Cynulliad Cenedlaethol Cymru

Good morning, everyone. It's great to welcome everyone to the first meeting of the Economy, Trade and Rural Affairs Committee for 2025. The evidence we'll be taking today will be related to the Welsh Government budget. But before we get into that, I'd just like to extend my sincere gratitude, and I'm sure the committee would, to Paul Davies, the Chairman of this committee from 2021 up until recent times, who has sailed off to become the business manager and chief whip of the Conservative group. Paul led the committee with great distinction and some significant reports have emanated from this committee that greatly informed the thinking and the scrutiny that the Senedd offers to Welsh Government policy, and there were some solutions, as well, in those reports that, hopefully, the Welsh Government will consider taking forward. We all pay tribute to the work that Paul did in his time as Chairman.

Moving on, there are papers to note, which I think Members have had sight of. Is everyone content with those papers to note?

Just very briefly on 2.9, 2.10 and 2.11, when are we expecting a response to those letters?

That is a very good question. On 2.8, the legislative consent—

To 2.9, 2.10 and 2.11.

Sorry. The disability employment gap, the future of Welsh steel and—

One of them is in relation to the Development Bank of Wales.

I think we're due responses to various letters from the twenty-third of the month onwards, from what my conversations with the clerking team yesterday were. Obviously, we will press to get those responses as quickly as possible, but sadly, as we sit here today, we're still waiting for responses on those particular aspects, along with the Holyhead letter that was sent at Christmas time—we're still awaiting a response on that as well, we are.

Great. Diolch.

Okay. I'll just do a couple of housekeeping notes, if I may, before we get stuck in to the evidence session with the Minister. The meeting is bilingual and is broadcast on Senedd.tv and there's simultaneous translation available. We have received apologies from Hefin David. And I invite Members to declare any interests.

Thank you, Chair. I'm an honorary member of the British Veterinary Association.

And I draw the committee's attention to my declaration of interest, being a partner in a farming business and should any matters around the agricultural department or agricultural support be noted in this meeting, the interest would be declared. Okay, thank you.

We'll move straight into the evidence session. For the first session today, we have Rebecca Evans in and Jack Sargeant, who is the Minister. Would the officials like to introduce themselves, please?

Bore da. I'm Jason Thomas. I'm director of tourism, marketing, events and creative.

Bore da. Duncan Hamer, director of economy.

I'm Jo Salway, director of social partnership, employability and fair work.

Thank you very much. That's for the record. I'll open the questions, because we've only got an hour to discuss the budget, which is not far off a £1 billion budget, so there's quite a bit to discuss and look through. Cabinet Secretary, when you were considering your budget options and priorities, how confident were you when you were making the allocations that the budget that you have put forward will stand the test of time, is sustainable and durable, given that, what we know from the Chancellor's budget statement in October, the money that has come through, which is very welcome, at the back end of the Parliament, will become more difficult with the money being curtailed in years 3, 4 and 5? So, was sustainability and durability one of the key priorities when you were deciding how to allocate the money in your budget?

Thank you very much and good morning, Chair and committee. I suppose, the first thing I would say in respect of how we considered the next financial year and the years that follow it is the fact that, of course, we are dealing with a single-year budget at this point. And then, we look forward to the Chancellor's announcements early in the spring this year, towards the end of March, when she'll be setting out budgets for future years, and then we'll be able to take that longer term look.

But I certainly think that the budget that we have put forward for scrutiny by the Senedd is absolutely a sustainable one. We've worked very hard to look where the allocations that we are able to make this year will have the most impact. And in doing so, I think that this year has been, probably—[Interruption.]—a breath of fresh air for us as Ministers and our teams as well, in terms of being able to allocate funding towards priorities.

Colleagues will be very aware of the difficult few years that we have had in relation to the overall budget, where we have had to reprioritise away from parts of the budget, both within portfolios but then across the Government, towards meeting those priorities, in terms of addressing the pressures caused by inflation on health in particular, but also transport. So, it has been a very different flavour to the discussions that we have had around this year's budget, which has been about allocating funding rather than looking to reprioritise.

And we have got a charitable donation from Duncan with his phone going off, we have, then—I'm sure you'll inform the committee. Going on the sustainable part of the budget and the funding allocations, obviously, in last year's budget, there were significant reductions in support for various key initiatives from the Government. When you look at, obviously, the jobs market at the moment, there are potential challenges there. Are you confident that, in this year's budget, you have allocated significant moneys to support Government initiatives to deal with the redundancies and job losses that, potentially, a tightening of the economic situation could create in the Welsh economy?

Well, we have certainly prioritised funding towards those areas that meet the First Minister’s particular priorities around jobs and growth. In doing so, we have provided significant funding for dedicated business support, for example. I think that that will be really important in the months and years ahead, looking at the work that we are doing in terms of smart innovation, the work that we are doing through the economy futures fund and, of course, the regional economic development work as well. So, I think that all of those will be really important.

Could we do more? Of course we can always do more, especially through Business Wales and the adviser team that we have there. But, I think that the budget that we are presenting to the Senedd is one that has the correct priorities in terms of business support. I know that Jack will want, during this session, to be able to talk about the funding that we are putting towards apprenticeships and employment support, and so on, which will be important, particularly should people find themselves in difficult situations. We have worked hard with this committee, and with particular members of the committee, to address the challenges around Tata, for example. I think that shows how we can be nimble and creative in response to those big economic challenges, whilst also working with colleagues in the UK Government as well.

Diolch, Cadeirydd. Just to add to the Cabinet Secretary’s points there, the Chair mentioned redundancies, in particular, in his question. I think that it is worth noting our programme and our response to those events, and the ReAct+ programme. So, in this budget in front of the committee today and in front of the Senedd, there is £7.425 million in that programme. That’s, no doubt, responded to lots of challenges over the years before and will go on to respond, if those events occur.

Thank you for that background information. On foreign direct investment, obviously, that is a portfolio responsibility as well. There is a tightening of foreign direct investment coming into the UK in the last year, the figures indicate. Wales, historically, has done particularly well on foreign direct investment. When you considered your budget and the budget allocations, were you looking at the possibility of extending the Welsh offer so that we can get a bigger size of the pie into Wales? Obviously, we know that, very often, those jobs are particularly well paid jobs. Ultimately, the Welsh Government, to its credit, has had good success—up in Shotton, for example. But, there is an increasingly competitive nature out there for foreign direct investment and, obviously, the Welsh Government needs to be at the forefront if it is to secure those jobs, going forward.

I might bring Duncan in on a bit of this, but I would absolutely recognise, as you have, the success that we have had in terms of the Eren development in Shotton. I think that that is transformational, both from an environmental perspective but also in terms of local jobs as well. 

Then, I'd also point to the work that we are doing with the UK Government around the investment strategy as well. So, the UK Government has identified areas where it believes that we have the greatest potential for growth. Actually, I am really heartened by the areas that they have chosen because they are areas where we are already performing very well, in terms of indigenous businesses but also in terms of attracting FDI as well. Particular strengths that we have, I think, relate to the compound semiconductor sector. So, I made a statement on that recently in the Senedd. There is huge potential for growth there, and we will be looking to partners from beyond the UK to support that growth. Also, the creative sector—again, that's an area that I think is very strong here in Wales, alongside aerospace, advanced manufacturing and others as well. So, I think, with the focus the UK Government is putting on that—and then we would want to see funding come through the national wealth fund to support some of that work as well—we are in a good place in terms of being able to market Wales on that wider stage, but I’ll ask Duncan to come in with some more detail.

