Pwyllgor yr Economi, Masnach a Materion Gwledig

Economy, Trade, and Rural Affairs Committee

17/03/2022

Aelodau'r Pwyllgor a oedd yn bresennol

Committee Members in Attendance

Hefin David AS
Luke Fletcher AS
Paul Davies AS Cadeirydd y Pwyllgor
Committee Chair
Samuel Kurtz AS
Sarah Murphy AS
Vikki Howells AS

Y rhai eraill a oedd yn bresennol

Others in Attendance

Andrew Gwatkin Llywodraeth Cymru
Welsh Government
Bill MacDonald Llywodraeth Cymru
Welsh Government
Claire McDonald Llywodraeth Cymru
Welsh Government
Dr Christianne Glossop Llywodraeth Cymru
Welsh Government
Estevao Simoes Llywodraeth Cymru
Welsh Government
Gareth Parry Undeb Amaethwyr Cymru
Farmers Union of Wales
Gwyn Howells Hybu Cig Cymru
Hybu Cig Cymru
Heledd Owen Llywodraeth Cymru
Welsh Government
Huw Thomas Undeb Cenedlaethol yr Amaethwyr Cymru
National Farmers Union Cymru
Lesley Griffiths AS Y Gweinidog Materion Gwledig a Gogledd Cymru, a’r Trefnydd
Minister for Rural Affairs and North Wales, and Trefnydd
Paul Harrington Llywodraeth Cymru
Welsh Government
Rob Parry Llywodraeth Cymru
Welsh Government
Steffan Roberts Llywodraeth Cymru
Welsh Government
Tim Render Llywodraeth Cymru
Welsh Government
Vaughan Gething AS Gweinidog yr Economi
Minister for Economy
Victoria Jones Llywodraeth Cymru
Welsh Government

Swyddogion y Senedd a oedd yn bresennol

Senedd Officials in Attendance

Aled Evans Cynghorydd Cyfreithiol
Legal Adviser
Ben Stokes Ymchwilydd
Researcher
Gareth David Thomas Ymchwilydd
Researcher
Katy Orford Ymchwilydd
Researcher
Lara Date Ail Glerc
Second Clerk
Lorna Scurlock Ymchwilydd
Researcher
Lucy Valsamidis Ymchwilydd
Researcher
Nia Moss Ymchwilydd
Researcher
Robert Donovan Clerc
Clerk
Robert Lloyd-Williams Dirprwy Glerc
Deputy Clerk
Rosemary Hill Ymchwilydd
Researcher
Rhun Davies Ymchwilydd
Researcher

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

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

Cyfarfu’r pwyllgor yn y Senedd a thrwy gynhadledd fideo.

Dechreuodd y cyfarfod am 09:33.

The committee met in the Senedd and by video-conference.

The meeting began at 09:33.

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

Croeso, bawb, i'r cyfarfod hwn o Bwyllgor yr Economi, Masnach a Materion Gwledig. Dwi ddim wedi derbyn unrhyw ymddiheuriadau y bore yma. A oes yna unrhyw fuddiannau hoffai Aelodau eu datgan o gwbl? Sam Kurtz.

Welcome, everyone, to this meeting of the Economy, Trade, and Rural Affairs Committee. I haven't received any apologies this morning. Are there any declarations of interest that Members would like to make at all? Sam Kurtz.

Diolch, Gadeirydd. I just declare an interest as a director of Wales Federation of Young Farmers Clubs and chairman of Pembrokeshire YFC as well. Diolch.

Dyna ni. Diolch yn fawr iawn. Unrhyw fuddiannau eraill? Nac oes.

There we are. Thank you very much. Are there any other declarations of interest? No.

2. Papur(au) i'w nodi
2. Paper(s) to note

Symudwn ni ymlaen, felly, i eitem 2 ar ein hagenda, sef papurau i'w nodi. Rŷn ni wedi derbyn nifer o bapurau i'w nodi. Dwi ddim yn mynd i fynd trwy bob un ohonynt, ond oes yna unrhyw faterion hoffai Aelodau eu codi o gwbl o'r papurau yma? Nac oes.

We will move on, therefore, to item 2 on our agenda, which is papers to note. We have received a number of papers to note. I'm not going to go through each one, but are there any issues that Members would like to raise at all from the papers to note? No.

3. Craffu Gweinidogol - Y Gweinidog Materion Gwledig a Gogledd Cymru, a’r Trefnydd
3. Ministerial Scrutiny - Minister for Rural Affairs and North Wales, and Trefnydd

Felly, symudwn ni ymlaen i eitem 3 ar ein hagenda, sef craffu ar waith Gweinidogion. Gaf i estyn croeso cynnes i'r Gweinidog Materion Gwledig a Gogledd Cymru, a'r Trefnydd a'i swyddogion i'r sesiwn graffu cyffredinol yma? Gaf i ofyn i'r Gweinidog a'i thîm i gyflwyno eu hunain i'r record, ac wedyn gallwn ni symud yn syth at gwestiynau? Gweinidog.

So, we will move on to item 3 on our agenda, which is ministerial scrutiny. Can I welcome the Minister for Rural Affairs and North Wales, and Trefnydd and her officials to this general scrutiny session? Can I ask the Minister and her team to introduce themselves for the record, please, and then we can proceed straight to questions? Minister.

Yes. Bore da, pawb. Morning, everyone. I'm Lesley Griffiths, Minister for Rural Affairs and North Wales, and Trefnydd, and I'm joined by Christianne Glossop, who is our Chief Veterinary Officer for Wales, and Tim Render, who is director of rural affairs.

09:35

Thank you very much indeed for those introductions, Minister, and perhaps I can just kick off this session with a few questions. Could you give us an update on when the agriculture (Wales) Bill is likely to be introduced by you and by the Government?

Yes. So, I can't give you an exact date because, whilst we are at an advanced stage of development of the Bill, and you'll be aware of the three consultations we've already had and the introduction of the White Paper, for instance, we are currently in discussions with Plaid Cymru because, as you're aware, it was part of the co-operation agreement, so it's really important we ensure the policy commitments outlined in that agreement are reflected in the Bill. There's also, obviously, COVID, and we haven't got as far forward as we would have wanted to in relation to the COVID pandemic, so we've had a real push, I think, over the previous six months. So, it will certainly be in this calendar year, but I'm not able to give you an exact date at the moment. What I really want to do, because I know from talking to stakeholders and the farming unions, for instance—there's a real interest in the sustainable farming scheme, and I still intend to publish that scheme in July, ahead of the summer agricultural shows, because I think it's really important that people see the detail of that, so we can have engagement over the summer. 

One of the other things I'm having to look at within the Bill now, apart from, clearly, food security and issues around what's happening with the dreadful conflict in Ukraine, is the cumulative impact of the free trade agreements as well. I need to have a look at that within the Bill as well, and making sure it's as flexible as possible.

So, the timetable has slipped, then, as far as the agriculture (Wales) Bill is concerned, because of COVID. 

Yes. I've said before, we didn't have the engagement with farmers that we would have wanted to have, which is really important, particularly around the development of the scheme, in relation to the pandemic. And as I say, the big issue at the moment, probably, is around the co-operation agreement and just making sure, as I say, that the Bill reflects the commitments in that agreement with Plaid Cymru. I think, initially, I was hoping to introduce it next month. It certainly won't be next month.

You touched on the sustainable farming scheme earlier on. It would be helpful if you could, perhaps, update us on progress on testing the sustainable farming scheme proposals in terms of pilot schemes, modelling and impact assessments.

Yes, certainly. So, what we're doing here is having a three-pronged approach to ensure that the proposals that are set out in the scheme are underpinned by very robust evidence. We want an analysis from a range of sources too. We've got the environment and rural affairs monitoring and modelling programme. That really allows us to estimate the impacts of potential scheme actions on land use, agriculture and environmental outcomes based on the data that we've drawn from farms—from a variety of types of farms, and from right across Wales. That's complemented by independent analysis that's been undertaken by a consortium of consultants and academics for us. That's exploring the potential economic impacts of emerging proposals at farm business, at sector and at regional level. I've always said it's really important that the scheme works for all types of farms, all sizes of farms and, obviously, right across Wales.

We've also got a programme of co-design, and I suppose that's where the pandemic had the biggest impact, in that we weren't able to go out and engage with our farms across Wales in the way we would have initially wanted to, but I think we had over 2,000 farmers engage with us in phase 1. This summer we'll have phase 2, and I checked with officials last week, and there are over 2,000 farmers, again, signed up, if you like, to help us with the second part of the scheme. So, the start of the second phase will coincide with the publication in July of the outline of the scheme.

There's a range of interventions also that will help prepare farmers and pilot processes, and I'll be making further announcements, probably, over next month or so, in relation to that. And we're going to evaluate those projects alongside those in the EU RDP, and that really, I think, will provide us with valuable evidence to inform both the design and the delivery of the scheme going forward.

We've been able to make some really informed decisions because of all that analysis that we've got and all that evidence that we've got, and I will publish an assessment of potential costs, benefits and impacts in the regulatory impact assessment for the agricultural Bill.

Okay, thank you very much indeed for that. I'll now bring in Sam Kurtz. Sam.

09:40

Diolch yn fawr. Forgive me, Minister, but my computer's just had a bit of a moment here, and we were worried that I was going to have this bit of a moment before this kicked off, so forgive me while I just try to reset this. Paul, do you want to move on to the next ones?

I've got a blank screen at the moment, so I'm not sure if you can see or hear me.

That's fine, I'll come back to you. If I can bring in Sarah Murphy. Sarah.

Thank you very much, Chair. Thank you, Minister, for being here today. You've touched on this already, but the Ukraine war has been described as being catastrophic for global foods. Russia and Ukraine are two of the biggest producers in agriculture and food globally, such as wheat, and Russia is also a leading producer of key nutrients in fertilisers that enable plants and crops to grow across Europe. Already, prices for these products have risen on financial markets, sparking fears the war will affect global supply and further drive up the cost of food. So, Minister, can I ask what conversations you have had with the UK Government and the food industry to mitigate the impact of the war in Ukraine on food supply chains and the cost of food? And you did mention this before, but if you could go into a little bit more detail about how that has impacted your upcoming strategy in developing the agriculture Bill, please.

Thanks very much. I think I should say right at the start there is no immediate risk to food supplies and food security within Wales or even the United Kingdom at the moment because of the conflict in Ukraine. However, I meet regularly with the Department for Environment, Food and Rural Affairs and my counterparts from Scotland and Northern Ireland. I meet regularly with the retailers, I meet regularly with the farming unions. This is business as usual, really, for me. So, last week, we did have an extra meeting that DEFRA had called. I met with Victoria Prentis, the Parliamentary Under-Secretary of State. On Monday we've got our regular DEFRA inter-ministerial group, which George Eustice will be chairing. So, again, it's another opportunity. Yesterday I met with the retailers, and they did reassure me that there were no immediate issues. Sunflower oil, I think, was the biggest concern. I think all the supermarkets are saying we are seeing people buy more sunflower oil, but there is certainly no immediate concern, because obviously that sort of thing is stored for many months, but of course we've got to look longer term.

So, while of course our food supply is really tightly integrated across the UK and international supply chains, for me—and I've reiterated this to the Welsh Government—we're a very global and responsible country, aren't we, here in Wales? And I'm very concerned—. I was reading about concerns in Africa around maize and wheat, for instance, because Ukraine is where they get their maize and wheat from. So, I think we need to be looking further than the UK. We need to be looking at everyone across the world, so that is something I will continue to discuss with the UK Government. Officials are attending several meetings; again, they're normally held perhaps once a month, but they've seen an increase in meetings they're attending around the agri-food supply chain more widely.

I mentioned before that there weren't real concerns at the moment, because we're not really reliant on Russia or Ukraine for most commodities or products, with the exception of sunflower seed and oil. So, that is an area where we will have a particular focus. We will continue to work with the retailers, obviously. I listened to their concerns yesterday and, as I say, in the longer term they may increase. I met with the farming unions on Monday; obviously, they're very concerned about fertilisers, because it's for animal feed—it's not just the public we need to feed, we need to feed our animals too. So, they've asked me to make some representations to the UK Government around that. And, of course, we've got the cost-of-living crisis already, and this is coming on top of that, so I think there's already significant food price inflation, so we are concerned that we will see further increases. I know, talking to the farming unions on Monday, they've already started to look at their planting plans, to adjust them for 2022, to see how they can help address supply chain issues if they should come further down the track.

Thank you very much, Minister. I will hand back to the Chair now so we can get through as many questions as possible. Thank you.

Just coming back to the sustainable farming scheme and the agriculture Bill, in terms of the pilot scheme, do you feel that you've got sufficient resource to appropriately run that pilot scheme?

Yes, and I will be making a further statement in the next couple of weeks, I hope, around the plans for supporting the rural economy over the next three years. So, the successor RDP plan, for want of a better term, and we'll continue to support farmers to prepare for that transition to the sustainable farming scheme. As you know, I've published indicative spending plans already up until 2025, and those spending plans do include support for the rural economy and for farmers as we prepare to transition to the SFS. 

09:45

Thank you. And just building on Sarah's point with regard to Ukraine, UK food production self-sustainability is approximately 60 per cent, and Wales is roughly the same as well. Do you feel that the new agricultural policies in Wales, through SFS and the agriculture (Wales) Bill, are going to build on that 60 per cent and increase it to nearer 70 or 80 per cent, or is it something of a status quo around that 60 per cent mark? How you do you think the policy is going to increase our self-sufficiency and food security levels?

Sorry, I do think it will support it. Obviously, we've always been very clear that the SFS will support sustainable food production, for instance. So, again, talking to the farming unions, I think they see lots of opportunities there to increase—. Horticulture—haven't we talked about horticulture a lot and growing more vegetables? I mentioned in my answer to Sarah that, when I met with the farming unions on Monday, they made it very clear that they've already started looking at their planting schedule for this year to see if there's anything more they can do to support the supply chain. I think they're very keen to play their part, as always, in any crisis. 

So, has there been any analysis done to see what percentage increase could be achieved from the SFS, or has it just taken that 60 per cent as the continuum through from old policy into new?

Well, I mentioned in my earlier answer that we're looking at a variety of analyses, data and evidence, so I would hope that that could be drawn out as we go forward. I will, as I say, publish the evidence and analysis when I publish the outline of the SFS.

Okay. I'm grateful for that. And finally, Chair, you mentioned fertiliser prices, and that's absolutely pertinent now. I think where we're looking at other shortages here in the UK and Wales specifically, it's because of the price increase in fertiliser. An example is an articulated lorry load of fertiliser 12 months ago was £8,500; the equivalent amount this year is £22,000. That's a heck of an increase. So, what farmers are looking to do is spread less fertiliser, therefore their yield is going to be less here in the UK. Is that being equated into discussions regarding food security levels here in Wales and the UK? Is that understood in terms of the lower yield and where the pressure points will come because of that?

