Cynulliad Cenedlaethol Cymru

My name is Vaughan Gething. I'm the Minister for Economy.

I'm Dawn Bowden, Deputy Minister for Arts, Sport and Tourism.

Bore da. I'm Jason Thomas, director of culture, sport and tourism, Welsh Government.

Good morning. My name's Dean Medcraft, director of finance, economy—uh, constitution and Treasury group.

I often—. The title of our committee is so long that sometimes I put them in the wrong order, so you have every sympathy.

You're very welcome this morning. We've got a lot to get through, so, if it's okay, we'll go straight into questions. So, firstly, looking at the evidence that you very kindly provided to us, the Welsh Government has said in that that physical and mental health, the benefits from culture and from heritage are immense. How would you say that that is squared by the effect that will inevitably come from cutting those budgets in terms of on people's health and people's well-being in Wales?

The starting point is that our budget settlement means that we have £1.3 billion less in real terms than two years ago. That's essentially the entire budget of a number of our individual health boards. So, if you think about it, Hywel Dda, with everything it has to do, running primary care, community care and the hospitals it runs, actually, we've lost the scale of that in our budget over the last two years in terms of spending power. There isn't a way to hide that. And this is after 13, nearly 14, years of successive budget reductions. And what's difficult is that the Government, over the last few years, has said, 'This is the most difficult settlement in the history of devolution.' The problem is it's true, because, every year, our spending power has been reduced. In capital, our spending power has reduced again significantly. An increase of £6 million doesn't get close to touching the sides of what actually has happened with inflation and spending power. So, the context of all of this is a budget that is shrinking and we then have to make priorities within that. And that's why we get to the budget priorities for the Government being extra money for health and extra money for local government. And I recognise that, actually, there are real-terms pressures, more than the cash we can provide. That's not a very comfortable position to be in, but it's true.

So, when you then think about all the other things that contribute to a person's health and well-being: the quality of their work, the other parts of their lives—I know of lots of conversations with Huw Irranca in the past about social prescribing and what it means—all of those things matter. Now, some of those, you come back to, 'What are you going to fund?' and 'What will survive?' And if you think it's the right choice that health and local government should be the big priorities, they're the two biggest spend areas. That has major consequences for every other part of the life for the Government. So, that's the overall context in which all of these choices have to be seen, because that's the truth of how Ministers have had to set a budget.

And actually, that's very helpful context, so thank you for that. But would you accept that there isn't an inevitability about cutting some of these budgets, even in those very difficult circumstances? I think we would all recognise the difficulty of those circumstances, but the Scottish Government, I think, they plan to increase spending on arts and culture, don't they, so there is still this context that, in these difficult decisions, these are the budgets that are amongst those that have been hit the hardest.

There has been a real impact, and I'm the Minister, so I've got overall responsibility for the department. As all Ministers, we've had that context and we agreed that those would be the big priorities, and how we try to protect our most vulnerable citizens. After that, you're getting into other really difficult areas. You could make a good case why you should spend more money in every area of this portfolio, and, actually, if you're going to say that health and local government get priority, we have made more than £40 million of cuts to our budget to make sure that we can contribute to the spend in other areas, and you'll have the same sort of questions that you're starting with, entirely reasonably, about the value of individual areas of spend, about what they contribute beyond that individual area, but you still have to make the budget balance.

Now, I recognise that, if we could spend more in arts, culture and a whole range of other areas, there would absolutely be a benefit, both for the health service, the health and well-being of the country and, indeed, for the economy, but you can't spend that money in every single area. In this department, it was my choice that apprenticeships should be the biggest spend priority. Now, there has actually been a 3.6 per cent reduction in the money that we put in to apprenticeships. There's also the loss of European money. But, even doing that, that means, every other part of my department, there's a consequence for it, and that does affect other areas that I'm directly responsible for, and it definitely affects the areas in the portfolio that Dawn leads on as well. But what we've tried to do is to make sure we can still run those services, there's still value in what they do, but I accept reductions of this type are real and there's an impact on the service and what it can deliver.

Thank you for that. Alun.

I completely accept and agree with the overall budget narrative that the Government has provided. I think there is a diminishing spend available to Welsh Government, and Welsh Government is not at the moment in a place where it wants to raise its own income, and I accept that. I'm not completely convinced by its arguments, but I accept it, and that's where we are. The consequence is we are where you've described. What I would say and what I would like to test this morning, Minister, is this: the Welsh Government's priorities, local government and health, are drawn very narrowly, aren't they? You define health, and in your opening remarks you've defined health, in simply budgetary terms: the health budget. You didn't define 'health', because, if you looked at health in its wider sense—you know this, being a former health Minister; in fact, you made the arguments I'm just about to make—health is a more holistic matter than simply providing for the health budget. One of the lessons I think we learnt from the pandemic is the wider impact on human health of other matters, and in this committee, of course, we're concerned about culture and sport, particularly.

So, for example, let's compare Wales with other places. If you have a diminishing spend supporting cultural activity in Wales, then you diminish Wales as a country in terms of our cultural expression as a nation, and then you diminish the—. And we know that mental health particularly is affected by people's inability to socialise and to enjoy cultural expression. We also know that people's physical health is helped by physical activity and supporting sporting activity. So, is it not the case then that the Welsh Government, in taking these decisions, where I agree you do need to prioritise, is drawing perhaps some of these matters too narrowly?

'No' is the straight answer, and the reason is I do understand all those determinants around health and health outcomes. The biggest is actually your socioeconomic success or inequality, and everyone in this room knows this. If you have a map of socioeconomic inequalities, it very neatly maps over healthcare inequalities. This is the economy department, where we have reduced the budget to make sure we can still put money into health and local government. Health spend isn't just the NHS budget, although it is a fact that the cash increase in the NHS in Wales will be 4 per cent, and is—[Inaudible.]—at 1 per cent in England. Actually, we've got much greater need. We've got people, and you will have constituents, who are anxious and concerned about the service they get, what it means for them, what it means for their future health as well. That's both the preventative end as well as the intervention, if you like, in a hospital setting as well.

What you have to accept is, if we chose to take money out of the health budget to make sure that we could even the settlement out for different organisations, including cultural bodies that I know you're going to question Dawn about later, you have to accept that money wouldn't be in the health service and there's a consequence to that as well. So, in all of this, you're weighing up and balancing the consequences of different choices, and I would never pretend to you or anyone else there's a consequence-free way of resolving the budget we have—

I accept that.

And I know you see that. So, it's always, 'Is it a better choice to put more money into the health budget and what that means, what we still need to do with the service, and what it means for all of our constituents? Is it better to make sure that we're still trying to sustain social care and local government alongside that as well?' Again, huge determinants of health outcomes in local government services. I can see you're sat next to a deputy leader of a local authority as well, but that's true—

Former deputy leader.

—and you then get to the point where you have to decide, 'Well, if we can't do everything, what do we choose to do? Where's our priority?' That then has a consequence. Otherwise, you don't have any priorities. And there's—. It's a very difficult consequence, but it's truthful.

I absolutely accept that. I represent a small authority that has less means of raising its own funding—

Indeed, yes. We regularly talk about it. It's true.

I fully accept that, but let's look again at some of those overlaps. I don't disagree with your broad analysis about socioeconomics; we've debated it enough times. But the cuts that you are making in these areas will have economic impacts as well.

I accept that. It's unavoidable.

I understand. Let’s take, for example—. The members of the committee had a letter yesterday from Nick Lock, who was discussing the impact, the potential impact, of cuts to the Royal Welch Fusiliers Museum in Caernarfon. Now, Caernarfon is a town that relies very much on tourist income, and the socioeconomics of the town and the ability of the town to sustain itself and the rest of it. Now, if there are significant impacts to the fusiliers museum in the castle there, then that is going to have, or likely to have, a knock-on impact to the socioeconomics of Caernarfon and that community. So, it’s very difficult to argue that you’re able to make sort of forensic cuts that don’t have a wider impact in the broader life, if you like, economic life of the country. Would you accept that analysis?