A good question. We operate on a cross-Government basis to be able to respond to every inquiry that comes in. As the Cabinet Secretary said, there are a couple of areas—for example, increase significantly the property portfolios, capacity to deliver, because one of the big challenges we see is sites, premises and national grid as well. So, we’re really looking to ensure, when those inquiries land, we’re able to offer a proposition. I’d also add, in the Minister’s portfolio, the flexible skills programme, a really important part of that armoury, as the skills offer, and, again, with me, R&D and innovation support that we can offer a particular inquiry, alongside access to the skilled people, which is always the key area of work. The Cabinet Secretary mentioned a few projects that have come off this year. I'd add Jayplas and others that we’ve done in rural and urban parts of Wales. I think our portfolio of activity is strong and we’re able to respond. But, you are right—it’s a challenging environment and we need to be really working as a pan-Wales, whole Government to be able to pick up those inquiries and action and deliver them.

I think also there’s a role for the UK Government in this space as well in terms of using its international offices to market Wales as well. It can’t just be about marketing England; actually, they do have a responsibility to market Wales, to make those links with Wales, to share the opportunities that we have in Wales as well. I know the First Minister has been really clear with the UK Government that she expects those offices to be working really hard for Wales as well as England and the rest of the UK. Then also, of course, we’ve got our own Welsh offices internationally as well, so they’ll be looking to put in touch businesses with opportunities here in Wales. When we do have our export events, they are very popular amongst the businesses that go on those export missions. But, actually, when having those conversations in the wider environment, we were able to pick up some good leads—for example, in Medica, with businesses that had money to invest in Wales, so we were able to follow up some of those discussions afterwards as well. I think we are in a good place in terms of what our offer can be, whilst also of course looking to support innovation and entrepreneurship here in Wales at the same time.

My final point on this, before I invite members of the committee, is how important, given this is a budget meeting, is the money offered to companies along with the skills agenda? We’ve talked about premises, business parks, et cetera, as well as that cross-working, governmental approach when trying to bring companies into this part of the United Kingdom, because, obviously, there’s an element of support, there’s an element of location, and there’s an element of skills and training that can be offered to bring the workforce up. So, from a budget point of view, are we in the best possible place, given your allocation for this key policy area, to be competitive in bringing those jobs and those companies into the UK?

I think money is part of the story sometimes, but not always. I think what’s more important often for international investors is the skills offer that we have, the property offer that we have, and that kind of wider ecosystem of support that we have in Wales. So, it doesn’t always require the Welsh Government to be providing money in that sense; it’s the wider offer that we provide that is often the attractive thing.

Jack.

I’m grateful, Chair. The Cabinet Secretary mentioned aerospace earlier, and the skills offer is where we can really add value to the Welsh economy. The example of aerospace in north-east Wales, in my own constituency, Chair, proves just that, doesn’t it? We have the best aerospace engineers in the world, and that’s very much because of the support that the company put in themselves, but also reliant on the support of the Welsh Government through their apprenticeship programmes and through other programmes such as the flexible skills programme, which I think Duncan mentioned earlier. That flexible skills programme in particular, we recognise, is an important part of our future offer, and that’s why we’ve invested significantly more in this budget than we have previously. No doubt Members will want to go further into detail on that, but that just gives a flavour of where we value skills in the offer to the wider communities across the world.

Briefly on this, Jason, then I want to bring Hannah in on apprenticeships.

Thank you. Just to say that, when we market our offer to the world, we take all these things into consideration. One of the big things that we always promote is that quality of life here in Wales. We've had some fantastic, award-winning campaigns where we've shown that not only can you be successful in business here, but you can have a really good quality of life, actually. So, that's what we do on a regular basis.

Thank you. Sam, I think you had a point on this one.

No, Chair.

No, sorry. Hannah.

Thanks, Chair. I think Luke's going to come in on apprenticeship schemes. Cabinet Secretary, in your response earlier to the Chair, you touched on employment support and the scale of it, and, obviously, the most significant one of that that we're all aware of is in relation to Tata Steel in Port Talbot. So, are you able to share with the committee how many people affected by the job losses there have been supported through the Welsh Government schemes in place, and what assurance can you offer to the committee that there is sufficient funding for support available for those who are going to need it in 2025-26?

Yes. We are able to share some of those figures in relation to Tata. So far, I think around 15 Tata employees have been supported through the ReAct+ programme, and 41 people whose jobs have been made redundant from the supply chain have also accessed those ReAct+ grants. I would say, though, that we are still, I think, fairly early on in the process in terms of the impact on employees, so there'll be more that we need to offer in support for future years, which is why we've maintained the budget in this particular space for the next financial year as well. I'm not sure if Jack wants to come in on the Wales Union Learning Fund, for example.

Yes. Thanks, Hannah, for the question. The Cabinet Secretary's referred to the ReAct+ programme, which we are maintaining at £4.75 million, but there are other offers that we offer for those currently in Tata Steel, and one of those programmes is the Wales Union Learning Fund. And I'll just declare an interest, Chair, as a member of Community and Unite the Union, who are trade unions within Tata. That fund, because of the difficult budgets we had to make, was reduced quite a bit in the previous years. We're able to put that back to where it was, and that's a significant step forward for those colleagues. I'd just urge the committee to, perhaps, watch the video that TUC Cymru put out last night on that fund—just a small amount of our budget, but what difference that actually makes. And I think they describe it in the workforce—the way they describe it is why they love WULF. And it would be useful for the committee to just take view of that, because that video exactly demonstrates why it's important to offer that type of programme to the workforce, not just in Tata Steel, but beyond. And then, indeed, with the Community union in particular we've explored further support with WULF to Community members in Tata in response to the difficulties there.

I think Jenny's got a point here.

I haven't seen the video yet, but how much evidence does it provide that the people of Port Talbot are empowered to make the decisions about their future, rather than being done to, with, 'Here's some money and these are the conditions'?

So, I think, more generally on that point, if you look at Community union and the work that they are doing in the town of Port Talbot—and the Cabinet Secretary, I think, has visited the support network that they have there—the funding available via WULF does help them pick up the skills that they require. The flexible skills programme is another place where I think officials have had early discussions with Tata Steel about what might be possible to support upskilling and retraining those people who are still employed by Tata Steel, to empower them in future offers.

We have lots of other support mechanisms. So, I think you may have seen in the very new year, this year, Chair, my announcement around a new career review, perhaps, and we offer that type of support through Careers Wales, where, if you are thinking about changing your career, there are experts available there for those like in Tata, but across Wales as well, where you can sit down with an expert, look at your choices and find suitable employment in a different field.

I would, Chair, as well, encourage any colleague to visit the community hub in Aberavon shopping centre and talk to the people who are there, because you'll hear from them then very direct stories about people who have come in, and not just workers themselves, but their family and wider people within the supply chain, and they've been able to talk about what their plans might be for the future. So, as well as the support that we provide through ReAct+, actually a large amount of funding is coming from the UK Government through the supply chain initiatives and so on. So, there is significant funding now available to people who would like to set up their own businesses, and talking to staff at the hub about the creativity that people are showing about what they might like to do as entrepreneurs I think is really fantastic. So, it's definitely the case that the support that we're trying to put in alongside the UK Government is there to try and meet individuals’ needs and aspirations. So, I think all of that is particularly positive, and we did have a specific session, Chair, with this committee on Tata, alongside the Secretary of State for Wales, and we were able to explore some of that. But perhaps in another month we can provide committee with some further information then in terms of the support that's available to individuals and the numbers coming through, because we would expect that to be increasing as we move into the spring.

To add to that specifically, to your point about choice, Business Wales, for example, has received £2 million from the transition board, which doesn't appear in your budget numbers, which does provide the support from the Cab Secs both for supply chain companies, which we obviously need to keep focus on, because they're sometimes hidden from the Tata headline, but also for Tata employees who want to start and grow a business. I think it is quite at an early stage in that, but we're starting to see the numbers flow through and the system is working really well. So, if you walk into the high-street centre, you will automatically get transferred, and Neath Port Talbot council also offer a grant in both supply chain and start-up space as well, so combined there are choice options beyond the Tata package, if you like, that people can take up and work through the sort of combined services of the local authority and Business Wales.