Yes, absolutely, and certainly in my discussions with both the NFU and the FUW they raised that with me on Monday. I know they've been having discussions with their counterparts across the UK. Certainly, it'll be on the agenda on Monday for the IMG, because it's not just Wales, is it, it's the whole of the country? And obviously energy prices as well. That was something that the farming unions asked me to raise, again—their concerns. Red diesel—the price of red diesel has gone up significantly, but also the difficulty obtaining it. They don't know when they could get a delivery date, they don't know what the price is going to be. They're having to move to white diesel and, again, I know there was a shortage of white diesel in Cardiff this week. So, these are all—it's just one crisis after the other, really, isn't it? And I think these are very, very uncertain times for the farming sector. 

Thank you, Sam. If I can now bring in Vikki Howells. Vikki.  

I've got some questions around veterinary provision. So, we know that there is a big shortage of vets in Wales. What are the implications of that that you have seen?

You're quite right, our veterinary capacity has been severely stretched. We had issues around leaving the European Union. So, just in Christianne's team, I think over 50 per cent of the vets in Christianne's team are EU nationals. I think 100 per cent of vets in Wales who work in the food hygiene part of the profession—so, our abattoirs et cetera—100 per cent of our vets are from the European Union. So, unfortunately, we have seen issues because of leaving the European Union. We've seen 1 million extra households have pets across—no, maybe not 1 million households, maybe 1 million new pets across the UK during the COVID pandemic. So, the veterinary professionals in Wales have done some outstanding work.

We've also been dealing with the avian influenza outbreak at a scale that, certainly, I haven't seen while I've been in the portfolio. So, it's been a very, very tough time, and we're definitely facing a shortage of qualified vets in the UK. We're obviously fully aware of the staffing crisis. We've been monitoring the situation very carefully; Christianne has been doing that for us with her other chief veterinary officer colleagues across the UK.

You'll be aware we have, at last, opened a veterinary school in Aberystwyth University. I think that will really help us, because we know, don't we, where people train often has an impact on where they stay? So, I think that was a really big moment for us, and I know something that Christianne personally has been trying to establish for a long time. So, it was very exciting that we'd been able to do that.

We've supported the veterinary profession and vets during the COVID pandemic with particular funds from economic resilience, for instance. The rural development programme has supported vets to work with our farmers, particularly, to do that, and, of course, our vets play a crucial role in helping us eradicate tuberculosis in Wales. So, it's really important that we do recognise where we have gaps, and we work very hard to fill them. 

09:50

Thank you. So, just picking up on that point about Aberystwyth University, is it offering a full veterinary degree now, because my understanding was that it was part of a course? 

That's right—it's part of the course. So, it's the Royal Veterinary College in London, and they do two years in Aberystwyth. But, it's really important that we've established that. It would be great to have a full course, you're quite right, but, at the moment, no, it's just two years and then they go to London. But, I have to say that they've taken—. They're the first cohort. They've got real pride in that, so we want to just continue to build on that. 

Is there an issue, then, with trying to retain people who've studied in Aberystwyth in Wales, because we certainly see that with doctors? Are there any plans to have schemes that encourage people to settle as vets in Wales? 

Well, I think we need to look at that. Obviously, this is the first year now, so we need to look at that going forward, but, certainly, when I was health Minister, we had particular schemes to encourage doctors to stay here if they trained. Part of having the north Wales medical school now in Bangor is to do the same. So, I think, as we go forward, we need to look at what we need to do if the need for incentivisation, for instance, to stay in Wales—. It depends how significant the shortage is. At the moment, it is a cause for concern. 

Thank you, Vikki, and if I can bring Sam Kurtz in. Sam, you've got a supplementary question you'd like to ask on this topic. 

Diolch, Cadeirydd. Just briefly, it's been brought to my attention that there may be concerns around private, large veterinary companies buying up smaller vets practices in rural areas and not being able to offer the full provision of what a vet's surgery could entail. Is that something that you are aware of, or is this quite an isolated incident?  

Yes, and thank you for raising that, because it is an important matter. Of course, veterinary practices are commercial businesses and they're going to make their own commercial decisions, but there has been a trend over the last few years of large corporate practices being established, and, indeed, buying some of the independent practices. So, it is happening, Sam. We are watching it carefully. Obviously, in itself it doesn't have to be a bad thing. So, as long as the services that we need to be provided are still being provided to the right standard, then it is a matter for the veterinary profession to make its own judgment on that. The Royal College of Veterinary Surgeons sets the standards, so it's not a question of standards being diminished, although—certainly, I've been seeing this happening—for example, practices now quite often don't offer the 24-hour cover; there are night services. So, if you're trying to get your dog or cat seen out of hours, you might find yourself having to go to an alternative practice. So, that's an issue. But, in terms of the provision for the services that we need vets to provide, that's still happening across Wales, but it is something that we are watching very carefully.

09:55

Okay. I'm never sure whether I should unmute myself, or whether I will be unmuted automatically. Can I ask about the UK-Australia free trade agreement, and the impact it will have on the Welsh agriculture and semi-processed food sectors? How are you, as a Minister, going to monitor the impact in the future and use it to inform trade deals?

Yes, well, the UK Government's own impact assessment shows that agriculture and semi-processed food sectors right across the UK as a whole will be negatively impacted by the agreement. So, I'll just put that there because that is obviously really, really concerning. Unfortunately, we have had very limited access to the data, and officials are really pushing to try and get further analysis and evidence from DEFRA in relation to that. What we've requested is fuller access to the detailed trade data that DEFRA had, or the UK Government had. From that, we would be able to get some additional insight, really, into further potential impacts on our industry here in Wales.

Officials are also working here in Wales very closely with our industry stakeholders to see if they can help us identify any potential impacts, and also with the other devolved administrations, to see what we can find out. I have pressed time and time again—and it's not just me; it's other Ministerial colleagues as well. We have really pressed the UK Government to make sure that we have some safeguards in place, particularly on sensitive agricultural products. I think that it's really important that we don't have an un-level playing field, going forward.  

So, is it fair to say that you and your officials have been completely out of the loop on this, with regard to the UK Government's approach?

Well, you know, we were kept out at a trade level. We were certainly kept out of those discussions. Obviously, that's another Minister that has been working with the UK Government on that. For me, the disappointment is that we haven't had that level of data shared with us so that we can do our own analysis on the impact. But, we haven't given up. We continue to push to have that fuller access to that detailed trade data that would really like to see to help us. But, it is an area of concern.

It's also not just the Australia deal. This comes on the back of New Zealand FTA as well, and I think that it is about the cumulative impact. Certainly, the UK Government, as far as I'm aware—and I'll ask Tim if he has any further information—don't intend to do any analysis or assessment of the cumulative impacts of these trade deals. It's very clear, isn't it, that the Australia deal has really now set a precedent. It was very similarly followed with the New Zealand deal. So, I am really concerned about this pattern that's emerging, if you like, around free trade agreements. There is a significant increase in agricultural market access. How is this going to influence the way that the UK Government do further FTAs across the world? The real area of concern for all of us, I think, should be that some of these countries do not have the same high standards of animal welfare, for instance, or environmental standards as we do.

With regard to control on those standards, do you feel that you have got any influence over animal welfare standards in these agreements? 

No. I mean, all we can do is continue to press the UK to make sure that, when they are doing these FTAs, they take that into consideration. I wouldn't think that they would want to see a drop in standards, would they? But it is really important that we do what we can to influence negotiation mandates. We have tried to do that for the past few years, obviously, and will continue to do so.

Just as an aside, you mentioned the New Zealand deal. They are essentially a lamb competitor with the Welsh market. Do you see that actually doing damage to Welsh markets and Welsh competitiveness?

10:00

Well, it could do, yes, absolutely. I mean, I hear all the time, 'Well, they didn't use their full quota before; why would they after?' I went out to New Zealand, from an agricultural perspective, back in, gosh, 2017—no, 2018—and I met with their chief negotiator and I remember thinking at the time I should be concerned, very concerned. New Zealand, I think they've got very high standards; I'm not criticising New Zealand at all. But, there is clearly an impact. At the moment, they tend to export to countries nearer. New Zealand is literally the other side of the world, isn't it? But, I think the potential certainly is there and is of concern. And if you talk, and I'm sure you have, to the farming unions, they will tell you they are very concerned. The farming unions aren't happy at all with the UK Government's FTAs.

I don't see any, really. I mean, I guess, for Wales, we do have very high standards. Our Welsh lamb and beef are world-known. I think it's really important, as a Government, and I take this role very seriously, that we do all we can to promote our fantastic Welsh produce, not just red meat but all Welsh food and drink across the world. So, you'll be aware of BlasCymru that we held last October, where we bring the world to Wales. We weren't able to do it in quite the same way as we've done it on previous occasions, but we still brought many representatives from many countries to Wales virtually, to be able to display and sell our fantastic Welsh produce. So, I think we have to look for positives, don't we? But, I'm afraid, at the moment, I don't see many.

And just on labelling, will you push for clear labelling of food, so people can be clear about where their food has originated?

Yes, absolutely. All meat and fish and seafood have to be clearly labelled with the country they come from. I suppose, for me, the concern is a lot of Australian meat could end up in ready meals, I guess. So, it would be part of that dish and you wouldn't necessarily know. In a shepherd's pie, for instance, you wouldn't know the mince came from Australia. That isn't required. But, I think it's really important that labelling says on the tin what it should say. And, as I say, at the moment—

Yes. But, as I say, that requirement for meat, fish and seafood is there. What requirement isn't there is if it then goes into a product. So, it's something that we will keep discussing, obviously, with the UK Government.

Thank you, Hefin. Minister, you'll be aware that we took some evidence a few weeks ago from trade experts regarding the UK-Australia free trade agreement, and they suggested that the negative impacts had been exaggerated. How do you respond to that?

Well, all I can go on is the impacts that I've seen from the analysis that officials have seen, from the UK Government, that tell us the sector will be negatively impacted. So, as I just said in my answer to Hefin, I think there could be some positives for our Welsh exporters, but at the moment I just see the risks more, and certainly that's what the UK Government analysis is telling us too. It would be good if we're wrong, but my concern mainly is around the cumulative impact as well. I think it is very disappointing. I had a discussion with Tim yesterday about whether we could perhaps do some analysis ourselves on Wales, but, as I say, it's so integrated across the UK, it would be better if we could do it at a UK level.

Okay, thank you very much. If I can now bring in Luke Fletcher. Luke.

Diolch, Cadeirydd. Just a couple of questions on fisheries. On the operational agreements, I'd be interested to know how they will address the long-standing concerns regarding the Secretary of State's powers to determine Welsh fishing opportunities.

Thank you, Luke. I fully expect the fisheries management operational agreement, or agreements, to address those concerns. That intention was included in the memorandum of understanding, and I will be looking to the UK Government to deliver on that commitment to set out very meaningful engagement and consultation in the determination process. I think what that will show is that there is already good practice in place. I've always had very meaningful engagement with fisheries. I think with fisheries, we've worked in this way for many, many years. We all went off to the December council in Brussels and stayed up all night, for several nights, where we did the negotiation. Officials are working very closely with UK Government officials to make sure that that happens. I am content with the co-operation that's been undertaken to date. I think the UK Government have delivered, for instance, on what they promised they would around following science evidence when we look at quotas and stocks of importance to Wales. For me, the main ones are sea bass, scallops, Dover sole—so, I think that has been provided. But, officials are keeping a very close watch on the development of the relevant operational agreement, with the other administrations of course as well, and with our stakeholders. So, I think that the UK Government are reflecting that commitment, really, in the engagement and consultation that's been held to date.

10:05

Thank you. Do you have a date for when those operational agreements will be published?

I'm expecting them all to be drafted this year, in 2022. We are really pushing for them to be considered as early as possible. I know stakeholders have got a particular interest in this—they've certainly told me that—and I think they're also interested in how the fishing policy authorities, the four of us, are going to work jointly on certain fisheries management issues. And again, going forward, we'll be engaging with stakeholders as we develop the operational agreements. But I would think they'll all be drafted this year—so, hopefully this year. 

Brilliant. Thank you. And moving on, I was wondering if the Welsh Government has given any considerations to introducing remote electronic monitoring throughout the Welsh commercial fishing fleet. On the one hand, we've got environmental non-governmental organisations arguing that they'd be a good thing, give us a good understanding of how much fish is being caught, but also how much bycatch of sensitive species there is, and then, on the other hand, we have the Welsh Fishermen's Association suggesting it would unrealistic to expect there to be cameras, for example, on every vessel. Where does the Government fall on that argument?

Yes, on the basis you can't please all the people all the time. This is a classic example of the lobbying that I have. The joint fisheries statement does commit us to exploring where there are opportunities for the use of technology, and obviously that includes remote electronic monitoring, for both scientific purposes and to aid the sustainable management and the control of our fisheries here in Wales. You may remember when I was in front of committee a little while ago on the JFS, I mentioned that I would anticipate the introduction of REM in some form during the lifetime of the joint fisheries statement. But you'll remember I said that there was a good story to tell here, and that we had brought forward an Order for a vessel monitoring system to be on all of our under-12m fishing boats that were operating in the Welsh zone. I think I might have said that I think it's 96 per cent of our Welsh fleet that comes in that category, so you can see how important it is for our fisheries management here in Wales to have that VMS on our under-12m fishing fleet. So, yes, I was really pleased to bring forward that. We're the first country in the UK to do that, so I think, as I say, it's a good news story. But, certainly, around your specific question around REM, we will look at that over the lifetime of the JFS. 

And on the vessel monitoring systems, how would you respond to the calls of environmental NGOs asking for parity on the requirements to have VMS on different sized vessels—them stating of course that the frequency of reporting for VMS on larger offshore vessels is far less frequent?

For the last 10 years, there's been a statutory requirement for all European fishing vessels over 12m to have a functioning VMS on board. That has to report every couple of hours. I mentioned the under-12m one. That requires reporting at 10-minute intervals, so it's very, very frequent, and that gives us that fuller picture of fishing vessel activity. It enables much better management of our fisheries and the wider marine environment. We absolutely recognise the parity of reporting across the piece. I mentioned the fact that all under-12m have now got that every 10 minutes. What we're doing is looking—. We are at the early stages, I should say, of considering how we can change the VMS requirements for over-12m vessels, so we do get that equivalence in reporting requirements across all our fishing vessels. But at the moment, as I say, 96 per cent of them are under 12m, so you can see we have a huge amount of data and reporting and monitoring.