I don’t think we’re trying to say that there are forensic cuts that have no impact. We’ve never said that. Our budget analysis does not say that, because that would not be true. I accept that, for every reduction that is made, there is a direct consequence. For people who are employed, we know that there are much more likely to be fewer people employed, redundancies because of the choices that have been made. That has a direct impact on those people, their families and their communities, and the service that is provided to the public. Because I do accept you can’t wander around saying, ‘There’s plenty of money; it’s just isn’t spent properly.’ That’s a dishonest analysis. I hear it sometimes—outside committee to be fair—but that’s simply not true.

So, we have to choose where do we want to prioritise, what do we think the benefit is for doing that, what gain do we think the public see, and then where do we have to make our most difficult choices about where we’re going to have to reduce spend. And in Caernarfon, actually, of course, it’s an area where I actually think, as an asset in Caernarfon, there'll be improvement because of the capital choices that were made in Dawn’s part of the portfolio, with significant investment and economic return for the work that been done.

Okay, let’s conclude this segment of the session with a question about how the decisions that you’ve explained—. And I recognise the power of the argument, I have no issue with any of that, but how does that sit with the wider Welsh Government’s position with the future generations legislation? Because the Government passed this legislation and placed a duty upon itself and others to take note of the interests of future generations in a way that's defined in legislation. So, how do the decisions that you have described this morning sit with that legislation, sit with those wider, more holistic responsibilities of Government?

I think they’re entirely consistent. You’ve got to be able to preserve and protect the things that matter most to people.

That’s not what the Act says.

Hang on. And you’ve got to think about that in a way where you’re thinking about the long-term consequences. You’ve got to think about what that means in terms of prevention. And actually the Well-being of Future Generations (Wales) Act 2015 has a number of different things to think about; it includes economics success, it includes cultural success. If you’re thinking about the long-term and how you want to plan in a way that gets you to your long-term future, you still need to think about today. What you’re not supposed to do is to let today crowd out the future. Now, that’s part of the reason we’re looking to make sure that we don’t collapse institutions. There were options that could have seen institutions close, and, within the budget, we had to make different choices to make sure that didn’t happen.

If the reductions that are taking place within some of the arm’s-length bodies had been doubled, actually, they may not have been achievable. And you could then have actually essentially said, ‘That needs to close.’ Now, we’ve made choices about safeguarding to make sure that there is a long-term future and a range of these institutions and what they deliver. And in all of that—. It goes into our decision about tax, for example. We could have taken, ‘Actually, it’ll really help us if we raise income tax, because that’ll avoid some of the choices we need to make.’ I'm not sure everyone would have seen the benefit of a 1p rise; we’d still have had to make really difficult choices. To do that, though, we’d have had to raise income tax on basic ratepayers, and it’s worth considering that’s partly about the structure of who we’ve got. We don’t have enough higher rate income taxpayers; we need more economic success in the country, not less.

Yes, I agree with you.

But you’d be saying to people on just over £12,500, ‘You’re going to pay more tax in Wales but you’re still going to see services reduced,’ when they’re already paying a record-high tax bill. And that’s a fact, not an opinion. So, all of this, it informs our choice not just about today, but what does that mean for those people and their own choices in the future, and, actually, we’d compromise their future by doing that. So, the settlement we have here, we need to be honest about the priorities we’ve got, and, outside this Chamber, we can make our arguments about what sort of future settlement we want Wales to have and who from.

The Minister’s tempting me to a debate around taxation, which I will resist this morning. [Laughter.]

We all appreciate the fact you will resist that as well.

Alun resisting temptation should be noted. [Laughter.]

Don't worry, we are. [Laughter.]

If I could just add to that, Chair, just in the sense that the Minister has outlined absolutely the kind of strategic direction here and the consequences, and we can't run away from any of those consequences? These are difficult, difficult budget decisions and neither the Minister nor I want to be sat in front of the committee today talking about how we've had to make reductions to the culture budget—

No, we appreciate that.

That's not what we came into politics to do. It's not what I came into Government to do. So, I want to place that firmly on the record. But I also want to place on the record that, within the choices that we have made, there will still be an amazing amount of work taking place in our cultural sector and our cultural bodies, and as to some of the health and well-being benefits that you've identified and that you were alluding to in your initial question, that work will still continue. We've got to mitigate the impact of these budget choices, but that doesn't mean that things are going to stop and will stop entirely. We still see a tremendous amount of work going on across our cultural bodies in terms of joint working with other departments, with health—the arts and health programme, the House of Memories Cymru work that we've been doing with museums with people with dementia. I could go on—the activities targeted by Sport Wales for the over-60s and so on. So, all of that work will continue, but clearly the ambition of some of those programmes is clearly going to have to be limited in some ways.

That was earlier than I thought. Diolch yn fawr. [Laughter.] Deputy Minister, when can we expect the culture strategy to be published?

Well, the culture strategy is already available in draft form. We had that drafted at the end of the year, in fact. We've been talking about it for some considerable time, but you will appreciate that, as the development of the culture strategy has come along, the financial position has changed as well. So, whilst we're in the position at the moment of having a fully worked up draft strategy, the designated member and I did meet with the co-chairs of the overarching steering committee last week to look at that strategy now in the context of the current budget situation. Now, that does not mean that we don't have the ambition for the culture strategy or that we won't be introducing the culture strategy—we absolutely will—but it would be wrong of me to sit here and say to you that all of the ambitions that we had intended in the first year or two of that culture strategy are now going to be deliverable within the current budget constraints.

So, the designated member and I have been working, as I say, with the overarching steering committee to look at how we can streamline that strategy to maintain the ambition, but quite possibly over a longer period of time. And to be fair, the overarching steering group themselves did accept and understand the position that we are in. So, that's the stage that we're at. There will be a report going to Cabinet shortly. We will still be having a public consultation that will follow the report to Cabinet and, of course, I'll be bringing that to the floor of the Senedd either through a written statement or an oral statement in the next few weeks.

Thank you. I'll come on to the impact of the budget shortly, but just to understand the delay, if you like, just to be clear, because, I think, in the very first committee session we had we talked about the culture strategy and you said that that was a priority and we're, obviously, nearly three years on now into this Senedd term and you're saying that the delay, if you like, has been a consequence of budget changes—

No, no. So, initially, and I think—. You're quite right, we have been talking about this for a long time, and I think I did give evidence to the committee some time ago when we talked about the strategy and where we're at, or certainly I answered a question on the floor of the Senedd about it. And we are further away timescale-wise than we would have wanted to be, but both I and the designated member were very clear that what we wanted was to get this strategy right.

But what's the cause of you being further away?

Basically because of the amount of work that's been involved in it. We employed an organisation called The Means that did the deep-dive work for us with stakeholders in the sector. That took far longer than was initially anticipated, and what The Means identified was that there were other groups that had not originally been identified in terms of the consultation that we also needed to speak to. So, our initial projection of this taking about six months was wildly optimistic. And so that was the primary reason for that—the need to get this right and to consult all of the right people.

We then had several iterations of the draft before we got to a final draft of what we felt was what we were looking for before it would go out to public consultation, and then of course the budget situation hit us. And that meant that we had to then find a way of ensuring that we could still deliver the ambition of that culture strategy, which we are absolutely committed to, but within the budgetary constraints that we have. And that's the bit that we're currently reviewing.

Okay. You mentioned the consequences of some of the changes in the budget on the cultural strategy. Can you inform the committee of the elements of the cultural strategy that perhaps were initially intended that will no longer be taken forward as a consequence?