Thank you. Hannah.

Thanks, Chair. Can I just pick up on—? Obviously you've touched on the range of employability support there, so things like ReAct and ProAct, largely for people who are facing the threat of redundancy, or redundancy is imminent. You touched on the value of that in-work upskilling as well, and training to prepare people for jobs of the future or to upskill them within the roles they're currently in. Can I just for clarity for the committee—? You mentioned the Wales Union Learning Fund, WULF, and I think it's helpful for the committee to get that clarity, that we need to restore it to the level it was before, and this is across the piece—that's not just something for Tata, that's across the piece for all of it.

Yes.

Great. Just on another point, the employability budget expenditure line has seen an increase in funding this year, which obviously is to be welcomed, and that includes the young person’s guarantee as well. Are you able to share with the committee why that has been a priority in particular? Has there been an increase in demand for services or increasing provision? And actually, if you're able to share with the committee, the impact that has had, because you see figures in black and white, but actually seeing the difference it makes in practice is really important to assessing the value of this funding as well.

Yes, absolutely. So, the young person’s guarantee is a programme for government commitment, Chair, and I think it's one that we're all proud to support in the way that we do. It's a flagship programme, so this is being recognised in other areas across the UK. I look at Greater Manchester; I had the conversation with the mayor of Greater Manchester about our programme and the offer that we provide. So, we'll go on providing funding in this budget for the young person’s guarantee. Jobs Growth Wales+ is the programme that delivers the guarantee, so we're increasing the budget to £32 million for exactly the reasons that we all are aware of—it gives the opportunity for young people to either be in employment or training or education. And because of the successes of the programme that we've realised, it has supported many, many people into employment and in the future, and I'm happy to share, perhaps in more detail, Chair—and Jo may have that now—but I’d be happy to write to the Member and the committee with the full detail of what that programme has provided to the young people in Wales. But as I say, this is being looked at and recognised elsewhere in the United Kingdom as a flagship programme that is really delivering for young people in Wales. It's one we're proud to support.

Perhaps you could write to the committee, because of the pressure on time, and there are parts where we've got to go through the budget, so it might be difficult to do justice to that particular piece. If Hannah is happy with that.

Yes, absolutely. 

It's a really interesting point, though, because this budget is different to some of my other colleagues', in the sense that we do have choices. Almost in any area of the whole portfolio you can put additional money in and you can do more, but where you choose to put the money is really important. So, we know that, with Jobs Growth Wales+, there are some areas where the participation rates or participation places available are outstripped by demand, and there is a waiting list, so that, I think, was one of the things that we were really mindful of in this space. But this budget is different because it's largely discretionary, whereas other colleagues will talk to you about their statutory duties that they have in various parts of their portfolio, whereas, actually, this budget is different because it involves a lot of choice. I guess that's the old finance Minister coming out in me. [Laughter.]

That's a very important distinction, in fairness, that is. Hannah, any more points? 

Yes, just one final point briefly, if I may, because I know we need to move on. The paper notes that there's no funding for remote working hubs now, and I know they've been expanded and there's a need to share best practice. So, I don't know where that funding could come from, if there was a need to do that, but also, just to touch in the round that, obviously, that's one part, isn't it, that can be done to improve work and around fair work. Can I just clarify that the fair work funding and things for Cynnal Cymru come out of the social partnership BEL? And it is linked to—. I know this is budget scrutiny but this is connected—so there's limited funding and limited levers around fair work. So, can I ask how Welsh Government can use that funding, and also across Government in terms of each department in terms of how they use procurement and grants, to ensure that, where there are those levers available, we maximise those resources to get the results that we would want to see in Wales? 

Sure, thanks for that. Just a point of clarity: we will write, Chair, on the other points, but I think it's supported, since 2022, 14,000 young people, but we'll write in more detail for the committee. So, Hannah's right, there's no dedicated budget for remote working. We haven't had that in the past and I think we've delivered a successful route to remote working in Wales, and delivered against the programme for government commitments that we've had in that area. I don't foresee that that will change. We'll still deliver through our social partnership networks and the work that we perhaps do with the UK Government and their Employment Rights Bill in this space. So, I won't be dedicating a particular budget to remote working but we'll go on working with the networks that we have to promote fairness. 

Hannah asks around the fair work funding, and whether that's in the social partnership part of the budget. It is; I can confirm that it is. I think £900,000, if I remember the figure from the top of my head, Chair—I'm sure Jo will correct me if that's not the case. There are lots of things we do to promote fair work in that way. One of the best things I think we do is around the social partnership conferences to promote fair work, and the Welsh way of working in social partnership, where we bring in not just public sector organisations but private sector organisations to realise the benefits of social partnership. We'll go on continuing to do that in this financial year as well. And the work with the UK Government around the Employment Rights Bill again gives us more opportunity to promote fair work with the levers that we have. 

I think you talked about the limited levers that we perhaps have. It's worth noting that the social partnership council will be looking at a piece of work for and with the Cabinet Secretary around the economic contract, and perhaps where we can strengthen some of the things within the economic contract to promote fair work in a different way than we have in the past. That work is ongoing and I'm sure the committee will be interested in that in the future.

Thank you very much for that, Jack. Luke.

Diolch, Cadeirydd. If I could move to apprenticeships, I think it was the Cabinet Secretary that said that the majority of the apprenticeship budget will be going to Medr, so I'll start with a bit of a technical question, which is everyone's favourite type of question, I'm sure. How exactly is that going to work? Is it that the funding within the apprenticeship budget that has been transferred to Medr has been ring-fenced? I'm just trying to get an understanding, really, because obviously there's a risk that then some of that money could be spent somewhere else if not ring-fenced and so on. So, I'm just interested in how that might work. 

Thank you, Luke, and I'm grateful for the technical question. Jo and I have had many technical chats around this and I'm sure Jo may want to come in with some more technicalities later on. But the direct question on whether the money will be ring-fenced in Medr for apprenticeships—the answer is 'yes'. So, it was ring-fenced when the money was transferred when Medr was created, and it will be ring-fenced—. The intention is that it will be ring-fenced in this budget coming forward, and that's within the proposals where we are on the apprenticeships.

Okay. So, how would the oversight element work between yourselves and Medr in terms of how that money has been spent and the responsibility element of it? 

So, the strategic priorities when it comes to apprenticeships and the policy direction of apprenticeships is set by the Welsh Government and, ultimately, me as the Minister responsible. Medr's responsibilities are really the delivery for the contract and maximising the value of the contract that we have. In terms of the way in which that will work, I will have regular meetings with Medr. I think officials—Jo and the team, in particular—have fortnightly meetings with the team at Medr, to monitor the progress around delivery of such responsibilities. I will then have those meetings with the leadership of Medr—the chair and the chief executive there. That's the way in which it will work going forward. But, as I say, really, their role is about the delivery of those contracts, and I'm very keen for them to make sure, and use this opportunity they have now in being established, to maximise the contribution and the value of the contracts. I think it's worth pointing out, and no doubt we'll come on to perhaps this, that we're £144 million into apprenticeships, Chair. That's not an insignificant number around the investment that we'll put into apprenticeships this year.

I'm conscious I might be straying away from talking specifically about the budget, but I think it is important just to understand Medr in this context, as a newly established organisation. What happens, then, if the delivery element of it isn't quite up to scratch in terms of what the Welsh Government wants? How does that affect, then, budget lines? There's another element as well, where we've ring-fenced that funding—does that limit Welsh Government's flexibility, then, in being able to react to certain pressures on that apprenticeship budget?