10:10

So, we can expect to hear more on the over-12m vessels in the near future, hopefully.

Well, as I say, it's very early stages, but, yes, I'll keep you updated.

Thank you, Chair. I've got some questions on animal welfare. If we go back to 2018, you made a statement on companion animal welfare, saying that you planned to explore veterinary provision, assistance and advice to support people in need of help when caring for their pets, such as during an emergency. Have any—[Inaudible.]—been progressed?

Oh, plans. Sorry. Yes, absolutely. We've been doing ongoing work in relation to that, and, in the last few weeks, I think some of Christianne's officials have been meeting with third sector organisations around this. And we do have a number of charities, as you're aware, Vikki, who already offer subsidised veterinary treatments for pet owners. But I think what is really important is that the Welsh Government reminds people that, if they do take on a pet, there can be significant cost. We've got our Paws, Prevent, Protect social media campaign, which we launch every year to promote responsible purchasing. We've got the Animal Welfare Network Wales, we've got the Companion Animal Welfare Group, and I know officials have been meeting with both of those groups, and also third sector organisations, to see what more we can do really to publicise the support that is available to owners if they are affected by these issues. I know that the third sector organisations, the charities, as well are really keen to engage with the insurance industry around this matter.

There have been quite a few changes, probably in the last—. You mentioned 2018; probably in the last couple of years, there have been quite significant changes, mainly because the pandemic has led to such an increase in the number of people who have pets. So, we have seen costs associated with pet ownership really increase. But of course, availability of vets has decreased, as we were talking about before. So, it is really important that we do that three-pronged approach: we keep talking to the third sector, we keep promoting responsible ownership and we keep having campaigns such as Paws, Prevent, Protect, just to remind people of those lifetime costs. We've got dogs in our family, and it is significant, the costs. We're never going to have an NHS for pets, are we, so it's really, really important that people recognise that before they get a pet. But I think we work really well in partnership with the third sector in relation to animal health and welfare. You'll be aware that, just a few months ago—I think it was November—we brought forward our animal welfare plan for the whole of this term of Government, so it covers the five years. We work really closely with our stakeholders and with the third sector organisations around that too.

Thanks for that update, Minister. Moving to the Animal Welfare (Sentience) Bill, which is progressing through Westminster now, does the Welsh Government intend to have a system to scrutinise the impact of Welsh policies on sentient animals?

This is something that officials are looking at very closely. We're trying to see what we need to do. I have to say, it's quite a complex piece of work, and I know that Christianne and her team are working as closely as they can. We want to work very closely with the Department for Environment, Food and Rural Affairs in relation to this. We've been following the Bill very closely. It is a UK Government Bill, as you say. I don't think you said this, but its provisions only apply to England. So, we need to work very closely with them and I know that officials will continue to engage. I'll bring Christianne in here to say a little bit more about this from a Welsh perspective. 

10:15

Sorry, I was just trying to unmute myself—I wasn't sure. This is really important, because we can make legislation, but if we don't have the right scrutiny to ensure that it's being delivered and applied properly, then of course, it's not worth the paper it's written on. But, of course, Westminster would not have the powers to scrutinise our policy, so that wouldn't be appropriate in a devolved matter. So, we're working closely with them. We recognise that the welfare needs of an animal in Wales are no different, of course—they are the same species—to an animal in any other part of the United Kingdom, and yet we have the scope to make our own welfare policies in line with that five-year welfare plan that the Minister has already referred to. So, it's about working closely with them, making sure we've got our own systems in place. And I would mention our animal health and welfare framework as well and the group, which would be an ideal place to—. And we do engage with them on our welfare ambitions. So, we have a framework in place, which I think any kind of scrutiny would fit very neatly into. 

Thank you. Moving on to the review of the Animal Welfare (Breeding of Dogs) (Wales) Regulations 2014, Minister, can I ask how you intend to bring forward the recommendations from that review and whether the regulations will be updated?

Actually, it's not the regulations themselves; it's the statutory guidance for the breeding of dogs regulations that's being revised. As you know, we have our public consultation. I think it's really important—we need to clarify and strengthen key areas relating to enforcement. Again, going back to the animal welfare plan for Wales, we're going to establish a working group of key stakeholders to consider the issue of pen sizes in dog-breeding establishments, for instance. We've got the local authority enforcement project and it could be that then we need to update the 2014 regulations, but at the moment, we're concentrating on the statutory guidance aspect of it. As I say, it is a five-year plan, I can't do everything in the first year, but what I wanted that plan to do was really set out—. I suppose it's the programme for government commitment, our manifesto commitments—bringing them all into one place so that everyone knows what we're going to do over the five years.

And the three-year project to built expertise among local authority staff involved in licensing dog breeding—how will you assess the success of that project?

The success and the progress with the project will be reviewed by the animal health and welfare framework group's oversight of the animal welfare plan for Wales. I think it's fair to say that we're working much better with local authorities in this area. What the project does is come forward with annual reports. We're now in the third year of the project. The reports themselves will provide updates on the progress. We agreed some project deliverables, so they will report on those to us. For instance, training courses that have been delivered—we'll be able to see how many and what training courses have been delivered across Wales, and how many enforcement officers have been able to take up those courses. It is work in progress, but I think it is fair to say that we are working much better with local authorities because of this project, I think, than we probably were before. 

Great. Thank you. One final question from me, then: I was just wondering, Minister, which activities you hope to regulate under the Animal Welfare (Licensing of Activities Involving Animals) (Wales) Regulations 2021?

Again, going back to the plan, it does set out our intention to introduce a licensing requirement for animal welfare establishments and animal exhibits. We're going to consult on the actual nature and the scope of this work, potentially under the Animal Welfare (Licensing of Activities Involving Animals) (Wales) Regulations 2021. Again, Christianne and her team work very closely with a range of stakeholders—again, the Animal Welfare Network Wales, the Companion Animal Welfare Group Wales—to make sure that we do realise our programme for government commitments and we do fulfil all the detailed proposals in the animal welfare plan.

I suppose what we need to do—. Like any plan, there are things that are more important, so you have to decide what you want to do in year 1, year 2, year 3, year 4, year 5 et cetera. So, working very closely with those groups to see what they think we should be doing as well. Of course, everything is urgent, and I'm not the most patient of Ministers, so it is—. Government sometimes works a bit slowly, but I think what you need to do is really work through that plan and make sure that, at the end of this term of Government, we've committed and delivered on all of them.

10:20

Thank you, Vikki. Minister, I just want to ask you some questions around common frameworks, which have been agreed with the other Governments across the UK. Obviously, we've been talking about the agriculture (Wales) Bill earlier on today. Has the Welsh Government taken or does it plan to take the proposals within that Bill through the agricultural support common framework process at all?

So, I think this an area—. The frameworks are an area where we've kind of led the way, and because—. I mentioned fisheries and the way that we've always worked on fisheries, and animal health and welfare is another example of where we've always had a kind of joined-up approach. So, I took the first consultation, which colleagues who were here in the previous term will remember, 'Brexit and our land', and then the second one, 'Sustainable Farming and our Land'—I took those to our DEFRA IMG meeting, just the last IMG meeting, I think it was. Northern Ireland brought their proposals. I think Scotland are looking at maybe bringing theirs too. I just think it's a matter of courtesy, really. Whilst, of course, agricultural policy is a matter for each country to bring forward their own bespoke requirements, I just think it's good practice, really, to share our views, and I do that at a ministerial level. Officials work very closely and have regular updates to their counterparts in the UK Government. In fairness, the UK Government brought their draft document to the IMG and shared it with all agricultural Ministers as they were developing their agricultural Wales policy as well. There is an official group, the policy collaboration group, also. They meet monthly, I think, and those discussions are held also.

Yes. The reason I was asking you that is because there are perhaps concerns that this could constrain you as a Government in terms of developing policy in the future. So, can you just tell us to what extent these common frameworks actually constrain policy development here in Wales, and how does this actually compare to former constraints imposed by EU processes? And again, I ask that question because it's particularly pertinent for the animal welfare framework, which includes all animal welfare policy in its scope, not just EU retained law.

Yes. I don't think it does constrain policy, to be perfectly frank. I mentioned that I think it's common courtesy to share. I think what it does give is the opportunity for other countries to look at our proposals and perhaps identify if there's an issue that could cause concern. But I actually don't think it constrains policy at all. And if you look at the way the frameworks have been developed, and, as I say, I think in rural affairs across the four countries, we've led the way, really, in frameworks since we've left the European Union across all portfolios. And we've really—. What we've done is developed those frameworks, and it's allowed the four of us to share information, to manage divergence. We all acknowledge divergence. We've always said, and I've always said, we will have an agriculture policy for Wales that's appropriate for Wales. Will all four policies be very different? Probably not.

So, I think that's what the frameworks have allowed us to do, to share that information. And of course, we as a Government and I as Minister retain the ability to develop policy for legislation that's very specific to the needs of Wales and our agricultural sector. So, I think it's fair to say that some stakeholders, or maybe the majority of stakeholders, would like to see a consistent approach. They don't want to see an unlevel playing field, and that's where I think it's really beneficial. It doesn't constrain us, but it's beneficial to talk about your ideas and your proposals across all four Governments.

So, just to be clear, then, Minister, you're confident that these frameworks won't constrain you as a Government to develop policy in the future, and you believe that these frameworks are there to manage divergence and also to work on joint policy making across the UK as well. 

10:25

So, I'm not sure it's joint policy making, because it is up to each individual country what they do. I think what I was trying to say—. I don't think it constrains policy; I can say that very clearly. And certainly, you referred to the animal health and welfare framework particularly; for me, that enhances rather than constrains policy development, because what it does is encourage development of policy across all the Governments in collaboration and it allows divergence and I think that's really important. So, when you say 'joint', yes, you're working jointly, but you still are able to have that bespoke policy that you want for your country.

So, we don't want to mandate harmonisation, but, as I say, stakeholders, perhaps businesses, would benefit from a consistent approach being taken. That's certainly the message that I've got. And if you think about biosecurity, for instance, you would want that to be similar, wouldn't you? You wouldn't want big variations there. So, what I'm saying is that it absolutely gives you the opportunity to say, 'Well, you know, I don't think that's right.' Now, you don't have to take that advice, but it's good to perhaps plant that seed in your mind when you're bringing forward a policy, particularly a policy as important as the agricultural Bill, for instance, that you get that sort of information intelligence, and, okay, you might not change your mind, but you've got that time to reflect—you know, pause and reflect.

And how will you ensure that these common frameworks don't actually weaken stakeholder involvement or parliamentary accountability in policy development, and, indeed, the legislative process?

No, absolutely. We make sure that all our stakeholders are included in that. I think it's really important that nobody's shut out. I've always said, 'Our stakeholders are outside the door.' We have an incredible—. Far more than any other country, I think, here in Wales, we have that approach with our stakeholders and I would expect that consistent approach in engaging with our stakeholders and with Senedd Members to continue whilst we do develop policy and legislation going forward.

So, within each framework, there are review periods, schedules, and that's where I will ensure stakeholders and Senedd Members are notified and engaged as we take them forward—very strong commitment to formalise the process of reporting on how we monitor and how we govern the frameworks, how the governance of the frameworks goes forward, and, once they've been finalised, we will do that, and I would expect the new inter-ministerial standing committee, which was outlined in the inter-governmental relations review, to be involved in that as well.

Thank you very much indeed, Minister, and I'm afraid our session has now come to an end. So, on behalf of the committee, can I take this opportunity to thank you and your team for being with us this morning? It's been very, very useful. As usual, a transcript of today's proceedings will be sent to you for accuracy purposes in due course. If there are any issues, then please let us know, but, once again, thank you for being with us this morning.

We'll now take a short break to prepare for the next session. Thank you.

Gohiriwyd y cyfarfod rhwng 10:28 a 10:47.

The meeting adjourned between 10:28 and 10:47.

10:45
4. Gwaith Craffu Cyffredinol ar Waith y Gweinidogion - Gweinidog yr Economi
4. General Ministerial Scrutiny - Minister for Economy

Croeso nôl i gyfarfod Pwyllgor yr Economi, Masnach a Materion Gwledig. Symudwn ni ymlaen nawr i eitem 4 ar ein hagenda, sef craffu ar waith Gweinidogion. A gaf i estyn croeso cynnes i Weinidog yr Economi a'i swyddogion i'r sesiwn graffu heddiw, a fydd yn cael ei rhannu yn ddwy ran? Yn gyntaf, mae gyda ni rai cwestiynau craffu cyffredinol yn enwedig ar agweddau sgiliau a masnach ryngwladol portffolio'r Gweinidog, yna fyddwn ni'n cael egwyl cyn i'r Gweinidog ymateb i gwestiynau ar gyfer ymchwiliad y pwyllgor i faterion lletygarwch, manwerthu a thwristiaeth, ac rŷn ni'n ddiolchgar i'r Gweinidog am ei bapur tystiolaeth ar hynny. Cyn ein bod ni'n symud yn syth i gwestiynau, a gaf i ofyn i'r Gweinidog a'i dîm i gyflwyno eu hunain i'r record? Gweinidog.

Welcome back to the Economy, Trade, and Rural Affairs Committee. We'll move on now to item 4 on our agenda, which is ministerial scrutiny. Can I extend a warm welcome to the Minister for Economy and his officials to the scrutiny session today, which will be split into two parts? First of all, we have some general scrutiny questions specifically on aspects of skills and the international issues in the Minister's portfolio, and then we'll have a break before the Minister responds to issues relating to hospitality and tourism, and we're grateful to the Minister for his evidence paper on those issues. Can we, first of all, ask the Minister to present himself for the record, please?

My name is Vaughan Gething, and I'm still the Welsh Government Minister for the economy.

Bore da—good morning. Steffan Roberts, deputy director, tourism development and sport.

Claire McDonald. Bore da. Claire McDonald, deputy director for economic policy.

Bore da. Heledd Owen, deputy director, marketing.

Bore da—good morning. Andrew Gwatkin, director of international relations and trade.

Well, thank you very much indeed for those introductions. Perhaps I can kick off this session with some questions around your skills policy, Minister. Can you give us an update on the progress made with the young person's guarantee since it was launched in June last year? And to what extent is the £500 million you reported during previous scrutiny sessions new money?

So, the young person's guarantee, as you know, became fully functional in October last year, and, as at the end of February, the figures we have are 2,296 young people have received advice and guidance from Working Wales. We've commenced a tracking activity, which we've talked about before, and I want to restate my previous commitments to make sure that we regularly report on that as well—so, not just the money, but actually how it's being used as well.