Well, I haven't got the culture strategy in front of me. It's quite a weighty document, but it's high level, and, in that sense, what we were seeking to do was to set out not just a culture strategy for my department but something that would impact on every governmental department. And that was a key part of the culture strategy—that we would embed the cultural elements of life in Wales across every ministerial portfolio, but every ministerial portfolio is facing similar budgetary challenges. Therefore, we're having to look at all of that as well. So, it's difficult for me to give you that kind of detail at this stage, because at the moment we don't know what's actually going to appear in the final draft. So, I wouldn't want to pre-empt what the overarching steering committee, I and the designated Member determine eventually is what the final draft looks like before we go out to consultation. But, as soon as we have got that, I will be happy to share that with the committee in advance of us taking it out to consultation. 

Thank you.

Thank you. We had the Minister for Education and the Welsh Language here last week, talking about the consequences for his portfolio, and we talked quite a lot about the overarching 'Cymraeg 2050' strategy. I was just wondering what consequence this budget will have on the ability of the culture strategy, or your wider portfolio, to achieve those 'Cymraeg 2050' goals. 

Well, it's really an unknown picture at the moment, Tom, isn't it? It is absolutely embedded within the culture strategy, 'Cymraeg 2050'. The culture strategy is based on the seven ways of working within the Well-being of Future Generations (Wales) Act 2015, so all of that is absolutely embedded in that. And, as I said, our ambition for that strategy is not diminished by the diminishing budget; what is diminished is how quickly we may be able to deliver the full strategy that we would have looked to have had in place this year. But, I am absolutely determined, as is the designated Member, that we do deliver the culture strategy within the term of the co-operation agreement. So, you can read your timescale into that, because that's the end of this year. So, that's when we would anticipate having that strategy. But, it is a long-term ambition, it's a long-term strategy. This is not something that is for the next two or three years; this is for the next 10 to 15 years. So, I think that's the context in which it needs to be looked at.

You had a letter the day before yesterday, Monday, from the Council for British Archaeology.

Oh, yes.

I was copied into it, which is how I'm aware of it. But they mentioned a lot of the things that you're mentioned—that this budget would have an impact on the ability of Cadw to deliver against the well-being of future generations Act, the ability for them to hit wider targets, such as 'Cymraeg 2050', the seven well-being goals. It sounds like you concur with that.

Absolutely. Absolutely. As the Minister was saying earlier, we are sitting here having to acknowledge the reality of the circumstances that we face. But, that doesn't mean that we ditch all of those things; it just means that we have to look very carefully at how best we deliver that with diminishing resources.

You set five-year remit letters for Welsh Government arm's-length bodies.

Yes.

Are they going to be amended in any way to reflect this?

Almost certainly we will have to look at amending those remit letters. Again, I've had that conversation with the designated Member, and we've had that conversation with the arm's-length bodies. They are term-of-Government remit letters, you're quite right. The circumstances have changed significantly in this term of Government and, as such, it is only fair that we revisit those remit letters and kind of refocus some of the ambitions of our arm's-length bodies. I mean, we will be looking very much for our arm's-length bodies to be the delivery arms of the culture strategy. To enable them to do that, we're looking to repurpose some of the co-operation agreement budgets that were allocated to the culture strategy, to allocate that directly to those arm's-length bodies, for two purposes: (1), partly to safeguard as many jobs in the arm's-length bodies as we possibly can, but also to give them a more direct focus on delivering elements of the culture strategy that we want to.

So, will the amendments to these remit letters take place before or after the publication of the strategy, because it seems like the two are quite intertwined?

Well, the two are very closely aligned, and I think they have to work in alignment because, clearly, the remit letter, which will be, you know—. The changes are going to be significantly aligned to the culture strategy and are going to have to reflect what the culture strategy says. So, it's going to be pretty much a parallel process. And we continue to have those conversations with the arm's-length body as we're continuing to develop the culture strategy.

Tom, just before you go on, Llyr wants to come in on this, if that's ok.

Yes.

Just on that, if I may, if the budget is being reduced as of April, then the remit letter will be amended in time for that.

It would have to be amended in line with the budget, yes, because this will sit in line—

That's what I was thinking, yes.

—with the budget allocation for next year. Yes.

OK, diolch. Tom.

But the culture strategy may not appear until the end of the co-operation agreement, which would be—

The culture strategy—. Well, I'm only saying that's the deadline.

No, no, no, I understand that.

It may well be—. I hope—I very much hope—it will be in advance of that, but, whenever it is published, it's going to be within the next financial year, so it's going to be constrained by the budget that's going to be allocated in the next financial year. Was there something you wanted to add to that, Jason?

Yes, and only briefly—thanks, Minister—just to say that those two things can work in tandem. So, we could, for example, put into an amended remit letter, before the next financial year starts, a commitment or a requirement from the Welsh Government for the arm's-length bodies to implement a revised culture strategy. So, they don't have to necessarily go at the same time; we could put a place marker in the remit letter that enables those arm's-length bodies to then work with us when that culture strategy is published.

Okay. And just finally, as you mentioned potential redundancies in arm's-length bodies, have you got an idea of the scale of that?

Not at the moment. That is a conversation that we've been having for some months now, actually, once the extent of our budget situation became apparent. It wouldn't have been right or fair to those bodies to have left it until we published the draft budget. We started that discussion with them as soon as the indications were coming our way that it was going to be a very challenging financial settlement. So, we've been having that conversation with them and they've been making plans accordingly, but until—. I think this is important to say, as well: we are at the moment in a draft budget process, and so we don't know what the final budget will look like. We're not anticipating any manna from heaven over the next few weeks, as much as we'd like that. That's not going to happen, so we're not anticipating huge amounts of additional cash to come our way. But, this is a draft budget process and the money that we do have could still be allocated in different ways. That's part of what we're doing here today, isn't it? That's part of the budget scrutiny process. But, you know, we've had that conversation with the arm's-length bodies and we've told them what we think the extent of the cuts to their budgets will be, and they are already making plans accordingly and having conversations with their trade unions and their staff about what the potential consequences of this will be. But, we don't actually have those direct numbers yet, and we wouldn't until they've had those conversations and that's been taken through that process.

Okay.

Okay, I've got another supplementary from Llyr.

Yes, on the job losses, 80 per cent plus of the revenue is on staff costs, isn't it?

Absolutely. Absolutely. Yes.

So, we mustn't try and portray a situation where, actually, we're still not looking at significant job losses, regardless of all the efforts that—

Well, Llyr, one of the principles that the Minister outlined earlier on that's been guiding the Welsh Government through this budget process is how do we protect jobs. How can we allocate budgets in a way that minimise the impact of job losses? And that is absolutely what we are intending to do. That was why I was really grateful for the conversations we were having with the designated Member on the budget that had been allocated to deliver the culture strategy, where she agreed with me that we needed to repurpose some of that money. That may have been money that we would have originally looked to front load, at the introduction of the culture strategy, but now we're looking at utilising a considerable chunk of that to go in directly to the arm's-length bodies as a way of hopefully mitigating some of the job losses that they inevitably are having to face. Again, I'll reiterate what I said at the beginning: this isn't where we want to be. We are very clear. Part of the agreement that we have, in the co-operation agreement, and one of the overarching principles that we have in culture, is that we want to protect our cultural institutions.

I'm aware that there are voluntary redundancy processes under way in certain quarters as we speak, but of course there's a financial cost to making redundancies as well. Is that expected to come out of the diminished budget also, or is that something you might consider as something that you can help with?

I will ask Jason and Dean to comment more on the wider financial picture, because it isn't just in culture, of course, that this happening. In the conversations that we are having with the arm's-length bodies, they know at this stage that they are having to finance redundancies, as will other bodies that are having to face redundancies, but there are discussions going on across the wider Government about this.

Yes. Thanks, Minister. So, two points, if I may. The first one is linked to redundancies in general. That's not the only tool in the toolbox, so to speak. Each of the bodies will be doing everything that they can, like the Minister said, to protect jobs. They will look at every kind of tool that they have in the toolbox to protect jobs as much as possible, and that could look at other things, whether it's a recruitment freeze or when somebody retires not replacing them. There are all sorts of things they will all be considering and have been considering for a number of weeks.