So, the apprenticeship budget's ring-fenced, isn't it? It's the significant sum of £144 million, which is ring-fenced over to Medr. If there are issues that arise, then we would look to respond in a way that we could, but the budget is the £144 million, and they have to deliver within that. I think the regular conversations that Jo and the team will have with Medr on a fortnightly basis will be able to make us aware of any potential issues in the future, and then we'd look at responding in a way in which we could if we have to. At the moment, I'm not foreseeing that we will need to do that, but I think there would be space for us to be able to respond in such ways. I think the committee has a—. I'm pretty sure I'm back in front of the committee, Chair, soon, on apprenticeships in general. I'm not sure what your programme of works, or forward programme, looks like, but it might be an idea to actually bring Medr in to discuss with them directly as well what their plans for the delivery of the programme are as well.

So, the viewing millions know, we're beginning a piece of work next week on apprenticeships, if I've read the forward work programme correctly. Jo.

Our engagement works on multiple different levels. So, obviously, we've got the programme for government target, there's very close monitoring, and it's Medr that holds the numbers at the start. But in that engagement as well, we're also looking at some of the longer term issues, and one of the big issues we've got, with the end of European Union funding, is how you get the maximum flexibility to actually vary the contract and manage the start. Because, of course, we provide the money on a financial year, the apprenticeship contract operates on an academic year. So, you've already got that shift in there. And one of the things that EU funding gave us the ability to do was vary the contribution of domestic funding and EU funding to manage those starts. Now, we've lost that flexibility, but we're in conversations with Medr about how you can actually introduce that with the funding models we've got. So, we do both operational but also the forward look and the strategic, and there's always that slight blurring about delivery on the ground and your strategic priorities, so looking at whether there are issues there around this being the best route. And obviously as well, with the agenda in England, and some of the changes coming through there, we'll need to be looking at how we manage those through. So, it's a very, very close relationship on a tactical and strategic basis.

That's really helpful, thank you. That was where I was trying to go—

Your technical answer, Luke.

Yes. That was very helpful. We'll have, I think, a better opportunity to maybe delve into some of that in a future session. Looking specifically, then, at the reaction to the budget as it currently stands, ColegauCymru and the National Training Federation for Wales did commission a report, which came to the conclusion that there are 6,000 fewer apprenticeship starts in Wales as a result of the loss of the funding in the previous year. How has that factored into this budget?

Thank you for that, Luke. I think the first thing to say is I'm grateful for anyone who takes an interest in the apprenticeship delivery and the offer that we provide, and ColegauCymru and NTFW are really key stakeholders in that, and you'll know that from your work as chair of the cross-party group. I saw the report that was commissioned by both of them. I think it's fair to say I perhaps don't agree with all of the report within there, and I'm still considering what that looks like. But some of the analysis within the report is perhaps based on old data, around a decade old, and it doesn't quite look at some of the interventions that we made on a one-year basis for the cash injection that we put into the programme, which increased activity. So, I'm not sure I fully agree with the outcomes of the report, but I'm grateful for the work that they do and go on to do.

Jo mentioned the quite technical answer of apprenticeship starts, where our funding is over a financial year and the apprenticeship starts are over an academic year. We're maintaining the budget of £144 million this year, discussing with Medr around the flexibility and adding mitigation into the system to allow the delivery of that contract. I expect the numbers around starts and the delivery to be similar to what it was in the previous year, so just last year gone, and we'll wait to see what those figures are when they are published in March. But I expect, roughly, the delivery to remain the same this year as it was last year. Jo mentioned the programme for government target of 100,000; well, I'm absolutely committed to that, and I think Medr is too.

Okay. So, taking on board that you might not agree with the way in which that report might have interpreted some data, there are indications that there are problems still, though, within the apprenticeships sphere. No doubt you've heard from apprenticeship providers— I've heard from apprenticeship providers—that costs are continually increasing alongside inflation. But, in this particular budget, the apprenticeship budget is relatively flat, so it's—. I understand there's a balance here, the loss of European funding makes it incredibly difficult, but how are these conversations panning out with apprenticeship providers, with ColegauCymru, around actually coming to a consensus that this is the new direction that we want to go in on apprenticeships? Is there perhaps a need to discuss the way in which we fund apprenticeships in a different way, tackling these challenges in a different way to that which we've traditionally done?

So, there's a lot of opportunity for those types of discussions. The UK Government's growth and skills levy, which will replace the apprenticeship levy in England, is the opportunity for us to do that. We'll be having those discussions with ourselves. We want to know, perhaps, what our ask might be around some of that, and we'll await the spending review as well from the UK Government, to see what perhaps could be achievable in that space. But those conversations are ongoing with a range of stakeholders.

So, I've met with ColegauCymru and apprenticeship providers myself. I'll be holding a green skills short-term review to look at all of the things that we offer in skills—flexible skills, the implementation of the net-zero skills action plan. I think one of the discussions that I'll have in that short-term review would be around the offers that we provide now, including apprenticeships, and if we could improve that offer in any way then of course I'd look to strengthen where we can. I think we're working with £144 million here. I take the point on inflationary pressures and all of that—those are the types of discussions that we're having with Medr. And when I'm talking about maximising the contribution and maximising the delivery of the contract, it's ensuring that the quality of apprenticeships, which I think is key to all of this—that we maintain gold-standard apprenticeships in Wales is absolutely paramount to the work that they do, but, indeed, the delivery of those as well. Those discussions are ongoing with Medr; I'm pretty sure we'll have plenty of opportunity in the next session to discuss that further. But, to make sure the committee is aware, we are continuing those discussions, and the investment in this budget is £144 million, which is, as I say, Chair, not an insignificant number.

Thank you. Just one point if I could raise it with you, Minister, on apprenticeships: on the Swansea city deal, there was a target for 3,000 apprenticeships to be delivered. Only 184 have been delivered. Clearly, we all subscribe to the importance of apprenticeships, but there's one thing allocating the money, and there's another thing, obviously, getting employers to create the apprenticeship opportunities, and those figures obviously show that there's a challenge in the system, and maybe that's something we could look at in our review next week, we can, then.

Yes, sure. And it's the opportunities there, isn't it? We have a commitment in the Government to jobs and green growth, and the Cabinet Secretary is very much leading on that work. I think the Swansea bay area will want to capitalise on some of that as well, and apprenticeships will be key to demonstrating some of that, so happy to discuss that in further detail when we have the opportunity to.

Thank you. Pressure on time. I'll call Sam now to take the next set of questions. 

Thank you very much, Chair. Tourism: one of the gems that we have here in Wales is our tourism offer, but the tourism capital BEL increased by £1 million to £6 million in total, so I'm just wondering how that increase will go, and how much of it will go, towards providing additional direct financial support to Welsh tourism businesses.

So, all of that £1 million will provide a capital fund for Welsh tourism businesses to futureproof themselves, and particularly to do so in terms of weatherproofing. So, we listened to the tourism sector through the barometer survey, which colleagues will be familiar with, and they said that the thing that they felt had the biggest impact on their businesses over the last summer was the weather, and actually that was a higher area of concern than even the cost-of-living crisis, so we wanted to respond to that, so we've been able to put in place this £1 million fund. But, of course, that's alongside the £50 million Wales tourism investment fund—that continues to be open to applications as well from Welsh tourism businesses—and, of course, there's been a combination of grants and loans through the development bank as well.

So, you mentioned there the survey, where tourism operators provided their feedback. One of the pieces of feedback I've had from tourist operators, when they're looking at grants and grant support, financial support, is how prescriptive these grants are, they're very specific, and sometimes flexibility in the grant or being more open-ended allows for a better delivery of the grant for the benefit of the business. Was that fed back to you in these discussions pre budget as well?

