need more funding to enforce the new regulations. We've put a range of options in, and I suppose that's what I mean when I say what level of service is Welsh Government prepared to pay for, really, and we can deliver, then. So, we put that in and that's part of the baseline review. 

On riparian ownership, there's some really good stuff going on as part of some LIFE projects. You mentioned LIFE projects this morning, and I was really pleased that that came up, because we've done incredibly well in getting two more LIFE projects through just at the point at which we've left the European Union. We've got another Rivers for LIFE. You will be aware of the Dee LIFE project; we've got another bigger Rivers for LIFE project that will cover four rivers. It's the same sort of thing: improving that riparian ownership, people really understanding what their responsibilities are, but actually, also, helping them to do the right thing. So, there's some good work there.

In terms of enforcement of SSSIs and tree felling, we do what we can. Sometimes it is difficult to get a prosecution to the right level of proof, but when we can, we do. On designated sites, we did a piece of work last year that showed that, actually, our designated sites in Wales are not in good condition, they're not where they should be. We are expecting, as part of this budget round, to get money from Welsh Government, as part of the Nature Networks work, that will go from us to landowners, as part of land management agreements—so, really, upping that role of land management agreements. Again, that has tailed off as the money tailed off, but we're looking, as part of this coming budget, to have more money, in each of the three years, to spend on that, which will really help with that relationship with the owners of SSSIs. There's a long way to go, let's be really clear. If these are the jewels in the crown, some of them are not as shiny as they should be, and more money going in over the next three years will really help with that.

13:15

Okay. Thank you. We've spent quite a bit of time on that, but it's well worth it. And, as we were reminded earlier as well, we will have a specific session looking at water quality in a fortnight's time, so, obviously, we'll be able to delve even further into some of those issues at that time. Okay. We'll move in a different direction now, and I'll invite Delyth Jewell to lead the way.

Diolch, Gadeirydd. Moving towards more general budgetary considerations, then, you told our predecessor committee that, from the end of 2020-21, you wouldn't be able to carry money over from one year to the next. Clare, I think that you said that this would potentially lead to gaps in funding. Could you please talk us through what the impact has been from that decision to stop you being able to carry money over?

This is a project that was called 'alignment', and, effectively, it meant that we can't carry forward the money that we earn, particularly from timber, from year to year. But, historically, we've also benefited sometimes from Welsh Government giving us money for specific purposes that we then could carry over. That was between £10 million and £15 million a year that fell into that. So, this last year, to help with that, we were given an additional £9 million to help smooth that, because we couldn't carry things over, but that, obviously, is coming to an end. That was why Lesley commissioned this baseline review from us last February. The work that we have been doing is really about saying that we need to get our budget, as the Minister said this morning, onto a stable footing that's not subject to, 'Oh, well, here's a bit of extra money to help you out on this; here's a bit to help you out on that'—really understanding what the core budget buys, what the priorities are and to be able to deliver against them.

Now, the other thing that's obviously sort of good is having that three-year funding, because it does enable you to plan in a completely different way. So, some of the projects we've had—really good ones—we've had that sort of moment every December/January when we've been going, 'Well, do you actually have to lay the staff off or stop the work?' because we don't know whether it's funded from the following April, and sometimes that can come through very late. So, that three-year funding will help, but it is one of the things that's been causing difficulty.

The Minister also referred to the discussions that we're having with them about timber income and how to get the incentives there right, and also ensuring that, actually, the work on the Welsh Government woodland estate is not compromised because of the fluctuations in the timber market, or by Welsh Government and us wanting to look for different benefits, different value for timber. So, looking at that sort of wider piece is another aspect of this.

13:20

Thank you. More generally, is there anything further that you'd like to add in terms of your views on the recent draft budget proposals? I'm thinking particularly about the tension that there has been in the past between—. I know that in the last Senedd, the Minister for the environment had said that NRW's funding would be sufficient to cover your statutory responsibilities and you've said a number of times that having a decreased budget can impact on your ability to deliver services; more duties get put on NRW, the equivalent type of funding doesn't seem to be—. That's not sustainable, is it? I don't want to ask a leading question, but—

Well, that's what the baseline review is there to look at. We have over 500 statutory responsibilities. Some of those will be quite small, some of them will be big and expensive to deliver, so it's looking across those and really understanding. And then, of course, there is, as I say, that sort of, 'So, what level do you want us to deliver to?' and that is a really important conversation and one that I think has been a long time needed. So, really welcome that. 