The second point, really, is to your question about the availability of funds to fund schemes such as this. As the Minister did reference, we are exploring with each of the arm's-length bodies that we cover what the potential scale of that might look like if something were to be done in this financial year. We've had to caveat that, because that funding isn't there at the moment, but we are doing an exercise to try and quantify the total scale of the funding that might be required. When we've got all that information together—and as you'll appreciate, it's now 17 January, so it's very tight—we'll obviously be putting that advice up to Ministers and then Ministers will have to consider that in the round, with all the other pressures that are on the budget this year.

Okay, thank you.

Okay. Diolch. Alun has some questions on arts organisations and the arts council.

We've covered much of that ground in previous questions, but I think we need to test this just a little bit more, because as the Minister pointed out in his opening remarks, there are consequences to decisions. Decisions that you are taking on budgets now will have consequences for the people and the organisations that Llyr and Tom have described. I'm interested in the relationship that you have with the arts council in this particular case and how you are seeking to understand, and how the arts council is advising you, about what some of these consequences are going to be. We seem to have agreed, across the committee this morning, that there will be redundancies in arts organisations as a consequence of decisions taken by the Welsh Government, which I accept within the context of that, and there will be organisations and venues, potentially, that will have more serious consequences. So, I'm wondering if, with the arts council, you've been mapping out those consequences and trying to describe, if you like, and set out what those consequences are.

'Yes' is the short answer. My officials, you will appreciate, are virtually in daily contact with all of our arm's-length bodies at the moment. I don't think they're doing very much else other than working with the arm's-length bodies to work through some of the consequences of these decisions, and the arts council is just one of those, of course. There are others that sit in my portfolio as well.

I think you may be specifically alluding to the arts council's investment review.

No, I wasn't actually. I was going to come onto it, as it happens, but—.

Oh, no, no, I was thinking because there is an impact—because of the impact on that—because most of the budget that goes to the arts council is about the Welsh Government funding for grants that they administer.

Yes, I understand. 

So, we support the arts council to deliver grant funding on behalf of Welsh Government. And when the arts council started their investment review, they were starting that investment review with a projected budget figure that was considerably higher than they've got now. So, we had to have those conversations very early on. Any organisations that there were likely to be in receipt of funding offers from the Arts Council of Wales, as part of the review, could only receive conditional letters because of the conversations we were having about the budget. So, we didn't want an organisation to be told that they were going to get, say, £100,000, and then end up being told that they were only getting £60,000 or whatever, and planning accordingly. So, all of those kinds of grant offers were provisional and conditional upon the final budget. So, that is a direct consequence of what has happened, because many of those organisations that the arts council fund, of course, are third sector organisations—

Yes. 

—and are cultural organisations out in the community—some of them very small organisations—that employ people. So, we're talking about the direct employment of people in the arts council, but any cuts to the funding of grants for other organisations has a knock-on effect out there as well, and we're very conscious of that. So, again, that's all part of the discussion about the impact. It is not just the impact on the arm's-length bodies; it's the impact beyond them and who they fund, which will be similar to Sport Wales, for instance. 

I'm grateful to you for that, Minister. Let's just crystallise what you've just said then. So, we've been through the process of the investment review with the arts council, and the arts council have taken some difficult decisions and we've seen the consequences of that; National Theatre Wales have seen it, and in my constituency with Head4Arts, for example. So, that process has now been completed. So, we're now looking at a second stage of that process, essentially, where organisations that have received conditional offers of support, which you've just described, may well find themselves receiving another letter, saying, 'The support that you were offered conditionally has now been reduced to whatever level it is as a consequence of this budget review.' The committee will understand that process.

It would be useful to understand the time frame for that, but also understand whether the Government intends to help and support those organisations that will see significant and substantial reductions to funding in the next financial year, to enable them to manage those reductions in a way that maintains as much activity and employment as possible.

I'll ask Jason to say a bit in a moment about the timescale and the work going forward, but the short answer, Alun, to your question is, 'No, there won't be', because the money that funds the arts is channelled through the arts council. So, whatever money we have available to fund the arts, we've already allocated it to the arts council.

So, there's no conversation taking place between the Welsh Government and the arts council about a transition, if you like, or a—

Oh, there is transition. Yes, there is—. Perhaps, let me—. So, through the investment review, any organisation that has lost out as a result of the investment review will have access to transitional funding. And all organisations, whether they continue to be multi-year funded organisations or not, will still have access to applications and be able to apply for one-off grant funding. So, that will still be available. The investment review was about funding organisations on a multi-year basis, but there will still be transition funding for those who lost out on that, and there will be the opportunity for them to apply for one-off grants. But I don't know if Jason is—

Thank you, Minister, and thank you for the question. I think the short answer to this one is, 'Yes, we are exploring this with the arts council.' It's a very similar position to Sport Wales, as the Minister mentioned. It's a sweeping generalisation, but we've got, broadly, two types of arm's-length body in the Minister's portfolio. We have those like the national museum and the national library, which, effectively, deliver front-line services themselves within their own organisations, and then we have Sport Wales and the Arts Council of Wales, which are, effectively—again, a generalisation—umbrella bodies that put that money out there.

So, I've written to each of the chief executives of each of the arm's-length bodies that the Minister covers, with a kind of two-pronged request. The first prong of that is, 'Please, provide us with the information in terms of the potential quantum of the cost of redundancies this financial year, so we can analyse that information and see if there's anything that we can possibly do to help.' We recognise the point that you make about the impact on the bodies that the arts council and Sport Wales fund, so we have also asked the chief executives of those bodies to provide us with an estimation of what the potential redundancies could look like in those bodies below them. In terms of timescale, I didn't put a date for a response on that. I just said, 'This is clearly very urgent. You need to get this back to me as soon as possible. Do not sit on the information.' And as the Minister said, we are working with them on a daily basis around this. We know that the sooner we get that information, the sooner we can put advice out to Ministers.

Huw wanted to come in.

I can see Huw wants to come in. Can I just conclude my section—

Yes, certainly.

—just by saying it is a moving situation, as we can see? It's very fluid. It may be useful for the committee to pursue this matter with the Minister by correspondence.

Sure.

It's only a short supplementary to Alun's questioning. We're very familiar with the arm's-length relationship with Government. Sometimes it's used as—. Quite rightly, the reasons these bodies were set up at arm's length, both in Wales and at a UK level, were to distance Ministers from direct political decision making in some quite difficult areas of decisions on sports and arts funding. But it is arm's length. Arm's length. It's not totally cast off and adrift. So, for the public watching this, what's the nature of the discussions you have with the arts council and the sports council? If they do something that is really out of kilter with Welsh Government's big, strategic thinking, because their decisions fall within the paradigm of the framework that you've set as Ministers on health and education and sports and culture, do you sit down in an armchair over a cup of coffee and say, 'Oof', sucking through the teeth and go, 'That sounds a little bit out there, that one, that decision there'? Just explain to the public what this relationship—

It's a bit more than a sit down with a cup of coffee in an armchair, Huw. I have formal meetings with them.

Good. Okay.

I have formal meetings with them, at least a couple of times a year. That's with me, and officials are meeting with them all the time. So, the starting point is, they have a remit letter from me, a term of Government remit letter, which sets out very clearly what our expectations are of them, as an arm's-length body, to deliver our programme for government objectives. That's why, in answer to Tom's question earlier on, we're now having to look at that remit letter, because some of those objectives and ambitions are going to have to be tempered slightly. So, we have to talk to them about that.

So, for instance, the investment review was something that we had detailed conversations with the arts council about. We had those conversations with the arts council about the investment review because our programme for government commitment was about widening access to the arts, and so we didn't want small arts organisations that were telling us how difficult it was to access funding through the arts council to continually be hampered in that process, and we wanted a different approach to how the arts were funded. So, that was on the basis of the discussion that we had.

Now, having had that discussion and having agreed the process, it then is not appropriate for me to intervene when that process is being followed, and that process is being followed through and is being measured against the six principles that were agreed in the investment review and the process for appeal and so on that were all agreed beforehand. So, if it was going absolutely off kilter and completely not following the review and the process that had been set out, then of course it would be appropriate for me or for my officials to say, 'This is not what you said you were going to do.'