We always try and aim to be as flexible as we can in the support that we provide, but, equally, you know, we have to ensure that, when we're providing public money to businesses or organisations, we are expecting something very clear from that money as well. I think it's incumbent on us to do that. And I think that, in terms of the support that we can offer to help businesses become more sustainable, which is the purpose here, trying to address some of those weather challenges, which are likely only to get more challenging in future years, I think, is a good way to respond to what we've been—

Because it's not just the tourism operators. On a previous piece of work this committee's done around the foundational economy, that open-endedness of Government financial support was advocated for there; being too prescriptive is a constraint on businesses looking to grow, looking to adapt. So, that feedback is becoming more prevalent and more known, that, actually, being too specific on how a grant is allocated—and you've mentioned the £1 million increase for resilience to weather changes—is that the best way of doing that, or would that be a better way, opening it up and saying, 'You, tourism businesses, come to us; you tell us how you would spend this money more broadly, and then we can have the discussion', rather than, 'Come to us with a specific weatherproofing idea, and we'll help you there'? Does that not close the door for some tourism businesses?

I think we offer a very wide range of support. So, there is a balance, I think, when we're setting up specific grant schemes in order to respond to specific challenges or Welsh Government desires in terms of more sustainability for the sector, whereas the wider support that we provide through Business Wales, that is very, very open, and that does work with individuals as well. So, it's that balance between that Business Wales very wide support but then specific grants to try and achieve something that is in line with the Welsh Government's aspirations in terms of sustainability, but also listens to the sector. It is a balance to be struck, and I do understand, from a business perspective, you might want access to funding that has very little attached to it as well, but it's public money, which we do need to be careful of. I think Jason wants to come in on this. 

Thanks, Cab Sec. Yes, I think there's a really good point in the question there, and we have listened to feedback over a number of years. So, the capital funding line that you mentioned there, for a number of years, we're really targeted that at local authorities through our Brilliant Basics scheme, and that itself replaced a previous scheme, which was a bit more open ended, and allowed businesses to apply for funding, for example, to go from three-star to four-star accommodation and do a range of different things. And then we specifically targeted local authorities through Brilliant Basics, because our strategy said we needed to get the basics right in tourism.

Things have moved on over the years, and I think the point we make now about weatherproofing—that's businesses telling us that's what they needed some support for. So we did really focus in on that. But I think, to the Cab Sec’s point, we're always flexible about this, we've got really good engagement with the visitor economy, and we can always adapt our capital funds to look at where the priorities are.

Okay, thank you. Views—. Talking there of the views of the tourism sector and operators. How else have those views been highlighted and addressed within the draft budget?

Well, we listen to the sector through the regional fora and also the Welsh Local Government Association's economic forum. I meet directly, myself, with representative bodies of the sector, but then, of course, speak to individuals who work in the sector as well. So, I do understand there are areas where some tourism operators are unhappy with the direction of certain policies, for example around 182 days in respect of holiday lets, and there are also some areas where there's concern about the visitor levy. I completely understand and appreciate that. But I think the fact that we understand those concerns so well is because the engagement is so constant with the sector. So, even though we might have different views on specific policies, I would say the engagement and the two-way discussion, I think, are good.

It's really strong. And just one thing to add onto that. We're in the stage now, obviously, of the draft budget being published, and that will go through scrutiny. What we then do is, I guess, we take it to another level with the visitor economy where, once we know what the final budget is, officials will draw up a business plan for the year, which we'll, obviously, clear through the Minister and Cab Sec, but we engage with the visitor economy on that plan before it's finalised. And the visitor economy forum itself is truly representative—it covers all regions of Wales, in terms of tourism. We have the Wales Tourism Alliance on there, a trade union representative. It's really broad, so they do feel that they have input into it. Would they like more? Would they like everything? Absolutely. But there's always a balance to be struck. So, I think the engagement is genuinely really superb with the sector.  

Okay. Cabinet Secretary, you mentioned in a previous answer to the Chair how discretionary the economy budget is, where you don't have core services that you need to satisfy, but you can spend the money where you like. But, given the amount of policy changes that the tourism sector are facing at the moment—182 days, tourism tax, changes to non-domestic rate relief—have you decided to put more emphasis within the tourism budget because of the forthcoming policy changes? Or is this a kind of, 'Well, the sector has to deal with these changes, and we've kept the proportionality of where our funding is within the economy portfolio pretty much the same as it has been in previous years, despite the change in policy that's coming'?

I think, often, in discussions with the sector and with representative bodies of the sector, you actually only hear about the tourism levy, the 182 days. What you don't hear about, of course, is the huge funding that we've put into Visit Wales. So, the work of Visit Wales brought in—. The total visitor expenditure influenced by Visit Wales marketing in 2023, which is the latest we have the figures for: £0.5 billion. That's £0.5 billion being brought in as a result of the incredible work that we do through Visit Wales. You'll have seen the recent launch of our 'Feel the hwyl' campaign. So, we'll be spending significant money advertising in our key audiences there, so USA, Germany—

Sorry to cut across. I appreciate that there's spend, but has that spend increased because of the impact or the potential impact of these other policies coming forward? Or is that proportionality spend exactly the same as it was last year, the year before, the year before that? Because of the changes that are coming, surely the sector needs an additional level of support to mitigate against some of the negative consequences.

So, we've already said, for the next financial year, that we'll be providing the 40 per cent support to the retail, hospitality and leisure sectors. This was always was a time-limited response to the pandemic. Ultimately, businesses do need to be sustainable. And when I meet with sector representatives and they tell me that the 40 per cent is a lifeline, I'm concerned, because 40 per cent support for your rates should not be the difference between a business being viable and unviable, or successful and not successful. So, ultimately, we need to be investing in the things that make those businesses successful for the long term, which is why we’re focusing on the additional funding, for example, around weatherproofing.

There are challenges within the sector, but, actually, I think we do need to look at the big picture. There's the work that we’re doing to bring major events into Wales—significant work on the part of the Welsh Government, significant investment on the part of the Welsh Government, to the benefit of the tourism sector. But we never hear about those in those conversations either. So, I do think that we need to take a broader look at our support for the tourism sector more widely, and understand that the Welsh Government is working very hard on their behalf to bring tourists into Wales, and to ensure that they have a good experience when they’re here.

And just on the visitor levy, the first time that that could be enforced would be 2027, in any case. So, that’s not something that would have a bearing on the next financial year in the budget that we’re looking at. 

I’m conscious of time, Chair, so I’ll—

I think the clock has beaten us on that particular section. Jenny.

Thanks. We don’t need many more reminders that we are not gripping the climate emergency as fast as we need to, because we have already reached 1.6 degrees C warming, over and above the target that was set in Paris. Looking at how we’re going to adapt our buildings, our energy, our transport, our food, can I just start with energy, because it impacts on so many of the others? You’ve got a £23 million capital uplift to support green jobs and growth, and I wondered if you could just explain what you think that extra money is going to be spent on.

In terms of energy, we’ve been really careful to understand that we need to be doing more as a Welsh Government in that particular space. So, you’ll see funding allocated within the budget towards both Ynni Cymru and Trydan Gwyrdd Cymru. Trydan Gwyrdd Cymru is going to be really important in terms of using our Welsh Government estate to develop those solar energy projects, or wind energy projects in the first instance, which will then allow us to do things in a different way, so to have a different model for the provision of renewable energy in Wales. It will be with a focus on maintaining the value here in Wales, and ensuring that we look at community benefits, for example, in a different way, and show that things can be done differently in this space. So, the funding that we have for Trydan Gwyrdd Cymru is important, alongside the funding for Ynni Cymru.

Just in recent weeks, I announced the financial support in this year of £10 million for 32 different projects across Wales. These are the smaller-scale projects that again speak to that sustainability point and that are available to public bodies but also businesses as well, to try and lower their costs, but also contribute to the overall picture in terms of green energy. So, there’s lots to be done there, but then—and I won’t go into it now because it’s more policy focused—there's a huge policy piece around offshore wind and so on.