And when it comes to what we've done since the launch, we have enhanced services working in Wales, both their online presence, but also the support that's provided as well, so there are dedicated advisers online and in physical premises as well. We've started the new job match service, we've also got a range of programmes, including, of course, the start of Jobs Growth Wales+, which launched in early March. That's a new £200 million programme that I've previously talked about, combining what we've got in terms of the success of traineeships in the previous Jobs Growth Wales programme. We're also extending and continuing our community employability programmes, the business start-up support service and continuing personal learning accounts. We've actually had quite a lot of work that is continuing and so, since the start—there's part of the start, but I think we'll get more as we get through each quarter, with more figures to show the impact of that.

And when it comes to new money, it is always more difficult than I'd want it to be, because some of what we talk about in the young person's guarantee are things we're already doing to help people in employment, education and training, and some of it's also about how we flex and change our programmes. So, Jobs Growth Wales+ is a £200 million programme, so in that sense it's a new programme and it's new money, but, of course, we're taking from traineeships and Jobs Growth Wales that we already have. Now, those programmes are still functioning; we've still got people in traineeships. So, I'll happily send you, if you want, a more detailed note on the £500 million and how we'd say, 'This is money carrying on being used in a different way and how much is genuinely new money.'

And equally, some of the points we've had in budget scrutiny about shifting money as well, because I've had to shift money in from other parts of my portfolio to maintain pace on skills and apprenticeships. So, we have some challenges on apprenticeship delivery, but we think that we're going to be able to meet our target. But if I'd taken the pro rata cut that would've come from the change in not having EU funds, then we wouldn't have been able to do that. That does mean that I'm going to be able to spend less money on things like innovation and direct business support, but that's a clear-sighted choice that I've made in prioritising the skills section of the portfolio.

10:50

Yes. You mentioned apprenticeships there and you've been clear, as a Government, of course, you've set this target of 125,000. What effect have the apprenticeship incentives for businesses had on the number of apprenticeships started and what progress is actually being made against this target during this Senedd term?

If I get any of this wrong, Claire will come in and correct me, but we think that the apprenticeship incentive scheme has been really successful; it's encouraged businesses to carry on recruiting apprentices whilst managing the challenges of COVID. Because there were some businesses that let apprentices go or decided not to take new ones on because of the uncertainty. So, this was part of the Welsh Government's COVID commitment, and I do acknowledge that this was started under my predecessor Ken Skates, so I won't claim all the credit for introducing this scheme as the Minister. But the latest figures we have are that more than 6,100 new apprentices have been recruited since August 2020, when I was in a different role, and it's due to end at the end of March, but we're pretty clear that a range of those apprentices would not have been taken on were it not for the incentives that we've introduced. That's also the direct feedback from businesses, so it isn't just us deciding that this has been a success because otherwise it wouldn't have happened; that is directly what businesses have told us.

And at this point, can I just bring in Hefin David who'd also like to ask you a question on this subject? Hefin.

Yes. Just with regard to degree apprenticeships, are you going to renew a commitment to degree apprenticeships and the future of those? 

So, we still think—and to be fair, you've been consistent in your interest in this—degree apprenticeships are part of the future. So, whilst not necessarily covered by the whole sweep of the apprenticeship incentive scheme, we're committed—and it's in the programme for government—to carrying on with degree apprenticeships. I think we're going to see those grow by 10 per cent, so, real growth, but also in the way that we try to target those. And I'm really interested, because I do think that when you look at some of the higher skill, higher value apprenticeships, degree apprenticeships certainly have a role to play, and I'd be more than happy to keep the committee updated on what we are doing, both with not just the money, but also the numbers of people moving through degree apprenticeships and, to be fair, your consistent point around the gender divide of those people who are taking up those opportunities. We still have more work to do on making sure that men and women see where those degree apprenticeships exist as real careers for them. There's more for us to do.

And what are you doing, as a Government, to address the pandemic's effects for learners on apprenticeships and, indeed, other vocational courses, particularly to tackle the number of learners who do not complete their course and, indeed, the growing deprivation gap?

10:55

Well, this is a real consideration, a concern for us, and both my predecessor and I have had to make choices on relaxing the eligibility rules, otherwise we would have seen people artificially prevented from completing. As all of us know, the pandemic interrupted many of the normal ways of working. So, what we've done is we've changed the rules to allow people to undertake an apprenticeship irrespective of their length of employment. So, we think that helps support the sector in providing opportunities to upskill. And we know that there's a challenge there are about motivation for staff. Now, the relaxation was initially put in place until the end of December last year, but I've now extended that until the end of this current contract year, to the end of July. And I think that's really important in terms of making sure we carry on making progress on our target, not just the target itself, but, actually, for those people to be able to complete their apprenticeships within a reasonable period of time. And we will continue to look at data on who is actually taking up apprenticeships and the completion rates. It's one of the things that we're really proud of, and I know this and predecessor committees have had evidence on as well. We've got not just a good start-up rate and a headline rate—and we've met our commitments on apprenticeships with a 25 per cent increase planned this year—but our completion rates are really good, and they're a really positive comparison with those courses on offer over the border. So, we want to maintain the strength and the quality of the programme as well as the numbers.

Okay. Thank you very much indeed for that. If I can now bring in Sam Kurtz. Sam.

Could I just quickly ask for—? Bore da. Could I quickly ask for your assessment of the impacts and opportunities presented by the UK-Australia free trade agreement for Welsh businesses?

Overall, we think there could be some benefit, but we think it's relatively minor in the overall impact on trade. So, there are some areas—so, on metals, pharmaceuticals and professional services—where there could be opportunities for Wales. So, it certainly isn't my position that there's no opportunity whatsoever and everything is negative about the deal; I certainly wouldn't want to say that. Because, actually, the Welsh Government is supportive of having more trade arrangements with more countries around the world. The challenge always comes back to the actual detail of the deal and, in Australia, we still remain concerned that none of the concerns we raised with the UK Government, about the impact on tariff rate quotas—so that's about the amount of agricultural produce, the safeguards on that. We think that the increases in quotas represent a future risk for the industry. And that isn't just our view; the National Farmers Union and the Farmers Union of Wales both agree with that.

And it's also not just that, but it's the challenge of what happens when you—. When you see the Australia deal and the New Zealand one that is working alongside it, and is likely to be the next one to conclude, that sets a baseline not a ceiling for other trade deals. And so, everyone else, whether it's the comprehensive and progressive agreement for trans-Pacific partnership, or whether it's Canada and others, will be looking at what's been agreed in the Australia and New Zealand deal, and the starter will be, 'We want nothing less than that.'

There are other positives, though. You know, for example, commitments on climate change, specific reference there, some points about gender equality. So, there are things that I think are positive, but there are risks within it, and that's likely to be the case for a range of these other agreements because I think they're likely to follow a fairly similar pattern, certainly with New Zealand, when it comes to what's going to happen.

Thank you. In a previous evidence-gathering session, we had some trade experts in who believed that the agricultural element of the Australia deal, the negative impacts, were overplayed somewhat in comparison to what the NFU specifically were saying. So, is that not an assessment from these trade experts that you agree with?

Well, look, we've had a range of assessments, and it's one of the things that UK Ministers have regularly said: 'We don't think there's any threat at all.' They've not agreed with us on some of the differential animal welfare standards, where practices that are unlawful in Wales and the rest of the UK are lawful in some states in Australia, and they've not agreed with us that there is a real risk because, as I say, at the moment, Australia doesn't take up all of the tariff rate quotas that it has. But the significant increase in it doesn't mean that you're not going to get a period of time when those quotas are taken up, and that will mean competing on a different basis between farmers, and I know, not just obviously yourself, but areas you represent and across the whole country. So, I don't think this is a matter of people being anxious about something that is remote and unrealistic, and I do think it's a challenge about whether we're competing on the same basis, the point about what is free and fair trade. So, I'm disappointed that we haven't had agreement on that, but, as ever, there will always be a range of opinion.

11:00

And finally, on the benefits, the opportunities that you mentioned at the beginning, what do you think Welsh Government needs to do to maximise those opportunities in the UK-Australia FTA? Is there building of a broader Welsh presence in Australia? Are there changes to our economy in Wales? What do you think we need to do to maximise those opportunities for Wales in the FTA? 

Interestingly, I've just been at the Explore Export Wales conference, where we've been talking about improving our exporting journey across the world, and Australia is one of the areas where we do have a presence as well. So, it isn't that we don't have an interest in trade with Australia, we certainly do, and we want to maximise the opportunities that come from it. So, it won't just be the engagement we have with a range of people. So, Chambers Wales, Industry Wales, Make UK, food and drink, fintech, there are loads of people with lots of opportunities, potentially, in the sector, and I've announced a programme of visits today as well as £4 million to support exporting opportunities, and so we are serious about taking advantage.

Part of the challenge that comes with new free trade agreements, and Andrew Gwatkin may be able to give you some more information that may help the committee on this, is once you've done the deal, you've then got quite a lot of work you need to do to make it work, and there's a challenge about how many of these agreements you can actually progress, not just from the Welsh Government, but from a UK Government point of view as well. Andrew, do you want to highlight some of the things we'll need to do to make the agreement work and then how that'll affect what we want to be able to do to genuinely take up opportunity where it exists?

Yes, certainly, Minister. You're absolutely right. In terms of implementation, that's something we're working very carefully on now. We're looking at the detail of the deal itself, in terms of the wording and what that means, but then also looking at working with businesses to see how do we help businesses to make the most of that. So, this summer, for example, we'll be having a virtual trade mission to Australia, and as part of that preparation we'll be having webinars with businesses, talking to them about some of the intricacies of the deal and what that will mean to them, and then very carefully working with them to prepare them for that virtual visit to market, working with partners in market as well.

Minister, you already mentioned that we work very closely with the Department for International Trade, and that will be very much a feature of the work that we do, as the Department for International Trade has a physical presence in the country, and we will work with them in the build-up. So, I absolutely agree with everything you've said, Minister; it is about making the most of those deals now, and the implementation will be key, but working with businesses more than anything, the one-to-one support, the one-to-many support that we give to businesses and that physical hand-holding through the whole export journey is very much the way that we're approaching this.

Can I just expand on that point that Andrew Gwatkin just mentioned? What will that hand-holding look like? How will that be done in practice?

We work through our international trade advisers on a one-to-one basis with Welsh businesses, and the international trade adviser meets with the business, talks about the current activity, looks at potential opportunities. We have the ability then, with the business, to explore markets, to look at either where they currently are and help them improve that approach, whether it would be through a different distributor or enhancing the way that they approach the market, or looking at new opportunities as well. We use our network, both within Wales and externally, to do that. So, the Minister's already mentioned quite a number of organisations that we work with, the likes of Chambers Wales, Make UK, et cetera, the food and drink industry boards. We will work with those organisations to help a business prepare for an export opportunity.

Our trade missions, similarly, are very much that either virtual or physical visit to market, but it's not just about everyone turning up as a group and supporting each other there, it's about the preparation for the trade mission, and absolutely afterwards about making sure that that turns into a real opportunity. The face-to-face meeting is an important part of that process, the actually being in country, but we will work with the business once they're back to ensure that the conversations they had turn into a real contract or a real deal or real opportunity. So, it's a whole series of things.

There are more elements to it than that. We run webinars where we look specifically at either a market or an element of exporting, such as market access. We also have export clusters, and those are a relatively new approach from our perspective, but really working very well, where businesses that are working in a similar area are supporting each other through their own knowledge and their experience, and we're inputting to that so that they're able to make the most of opportunities. So, there's a whole range of things in there, from what we traditionally think of in terms of trade missions, but right through to the more flexible approach that we can do through digital and physical presence.

11:05

Can I just flip that on its head? If I've got a business in my constituency and it wants to access some of this support and guidance, what would be the route? Would that be Business Wales for that gateway in? Because there seems to be a lot of—.

The gateway in, Business Wales, absolutely, and that way—. There is no wrong door. Business Wales is a great start, but if it's directly to us as a team and our international trade advisers, that's perfect too. It will get to the right person. But Business Wales is a perfect way in, yes.

We do try to use Business Wales as a singe door to all of our Business Wales support, so it is that point: come to Business Wales, and we will help you to find the right person and the right place to get the extra support. And I think they have a really good story to tell on supporting exporting businesses, and I think we have more to do and more to gain from doing this as well, not just for businesses being successful abroad, but there's a definite return on that, which is my interest in actually jobs and businesses here in Wales, and what that allows them to do. So, I think we have a really good story to tell. It might not be a bad thing if we had an opportunity to talk in more detail or share more with the committee on what we're doing to support exporting businesses, maybe as we get more information on the success of our latest exporting clusters as well.

Okay. I think there are questions to be asked about the capacity of Business Wales to do this and, post pandemic, are they fully staffed and prepared for what may be a continuing high demand?

So, the extra money I've announced today is part of trying to make sure we have got that capacity. It's also some of the budget choices I've made to try to make sure that Business Wales isn't denuded, and again that's part of the challenge of needing to prioritise parts of the portfolio, and that means that there are other things that I would want to do more in, but I can't. But, as to Business Wales, we have looked at the model moving forward to try to make sure that it does still have the capacity, because, like I say, we still think there's plenty of opportunity to help the economy grow here, and exporting is very much part of the story.

Moving on to negotiations and governance and the relationship with the UK, various committees and joint-working groups have been established to support the implementation of the FTA. Has the Welsh Government made representation about being party to those groups? Will there be Welsh Government civil servants and ministerial representation on those groups?

I'll start, and then Andrew can provide some more detail on this. So, we're still seeking clarification on the implementation arrangements. It goes back to Andrew's point from earlier about what you need to do to successfully implement the free trade agreement itself. There's a range of work streams and working groups that the agreement sets up, and, within those committees, it isn't clear yet how any of the devolved Governments are going to be involved. Given the number of committees that are involved, I think it's honest to say that we could not be physically present in all of those as well. On the capacity of the Government to take part in all of those and Australia and potentially CPTPP and the gulf group and Canada, there's a challenge there. That's what I mean about the capacity of the UK Government being stretched if you're trying to deal with all of the detailed implementation all at the same time—[Interruption.] And my terrier agrees with me on that. But there is a challenge, therefore, about, the clarity from the UK Government about where we're going to be involved, and we then need to make clear-sighted choices about how we actually staff up and deal with the capacity within that. It may be that we take a watching brief on some issues, so we've got to choose where we think will be the greatest interest but also the greatest level of opportunity.

There's a squirrel in the garden, I'm afraid, Chair. Nothing I can do about that. [Laughter.]