Also, hugely welcome the additional money that's been secured for tackling the climate and nature emergencies. We heard some of that detail this morning. And also recognition that all our aspirations are huge in this area and the challenges are huge. And this is about making sure that the money that we do have is spent in the best way possible, and that conversation with Welsh Government about priorities and levels of service is absolutely key.

But, from our perspective, we really welcome the commitment to fund the new national park. I've mentioned the nature networks programme that will enable us to spend money on designated sites. The national peatlands action plan—a great project restoring peatlands across Wales—that's funded going forward. We've got the match funding for the LIFE projects, which is brilliant. That sucks in money from elsewhere, but it's also the only real source of landscape-scale money at this point. Natur am Byth—a major project with National Lottery Heritage Fund funding—also, we've got confirmation that we've got the match funding for that. So, some really good things in there. On flood, you heard this morning, I think, a real sense that some of the priority areas there will be funded, and, obviously, around coal tips.

So, we are in the middle of this discussion with Welsh Government, and, from your perspective, I can understand that that's a bit frustrating, because some things are becoming clear, other things are a bit, 'Well, we'll see where we are.' But, I think it is really critical that—. As you say, we have our budget and our grant in aid has reduced by 30 per cent in real terms since we were created. We have got new duties, and I'm absolutely realistic about the state of the nation's finances after a long period of austerity and coming out of the pandemic. So, I am utterly realistic about there not being loads of money for new things, but it is about being clear about what the priorities are and what we should deliver, and I think that will go to Huw's point, about, actually—. My team want to do the best they can for Wales, and sometimes that feels really difficult. But I think if it's clearer about what's expected, I think some of that will be more manageable. As I say, we all have such high aspirations for what we could achieve, so, yes.

13:25

There we are. Okay. And, in being clear around what's expected, I suppose it gives you clarity then around what isn't so much a priority to deliver.

It's important for you to know, yes. Okay. Huw, you wanted to pick up on this.

Yes, it's only a brief follow-up. I notice, Clare, that one of the things that you haven't been doing throughout all of this is whingeing. When there was, for example, a slight uplift in the Environment Agency's budget in England, you didn't suddenly rush and say, 'We'd like that as well, please, Minister.' You're focusing more on this idea of reforms, targeting effectively, changes that you need to do with your partners and all of that. Is that because you're just trying to be helpful with Government, or would you like an uplift as well?

Well, I think no chief executive is going to come in and say, 'Ooh, no, I wouldn't be able to manage with extra money.' But, in Wales, I think we do things differently. We're part of the fabric of what makes Wales a different place to work. I've worked in UK Government, I've worked in England bodies, and I'd worked in Wales, and, my goodness, I'd rather be here, and that's because we do work together. And it's not about finger pointing and going, 'Oh, this should be more for us' or whatever. I want the environment in Wales to be something that this generation and future generations can look at and go, 'We did good.' But I'm also really conscious that we don't have endless money, and we are coming out of a pandemic where our health services, our emergency services, our local authorities, our education are all really struggling. Because I live in those communities, my staff are governors of schools, and everyone is struggling. So, it has to be that team Wales approach, because if we don't do that, well, yes, there's no point. Sorry.

Could I just ask one brief corollary? It's a follow-up to that follow-up, which is this: I was the Minister when we had some frank and open discussions in the public domain with the Environment Agency, when I was the environment Minister, and they never felt afraid—they didn't do it regularly, but they never felt afraid—to challenge the UK Ministers when they thought UK Ministers had got it wrong on the environment. Do you feel in any way, with that collective approach, a Welsh way of doing things—? I commend that, by the way, but does it inhibit you in any way from calling out Welsh Government when you think it's wrong? Because, ultimately, you're not just the regulator, you are also the advocate for the natural environment.

13:30

Absolutely. And I think we do. I would always try and do it in private first, and we are listened to. I think that you can have that influence and provide that advice, and there are many, many instances where we do that, so that would be how I would prefer to work.