On this £23 million, how is that going to make a difference? Because Ynni Cymru and Trydan Gwyrdd Cymru are very welcome, but they’re small beer compared with the extent of the shift to renewable energy that needs to take place. 

I think that the funding that you’re specifically talking about is the property BEL, which looks at how we provide space and buildings for businesses. We’re looking to develop those very much in a way that contributes to our route to net zero. Tomorrow, I’ll be in Cross Hands, looking at some of the support we’ve been able to provide there for businesses to be able to grow in a way that is more environmentally friendly and ensuring that those buildings meet good environmental standards and so on. 

So, this is greening existing buildings, making them more energy efficient—

Or creating new—

It's a little bit of both. If you think about a lot of the property portfolio—the £300 million property portfolio of the Welsh Government—a lot of it was built in the 1980s, 1990s, to a Welsh Development Agency-type spec. So, a lot of the work we’re doing is upgrading energy efficiency, but also bringing great connectivity and new build as well, basically allowing businesses to reduce their energy costs and become more carbon efficient.

Obviously, the public sector is supposed to have decarbonised all its buildings by 2030, but I don’t detect an awful lot of urgency from local authorities or health boards on this.

There is—sorry, Cabinet Secretary—the continued commitment to the £21 million for the public sector to continue to decarbonise their buildings. I do think we're getting, certainly from business, an increasing appetite, because everybody wins, in effect. If you reduce your energy costs, you reduce your carbon. And so on the Cab Sec's point about the viability of businesses, we can really harness it. 

And the Welsh Government energy service, so that's the £21 million that Duncan referred to, is available for the public sector to be able to provide them with support to be able to move towards that challenging test that we've set in terms of net zero by 2030.

All right. Sticking with energy for the time being, RenewableUK Cymru are saying that, because we are blessed with so much wind, there's a £47 billion private investment opportunity within the next 10 years. I wondered if you could tell us how the allocations in this draft budget will encourage this inward investment and make sure that they're using Welsh skills to deliver it, because otherwise they'll bring their own or they'll go somewhere else. 

Within the draft budget, the funding that we're providing is more in the space of the publicly owned energy, rather than trying to lever in the private investment, because the way in which we lever in the private investment is more around the policy choices that we make. You heard the statement last week in respect of floating offshore wind and the setting up of that task and finish group, which will put in place a plan, essentially, because what we hear from the private sector is very much that they need certainty and they need that confidence to move forward. The plan is intended to ensure that they have the confidence and the certainty to move forward, because the sector leads who are working in the skills space or the ports or with the developers themselves will be able to set out that plan, where everybody knows at what point they need to be doing things and they have confidence that the investment that they make will be leading to successful projects for them. And then, of course—I won't go into it now because of time—there's all the work that we're doing to speed up the planning process with the new Act, which will be in force later this year. So, the policy space is where we make the difference. 

All right, but how do you ensure that you have the skills that are going to be needed—whether we're decarbonising buildings or building new zero-carbon buildings, that we have the skills that industry needs to ensure that we're bringing Welsh workers in to do these jobs?

I think we've raised a few of the points on the skills sector already. We're putting £144 million into apprenticeships. I'll just choose one example that's recent. RWE have announced their technician apprenticeship for the wind energy space. The flexible skills programme, which will include an element of green skills, has had an increase of £6.5 million in this budget. That is an area where companies—large companies, or any size company—can engage with that process to upskill their workforce, and we'll be looking to shape the programmes with business to meet their needs as well.

On the green personal learning accounts, we have a stakeholder advisory board, which officials meet with as well, and they look for programmes through those learning accounts in the green space. So, there is lots of work that is ongoing and has been ongoing for a number of years now. The budget in front of us allows us to continue that work, but actually increase our efforts in some spaces as well, particularly around the flexible skills programme.

I think the last time we were here, Jenny, you discussed the need around house building. You will have seen, I'm sure, in the flexible skills programme, a skills programme on forestry skills and timber skills. That will be one way of making sure that the houses of the future are built in a green way as well, and also contributing to that wider net-zero ambition. So, just a few examples there where we are really focusing our efforts in this space. 

And just finally, on improving our food security, how is the green jobs growth going to make us better able to rely on food produced in Wales, rather than food that may or may not arrive from the continent?

We've got the Deputy First Minister with responsibility for rural affairs in next, and largely the support that we provide is through his portfolio, although I did provide a written statement recently alongside him in terms of what we're doing in the planning space to try and encourage horticulture.

If we're going to have more sustainable farming practices, we need to have the apprenticeship skills to ensure that people have got them to make a successful business of it, so that surely comes into this part of the discussion—

I'll certainly take that on board when the Deputy First Minister comes in. I'm just conscious it's 10:30 and Luke has the final section to ask. I appreciate, Jack, that you indicated you might wish to come in on that point. If it's an important point, but I'm conscious of time—

We can consider writing to you, Chair. 

I'm very grateful. Luke.

Just looking at the time then, Chair, I'll limit my questions. I was going to focus on the regional economic development aspects of this budget. What I'm really interested in understanding is that additional funding towards the city deals—the £88.5 million. In your paper, you mentioned that it came from the Treasury to support the city deal programme. Is that money that you were expecting to come down or was it additional to what you were expecting?

That's funding that the UK Government has reprofiled, so it doesn't change the overall quantum of funding coming from the UK Government, just the profile across different financial years.

That was the element that initially I was confused on, because if you remember, in the Chamber, I suggested that perhaps that money could be better spent with local government. So, it's a matter of it being tied to that budget line, rather than being moved about—it has to go there, yes?

Yes. It comes, essentially, through our budget and then to the city and growth deals. 

Okay. Again, I'm conscious of time, so I'm going to have to try and get through these pretty quickly. On the Tech Valleys programme, there's a commitment there to invest £100 million over 10 years. How will the draft budget allocation drive some of the progress that the Welsh Government wants to see within Tech Valleys? Because at the moment, it feels like Tech Valleys isn't perhaps meeting people's expectations. 

Since the first allocation, the programme has now invested over £40 million, so we would obviously want to continue investing and supporting jobs and growth in the area. To date, the programme has created 298,000 sq ft of new and refurbished floor space, and we recently had a new tenant, I think, into one of our investments there, which was really positive. But, of course, we want to continue to do more in this space. Again, in the interest of time, I don't want to give you a short answer, so perhaps I'll write to you with a bit more detail of what we're doing in this space.

Perhaps I'll write back to you with a couple more questions. [Laughter.] I really want delve into some of this, but the time is restrictive. The final one is the point around the regional development aspect of the budget. There's £2 million that's been removed from that budget as a result of Arfor. How does that affect the future of Arfor? Are there discussions currently happening around extending the programme, going into, potentially, Arfor 3 down the line? I've noticed a lot more Arfor-related advertising—one of them was on the back of a bus I was behind in Bridgend, which I found quite interesting.

I'll perhaps ask Duncan to come in. I know that the existing programme, at least, was due to, as you say, come to an end in 2025.

The full £11 million commitment will be made by April 2025. There is a full evaluation ongoing on those activities. We are looking to do a combination of things with partners, obviously—mainstream where possible, learn the lessons. I'd anticipate that there will be an element of bespoke support, subject to advice from the Cab Sec, around young people in particular in those particular regions. So, it's one we'd need to come back to you on, I think, because the evaluation will really inform what happens next on that piece of work. But it is a very active area for the next quarter, because that programme is about to come to an end.

Okay. I'm going to have to hand back to you, Chair.

Thank you very much, Luke. Thank you very much, Members, and thank you, Cabinet Secretary, Minister and officials for your evidence today. There will be a transcript provided to you, so you can check that for accuracy. I believe we're keeping the Cabinet Secretary for the next session, and so there'll be a five-minute break now. We'll go into private session while the deckchairs on the Titanic are rearranged. [Laughter.] We'll resume at 10:40, if everyone's happy with that.