Right.

I have no evidence to suggest that that is what has happened through the investment review.

Okay, that's interesting to hear. And just one short supplementary to that supplementary then. If you thought something was really off kilter—and clearly you're expressing the view to the committee that, in the decisions that have currently been made, even faced with these budget constraints we have now, there is nothing that you think that is significantly off kilter, otherwise you'd have said it—would you say that privately, in your formal meetings? Or would you say it publicly?

Sorry, I—

If you thought something was going beyond their remit, going out of what you've set them to do, strategic priorities, would you deal with that privately, within that formal meeting, rather than—

Initially I would, yes, because I think that's the appropriate relationship with an organisation that I have ministerial responsibility for. I don't play out my role in public; that's not an appropriate way to deal with that. I have a relationship with these organisations and I have a responsibility to ensure that they deliver in the way that I want them to deliver.

Sorry, can I say: why isn't it appropriate in public? Because this is public funding, these are public matters, a matter of public policy. Surely, if there are issues of the type that you're describing, then that's a proper subject for public debate as well.

Well, I'm not saying that it wouldn't ever reach the public domain, Alun, because—

Well, it should reach the public, surely.

I'm not saying it wouldn't ever reach the public domain. You might cast your mind back a few years ago to problems in Sport Wales, and we had to change the chair of Sport Wales and so on, and all of that was played out very much in public. And the then Minister—

And the national museum as well, yes.

—made statements on the floor of the Senedd and so on. But there was an awful lot that had gone on in private before we got to that point. So, I'm not saying it would never get to that point; I'm saying that that's not your starting point.

Public scrutiny is quite an important part of that process.

But that's not my starting point as the Minister dealing with arm's-length bodies. It may well be that it comes to that point, but the appropriate way for me to deal with bodies that I'm responsible for in Government is to have those private conversations to try to correct the situation. If it can't be, then, inevitably, we would end up in a public arena, without a doubt.

Could I check—? Forgive me, Dean, I will come to you in a moment, but could I check, in terms of a situation like what we have with a major national institution like the National Theatre Wales, facing, well, an existential crisis, really, do you think that there would be merit in bodies of national significance like them being directly funded by the Welsh Government, rather than having to apply for funding from the arts council?

Well, 'no, I don't' is the short answer, because I don't think it's the job of Government to be running national organisations like that. We have a vehicle set up and they are the experts, that's why they're there. They're the Arts Council of Wales. They are there, they understand about the delivery of arts and how arts are funded. If we were to do that in Government—I'm not an arts expert, that's why I rely on the Arts Council of Wales to advise me. I'm not sure what particular benefit there would be, other than to really cheese off lots of other organisations—it would see certain organisations apparently getting more favourable treatment. I think the Arts Council of Wales are very objective in terms of the way that they deliver funding on behalf of Welsh Government, and that's absolutely the way it should be. And I think that was the point that Huw Irranca-Davies made earlier on, in terms of it provides a distance, so that there is no political interference about which organisations are funded and which are not.

I'm going to go briefly back to Huw.

Yes, I agree with that point, but, listen—my recollection may be incorrect here—I think the UK Government does directly fund some of the major arts institutions, as opposed to museums and galleries, because they've seen the merit of their attention. They tend to be high art. And I know I always say I hate this phrase, but they're ones that have said, 'This is gold standard; we're going to wrap around them.' And they will still face reductions in funding sometimes, but they have decided there are two or three. So, they've seen merit in it.

They're normally—[Inaudible.]—issues, aren't they, Huw? And they're often large institutions based in London, where they require a public subsidy for them to keep on functioning. 

Yes.

And, actually, I think there's a broader point here that goes beyond the budget of what you expect Ministers to do. What's their role in holding bodies to account, setting a framework for policy and for funding, and how does a Minister's time get used? If the National Theatre Wales is directly funded by the Government, there'll be lots of other bodies you'd have to think about and consider, because, otherwise, you would have inequity within that system. And it does get into, then, Alun's point about how does a Minister's time get used. You normally expect to try to deal with issues by having that normal conversation. If it gets difficult, you have an extraordinary meeting. But there are definitely times—and it was a good example with Sport Wales—where the conversation that took place couldn't resolve matters, and it was right that the Minister came to the floor of the Senedd to explain what was happening. So, it's not about saying, 'You never have a public conversation', it's about how you use your relationship and your responsibility to make things happen, to provide scrutiny, and then we're then scrutinised by this institution, and I think that's the way it should work.

Thank you for that. Dean, you wanted to say—.

Yes, thank you. I was just going to add on the accountability side: there's a direct financial accountability between those arm's-length bodies and the Minister and Deputy Minister as well. And the reason why we need to understand the reductions that these bodies have had is because it has a direct impact on the overall MEG position as well. So, my team, with Jason's team, working with the arm's-length bodies, need to understand the plans that they need to deliver to their financial position. Because if they don't deliver, it affects the overall position as well. So, there's that direct financial accountability between us and those arm's-length bodies, which is really important.

Thank you, Dean. Diolch.

Jason wants to say something.

Jason.

Thank you. It was briefly in response to what the Minister for Economy said there as well, with the question around how they fund things in the UK Government. I can say with assurance that they wouldn't necessarily have the system that they have now if they started from scratch. There is, I guess, a patchwork system there and that it's difficult to find the rationale behind some of it. So, if we were to look—[Interruption.] If we were to look at a different system for Wales, as the Ministers have alluded to, you'd have to set out something that would be truly objective, a framework for which all bodies would be tested against, to decide whether or not they should be funded directly. And then the implications of that are so significant because of the vast majority of things that we fund. You can see individual sports governing bodies saying, 'Well, let's fund us direct then'; the same on the arts side. And then, before you know it, you might have so many organisations that would consider themselves eligible for funding directly, you'd call into question the need for an arm's-length body to manage that for you anyway. So, I think the system that we've got now works effectively.

Thank you for that, Jason. We're going to have to move on to—[Interruption.]

Diolch yn fawr. Deputy Minister, if the national museum came to you, and said that they were going to have to ask people to pay for entry to their sites across Wales, what would you tell them?

And they already have.

So, what have you told them?

I have said to the national museum that they need to go away and explore that. Again, we've had this conversation with all of our arm's-length bodies, about how they can generate more income. The national library have actually employed somebody directly to lead on work around where they can generate additional income. Cadw are having to look at that—their entry fees and so on. Now, the national museum—. And it really has been one of the jewels in the crown, hasn't it, in terms of free access to the national museum sites, and it is not something that we would be considering or asking the museum to look at and to consider if it were not in a critical situation and the budget situation was such that this was an option that had to be on the table. Now, I'm not saying that that's where we will end up, but it would not be responsible of me to rule that out at this stage or to suggest to the museum that they shouldn't be exploring that. What I have said, and what I would maintain, is that, if we get to a point where we have to introduce any charging, there has to be equity in that, and there has to be a system within that, a system of exemptions, if you like—where certain people that are currently exempted from Cadw charges, for instance. And I would want to see that kind of principle employed as well. So, it's not anywhere that I want to be, Llyr, and I hope it's something we can avoid, but, frankly, the scale of the challenges that we're facing means that we have to explore everything at the moment.

Because there's an air of inevitability about this, isn't there? I feel that that's where we're heading. Because when you look at the other opportunities—. You say in the draft budget narrative that culture bodies will need to explore other sources of income. Well, what other sources of income are there that they haven't already been pursuing over recent years?