We picked up from the Minister for rural affairs some frustration in relationships with the UK Government. How do you feel, from a trade development perspective, about the way the UK Government is engaging with the Welsh Government? Do you feel you are being brought into these negotiations?

It's a bit of a curate's egg because, on the one hand, we have got really positive and constructive engagement where officials talk with us. We still have, though, a challenge over where we're not involved. So, you have this difference. So, there's pretty straight language from some parts of the UK Government that trade is reserved, and we don't think it's that simple. We've been talking about what we've been doing to support businesses to trade and to grow their businesses successfully, and actually, on the practical relations around that, we actually work well with the Department for International Trade. When I was in Dubai, there was a really good relationship between our staff from the Welsh Government and the Department for International Trade. The difficulty comes in that many of those areas that they say are reserved have a direct impact on devolved responsibilities, and where they say, 'You're not part of it', you end up finding out late in the day and when it's too late.

Our challenge still is, as there are going to be more free trade agreement negotiations, how much earlier can we be properly involved and engaged, when our interests are definitely engaged to make sure we don't end up with a frustrating and, I think, unhelpful perspective. Because if we're saying, 'We're frustrated we haven't been told about this, and it's almost too late for us to do anything about it', I just think that's a really unhelpful element of mood music internally and in scrutiny. And we'd be much better off saying we've had early engagement on this, because, when it comes to it, we have constructive things to say. We're not interested in torpedoing the trade negotiations themselves. We're actually interested in making sure that the interests of Wales are properly reflected, and actually, in many instances, there are other parts of the UK that share similar interests with them. So, in some parts it's been really positive, but I think it could be better.

11:10

Thank you, Hefin. Are there any other questions in this general scrutiny session that Members would like to put to the Minister? No. Therefore, we'll take a short break, and we will resume our scrutiny of the economy Minister and his team into our tourism, retail and hospitality inquiry after the break. 

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

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

11:25

Croeso nôl. Mae'r sesiwn hon gyda Gweinidog yr Economi yn rhan o ymchwiliad byr y pwyllgor i faterion lletygarwch, manwerthu a thwristiaeth. Felly, symudwn ni yn syth i gwestiynau. A gaf i ofyn i Luke Fletcher ddod i mewn i ofyn rhai cwestiynau? Luke.

Welcome back to this second session with the economy Minister, as part of the committee's short inquiry into hospitality, retail and tourism issues. We will move straight to questions. May I ask Luke Fletcher to come in to ask some questions? Luke.

Diolch, Gadeirydd. Beginning with the strategic approach, how will the retail strategy and visitor economy action plan take into account the challenges that the tourism, hospitality and retail sectors face from cost-of-living pressures and labour shortages, as well as the challenges that businesses have faced over the past two years?

Well, the honest answer is a bit circular. Of course, we haven't finished the retail strategy. We are still engaging with it. We published an update, as it were, on where we are getting with the retail strategy. But, again, we are working with both sectors to try to make sure that we do have something that tries, as far as we can, to take account of the very points that you make: the challenges that have come from the last two years from the pandemic; the changes, some of which are negative and some of which are potentially positive, in terms of consumer behaviour for both sectors; and the significant shift to online—that's been really accelerated. Lots of our high street, for instance, didn't have a website. Lots of people have had to do that to get through the pandemic. So, there are different opportunities, as well as wanting to rebuild people's confidence in coming back, and then virtually every sector of the economy still has challenges over labour. And there is the impact of our changed relationship with the European Union. So, we are going to try to take account of a range of those challenges by working together with the sector—and when I say 'the sector', I mean the businesses and also, of course, the trade unions involved within the sectors as well—to try to come up a plan, whether we want to call it a strategy or an action plan, that we can actually have some joint ownership and agreement on. So, the Government does what the Government can do, and each of those sectors then has a shared understanding of what we are trying to achieve together.

So, I can't really set out for you in detail now all of those things. But, as we know, in today's world, it isn't just a cost-of-living crisis that existed before the war in Ukraine, but those things have made some challenges worse. That's a particular issue for some parts of the retail sector. So, if you are in essential goods, people will still need to buy food, even if the costs increase. That's a real pressure on families. But, with more discretionary spend, there's a further challenge there as well. That isn't just an issue for the visitor economy, but those are the challenges that we are going to need to work through. Whatever we set out in the shared strategies that we have, then we are still, I think, going to need to return to them, to make sure that we have got ways to mark our progress together, because there could be different challenges. I hope that we will be in a position of having gone further than we might have expected, but each strategy will need to be living in order to make a difference.  

Thank you. If I can just pick up on what you said in terms of working with the sector and working with businesses in the sector, how would you respond to the Wales Tourism Alliance comments that small and medium-sized enterprises in the sector have not felt particularly valued, and that it doesn't have a direct working relationship with the Welsh Government at the moment? There appears to be a bit of a disconnect between what you are saying in terms of working with the sector and businesses in that sector, and with what the businesses in that sector are feeling at the moment. 

I only became aware of those comments in preparing for this meeting. I have to say that I was pretty surprised and disappointed that that's what the Wales Tourism Alliance is saying. The Wales Tourism Alliance represents small and medium businesses in that sector. We have dedicated work streams on trying to redesign the future, to try to make sure that we still have a really healthy visitor economy. Nearly 12 per cent of people employed in the country pre-pandemic work in this sector. So, it's not marginal activity; it's really important to us. Actually, there's a good amount of confidence in the sector as well. About three quarters of the sector, from the latest barometer survey, still think that they are positive about their future. So, actually, confidence levels are similar to pre pandemic. And the thing that I find difficult about the comments isn't just that they're critical, but that actually I've seen an awful lot of the Wales Tourism Alliance in regular, regular meetings. In having to run through another emergency phase of the pandemic, we had regular engagement between officials and all of those business groups, including the Wales Tourism Alliance, who are part of our visitor economy group, and I personally had regular engagement with them. I managed to get away during half term in Wales, but I interrupted my half term to make sure I carried on having those direct meetings with them from a screen. It didn't make for the best family holiday, but it was a necessary part of what we were doing, and it underscores—. Not just with me, but officials as well. So, I don't really recognise where those comments are coming from, because it just doesn't reflect the way that my time has been used, or indeed the time of our officials.

11:30

Thank you for that. The Welsh Retail Consortium, moving on, has called for additional funding to accompany the forthcoming retail strategy with an action plan to follow it. Do you intend to develop an action plan and how will using existing funding streams allow you to deliver the strategy's aims?

Well, I don't blame the Welsh Retail Consortium for asking for an action plan and for extra money. Why wouldn't they? Part of our challenge, though, is that we'll need to see what we actually end up agreeing in terms of the retail strategy to see the commitments that we're making and whether we need an action plan or not. I think it is a bit cart before horse before we actually have the strategy agreed and signed off, and we'll then need to consider what we all need to do to make it work.

From the money point of view, well, we'll need to see what resources they're looking for, because we have resources we're already deploying and it's really about how do we make best use of those. You'll know from going through budget scrutiny that there isn't a giant pot of unused money waiting for a home to be found for it. So, it's still about how we make the best use of our resources. And there are different actors within the retail consortium, of course. You've got very large groups like supermarkets and other very large stores that have a significant amount of spend and ability in terms of marketing and promoting what they can do, and then you have more bespoke areas, from your local high streets to a range of other businesses as well. So, part of the challenge is, with the different parts we're going to need to cover from our strategy, how do we then make sure that those are successful?

So, I wouldn't close the door off and say, 'No, there will be no money at all', because we need to see what the strategy says and then deal with the resources that I've got available to me in the department. And equally, I wouldn't say that there definitely won't be an action plan, but that again is because we haven't finalised the strategy itself, and we may end up having what the retail consortium might call for in an action plan as being part of what we agree in the strategy in any event. So, I'll be more than happy to update the committee on what we have agreed when we've agreed it. That won't just be through a written statement that I would expect to issue in any event, but if the committee want to have more from me once we've agreed to that then I won't have any problem at all in coming back to you.

Thank you for that. So, there's surely a ballpark figure, at least, that you could give us as an indication as to what that funding would be, surely, or is it a case of just having no idea?

Well, it's the case that we haven't agreed the strategy, and if I give you a ballpark figure then I'm plucking something out of the air, because we haven't signed it off, we haven't agreed what the strategy is going to be. And in some of this, it can be about promotion, it can be about the way we seek to use our influence and powers, and those powers aren't just the hard things of money and the law, but it's actually about what we can do on a softer point as well.

So, some of the stuff we've been doing, for example, with both the visitor economy and the retail sector about trying to encourage people to think about careers in these sectors—not just a seasonal job, but real careers to have—well, there is some spend that goes alongside a marketing campaign in wanting to shift people's attitudes and behaviour, but that in itself isn't necessarily the sort of multimillion megabucks. It's also about how we do that smartly, so we're thinking about who we're trying to influence in doing that. So, I just think that, whilst I understand that you want me to give a figure, I've learnt from times past in both being a backbencher and a Minister that plucking a figure out of the air is a really bad idea. I'd much rather, when we get the strategy, come back and say, 'Here is the strategy and here is how we're going to make progress with it', including any points and choices about money, whether current spend or indeed the possibility of new spend, if required.

But, surely, Minister, it's not a matter of plucking a figure out of the air. Surely, you are doing some work on this at the moment. Therefore, surely you would have some sort of idea what sort of funding you will require to put in place to support this.

11:35

It really does depend on what we do with the strategic vision and the different challenges; we have to come up with the strategy. So, we're already putting money, for example, into skills; we talked about that earlier in general scrutiny. Now, some of that money is already there. It may be that the money that we have with Jobs Growth Wales+, some of that will help people into careers within the sector. And it's a bit of an artificial exercise to say, 'I'll carve out a section of Jobs Growth Wales+ or the new ReAct+ fund we're going to have to help people into work, and I'll carve out another section of the broader employability plan and say that's what's going into the retail strategy.' Because if you're using your current resources to focus on a strategy you've come up with to try to help the high street, to help retail more generally, then I just think that's an artificial exercise that I don't think gets us there.

And I do appreciate there are times where it can be frustrating to have a Minister saying, 'Well, I'm not going to give you a figure now', but I just think it's honest. Much more honest and useful, I think as well, from the committee's point of view, when we have a strategy, and when we've agreed what we're going to do, to then say how are you going to make it work and what you're going to do in terms of financial resource and non-financial resource, and what indeed are the sector going to contribute as well. And that's a discussion that I'm more than happy to come back to have with the committee itself. That isn't just a budget question; it's actually much more than that in terms of how we make the sector have the successful future that all of us, regardless of party, would want to see it have. 

Yes, that would be very useful, if you could come back to us as a committee. Thank you. Thank you, Luke. If I can now ask Vikki Howells to come in. Vikki. 

Thank you, Chair, and good morning, Minister. I'm got some questions first of all on business support for the tourism, retail and hospitality sector. So, business representatives have called for additional funding to be made available to support capital investment in the tourism sector. They say they believe that the current allocation is not sufficient. What consideration have you given to this?

Well, we do have—. We've got some small capital grants, for example, the Brilliant Basics programme, where we are looking at smaller capital investment. And look, I think the starting point is that you would expect every organisation to say, 'If we had more resource, we could do more.' And I accept that's true as a starting point, then they can use money and they can use it well. So, I'm not saying that there is no case at all for any investment. It's always about the resource we have available and what we choose to prioritise. It's also about some of the other points, where we wouldn't necessarily say, 'This is definitively about retail, or about the visitor economy', but the Transforming Towns programme is £136 million of support, and, actually, the sense of place you get is actually really important both for retail and the visitor economy as well. A successful town, whether it's Narberth or Tonypandy, where they talk about the success of their high street, actually those things matter for a sense of a place for people who live there, but also for visitors as well. 

So, the challenge will always come back to how do we set out the resource we have available, and how do we then successfully deploy it, where you've got some schemes, like I said, like Brilliant Basics, that are visible and obvious in that way, and others where you can't necessarily always talk about them discretely. And there's, you know, for example, the project we're doing with Aberystwyth on the Old College as well, that should make a real difference to the visitor economy, and there's quite a lot of money being spent in that way. 

We could try to list some of the areas, but, again, I think it comes back to the real request that the sector has and how we understand what they're really looking for, as opposed to a general, 'Yes, we'll spend more money', and the honesty of what I've had to say around the fact that we have less money available. European moneys did help us in the past. What we're doing on the Old College, for example, is supported by former EU funds. So, that's a source of income that won't be available to us in the future, and whilst we've had some announcements on the community renewal fund and the shared prosperity fund that's going to replace it, we still don't have certainty, but some of that could help in parts of the tourism economy—so, the canal project, for example, in mid Wales, and some of the projects in and around Wrexham. But we don't have the certainty on how we're going to able to shape that together with the sector, and how, if there's going to be a continued bidding process, that would work. So, I'm afraid there's still some uncertainty about that. But if there are specific things you want to be able to set out, then, if not now, between Steffan and Claire, then I'm more than happy to come back to the committee if that's helpful as well, Vikki.  

Thank you. And when we're looking, for example, at the growth of the visitor economy in some of the areas of Wales that are crying out for regeneration, such as the south Wales Valleys—and I've seen photographic evidence, Minister, of how much you enjoyed your visit to Zip World—[Inaudible.]—a short while ago—. So, would you say that it's the regeneration pot of funding that should be being tapped into there, or is there anything more that could be pulled together by Welsh Government to use regeneration—to use tourism, sorry—as a regeneration tool?

11:40

I certainly think tourism is part of a regeneration tool. And I certainly did enjoy my visit to Zip World, and I look forward to going back with a very excited young boy—he wants to try it out for himself. But it is then about what you do, not just in going to enjoy that, but actually seeing what other opportunities there are in the area. That's part of the strength of the visitor economy—having really strong attractions for people to come and see, and, if you draw people in with those, people often work out there's often lots more to do there as well. Yesterday—no, on Tuesday, rather—I was in Swansea, and I saw what they're looking to do with the Skyline proposal as well. And the works around Penderyn, of course—you have a base within your own constituency, and they're looking to expand in Swansea as well, with a visitor centre as part of the attraction too. So, there is a real join-up. So, regeneration is part of it, but not all of it.

And again, we have this challenge of the different budgets that exist, and how those different budgets get used to improve our economic future and what it will do for a range of different sectors as part of it. And that proposal in Swansea has an element of retail to it, but it also has the potential for a food and drink offer as well, with the potential for a new eating venue. So, there's a range of different areas, and it's all those different jobs. So, I wouldn't necessarily say it's just regeneration, but regeneration's certainly a part of it, and at the moment that's being led by the Deputy Minister for Climate Change.