We're now out of private session and into public session. I welcome the Deputy First Minister, Huw Irranca-Davies, and the Cabinet Secretary for the economy, Rebecca Evans. There is a series of officials to the right and to the left of the Cabinet Secretary and Deputy First Minister. I invite you, from Dr Richard Irvine across, just to put your names on the record and your roles, and then we'll go straight into questions, if that's all right, please.

Diolch. Bore da, pawb. Richard Irvine, chief veterinary officer for Wales.

Bore da, pawb. Gian Marco Currado, rural affairs director.

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

Bore da. I'm Peter Ryland, director of regional investment and borders.

Thank you very much. Straight into questions, if I may. Cabinet Secretary, Deputy First Minister, how has the exiting of the EU shaped your budget priorities when setting this budget line that you both have in your portfolios? I'll go to the Deputy First Minister first, and then the Cabinet Secretary.

Thank you, Chair, and welcome to you as Chair of this committee as well. I hope you enjoy this experience here.

First of all, it has shaped the budget in a number of ways. Some of them are really practical and direct, others are dealing with, if you like, a long tail legacy of Brexit, because the idea that we would deliver Brexit and then everything would be done and there were no more implications, I'm afraid, was for the birds. So, what we've got is a situation where, for example, one of the big sensitivities around Brexit, of course, was our relationship with Northern Ireland and the need to ensure that politically we have stability there. So, that has been a factor of the discussions ever since the Brexit vote was delivered, and there have been various permutations, from the Rt Hon Theresa May to Lord Mogg and others, back and forth, to try and stabilise the politics out there, but also to deliver secure borders. We're not finished; we're still at the point where we don't have complete clarity on how we move to a future sanitary and phytosanitary or veterinary agreement, what we do with border controls. I can go into this in more detail, but this is one implication. This means resource for us, resource for the UK Government and having to work through a changing chessboard over the last few years of what that means.

But there are other practical ones, Chair, as well. If you look at some of the drop-downs from European regulations that have now fallen squarely on the Welsh Government—things that I used to deal with as a DEFRA Minister, but with European counterparts, such as chemical regulations—we now need to take those on board ourselves. So, we're doing it, but there's an implication there as well.

I can touch on one other as well, which is that one of the big ones is what we do with coastal communities, and one of the big implications there is fisheries. So, it's great that we have the ability now to bring forward fisheries management plans, but they are resource intensive, they are resource hungry. They take a lot of work from a small team that we have here, so that also is reflected within the budget as well.

The final thing I'd say from a portfolio perspective is we'll always have discussions over the quantum of funding that's available for farming, agriculture, rural development, fisheries, and so on and so forth—of course we will. But one of the things, turning a page, and I want to stress that, into reset post—which is still going on, I have to say, that reset of the relationships, and that takes resource for us to deploy into it—one of the things is where we are with the funding overall. So, having turned a page, having not got what we once had and having to deal with the reality of that, we're doing the very best case in all of our portfolio areas to argue for how we backfill when we still have the challenges of social services, healthcare, education and everything else that you rightly raise on the floor. So, we never had that full quantum return of the multi-annual rural—not just the structural funds—investment and agricultural funding, the not-a-penny-less argument. It's not a political point, it's a practical point.

So, having said that, we turn a page. What we've argued strongly for in this budget is the quantum of funding we need to give stability to farmers, for example, with SPS funding, with the Habitat Wales scheme funding, to take that forward, the transition to the SFS scheme and the fisheries investment and all of that. So, yes, Brexit for us has a long and continuing tail. We're having to still wrestle through some really difficult areas, but, meanwhile, we've turned the page and we've, successfully, I think, argued for funding that can help keep stability going forward in a range of areas.

Thank you, Deputy First Minister. Cabinet Secretary.

I would just emphasise the point about the challenge being in relation to the quantum of funding. So, colleagues will remember that, some time ago, I made a written statement in my finance role where I showed our calculations in terms of there being a £772 million shortfall in EU structural funds, and a £243 million loss in relation to EU rural funding. We're never going to be able to plug those kinds of gaps, so the quantum really is the challenge. But then, in terms of how we respond, really, it's less about the budget and more about the kind of work that our teams do. So, our teams work really hard to support businesses to understand what changes are required in terms of export and so on. It has changed some of the practical work that we do, as well.

Thank you. I was going to ask a question on evolving issues, but I think you've touched on some of those points in your response, Deputy First Minister, so I'll come straight to Sam.

Thank you very much, Chair. Focused around predominantly the economy brief and following the closure of Holyhead and the impact on trade, a lot of the focus has been the impact on trade into Ireland and goods and passengers into Ireland. Has any economic analysis been made around the impact on trade into Wales from the Republic of Ireland or the impact on the economy in Holyhead and Ynys Môn more generally?

Do you mean generally as a result of Brexit, or because of the Holyhead issue?

Because of the Holyhead specific issue, given that, tomorrow, terminal 5 will reopen and sailings will start again for the first time since the closure. Has any economic impact assessment been made on the reduction of trade due to the closure of Holyhead?

I believe Ken Skates is due to make a further statement, a written statement, on this. I'm not sure if it's already been provided over the last couple of days, but it's on the way. Broadly speaking, the way in which we were able to respond in partnership with the UK Government, the Irish Government, the ports, ferry companies has been positive in terms of enabling—

Yes, I've commended that in the Chamber last week to the Cabinet Secretary for transport. But, on the element of trade and the goods flowing through Holyhead, obviously, the closure of that port would have had an impact on trade goods coming into Wales from the Republic of Ireland. Has there been an economic impact assessment of the impact of that closure for goods coming into Wales?

Peter will come in on this point.

Thank you, Cabinet Secretary. We are working with Ynys Môn council to be able to do that survey of businesses locally. There were two quite distinct questions there, really. We won't have the answers to that, but we are certainly, obviously, very interested to know what the impact was locally, because it's very hard to gauge. A lot of this traffic passes through Holyhead and barely slows down, so we don't really know the extent to which it would have an impact on local businesses, the shops and the cafes and so on. There must be some, but we don't know what it is yet, but we are asking those questions.

In terms of the overall trade in Wales, again, it's the same thing, to some extent. A lot of what passes through Holyhead flies down the A55 without really slowing down; it's not actually coming to Wales in the first place, as most of it's passing straight through. So, we know, obviously, that people have diverted to other ways, so there will be additional costs, additional fuel and that sort of thing, but we haven't been able to quantify that in respect of Wales specifically. I'm not sure that you ever would be able to do that in a way that specifically identifies those extra costs in a meaningful and reliable way. The fact that most of the traffic isn't actually destined for Wales in the first place means that it'd be very hard to separate.

Okay. Sorry, Chair, just one final point. My point in bringing this forward is that, in the Wales on Sunday newspaper, there was no comment from the Welsh Government as to the reopening of terminal 5 on Thursday; it was from the Irish Taoiseach and it was from the Irish Road Haulage Association, showing the importance of Holyhead to Ireland, and quite rightly, but Holyhead is a significant economic nucleus and catalyst in Wales, in north Wales specifically. Surely, there must be more work being done to understand its economic impact, given the prolonged closure that has gone ahead. Surely that would be a focus for Government.

Holyhead port is very important for all sorts of reasons as well as the ferry traffic passing through it. You know, the free port work that's going on that we're all very hopeful about and its future as a base for the support for marine energy, and so on, fine, but, honestly, the ferry traffic that goes through it is a separate issue.

Okay. Thank you, Chair.

Thank you. Luke.

Diolch, Cadeirydd. If I could go to border policy and direct my questions to the Deputy First Minister, looking at the border controls BEL, there's been a reduction of 36.5 per cent. Could you explain why that reduction has happened?