There we are. Okay. Sir David wants to come in, also Ceri, and then we'll move on to Jenny then for the next—

Only briefly, if I may, thanks. It's a very important point, and I can't disagree about some of the dialogue that goes on in England and the UK, but we're beginning to recognise where NRW has been. There were doubts about us in terms of our ability to perform and the rest of it, and so, that's an unfolding story about improving confidence and the rest of it. We have a responsibility to make sure the money we spend is spent effectively, and, actually, that's what we're doing, as far as we can. We have a responsibility to reform, to re-engineer, to actually change the way we do things—we reference back to the water point about bringing others in to help us through some of the lifting on these issues.

But make no mistake, there have been some hard conversations, both with previous Ministers and current Ministers about where we are and what we see, and we do have a statutory responsibility, in looking at 'The State of Natural Resources Report', for example, to call out the state of nature in Wales. We can't avoid that, we don't try and soften that; it's a factual description of where we are.

I have to say, everybody would want more money, and indeed, on climate and environment, we are now looking at something where we are going to have to think very, very differently. We've got some levers, but fundamentally those policy levers lie with Government, and actually not just Government, but with others in the sense of making sure—. For example, the private sector, if we want scaling up, the private sector has to be brought into this in a way that actually makes the change.

Indeed, you're right, it's even broader than Government, isn't it? Ceri.

Just really briefly, just to mention that other point. One is an example where we're working with all of the local planning authorities on the phosphate issue on the rivers, for example. Rather than us going away, beavering away and doing something on our own, we're working collectively on how we can develop the tools and techniques. So, I think that lends to Clare's point about working differently in Wales.

I think the other area that's not been touched on, but that we are working with Welsh Government on, is we are undertaking a strategic review of our charging scheme at the moment, because, obviously, what we've inherited, if you like, is a real mixed bag of some who are regulated paying charge recovery for the work that we do, and some areas of regulation are simply not charged for at all. So, that's another area where we are looking to see—. And it comes back to the point, I think, that Carolyn was making that we want to be in that education role, we want to be helping people to do the right thing, not taking action because they've done the wrong thing. But, to be able to do that, we need to ensure that we've got the charging schemes in place that will help us to deliver that. So, that's another area of work that we're working on, and I think has been understood and identified by the Minister as one that we'll need to work more closely on to bring in those regulatory charges.

There we are, okay, that's excellent. Another thorough passage of questioning there and responses as well, thank you for that. Jenny.

Thank you. This cosy relationship we have, you could argue, has got us into the situation we're in at the moment, which is that we are between a rock and a hard place when it comes to the climate emergency. We don't have nearly enough renewable energy, which is why we were so vulnerable to all these gas price hikes, and we don't have nearly enough timber, according to many of the stakeholders, which I know the industry has been shouting about for years. So, how does this commercial strategy fit into your relationship with Welsh Government, given that you're so hemmed in by having to hand most of the money back anyway?

Thank you, Jenny. We published our first commercial strategy this time last year, and it was absolutely based on the principles that we were looking for the three Ps: planet, prosperity and—oh, God, planet, prosperity, what was the other 'P'? Anyway, it'll come back to me. People, sorry. [Laughter.] It's extraordinary where your mind just goes completely blank at that point. So, it's really important that that is the basis, the intellectual and ideological basis, on which we're working. The first year has been very much about putting the building blocks in place internally, getting that culture shift within the organisation and really working through what that 'three Ps' approach means. But there are some really important aspects to this. We have nearly £100 million-worth of contracts out there. That procurement can be massively influential in terms of supply chain in Wales, jobs in Wales and decarbonisation. So, we can drive real change through our commercial relationship with our supply chain, and that's a really important part of our commercial strategy.

We also, in perhaps a more traditional way, earlier this week announced that there was going to be a development within the Welsh Government's woodland estate at Garwnant in partnership with Forest Holidays, with the Brecon Beacons national park, Dŵr Cymru and local authorities to create a series of eco cabins. That will create 60 jobs and estimated income into the wider economy from all those visitors. So, there are all sorts of different ways in which we can improve the way we behave commercially. One of the things we've done over the last year is review all the way in which we allow permissions for filming on our land, getting that into a much better state, having real clarity about what we allow, what we don't allow, what we charge for, what we don't charge for. So, that much more commercial approach, but always recognising that we're not just driving for the bottom line; we're driving for wider value, so environmental value and social value. And I think that's absolutely at the heart of it. So, I would see this being something that is the way we do things going forward. 