It's also about what we can do in broader business support as well, as well as what we specifically do within this area of the economy. But I definitely think the visitor economy has a larger part to play, both domestic—so Wales and UK-wide—but also international visitors as well, because they're often high-value spend. International visitors come here with a plan about what they want to do most of the time, and there's other time they have as well, and they will be looking to spend money and do things there. So, we're definitely interested in that. And that's a very competitive market. So, we know that Scotland and Ireland, for example, are very aggressive in marketing themselves internationally. And it's how we do that in a way where we will both have a sustainable approach to what people do when they're here as well, and the markets we're especially interested in match a range of other areas in our international strategy as well.

Okay. Thank you. I'll try and go for a range of quick-fire questions now, Minister. My first will be the ever-thorny issue of business rates. So, business representatives have called for reforms to business rates to address the disadvantages that they see in property-based businesses, such as those in tourism, hospitality and retail. Have you held any discussions with the Minister for Finance and Local Government on this topic?

It is something that comes up as we look at the potential for business rates reform. But we have a significant package of business rate relief coming out this year, which is at least as good as every business over the border. And so they're certainly not disadvantaged, but there is a broader movement across the UK, to think about what will the future of business rates be. But it's not a simple reform package to deliver, and it's something that no doubt the finance Minister, with her future taxation policy hat on, will continue to take a keen interest in, as will I, because I understand this is a significant part of the base cost for businesses, and then how those taxes are actually used to help benefit all of us in different ways.

Thank you. And there have been really strong calls from the tourism and hospitality sector for VAT to be maintained at 12.5 per cent. Have you discussed that with the UK Government, and, if not, do you have any plans to do so?

Yes, I've raised it, as indeed have other Ministers in our engagement with UK Ministers. We think that removing that early could actually harm the economy as it's still bouncing back. We're still not—. Well, the overall economy in Wales is back to pre-pandemic levels, earlier than other parts of the UK, which is good news, but the recovery isn't necessarily secured in every sector. And I do think that allowing business to carry on without further increase in the rates of VAT would be a positive step to help businesses to continue to grow and invest in their future.

Thank you. I know that will come as comfort to businesses in the Cynon Valley who have raised that issue with me. I've just got a few questions now around the fair work agenda as well. Which are the main levers the Welsh Government intends to use to deliver fair work improvements in the tourism, hospitality and retail sectors, and what also are the key outcomes that you're looking to achieve from these?

So, we have a range of broad levers to promote and influence fair work outcomes. So, there's direct influence we can have in the public sector that's devolved. That's not the tourism sector, of course, but that can affect broader employment conditions and expectations in an area as well. There are our procurement and financial levers, and some of those will impact. We talked earlier about capital and a range of other areas as well. There's also our convening power with networks and social partners, and we've certainly seen that become further embedded through the period of the pandemic. We have better relationships than ever before I think, despite the questions about the Wales Tourism Alliance's description of that.

There's also how we can support individuals to improve their skills and access fair work. So, improving people's skills often improves their access to better paid employment and the way that their employers then value what they do. And there's also the efforts we'll continue to make on the reserved areas of employment rights and duties.

But fundamentally, this is about, in this particular area, how we influence the private sector to improve its offer. Some of that's happened by necessity because, actually, because there's been a labour shortage, a range of businesses have had to improve their pay and have had to improve their offer. And it's part of this point that, if you want people to see this as a career, not a seasonal job, you've got to improve what people are going to get, not just in terms of take-home pay, but in the genuine investment in them and their career.

11:45

Thank you. And in terms of Welsh Government interventions, the economic contract, surely, is a key vehicle here. But when we talked to business and trade union representatives in our last session, they told us that they felt that the economic contract wasn't well understood and actually that it wasn't a contract. What work are you doing to ensure that the policy is better explained in future? And are you planning any broader changes to strengthen the economic contract?

So, yes, it isn't a legal contract, but then, to be honest, politicians and governments and organisations regularly talk about a contract with people that isn't a legally binding contract. I remember for the last election, the current Prime Minister setting out what he said was a contract with Britain. So, you have a range of things that are described as contracts that we know aren't legally binding contracts. What it does do, though, is it encapsulates our approach to trying to raise the bar with companies that we support and engage with. And I regularly tell you that when I have decisions to make about whether to support businesses, it is a key consideration whether they have an economic contract in place or they're prepared to sign up to having an economic contract. And it's broader than fair work, of course.

The four pillars set out currently are: economic strength and adaptability; fair work; promotion of well-being, because well-being isn't always necessarily well captured in people's understanding of fair work, but it's hugely important; and low carbon and climate resilience. So, we're actually trying to shift the way that businesses look at their own investment choices and the contract is helpful as part of that. And, yes, we are looking at how we strengthen the economic contract. It's one of our commitments in the programme for government—to expect that we can introduce further expectations for continued support from the Welsh Government. So, those businesses that have economic contracts do understand what they are expected to do and I am hopeful that we will see more parts and more businesses in the economy covered by the strengthened economic contract as we introduce it.

Thank you. And finally from me on procurement: Welsh Government's procurement is obviously really important to the Welsh economy and it's an area where the Welsh Government can set an example as well. Trade unions have told us that they feel that there's a bit of room for improvement in the way that the Welsh Government buy its goods and services and from some of the businesses who they source those contracts with. What would be your response to them and are you planning to make any changes to the approach to procurement for Welsh Government?

Okay, so, yes, we think there is room for improvement. If we didn't think there was room for improvement, then we wouldn't be looking to set out the social partnership and public procurement Bill. I don't know which committee is going to scrutinise that, but we're not interested in legislating to keep what we've got. We're interested in how we further improve what we've got. And, as you know, it's a key lever to keep money within local economies, but also the ability to make sure that the conditions within procurement help to improve outcomes for the workforce as well, going back to your questions on fair work.

We have made progress in this area since before I was a Member of the Senedd, when I was then a much younger person and president of the Wales TUC. At the start of the financial crisis, we came up with a joint plan with the Confederation of British Industry, and a key part of that was improving local spend and procurement. And so this body, within all its different iterations, has moved the dial forward, and we've got 10 principles for a procurement policy statement. We've got a code of practice on ethical employment in supply chains. So, there is more that we want to do, but we have a base to build on. So, the story is of improvement, but, yes, there's further improvement we think we can make—the Bill will be part of that. But, you know, if we do think—. If committee members individually, or the committee as a whole, in your evidence that you've heard, think there are opportunities to further improve it, or indeed examples of good or poor practice, we'd be really interested in hearing that. So, as my colleague Hannah Blythyn takes the Bill through, we can think about what that means, but this is genuinely an area where we think there is more gain we can make, and of course Rebecca Evans is the lead Minister in this area, but I have a definite interest in what improvement could really look like for the Welsh economy.

11:50

Thank you very much, Chair, and thank you for being here, Minister. I don't want to go over things that we've already covered. We've already looked at making sure that there's a proper career path in the retail sector, for example. So, how does the Welsh Government intend to raise the status of these sectors and encourage better career progression opportunities within them? What I would say is that there's been talk of potentially having degree apprenticeships specifically for the tourism and hospitality sectors, so that was something that we were quite keen to ask you about in the committee. What are your thoughts on that?

Well, on degree apprenticeships, we're interested in how they can help to genuinely improve in an area where there is a challenge either in supply or a definite return. So, we've got a range of areas where we're already active, and as we look to expand, we'll consider what that might look like. But really, the challenge in the tourism sector is the part of the convening power and the influencing power the Government has, working alongside the industry, in persuading people that there are genuine careers within the sector, because there's a big competition for labour, and every area wants to improve the skills of its workforce. So, we think there is more that we can do together. We think that Jobs Growth Wales+ will help that. We think there is more we can do alongside the sector.

I wouldn't definitively say that degree apprenticeships are the answer, but I think degree apprenticeships are part of the conversation we're happy to have with the sector about what sort of a difference they can make in building on what we've already got. I think there's always a danger that you hear that there's something new and you say, 'That's what I want and that will help to improve what I've got in the sector.' And actually, we've got some basic points about keeping staff in an area where I think too many people do see it as casual and not see the point about the career, and also the businesses themselves, when you think about how they invest in their workforce to keep them there, because as I say, in the tourism sector we know there is lots of competition for staff already, and so that's driving people to want to secure people on longer term contracts with better terms and conditions, but within the sector too there is still quite a lot of pay at what I would say is the lesser end of the scale, and that's one of the things we need to improve, because that will help to change people's views and attitudes towards the sector.

Thank you. When we heard evidence, we heard from people who had been working in the industry for, like, 30 years, really hard, who'd had an entire career out of it and still found it really unfulfilling, and they were the ones who were really saying to us that it just doesn't feel like it's given the respect that it should be. One of the examples that they gave us was that when young people are getting career advice, whether that's in school or whether that's maybe through Citizens Advice or if they go to the jobcentre, actually having a career in retail, hospitality and tourism isn't mentioned and isn't promoted in that way. So, is that something—? Do you ever talk to anybody in those areas, who provide this advice as well? Is that something that could possibly be used to help people realise that this is something that they can have a lifelong career in, really, and progress? What are your thoughts on that?

It's not just the young person's guarantee and our work with Working Wales and Careers Wales, and it's not just where people go to get advice, but to think about what would a career in this area be, and I think talking to people about not just a job but a career in this area, so people get a sense of longevity and ability to progress. Within hospitality, tourism and the broader visitor economy, there are lots of areas where people can have a genuine career, and that is partly impression, and it is also partly, you're right, about, at earlier stages, making sure that people have their eyes open to that this isn't just a part-time job to have. So, yes, I'm more than happy to think—. And it's more about the constructive conversations we're trying to have with the visitor economy group about how we do that and how we bring in the different levers that we've got. Because Careers Wales is part of my responsibility as the sponsoring Minister as well, and it's how we think about what messages are given, and equally, where there aren't careers advisers but conversations taking place when young people are considering what they might and might not want to do with their life.

When I go into a primary school and I ask the class, 'What do you want to be?', not many people say they want to work in tourism and hospitality, but there are people who sometimes say they want to be a chef, they want to do other things. It's part of the broader impact of the area and understanding that those are jobs with a real career path. And actually, if you are a qualified chef at the moment, there are lots of people who will want you and your skills in a whole range of businesses, so it is possible in those jobs to have something where you've got not just the ability to earn money, but how that matches with people's changed expectations, about the balance between life in work and outside it—. So, I very much see that as part of our ongoing conversation with the visitor economy group, and then to try to see if we can shift forward positively the conversation with the wider public.

11:55

Thank you. I hope it's okay, Chair, if I just throw in another question that has come to mind. I know quite a few people who work in the hospitality sector, and as you know, Minister, data collection and surveillance in the workplace is something that I'm very passionate about, and I know a couple of young people who have actually had to walk away from their jobs because it's quite common in the hospitality sector to be asked now to download an app that gives your employer your location at all times, so that they can keep an eye on you when you're on site, but also they can keep an eye on you whenever. There are also a lot of restaurants and hotels that are asking their staff to sign in by using their biometric data, and if they say 'no', then they're let go from their job. And again, I suppose it speaks to what you were saying earlier on, there is sometimes that imbalance of power, because a lot of people are very much in need of these jobs; their managers are the ones often that determine how many hours they get a week. So, I was just wondering if you had any thoughts about that, because I feel that retail is a more precarious profession at the moment, and I just feel like maybe there is that imbalance of power there where they can be asked to do these things, and is it really asking for consent if the option is, 'Do it or lose your job'?

I'd be really interested in some of those specific examples being shared with us, Sarah, because I do think when we're having a conversation about the future, it's exactly the conversation we need to have about how we say, 'This should not be representative of the sector', because I wouldn't be interested in promoting and saying, 'There's a great career to be had in retail or in the visitor economy, and all you need to do is make sure your employer knows where you are at all times, including when you're not in work.' That's not a great message at all, and it's not helpful when you know that you're competing for labour. And if you're trying to say, 'There's a great career to be had, so positively choose this sector to spend your working life in', then that message runs entirely in a different direction.

So, if you can share the examples with us, because they're things we want to be able to talk about as we're finalising our strategic approaches. I would have thought the leadership of the sector would be very clear that they want people to come in and they want people to meet fair work expectations—not just to point out you'll be getting a decent wage, but that, actually, you'll be treated well and with respect by an employer that values you. But we do always need to think about how we manage—. But those parts of every area of the economy where there are less scrupulous and less positive employers, and what we as a Government do in our messaging, even if we're not in control of all of the legal obligations in that area—.

Thank you, Sarah. And I'll bring in Luke Fletcher, who wants to ask a supplementary question on this topic. Luke.

Diolch, Gadeirydd. I would be interested to know from you, Minister, what role you can see Welsh Government playing in pushing the sector—specifically hospitality now—to improve workplace conditions. Sarah's touched on it there with the imbalance of power. I can speak from experience that it's a massive imbalance of power in the hospitality sector especially, and I can only speak on that particular sector because I've worked in that sector.

There is a role here, I think, for Government to help push the sector to better improve workplace conditions, but I would be interested to know what your view would be on that. For me, I think that a lot of the employment issues that they're facing right now do boil down to some of those workplace conditions, for example zero-hour contracts, employers punishing employees through cutting their hours if they don't agree to certain things, so I think that's what it boils down to more than anything else. I think the degree apprenticeships may help, but as you've said already, I don't think it's a solution, really, to the issue in the hospitality sector, so I would just be interested in your views on that.

12:00

Well, look, as a much younger man, I worked for years as someone who washes up in the kitchen and I've worked as a waiter as well. My brother took the career path and he's now a chef, so I've seen from my own experience the demands of working in the sector, but my brother really enjoys his job; he get's great fulfilment from it, but it's demanding. And so, there's a balance for him and how he has his life with his family. I do understand there are real pressures for people in the sector, even with a good employer, but every job has its demands, as everyone in this room, or virtual room, knows, in the job that you do, even when you find it fulfilling.

The challenge of those poorer practices—and, again, thinking back to a part of my life when I was actually in employment law—I've seen some of the practices that you describe and I've represented people in those areas as well. Part of our bargain on fair work is both about our expectation as a Government and the sort of businesses we're prepared to promote and what we expect people to do in return for that support. There's also just a general point about the message from the sector and the sector leadership as well. So, the sector leadership doesn't say, 'All of these practices are really important and we must have ultimate flexibility over everything.' Because, actually, that isn't going to attract people in and you're not going to get people if you can't provide more of a balance between it. So, there's a messaging point there that has to be borne out in practice. And I think the truth is that if we had this conversation in five years' time, we would still find that there are some poor employers within this sector and every other one.