Well, indeed. They are looking at it, and it is actually one of the things that we've been talking to the museum about over a number of years, as we have with the library. And sometimes it's—what's the saying about necessity being the mother of invention, isn't it? In the past, where we've talked about this, it hasn't been such an imperative; it absolutely is now. So, I think that it is now being taken more seriously. And as I say, the library have got somebody in place now that are looking at how they can generate some income. The library don't charge, of course, to go in, and there's no suggestion that anybody is going to be charged to go into the library. But the library do offer lots of services, some of which they don't charge for, so they may have to consider charging for some of the services that they provide. The museum similarly; beyond entry charges, there are other services that the museum can provide. So, it is about them looking objectively at everything they do, and whether there is a source of income that could be generated from things that they do. But having said that, I'm very clear that the principle of charging is not something I'm happy with, and if it has to be introduced, it has to be done in a way that those least able to afford are not excluded, because part of the reason for free entry is that it widens access to our culture and our history, and absolutely that should remain. So, I hope that we would be able to write that into anything that we do. 

Okay. Capital allocations, of course, and you know where I'm going with this one. 

Ah, yes. 

It was graphically demonstrated to us, wasn't it, in the evidence that we had that the national museum now has to arrange its staffing rotas in accordance with the weather, in case they need to remove artwork from the walls because of water ingress and water running down those walls. Now, they've quantified the capital spend for the remainder of this decade as around about £90 million to get their estate up to scratch. Are the current levels of capital allocations anywhere near enough to address some of that, or what's the plan?

Again, the short answer is 'no, they're not'. I think I answered a question from Tom about this last week in the Senedd. So, what we did last year was we did give an additional £5 million as capital to the museum last year. There's a further £5 million capital allocated in their budget for next year, which is primarily around dealing with the most immediate repairs and concerns. And what the museum have said to us is that those immediate pieces of work that they have been doing as a result of the additional capital funding that we did put in last year has made the collection safer for now, but there is—. We're not running away from the fact that we are dealing with very old buildings that need significant maintenance and repair, and we do have to protect those national collections.

The extent to which we can support them is very, very limited, but they know that. We're continually having conversations with them about what the challenges are, what they need to do, and we're now having to have those conversations about what the alternative sources of funding might be to them, because there are no sets of circumstances that I can envisage in the next year or two where anything more than we've already allocated can be given to the museum. If I tell you that the additional capital allocation that we had as a result of the autumn statement for the whole of Welsh Government for 2024-25 is £5.8 million, then you can see the level of challenge that that presents if we had to go anywhere near meeting the £9 million a year bill for the national museum.

Jason, I don't know if there's anything you want to add in terms of the conversations that you've been having with the museum about their capital concerns.

Thanks, Minister. I think you've covered everything really well there. We absolutely understand the challenge. We've got a similar challenge ourselves with Cadw where we directly manage a massive estate ourselves. We've got 131 sites directly under the responsibility of Ministers. In many ways, it's a question of which lens that you look at this through. So, if you used the Cadw example, the whole maintenance requirement for Cadw over, say, 10 years for 131 sites is staggering; it's an eye-watering amount. So, as the official who looks after that for Ministers—we have to prioritise. We have to prioritise where is the best use of capital funds on an annual basis to maintain our statutory responsibilities, and it will be a very similar question for the museum to consider: what are those priorities for a limited capital budget over the coming years to be able to keep sites open? 

We'd obviously love to have more money that we could put into this, but we are confined by the budget that we have available to us. This is the same for all our arm's-length bodies: how do you prioritise the capital money that you have? Focus on those areas that are the most urgent, and we will do everything that we can to work with them to try and help as much as possible in the coming years. But I think having a figure like that is not always helpful. It's more, I think—it's sometimes important to focus on what's the budget that's available over the next two to three years, and do they have enough to focus on those immediate priorities. And that's what we're working with them on on a regular basis. 

Yes, I—

Llyr, forgive me, Carolyn just wants to come in on a supplementary. 

Thank you. Just on that question, can they do prudential borrowing, the museums? Is that something—? I know they'd have to have revenue to back it up, but is that something they've looked at?

I think this is challenging for a lot of our arm's-length bodies because of their charity status and the way they work. Also—and I'll pass to Dean, who's very much more of an expert on this than me—where an arm's-length body that we fund then takes in external loans or borrowing, that has, potentially, an impact on the Welsh Government budget as well. So, it's not straightforward. Where we do ask the arm's-length bodies to focus on, really, is, as the Minister's mentioned, other sources of commercial income, but then also—and the library has been particularly good on this—benevolent funding, donations made. They've been really, really good on that. Part of the answer to all these challenges is how do all our bodies work closely together to build upon the strengths of each of those organisations. Cadw is really good on site income and membership; the museum is really good in terms of its food and beverage offer at some of its sites, and what it does around access; the library is really good on digital. It's how can they all work better together to exploit the strengths of each of them.

Could I just come back? I read in a report that the UK Government are looking at saying to local government, even, 'Look at your assets; perhaps market them, sell them off, mortgage them to get that income', which I think is a concern for me, because once they've gone, that's it. It's not planning for the future—the future generations and well-being Act. But these are just questions we've got to ask at the moment, when things are really, really tight—to think outside the box, unfortunately. 

Financially, they are all the questions we are asking with our arm's-length bodies. There is an issue because of the clear line of sight and the effect it has on us as a Government as well, and the limited revenue that the organisations have got. So, like Jason said, we're exploring everything, and it's how we prioritise over the next couple of years with those organisations.

Thank you. Back to Llyr.

I was going to ask a similar question about the national library, and them telling the committee that trebling their capital budget wouldn't be sufficient. As much as we regret the situation, I just don't feel there's a long-term answer. It's all one year to another. I know maybe that's the reality of the situation somewhat, but I was looking for something a bit more ambitious and longer term, really. 

It is, at the moment, Llyr. That absolutely is what we’re doing. We have allocated capital funding for the national library. And again, this is about securing collections as well. The national library is a beautiful building up there on the hill in Aberystwyth, but it’s an old building and it needs maintenance, and it’s in disrepair in parts, so it’s something that they’re going to have to address.

When there have been emergency situations, we’ve tried to help. We did give them an additional £0.5 million last year to put a new fire system in, because they were very concerned about that. We did help with that. We’ve given them an extra £1.5 million capital for other works, emergency works, over the last year or so. So, where we can help, we absolutely do. In terms of the pressures on our capital budget, as you will have seen from the papers we’ve already submitted, there is not the same level of pressure on the capital budget as there has been on the revenue budget. So, to a large extent, the capital budget allocations for our arm’s-length bodies have been maintained, but we’ve not been able to increase them because we didn’t have any increase in our budget.

So what you're saying, effectively, and regrettably, I'm sure, from your part as well as ours, really, is that for the foreseeable future it's going to be sticking plasters and responding to emergencies. 

It's doing the emergency work and prioritising the emergency work as best we can, yes. 

Okay. Just finally from me as well, the national library, of course, was provided with funding to implement the recommendations of the tailored review. That's not the case for Museum Wales. I was just wondering, what does that mean for them, therefore, in light of that review?

At the time when we had the tailored review, we would have looked at the recommendations and there would have been a budget allocated to go alongside that. The budget situation has changed, so that's made us have to sit back and review that. But there are things within those recommendations that don't cost money, and on some of those recommendations that don't cost money we have been working with the museum. They set up a task and finish group to look at the recommendations, and Welsh Government officials are part of that task and finish group. What they're doing is going through all of the recommendations. Those that they can implement without additional cost they're doing, so some of those have been implemented already—processes and procedures that we know from the situation that the museum was faced with last year. So, those have been looked at. There are no significant costs involved in that. Changing titles to give better clarity to the roles that people undertake—there is no cost to that. So, we've been doing those kinds of things. I don't know, Jason, because you've been involved in the task and finish group as well, whether you want to say any more about what they've been doing.

Thanks, Minister. Again, I think you've covered it. Ultimately, we’re in an exercise there now through the task and finish group to try and assess what all those costs will be. Similar to what we've covered throughout the committee, there is a real challenge in terms of the availability of funding over the coming years to put into that. So, we are focusing on those things that don't cost much in the immediate term. And there has been some really good progress on that.