One of the things I think that you're getting at and we're debating and is very live is that the Welsh Government's woodland estate is in many ways huge—126,000 hectares and whatever. But it also can produce multiple benefits in terms of recreation or carbon capture. So, the pressures on it are actually quite difficult, sometimes, to navigate. So, do you put another windfarm or do you grow trees for timber, or do you restore ancient woodland, or do you restore for peat? So, there are some really complex issues about the use of the Government woodland estate and what you're looking for. So, we use sustainable management of natural resources as a way of working our way through that, and that underpins all those commercial decisions that we make. But I think it is something that, not just on the Government estate, actually across Wales, all those 'How is land used?' and 'What is the best use of land?' will become something that's very much part of the public debate over coming years.

13:35

Okay. Well, it's a really interesting debate, but, at the end of the day, a lot of people argue that the benefits from all our natural resources, from wind particularly, that the beneficiaries are foreign companies, that we simply haven't captured the benefit for Wales, in the main. So, that's a real problem.

And then the other thing about timber is that the long lead-in times, tooth-and-claw capitalism doesn't lend itself to that, because you have to wait 20 years before you can get anything. The current situation is that we don't have enough of either of these resources, in terms of our need to heat homes and build new buildings that are carbon neutral, and Brexit just made that problem even worse.

13:40

On windfarms, we have a number on our estate, as you well know. As we have got more experienced and more confident in the way we do them, the benefits for communities coming from those windfarms have increased. So, the one in Clocaenog, which I know you know well, the one in Brechfa, and the ones that are currently in the system, will bring greater community benefit as part of the development. But, yes, I would like to see—as is in the programme for government and the co-operation agreement—a Welsh energy company that actually could take some of this forward and do things at perhaps different scales, so, some of the small-scale community stuff, but also right up to the big 30/40 turbines developments that we need if we're going to be looking at being self sufficient in terms of renewable energy over the next period. On timber—

Okay, so NRW never envisaged becoming a windfarm developer itself?

I think we could, and I think the Minister said this in response to questions. There are different roles that we can play. We are quite experienced in terms of developing windfarms now. We've done many on our land. But I think it would—. We'd need to look at financing and we'd need to look at how we'd do it. Those conversation are live at the moment. But they will go on, I think, in terms of what is it that we're trying to get, which is, basically, keeping the profits in Wales and ensuring that the communities within which these windfarms are sited benefit from them. So, those need to be the twin drivers.

On timber, I completely agree in terms of the lead-in time, and we do our forest resource planning over 50 to 100-year cycles—this is a very long game. But increasing the amount of Welsh timber that's used in Welsh building and all the rest of it is something that we're absolutely signed up to.

Okay, but this is something that's already a crisis. Because there isn't sufficient Welsh timber, we're having to import it from elsewhere.

Well, as the UK imports 80 per cent of its timber, we would have to pretty well plant the whole of the UK with trees to meet our timber needs in totality. So, I think—.

Okay. Right. So, can I quickly just ask about the timber sales and marketing plan, then? Do you think—? Have the sorry stories of earlier history of NRW been put behind us now? Have you been able to no longer have qualified accounts?

Yes, we have no longer got qualified accounts. For the first year—. The accounts that were published last July were not qualified for the first time in five years. That's been—. It's been a hugely difficult time for the organisation, for the staff, for our customers and all the rest of it.

Okay. Thank you. So, just moving on from that, how quickly are you going to be able to marry up the twin demands of both growing more trees for biodiversity and growing more trees that we need for other purposes?

So, on the estate, I think it's about 86,000 hectares of the 126,000 hectares are commercial timber. We work to the UK Woodland Assurance Standard, which sets the balance between commercial and largely broadleaf, non-commercial timber. We also look at what's the best use of different pieces of land. But, fundamentally, if we're going to meet those tree planting targets, it's not going to be on Welsh Government woodland estate land. That is planted, pretty well; it's in rotation and all the rest of it. So, that is the work that Lee Waters was talking about, the deep dive on timber that we were very much part of, which is looking at how you plant trees on other land in order to meet those targets.

13:45

Thank you very much. Right, we have 15 minutes left, and I know we have at least three other areas of questioning, so I'll come next to Janet to ask a question.