What we do need to do is to raise the bar, though, to make sure that the typical experience is a good one, and the typical experience is one that we're able to promote successfully. Because all of us will have within our constituencies or regions employers within the sector we think are really good employers, where there is a great career to have, and it's part of what we think makes the places that we live special, unique and worth visiting and living in as well. So, there's a balance in this. But I wouldn't try to say there aren't the challenges that you raise within some of our employers. We don't have control of the law. We do have the influencing role that we have and we'll continue to work with people to try to make sure that we get through that.

But I do think there'll be a helpful conversation around fair work when the social partnership and procurement Bill is going through, because fair work is a key segment within that, what we mean by fair work and what other people understand by that. And I hope that'll be part of reinvigorating a national conversation about what our shared expectations are. Regardless of the side you take in politics, actually, for businesses to be successful, we know that the most successful businesses are almost always those that really do value the people who make their businesses work. Other models are, of course, available, but I'm clear what I'd like Wales to be is a successful, prosperous fair-work nation.

Diolch, Gadeirydd. Thank you, Minister. I just want to go away slightly and talk about—. Obviously, it's St Patrick's Day and there's a worldwide—. Everybody knows about the Irish culture and everything that is associated with Ireland, and St Patrick's Day is celebrated around the world. What can we do in Wales to try and replicate that, to strengthen Visit Wales, strengthen the knowledge of Wales and what we have to offer across the world?

The Irish story isn't just known because of the success of Ireland as a country. For those of you that aren't aware, this is the regular reminder that my wife is Irish. She's from Cork and St Patrick's Day is a really big deal. It's a big deal for them, as well as for how Ireland projects itself on the world stage. And I actually think that part of this is that we'll need to understand where our own diaspora is. There are lots of Welsh people around the world who are really proud of being Welsh, and links to Wales as well. So, it isn't just Hillary Clinton, going back several generations, who is interested in her own Welsh heritage, but we have people in the here and now today who have been successful.

And if you think about some of our communities of interest here as well—. One of the last ministerial visits I did before Dubai, when I got out of the country, was I went to India as part of a recruitment exercise we were doing in getting people to come to work in our health service. It was good for India, actually, because a number of those people went back to India afterwards to improve skills, but they worked in our NHS for a period of years, and some of those people settled and stayed. But, actually, the group of people that were the best advocates were people who worked in the service and were doing the interviews. And, very much, they were advocates for India in Wales, but very much advocates to the wider Indian community for Wales as well. So, it goes in a range of different areas.

I think that one of the things we have to be able to do is to have a general sense that we think it's a good thing to promote Wales on the world stage. And the envoys that Eluned Morgan set up when she was the international relations Minister—although we then had a pandemic that's affected all that—they're really proud and the influence they brought made the Dubai trip successful. We had one of our US envoys who came over and made a real difference in helping us with the fintech events that we had. And they're really keen to make sure that we do promote Wales successfully, and we have to get to the point where we think it's a good thing for our Government to promote Wales and the activity that that means around St David's Day.

To give you an idea of the scale of what Ireland do, there are 35 Ministers in the Irish Government, I think, and 33 of them are undertaking international visits around St Patrick's Day. Simon Coveney and one other Minister have drawn the straw to be the Ministers on duty in the country and everyone else is out promoting Ireland. Now, that's a significant and sustained effort. I'm not saying that every Minister in the Welsh Government needs to be on a plane, train or boat going to another part of the world, but I do think that we need to try to understand where we think our biggest markets and opportunities are, where we've got Welsh diaspora who want to be part of helping, and how we make sure that the story we can tell is a positive one, not just about our past and the history of people in parts of Wales—there are people on both sides of the civil war who have Welsh heritage; Jefferson Davis on the wrong side, there are others on the right side, though, of that particular conflict—but actually what it means today. It isn't just about celebrating the past, and today there are people with a link to Wales who can make a difference. I'm really keen that we do use international trade and marketing as part of what we do and St David's Day is a very obvious part in the calendar to try to do that around. Like I say, there'll always be a story about who has been out of the country and how much it costs, and I accept that that happens, but if we're serious about this, we need to get to a point where we say that it's a good thing that we are promoting positively what Wales has to offer the world today and for the future, and we will benefit from that around what we can do around St David's Day and his Welsh compadre, St Patrick.

12:05

I appreciate that. That's a really long, detailed answer of the benefits, potentially, around it, but what are Welsh Government going to do with the powers within the economy portfolio and across the Cabinet to really push that forward? You mentioned when Eluned Morgan was international Minister, what she set up, but what is there now in place to really push that forward? Or is this just a part of a wish list that, actually, we've got other things that we need to do first, but this is stuff we'd like to do? Or, is there stuff in play already?

So, I've announced today a programme of international visits for the next year about promoting our opportunities to train and grow our market share. I'm looking at what we're going to be able to do with our St David's programme, together with the First Minister, for next year. So, there are real things that we're doing in our international presence, and we've got envoys in the middle and near east, we've got an envoy in Japan, and we've also got envoys in the United States. We've got the current Year of Wales in Canada, lots of economic opportunity there, and we've still got things following on from the Year of Wales in Germany as well. So, there are real things that we are doing to try to promote our profile on the international stage that are economic, but there's also social and cultural influence as well. And those things do really make a difference.

So, yes, there's a programme of work. As ever, with more resources, we could do more, but it's still about maximising the opportunity of what we have got to try to make that difference, and in doing so—I think I've said this on a number of other occasions—it is still about what the UK Government do alongside and with us as well. And in Dubai, there was good co-operation. I was really pleased that the British ambassador was part of what we did and was there for our St David's Day celebrations, and he was very complimentary about the Welsh food and drink on offer, and in recognising that, there was also the Department for International Trade, where there was a really good relationship with the two offices and it made the event successful. So, it's much better when we can work together and not have competing objectives, but we think it's entirely possible to do that, and like I say, the international visits programme we've got, I think, will be part of making that real, Sam, as opposed to, 'We'd love to do this, but we can't.'

Thank you very much. Unfortunately, our session has come to an end, so on behalf of the committee, can I take this opportunity to thank you, Minister, and your team for being with us today? It's been a very useful session. As usual, a transcript of today's proceedings will be sent to you for accuracy purposes, so if there are any issues then please let us know. But once again, thank you very much indeed for being with us today.

5. Cynnig o dan Reol Sefydlog 17.42(ix) i benderfynu gwahardd y cyhoedd o eitem 6 cyfarfod heddiw.
5. Motion under Standing Order 17.42 (ix) to resolve to exclude the public from item 6 of today's meeting

Cynnig:

bod y pwyllgor yn penderfynu gwahardd y cyhoedd o eitem 6 cyfarfod heddiw yn unol â Rheol Sefydlog 17.42(ix).

Motion:

that the committee resolves to exclude the public from item 6 of today's meeting in accordance with Standing Order 17.42(ix).

Cynigiwyd y cynnig.

Motion moved.

Symudwn ni ymlaen, felly, i eitem 5 ar ein hagenda. Dwi'n cynnig, yn unol â Rheol Sefydlog 17.42, fod y pwyllgor yn penderfynu gwahardd y cyhoedd o eitem 6. A yw'r Aelodau i gyd yn fodlon â hynny? Ydyn, dwi'n gweld bod pawb yn cytuno. Derbyniwyd y cynnig, felly, a byddwn ni yn symud i mewn i sesiwn breifat.

We will move on, therefore, to item 5 on our agenda today. I propose, in accordance with Standing Order 17.42, that the committee resolves to exclude the public from item 6. Are all Members content? Yes, I see that all Members are, indeed, content. The motion is therefore agreed and we will move into private session.

Derbyniwyd y cynnig.

Motion agreed.

12:10

Daeth rhan gyhoeddus y cyfarfod i ben am 12:10.

The public part of the meeting ended at 12:10.

13:45

Ailymgynullodd y pwyllgor yn gyhoeddus am 13:47.

The committee reconvened in public at 13:47.

7. Cytundeb Masnach Rydd y DU ac Awstralia
7. UK-Australia Free Trade Agreement

Croeso nôl i gyfarfod y Pwyllgor Economi, Masnach, a Materion Gwledig. Fe symudwn ni nawr i eitem 7 ar ein hagenda. Mae'r sesiwn banel hon yn edrych ar effaith debygol cytundeb masnach rhydd y Deyrnas Unedig gydag Awstralia ar Gymru. Gaf i groesawu'r tystion i'r sesiwn yma? A chyn inni symud yn syth i gwestiynau, gaf i ofyn iddyn nhw i gyflwyno'u hunain i'r record? Fe ddechreuaf i gyda Gwyn Howells.

Welcome back to the Economy, Trade, and Rural Affairs Committee. We'll move to item 7 now on our agenda. This panel session is looking at the impact on Wales of the UK-Australia free trade agreement. May I welcome the witnesses to this session? And before we move to questions, can I ask them to please introduce themselves for the record? I'll start with Gwyn Howells.

Prynhawn da, good afternoon. Gwyn Howells, chief executive, HCC—Hybu Cig Cymru.

Diolch yn fawr. Prynhawn da. Huw Thomas, cynghorydd gwleidyddol, NFU Cymru.

Thank you very much. Good afternoon. Huw Thomas. I'm political adviser for NFU Cymru.

Prynhawn da. Gareth Parry, senior policy and communications officer from the Farmers Union of Wales.

Thank you very much indeed for those introductions, and we'll go straight now into questions, and I'll now bring in Sarah Murphy. Sarah.

Hello. Thank you, all, for coming to speak with us again today. We've got a lot of questions to get through and not much time, so I'm going to group these together. You've highlighted a number of concerns relating to the impact of the agreement on your sectors, so could you just provide an overview of the exact nature of those impacts, timescales, when they're likely to be felt, what data the industry will rely on to monitor the impact, and what you think can be done for the sector, from a UK and Welsh Government perspective, to mitigate those impacts? I know that's a lot, but it kind of follows through quite nicely, and I want to be able to get through as much as we can. So, can I start with you, Gareth?

Thank you very much, Sarah, and I appreciate it's a big subject to cover in not very much time, so I'll try and be as brief as possible. I think, to start with, in terms of the nature of the impacts, I think there's a natural concern that the full liberalisation of the trading of agricultural goods does risk the displacement of Welsh and UK food production. And, although the UK impact assessment does quote an estimation of a loss of gross output for Wales's beef and sheep sectors of £29 million, I think this needs to be considered in the fact that the UK-Australia deal is likely to set a precedent, then, for future trade deals. So, that cumulative effect that we would expect, really, from trade deals with countries such as New Zealand and others within the CPTPP, means that that £29 million then becomes much greater, in the longer term at least.

There's also the potential for trade deals such as this to impose further barriers on our UK exports to the EU, particularly when we consider the differences in production standards between the UK and Australia. And, although we do have, of course, UK products that do enter niche and specialist high-end markets, we need to be realistic and consider how important the commodity markets are. Even for those producers who try to enter those high-end markets, there will always be a proportion that enter those mainstream markets as well. Also, it's likely to increase our reliance on food security, particularly if we do see the displacement of our UK production and our reliance increases on cheaper food imports.

In terms of a timescale, of course, currently beef prices in Australia are higher than what we're currently experiencing in the UK. Historically, if we look over the past 10 years, we've seen prices much lower for beef and sheep in Australia, and that's been evident in how much Australia have filled their quotas in the past. So, of course, Australia are currently relying heavily on the Chinese market, and there's always the potential for that market to close overnight, if you like. So, although we may not see these impacts suddenly over the next 12 months, 18 months or 24 months, there is obviously the likelihood of those impacts being felt further in the long term.

Monitoring wise, I've quickly jotted a few ideas down, but hopefully Gwyn can follow up on these. I think market prices and agricultural output are sorts of measures that we can monitor in the UK, but I think the big thing I'd like to highlight there, really, is the fact that monitoring is obviously going to be really essential with trade deals such as this, but we need to have those mechanisms in place in the text of the deal to be able to act on changes in market prices or agricultural output, or imports and exports, whatever we are looking at.

Quickly, before we move on to the other speakers, in terms of support, I would say, from the UK Government's perspective, maintaining the Welsh agricultural budget allocation, as we've seen cuts in recent years. Also, I think there should be a shift in focus, really. There's been a big focus and a lot of effort going into signing trade deals such as this since we left the EU, rather than maybe streamlining and making the current UK-EU trade deal more efficient. And the barriers we have seen to our exports—. We have seen a 25 per cent reduction in our sheep meat exports to the EU since we left there, so there are obviously improvements to be made there in terms of our trade deal with the EU, which is obviously our biggest export market for our red meat.

Then, finally, in terms of Welsh Government, I would say that there needs to be a big emphasis—. We've seen from global events now how important our food security is, so we need to ensure that the Welsh agriculture Bill is flexible enough for us to be able to use secondary legislation to act and react to such events. And there's the importance—I know I've mentioned this to the committee in the past—and how important it will be to have a stability payment as part of the future scheme.

And just the last, final point, from a UK and Welsh Government perspective, I would say there needs to be consideration of postponing any sort of introduction of additional red tape, whether it comes to livestock transport regulations, the nitrate vulnerable zone regulations, whatever, under circumstances that would put our producers at a further disadvantage compared to producers in countries such as Australia—producers that we'll be in competition with if this trade deal is signed, with its current text. Thank you very much.

13:50

That's brilliant. Thank you ever so much, Gareth. Gwyn, did you want to come in and add to that?

Thank you very much. I think we're in a new era of trade deals, obviously, given that we've left the European Union and, obviously, the caveat would be that there are some positives in that, and certainly we'll be looking forward to those positive trade deals, but also there are some challenging ones, and Australia and, indeed, New Zealand are very, very challenging for Welsh and British farmers, as we've seen with this particular text and narrative around the trade deal. I think it has a serious potential to distort the market, certainly, in the medium term, probably, and certainly in the longer term. I think the trade flow in terms of our sector, red meat, is going to be one way: from Australia to here. There will be no opportunities going the other way, and therefore the Department for International Trade's own statistics and estimates of how they foresee a shift in the value of the trade away from agriculture into manufacturing businesses from these shores actually proves that point. So, I think there are very few protections, indeed, for Welsh and British farmers in this deal, and that's probably regrettable, given that that's not usually what happens with sensitive sectors in trade deals and how they're negotiated worldwide. I take from the evidence of the farmers in Australia and the politicians that they are very, very pleased with themselves; they've negotiated a very good deal, and that probably speaks volumes as to the way that they feel it's going to go.