There are a large number of recommendations in that tailored review. I think it went—from memory—into the seventies. I think it was over 70 recommendations. So we will just be continuing to work with them to see what sort of costs there will be. I think it's important to say that a lot of those costs will already potentially be covered by other budget lines that we have, or other commitments that we've made via the programme for government or via the co-operation agreement. But as we've said throughout this meeting, it’s challenging. There's not a massive amount of money that we can put additional into this.

Diolch. Huw, you wanted to come in on this.

Yes. I guess I'm allowed to ask the really naive question. Based on the picture that's been given to this committee, which Llyr alluded to, of people running round, being on call with buckets, do we have any parts of the national museum or national library curated stock or businesses that are at high risk—where it's not sticking plasters but literally could damage the national collections that we are in charge of, or that the buildings themselves could be in a state of disrepair?

I think the evidence that the national museum gave to this committee was alluding to that. I don't think they were saying—. The roof isn't in imminent danger of collapse, so to speak, but they know that if they don't do some work on the building now, it's only going to deteriorate even more and then it will become an emergency. So, that's the point that Jason was making: they clearly have to prioritise the repairs.

Indeed, but I don't know, Minister, whether you or Jason would expect them, in those conversations that you have in official meetings with the national museum, with the National Library of Wales and so on, to be quite explicit and upfront with you if they thought at any moment that they had parts of their collections that were in danger, let alone their buildings and roofs—so, not just an individual circumstance. 

Well, that did happen last year, of course, because that was exactly the conversation we had with them, which is why we had to allocate an additional £5 million of capital last year and another £5 million capital this year for those immediate repairs—those things that were immediately required. So, this comes up regularly in discussions that you're having with the museum, doesn't it?

It does. Thanks, Minister. Risk in general is covered at the formal meetings that we have between the Welsh Government and each of the arm's-length bodies. I think it's safe to say that the risk to the collection is right at the top of the risk register for the national museum. This is just where it gets really difficult. If you're the chief executive of the museum, as Jane did say, I believe, when she was in front of the committee, the preservation of the collection is the thing that keeps her awake at night. I'm sure she used a sentence similar to that. So, it's a choice for the arm's-length bodies: where do they prioritise funding to offset the greatest risks that they have? It's not for us to second-guess that, but we are a team, ultimately, in all this, and we all want the same outcomes. We want to have a collection that's preserved and accessible for the public. So, we do work really closely with them, and when something really hits that crimson red on the risk register and they are at immediate risk, that's where we have to put advice up and say, 'Look, this is a real issue here, is there anything that we can do to support?' It's not an 'us and them'; it's a team approach to things of national significance.

Thank you for that. We are scheduled to finish at five past. Would you have time in your schedules if we needed to stay until 10 past? Okay. So, we'll have to finish. In that case, we only have 20 minutes left. Alun, very briefly. 

It appears to me that this is a real national emergency, because the issues we are talking about with the museum and the library, in particular, are not issues that have arisen in this particular year or last year, they are issues that have arisen over a number of years. The collections represent the soul of the nation and we cannot be the generation that lost these collections. We've got the example of Brazil where they lost a significant part of their history. It appears to me that it's somewhat unfair to expect the culture department to bear the whole weight of the capital works required to maintain the collections that we are debating and discussing. Perhaps this is a matter for the Welsh Government as a whole, rather than simply the culture department. It might be useful for us to pursue these matters with the Minister and the First Minister in order to look at a way in which these matters can be resolved, because I don't think it's simply a matter for the culture department to resolve these issues.

It's a challenge with our budget, Alun. 

I accept that—

It's the whole budget. The capital budget is wholly inadequate for our needs. When I said earlier that the reduction is the size of Hywel Dda health board's budget, actually, Hywel Dda health board's budget is about £300 million less than the reduction. And actually, the NHS wants more capital, local government wants more—so, every area. And it's still then the terrible choice of what you do. At the moment, we are just keeping going; we're trying to avoid significant harm being done. If we want to get to the point where I think we safeguard the future, we need a different capital settlement. Some of it could come if we looked again at our borrowing; there's a whole range of things that we could do with a different settlement. But we're being honest with you. And I'm not trying to tell you not to be concerned, because Ministers are concerned about this too.

I'm not disputing that. We had that conversation yesterday in the Chamber, to some extent. But I do think that the Government as a whole, and not simply this department, has a wider, more profound responsibility for these matters.

We're going to have to move on, please. Just for Members to be aware, we are very short of time. Carolyn.

Does what the Government can borrow—because there is a limit to how much Government can borrow—have an impact on this as well, do you think? If the Government was able to borrow more, because that's something that we keep asking for from the UK Government, because that's been fixed and stuck for a few years now and not risen—

It has not risen in line with inflation, even. It matters for a whole range of things, whether it's healthcare, whether it's education or, indeed, whether it's borrowing to invest in infrastructure; it affects what we can do. That then means that the actual capital that we have can be used in a different way. We then have to think about the revenue to actually be able to fund the borrowing as well. But it would make a big difference if we had different limits for what we could do.

So, that's a case we need to keep making to the UK Government.

Yes. Both borrowing and the overall capital budget we get.

I just want to ask you questions about support for local culture and sport. We did a report on access for disadvantaged communities to sport. Local government are a delivery body as well, and they've had decades and more of austerity as well, and inflationary pressures. So, like the Welsh Government, they're having to look at funding core services, such as education and social care, and again, it's culture and leisure that is mostly impacted. We're hearing that libraries might be open one day a week. They're being used as warm hubs. Swimming pools might be closing, and arm's-length bodies that have been set up by local government still rely on core funding. We're talking about 1 per cent or 2 per cent increases in funding, but they really need 24 per cent, because of inflationary pressures. So, I just want to ask, really, what conversations have you been having with the Minister for Finance and Local Government regarding this. Has this been part of making sure that you're prioritising local government finance centrally as well? Because this is all just part of that impact as well.

If I say something and then let Dawn deal with the detail of what you're talking about. The overall settlement does prioritise health and local government, and that has a big consequence for everywhere else. I've got real sympathy for political leaders in local authorities in every and any part of Wales, regardless of the leadership, because their practical choices are really constrained, and in real terms, they're going to have to make some really difficult choices that you can't avoid. They'll still have to choose, just as we have done. I know that Huw worked in the leisure sector before he got elected, so I understand that the impact of this is very real, but they still have to choose. And they've got statutory responsibilities and things that they recognise are important but are discretionary. So, I understand why they may not want to make that choice.

Things are bad here, but they're worse over the border. I think there was a report at the start of this week about the level of debt that local authorities are carrying—Woking being the largest debt-burdened authority in England. That might be good for us to say, 'Actually, look how much worse it is over there', but it doesn't mean that local authorities here can avoid the choices that they still have to make. So, I'm not trying to say that there aren't difficult choices; there really are. Indeed, the Welsh Local Government Association was absolutely right when it said that there are very, very difficult choices for local government to make.

We have engaged with the WLGA on this, because, obviously, although local authority museums and leisure services don't fall in my portfolio—. I know it's quite a strange division. So, we set policy, but funding of local authority leisure and sport and culture is actually delivered by local government and their funding. So, the point about local government being one of the priority areas, you would hope would follow through in terms of the support they're able to give to cultural and leisure facilities, but that absolutely is a matter for local authorities and whatever their priorities are within their budget constraints, which we know are really difficult. I know—. I've heard anecdotally about proposals to close libraries for certain days of the week, ditto museums and so on. But I really can't speculate on that, Carolyn, at the moment, because local authorities are still going through their budget process, and we don't know what their final decisions are as far as that is concerned yet.

What I can say to you is what we can do through Welsh Government, and we do have regular discussions with organisations about this, and I think I did raise this when we had the inquiry in committee. It's about the support that is available through Welsh Government for a number of these organisations to get with energy supply—energy efficiency, rather, not energy supply. So, Sport Wales have lots of grants for leisure centres—whether it's swimming pools, leisure centres—that can assist in the longer term with energy efficiency, because I think that is the answer to some of these difficulties, not the short-term fix of just, 'Can we pay the bill this month?', isn't it?