I think there is no futureproofing in it, and that's a very disappointing aspect. Obviously, the floodgates proper open after 15 years, and 10 to 15 years are the key timelines. Obviously, in the interim, there will be volumes coming in, but they'll be caveated by two major elements. Gareth mentioned there that the antipodean countries—New Zealand and Australia—have very, very good trade at the moment with Asia and the Pacific countries and the middle east, for example, allied to the fact that production, certainly in Australia and to a degree in New Zealand as well, has been laid quite a bit lower by successive droughts in the country. They are hoping that they will recover from those droughts where production has dropped significantly, and their latest forecasts for production to increase over the next five years is a very significant worry, because, obviously, the UK market for all exporters of meat from other parts of the world is a very lucrative market. It's a very dependent market on retail, and therefore the profitability of exporting into the UK market, with the sophisticated retail chains, is a big prize. And it's quite worrying, really, that there are no futureproofing restrictions and protections for the farming industry. Whilst we wait to see what the absolute impact is, there is enough there to worry rural economies and farming economies as we see it now.

Now, what can be done and how do we measure it, obviously, the measurement will be in trade volumes. If you look at trade volumes from Australia in the first two months of this year, January and February, they're very similar to what they've been for the past two or three years. So, very little change. That's not maybe how it might be in the future. So, given the divergence of their trade generally to the eastern part of the world, I don't see that changing any time soon unless, obviously, geopolitical reasons necessitate change.

What I would say as well is that there's a bit of an anomaly, as I see it, and a bit of irony in that, certainly in England at the moment, the farming support seems to be all around environment and sustainability, which I can understand, but there is little there, as I understand it at the moment, about protecting food production and food security. It may be a coincidence that carbon emissions are measured at the point of production and not at the point of consumption, and therefore any food coming in is not counted in the inventory for carbon emissions. But I think that's short-sighted, certainly now and in the future, and I think we have to have this middle ground where we have a balance of sustainable agriculture—and we have in Wales one of the most sustainable agricultures in terms of red meat anywhere in the world, and I think we need to be aware of that—and the need to find this sweet spot in the middle between producing food that drives economic activity and at the same time doing it in a sustainable way, and, yes, we can do better on that as well.

So, those are my thoughts just now, Sarah. Thank you.   

13:55

I haven't got a huge amount to add, actually, because I think the previous two speakers covered that very comprehensively. But, yes, we are poised to admit very significant volumes of product onto the UK market in tariff-free form at a time when there is a cost-of-living crisis pending as well, so I think we see a very significant threat to our domestic producers here in Wales. I think others have spoken about the anticipated cumulative impact of this as well. We've got the Australia deal, New Zealand's been granted very similar terms and, undoubtedly, other agri-food producers will want to secure similar favourable terms as well.

I'd make the point as well that a lot of this food coming from Australia will probably be destined for the foodservice sector, so hospitality and out-of-home consumption. Before the pandemic, about 50 per cent of consumer spend was on food outside of the home, but we'll see a lot of it going in there and we all know that there is a weakness there in terms of labelling around food consumed out of home, so I think we see that as a risk to our sector, as well. Australia is a huge, very competitive agricultural producer with many, many advantages of production—far cheaper production, lower standards in many regards, as well, being able to send vast volumes of product over. The safeguards aren't really meaningful, because they are set so high. In years to come, the safeguards that we've got aren't really going to protect the industry sufficiently, in our view.

In terms of data monitoring and that sort of thing, there is a market monitoring group that is set out under one of the agricultural support common frameworks, so I would have thought there'd be a role for them in monitoring what is happening in the marketplace. Levy bodies would have a role in that, with the farming unions, of course, feeding in. I think, all too often, some of the data sets that we get are lagging indicators, so damage may already have been done to the industry by the time we get the data through.

In terms of future actions that UK and Welsh Government could take, I think, as Gareth has said, it's about future agricultural policy and ensuring that there is a stability element to that. I think now would be opportune for Welsh Government to pause and review its agricultural support policy in light of what is happening with these trade deals. I would hope that there would be learning that the UK Government could take from this, as well. I think they rolled over far too easily to the Australians, granted very generous access, didn't push hard enough on some of the welfare stuff either. The involvement of the devolved administrations, stakeholders like the NFU, et cetera, in terms of mandate setting as well was very minimal. So, I think there are lessons to be learned there, but the fact is that the precedent has been established with Australia, and once that has been set, it is difficult to retreat from that position, if you like. I'll leave it there. Thank you very much.

14:00

Thank you, Sarah. Before I bring in Hefin David, we haven't got much time, so if I can ask you to be as succinct as possible. We've taken about 15 minutes on the first question. We've got quite a few questions to get through, so I would ask you to be as succinct as possible. Hefin.

Thanks, Chair. I don't think I need much time, really. I was going to ask about the UK Government's impact assessment, and given the gloomy picture that you've just portrayed, it would suggest that the UK Government's impact assessment should recognise some of these things. I suppose my question is: does it?

I'll quickly come in there, Hefin, if that's okay. Just very briefly, I think the UK impact assessment highlights that the benefits to the UK are negligible, although the damage to UK agriculture is much more significant in that sense. I would say it doesn't truly demonstrate the impact for Wales and Welsh agriculture specifically. I'll just refer you quickly back to that £29 million fall-in-output figure. The impact assessment does state that this could be an underestimate, given current trading conditions, so although it is an estimation, I accept that, they're still not certain that that's the projected change, if you like. I would emphasise that a Welsh impact assessment would consider the impacts not only for Welsh agriculture but also the local economy, rural communities and so forth. I think aspects like that would have a greater impact in Wales, more so than other areas of the UK.

14:05

On the impact assessments, we don't know the methodology or how they were arrived at, but they don't make for good reading in terms of what we anticipate the effect being on the agricultural sector. We've called for a Wales-level impact assessment to be conducted as well. We would like to see that done. Wales is skewed towards the production of red meat and dairy, and we know that those are the products that are likely to come through in significant volume from Australia. So, looking at things on a UK level, where you've got other agricultural sectors, and looking back at them on a Wales level, we are poised to sustain perhaps a greater detriment here because of our reliance on certain sectors over and above others. Diolch.

I've got nothing to add other than that in the Department for International Trade's assessment of £94 million loss or deficit, there was also a signal there that carbon emissions measured against this trade deal would increase by between 30 per cent and 40 per cent based on the trade between the two countries. Therefore, in terms of sustainability or economic advantage, there isn't a lot of benefit for the agricultural industry whatsoever.

Thank you, Chair. My question is to you, Huw. You've already mentioned the fact that the NFU have called for a Wales-specific impact assessment for free trade agreements, and we know the UK Government has previously rejected this. What representations have you made to the UK Government on this issue and what specific information would you like to see included in that assessment?

Thank you very much. We've made representations on numerous occasions on this point, I think probably starting with the work we did as part of the Trade and Agriculture Commission. So, we've made that point there. We've made the point before parliamentary committees. I know the Welsh Affairs Committee actually recommended that this be taken forward. We've made the point to Welsh Government and we've made the point to UK Government Ministers as well. It might be that there is some sort of Wales-level data out there that the UK Government has gathered. We haven't had sight of it. But we think a Wales-level impact assessment does need to be undertaken for the reasons I outlined previously, really. It's our reliance on the red-meat sector, the dairy sector—the sectors that stand to be most adversely impacted by the admission of Australian products onto the market place, really. We need that sectoral information, really, on those two sectors, and we'll continue to make that point. There are politicians out there who share this view, including the Welsh Affairs Committee in the House of Commons. Diolch.

Thanks, Huw. You mentioned there that you've made representations to the Welsh Government as well. Can I just check whether those representations were designed to help inform the Welsh Government's own assessment of the agreement? Because we know that's due to be published soon.

We continue to make representations to the Welsh Government. I think the trouble is we're not in possession of all the data. Some of the data is an aggregated UK-level data set as well. We do continue to make that point to the Welsh Government. You referred to the assessment that's due out from the Welsh Government soon. We haven't been made aware of that as yet, but we will be interested to see it when it is published. Diolch.

Diolch, Gadeirydd. Prynhawn da, bob un.

Thank you, Chair. Good afternoon, everyone.

Just coming back to the opening question and Hefin calling it a very gloomy picture for agriculture following this trade deal, that doesn't quite echo what we heard from Sam Lowe, Emily Rees and Professor Michael Gasiorek when we gathered evidence from them. Why do you, as a panel, think that is? Gareth, I'll start with you.

14:10

Sorry, Sam, would you be able to repeat the question? 

For background, when we heard from Sam Lowe, Emily Rees and Professor Michael Gasiorek, three trade experts, they didn't echo the concerns of agriculture with regard to the trade deal. Why do you think that is?

I think, as a union, of course, echoing what Huw has just mentioned, we've met with a number of UK politicians and Members of the Senedd to echo our concerns regarding the trade deal. I think the benefits for the UK in terms of the figures in the UK impact assessment—. Because they don't necessarily focus on Welsh agriculture specifically, I think the impacts that we are likely to see as a UK agricultural sector, but more so a Welsh agricultural sector, I would say are being hidden, if you like, by the benefits to other industries and other sectors within the UK. I think the GVA benefits for Wales of 0.09 per cent or around £60 million a year—. I'm just going through the impact assessment now. If we compare that to the £250 million deficit that Welsh agriculture has experienced over the recent years and in the coming year or two—cuts to agricultural budgets there—that £60 million is negligible, if you like.

Thanks. I think Gareth got to the nub of the issue there, really. Welsh agriculture, I think, stands to be disproportionately impacted by this as compared to the rest of the UK. I would go back as well to the safeguards. The UK Government has made much of the safeguards in the deal, but these safeguards are pretty weak, really. The TRQs, the thresholds set are so high that by the time the safeguards are triggered I would suggest that the industry would be in some pretty dire straits. I would also point to the fact that the Australian press and media, Australian farmers, were lauding this deal as a fantastic opportunity for them. So, I think that tells you rather a lot—that they were jumping for joy at the news back in December. Diolch yn fawr.

Gwyn, before I come to you, I'll add an amendment to the question because of your background with Hybu Cig Cymru. What is the difference, following on from that question, between red meat product from Wales and that from Australia? Is it a comparative product, or, as Huw mentioned, does one go into the service sector, predominantly? Australian meat would go into the service sector. Is it different quality? Or is there no divergence between the two red meat products?

It's a good question, Sam. I think there is a difference, but I wouldn't say that the Australian product is poor. That would not be the case. It's a different product on three areas, probably. One is in terms of the size of the economies of scale of production in Australia, which are vastly different, obviously, to family farms in Wales. You've got farms in parts of Australia that are the size of Israel, for example, and several counties in Wales. So, economies of scale in terms of production. And costs of production are very low compared to here. The climate is very much better, other than they are suffering some serious drought conditions at the moment. But there is also the difference and divergence in standards in terms of animal welfare, environmental standards, food safety, for example. There are significant differences there, and generally a lower regulatory baseline. Competition is good. We're not afraid of competition in any market, because we can probably outperform the competition on the basis of our quality, provenance and standards. I think the consuming public, when volumes do come in from Australia and other places, need to be informed about the country of origin. As Huw mentioned earlier on, we have in the retail sector very, very clear labelling regulations, which are very, very useful. Now then, they disappear when you go to the food service sector, and I think that there needs to be a big press on lawmakers in the UK to actually introduce food service labelling that will require food service operators to clearly identify the origin of their purchases, so people and consumers can make informed choices as to where they're voting in terms of their choice. And they can make that choice in a very discerning fashion, and we're seeing that increasingly. So, I think those are the main differences, Sam, in terms of where they are and where we are. It's a different product, it's aimed at different segments of the market. We're at the premium, they're what I would call more standard, and probably a more standard offering for food service operators.

14:15

Great, diolch, Gwyn. And finally, given the horrific scenes over in Ukraine and the calls for food security to be prime within future agricultural policy—obviously fertilizer prices going up as well, red diesel prices going up as well—with a trade deal like this, how does that impact on our food security within Wales? Is it a positive impact or is it a negative impact or is there a negligible impact in terms of our food security with a trade deal like this? I'll go around in the same order. Gareth.

Diolch, Sam. I think I emphasised this in my response to the first question. Whether this deal results in a reduction in our agricultural output in Wales or it increases our dependence on cheaper food imports, I think the impact of both of those possibilities will have an impact on our food security. We are seeing, as you say, global events, such as what's happening in Ukraine, emphasising how important it is, or how important it will be now for the next 12 months, for us to produce as much food as possible in the UK, given that the impacts of what is happening in Ukraine may not hit us until we need our fodder for our livestock in the winter to come. So, in terms of—. Yes. So, I think I'll leave it there because I'm conscious of time.

Thanks. I'd agree with what Gareth had to say there. I can't see this having any sort of positive impact. There aren't any reciprocal benefits in this trade deal. We certainly can't discern what they are, if they are there. It is adverse in terms of it risks undermining our production base because of the addition of the cheap imports, and in turn it obviously makes us reliant on imports from not even a nearby exporter; it's an exporter that's 10,000 miles away. So, I can't see how in any way it would improve the food security picture in this country.

Yes, very quickly, Sam, I think no country is insulated from the hike in import costs that we're seeing now; it's no different in Wales or the UK. I think it could have a bearing on production, which would in turn have a bearing on food prices in a negative way. I think we'll see how it pans out, but we wouldn't want to see food production shrink because of inflationary costs, because obviously they'll come back into line at some point—question mark when that might be. But, there is a real danger that, if food production does wane significantly over the next 12 or 18 months, the hike in food prices will be even higher, and that's not great for society generally.

Thank you, Sam, and I'm afraid time has beaten us this afternoon. So, thank you very much indeed for giving up your time to be with us today. It's been very, very useful in hearing your evidence this afternoon. A transcript of today's proceedings will be sent to you in due course for accuracy purposes, so if there are any issues with that then please let us know. But, once again, thank you very much indeed for being with us. Diolch yn fawr iawn.

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

Cynnig:

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

Motion:

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

Cynigiwyd y cynnig.

Motion moved.

Symudwn ymlaen, felly, i eitem 8 ar ein hagenda, a dwi'n cynnig yn unol â Rheol Sefydlog 17.42 fod y pwyllgor yn penderfynu gwahardd y cyhoedd o weddill y cyfarfod. A yw Aelodau'n fodlon? Ydyn, dwi'n gweld bod Aelodau'n fodlon. Felly, derbyniwyd y cynnig, ac fe symudwn ni nawr i'n sesiwn breifat ni.

We'll move on, therefore, to item 8 on our agenda, and I propose in accordance with Standing Order 17.42 that the committee resolves to exclude the public from the remainder of the meeting. Are Members content? I see that they are. Therefore, the motion is agreed, and we will now move to private session.

Derbyniwyd y cynnig.

Daeth rhan gyhoeddus y cyfarfod i ben am 14:19.

Motion agreed.

The public part of the meeting ended at 14:19.