Minister, can I ask you about the national contemporary art gallery, going forward? So, given the budget constraints, do you think that this is something that you can still take forward, and is funding coming from within the existing portfolios?

It is still our intention to take it forward, at the moment, Carolyn. We have reduced the budget that was going to be available for next year, but there is still money allocated to progress the national contemporary art gallery. But what we are doing with the delivery bodies—that's the arts council, the library, the museum—is to talk about how we can reduce the reliance going forward on public sector revenue funding. So, there's no major revenue commitment on the dispersed gallery until the end of 2025 when the capital funding comes to an end, because all the work at the moment is basically capital work in developing the galleries and so on. We will have the full business case by the end of the month, and it is our intention, as I sit here today, and within the current budget constraints, still to proceed with that.

That is the dispersed model. We also have the anchor gallery site, which, I have to be honest with you, I think is more of a challenge, because that is, potentially, a significant capital investment, and, again, we are still hoping to have a decision on that by the end of March; our original timetable was that we'd have a decision by the end of March. But I think, where we're at at the moment, we may have to revise and revisit those proposals. That may be something that we have to look at over a longer period is really where I think we're at at the moment. So, I think there's slightly more uncertainty around the anchor gallery, but just in terms of the massive investment that would be needed for that. So, it's not that, again, we don't have the ambition to do it, but I think we just need to revisit that.

Sorry, I'm rushing—

Thank you. Forgive me, I'm—

I just want to ask about the museum for north Wales as well.

Okay, very—

The museum of north Wales—

Yes, which is very important.

Very, very briefly, and then we're going to have to move on, I'm afraid.

Yes, I'll be very quick. So, Amgueddfa Cymru were initially developing the plans for a museum of north Wales. That didn't progress as quickly as we had hoped it would, and there were other issues going on in the museum and there were other priorities there, and it just, basically, didn't happen. So, as a result of that, we, basically, have taken that back in-house. So, we've taken in-house a whole new work stream, really, on developing plans for a museum of north Wales. Jason might want to say something more about that, but Amgueddfa Cymru, then, will just be concentrating on the redevelopment of the slate museum in north Wales. Do you want to say anything—

Okay. I'm so sorry. Do you mind if we write to you to ask for that further information? Is that all right?

Please do, please do.

I'm so sorry. It's because I'm so aware of time. Forgive me. Huw, over to you for the final—.

Yes, and I'll try and keep it really brief. So, the old sports manager in me gets to ask this question. The evidence that you've submitted to the committee for this session—for the third time running, actually—talks about cross-sector work that needs to be done to maximise the impact on sports participation, levels of physical activity, fitness and so on, health and well-being. So, it's the third year in a row that you've included that approach. How's it going, particularly when faced with the financial challenges we have?

It is challenging. It remains challenging, and all of it has to be funded, doesn’t it, of course. But it is still happening. So, it’s still included in my remit letter to Sport Wales. So, there are several cross-Government actions: so, we’ve got decarbonisation, addressing climate change, supporting curriculum reform, the Welsh language, preventative health measures such as social prescribing, improving and building new facilities, including 3G pitches, which is not just a Sport Wales funding, but that can be funded through sustainable communities for learning and through the community facilities grants. So, all of those things are being done in conjunction with other ministerial departments. So, that’s been an ongoing piece of work. So, it is working well, it’s delivering good results, and it's something we'd like to see grow and continue, but it’s all done within the current financial constraints.

When you say it's delivering good results, in which way are you measuring those results? Is that through the inputs of everybody chipping a bit in from different budgets, or is it actually in outcomes of widening participation, particularly, as Carolyn mentioned, amongst disadvantaged groups?

A bit of both, a bit of both. So, the Sport Wales activity tracker gives us an idea of how well some of those projects are going. I think they published it yesterday. It was circulated I think yesterday to colleagues, so it might be worth you having a look at that. But that is tracked and monitored by Sport Wales, yes.

And is any of that work that's being done across different portfolios, across different people who can contribute to the same, is it being focused on work that the committee identified, which is on areas of disadvantage, but also individuals who face disadvantage? Now, some of these barriers are perceptual, cognitive barriers to stepping over the threshold of a leisure centre—I say this as an old leisure centre manager—others are actually to do with being able to access those opportunities and have groups and organisations. So, is the Government work on this, on a cross-sectoral basis, focused on areas of disadvantage and individuals who also face disadvantage?

Yes, and it absolutely is about a prioritisation programme, because, again, we are working with limited resources, so there has to be prioritisation within that. Certainly, allocation of Sport Wales grants, that is part of the consideration in grant funding; community facilities grants, you know that that is generally looked at in areas of deprivation, as are active Wales grants and so on. So, all of those grants take that into account and that is absolutely part of the cross-Government approach. We don't just want those communities to be targeted, but they are absolutely a priority within the current financial envelope.

Chair, I could go on, but I think you've got other questions as well and other areas that you want—.

Well, we've probably only got time for one final question. Did anyone have—? Carolyn, was there one final question that you would like to ask?

Well, no, if you could provide the information regarding the museum for north Wales, written information, that would be great. Thank you.

Just on that, the chief executive of Amgueddfa Cymru told us that in relation to the north Wales museum—or museum of north Wales, if I'm getting the title right—

'We don't know what that looks like and what it might mean.'

That's concerning, isn't it?

Well—

I mean, they were, frankly, telling us they didn't have a clue what that was all about.

Yes, which is why we've ended up, basically, taking it back in-house, because that was very clearly in Amgueddfa's remit letter. It was a programme for government commitment. It was something that we agreed to develop and we had terrible trouble actually getting the museum to bring forward a plan for that and, in the end, our decision was that we would have to do it ourselves, and that's—

So, what is the plan?

Yes, could you just explain to us exactly what will be captured in a museum of north Wales?

I'll ask Jason to say a bit more about that. 

I'll keep it brief for the Chair as well. So, obviously, the commitment to develop plans for a museum of north Wales was set out in the programme for government. Now, we were working with the museum for a number of years on all of this, and the heart of our concerns, really, were the complete focus on the National Slate Museum as being the site for a museum of north Wales. Now, many people would say, 'Well, that makes obvious sense, doesn't it? That's a site, that's a national museum site up there.' But, for us as Welsh Government and for Ministers, we wanted to explore all options in north Wales. We didn't want to presume that that site would be the National Slate Museum.

I'm not asking about the site. I'm asking: what is a museum of north Wales?

So, for us, all options are on table: what is the best available place, resource, to have a site of national significance in north Wales that tells a story of north Wales?

[Inaudible.]

Yes, I'm not asking where or—. What's the concept? What does it capture? What would people come and see?

So, the concept was—is—that north Wales, the history of north Wales, the industrial landscapes of north Wales, all of that has a story to tell, and it is about focusing that story as a part of the national museum, telling the story of north Wales and everything that goes with that. As Jason said, what happened, what appeared to happen, is that that was being concentrated around the slate museum and the slate story, and we were saying, 'Hang on a minute; it's far more than that.' And so it's about developing that. So, the slate museum may have been the best location for it, but it has to be about more than telling the story of slate. It has to be about—. There's a long and varied and colourful history in north Wales, and we want all of that to be told. And there are collections about and of north Wales in other parts of the country, and we would want to bring that to north Wales so that becomes part of the story.

So, it's no longer being considered, in terms of location, around the slate museum.

It might be. It might be. But what we were saying was that there needed to be an options appraisal about what might be the best way. It could another dispersed model site, couldn't it—[Interruption.]—of several—. I know Alun loves—

Sometimes you have to put your foot on the ball and consider your options, and that's what we're doing.

And that's what we're doing.

Thank you very much to you all for staying those few extra minutes. We'll bring this to an end now. A transcript of what's been said will be sent to you so that you can check that it's a fair record, but thank you all very much.