Thanks, Luke. Yes, it is to reflect what we need for the year ahead in 2025-26. So, our assessment for the year ahead is that that will meet those essential costs for—. We were just touching on Holyhead, for example. So, for example, on completing the work on Holyhead, the basic things of utility costs, security rates after handover from the construction company, basic staffing costs and so on. So, it's a reflection, as opposed to a cut, of actually what is needed to progress, as we currently are. I come back to that point, though, Chair, that I made earlier. The reason we need checks here is not only for what happens in the future, but actually, in terms of phytosanitary and sanitary checks, we need those in place, one way or the other, for goods coming in from around the world, through Northern Ireland, and so on. So, we do need to resolve this. But that reflects, actually, what the needs are within the budget for the year ahead to get that completed, to get the basic staff in and security costs in place—no more, no less.

So, the costs have gone down, essentially, have they? That's why the reduction is there.

Yes, indeed. But do be aware, of course, that we still have the ongoing discussion—this is part of that long tail issue—we still have the ongoing discussion with UK Government about—. We have to have in place those sanitary and phytosanitary controls regardless, because those respond to the wider goods coming in from all around the world. But the majority of these are from the EU, of course, so those discussion are going on at an EU level at the moment, which are very complex, very delicate and very cognisant of the sensitivities around Northern Ireland as well. That might lead to a point where then Holyhead and other Welsh ports need to be up and commissioned and working in one way or the other. And on that basis, of course, we would maintain our position that the running costs for those, alongside the commissioning costs of construction, need to fall to the UK Government because this is a UK issue. But, Peter, I think you wanted to add.

Yes, thank you. First of all, implementation is a programme, so you wouldn't necessarily expect the costs to be even from one year to the next in the way that a business-as-usual function might be relatively stable. But we've had to revise our forecasts of what's going to fall due, when, on a regular basis, for the sorts of reasons that the Deputy First Minister was outlining, the programme has been delayed on a number of occasions due to high-level policy discussions with the UK Government that are beyond our control to some extent—a large extent. So, this is our best estimate now, knowing that the date at which we would go live with physical checks keeps getting put back, and there are some items of expenditure that we just won't need until we are closer to the time, for example. So, it’s a function, if you like, of the shifting programme plan and the point at which we expect expenditure to fall as much as what the total cost will actually be in due course, and, as the Deputy First Minister mentions, the conversations about who’s actually going to pay for it between us and the UK Government.

Yes, because to be fair, there’s a lot of things at play here, isn’t there?

There's a lot of moving parts.

A lot of things.

I mean, the Government’s position was that expenditure would be coming down in this particular field anyway.

I think the hard reality is we would have liked to have resolved this by now, if there wasn’t a series of year-by-year changes and adjustments. I was there, as a backbencher, with the interparliamentary group out in Brussels, when there was a really good announcement on the Windsor framework, and everybody welcomed that and said, ‘Well, here’s the next iteration’, but it was exactly that. It still didn’t resolve the ongoing problems. I’m always cognisant, Chair, when I say this, that there are real sensitivities around this with Northern Ireland. We’ll all recall people saying, ‘Well, this is going to be easy, because Northern Ireland doesn’t factor in with this Brexit stuff', and what we’re finding is we’re still having to resolve this. So, when I speak to Andrew, my colleague in Northern Ireland, I’m really conscious of the fact that the last thing we want to do is undermine where we’ve got to in the Windsor framework, undermine sensitivities about trade in Northern Ireland and with Éire and so on and so forth. But the reality is that this isn’t only about post Brexit now and what we put in place. It’s good, by the way, that we are now in discussion with the UK Government, it’s good that the UK Government recognises our challenges as well as the Northern Ireland context, because our challenges remain, as they always have been, the issue of security of goods coming in and out.

There are real policy implications here if we fail to get this right, both in the transition to a future sanitary and phytosanitary, veterinary, agreement. Our hope is that it is a wider SPS agreement there. We’re in those discussions with the UK Government, but we are starting late again. And the other complication to this, of course, is it’s in the hands of the EU. And I’ve been out there as a Minister. This is tricky stuff and they’ll want the whole package, as you know, Chair, not just this issue being sorted; they’ll want the whole thing. Nothing is agreed until everything is agreed. So, on that basis, we could be in a period—I hope we’re not—where we will not have full clarity on the way forward on SPS and veterinary things for two, three years, maybe, because they’ll want everything agreed. Meanwhile, Luke, we absolutely have to make sure—. And I’m glad the UK Government now are in a good place on this of saying to us, ‘We understand these issues' over, if you like, back-door entry that could compromise what keeps Richard awake at night and rings me about, saying, ‘We need to really, in this transition period, make sure that we’ve got effective border control’, so we don’t have—. You’ll remember the meat scare that we had a decade ago and so on. We've got animal diseases appearing in different parts around the world and so on. It’s all of that. So, that continues regardless of the wider post-Brexit issues, but it’s deploying a lot of resource from the team here.

I am conscious on this particular block that time has beaten us. Have you got another key point that you wanted to make, Luke, before I move to Hannah? 

Well, one of them was more just how—. It was more of a technical, but I’m happy for that to go in writing. I’m confident I’ll get a response to that.

Thank you, Luke.

Diolch. 

And just before I call Hannah, obviously, the topical point for discussion at the moment on border security is the foot and mouth case in Germany, as such, which I’m sure Richard is kept awake at night thinking about.

Yes. 

Hannah. 

Thanks, Chair. This is actually directed to the Cabinet Secretary. In the written evidence, you explain that the value of Welsh goods exports is down by £1.8 billion, and then, obviously, you go on to emphasise the importance of providing comprehensive support to drive exports. But the draft budget allocation for the export, trade and inward investment BEL is the same for 2025-26, and was subject to a 10.5 per cent cut the previous year. So, how do you expect that could impact, potentially, on the delivery of the export action plan?

As Hannah says, there was a cut in the previous financial year, and that has been maintained now as a flat budget going into the next financial year. It did impact on some of the things that we were able to do through that BEL, for example, our activity to inspire new exporters in Wales; it has meant that we were only able to undertake a refresh of our existing export exemplars programme, as opposed to the creation of a new cohort of exemplars. Normally, we would expect or hope to have six new exemplars every year, but we weren't able to do that in this financial year. And there has also been a reduction in the number of events in Wales that we've had focused on export development as well.

So, it has had an impact on what we've been able to deliver, but it's also meant that we've looked to refocus and prioritise some of the actions that we take around the things that we know are most important to businesses. For example, we have discontinued our international manager for hire programme, but then gone on to bolster other programmes, such as the overseas business development visit programme. So, we've listened, really, to see what’s most effective for businesses, what’s most helpful to them. But, of course, as we talked about earlier, really, in the session, anything that we do in this portfolio, when we have got more money, we can do more of it. But I think that the work that we do on the export action plan nonetheless is really successful. The feedback that we have from businesses that we provide information and advice to is really good, as is the feedback that we get from those we take on those international trade visits as well, and we know that those visits do result in millions of pounds of contracts for Welsh businesses.

Thanks. Your written evidence also lists some of those examples of outputs delivered as part of the support provided to Welsh exporters, but they're not actually linked in the paper to the international strategy and the export action plan targets and actions. In the interests of time, would you be able to provide the committee with a written update confirming which actions and targets in the plan have been delivered and those that remain outstanding within this Senedd term?

Yes. We can definitely provide that, alongside some information about the number of visitors we engage with, the number of events organised in Wales and overseas, and the value of any new export orders won by businesses that we have supported, which I think is really important as well. But very happy to provide a more detailed account of that work.

Were you just smiling because I'm good looking, or was there something that you wanted to say, Huw?

Well, there's a small but very important part that falls within our portfolios on this—the work that we do together on food and drink. It is a rip-roaring success, in terms of Welsh food and drink. Based on the high standards we have, based on the credibility that we have of high animal welfare standards, this green and pleasant land, our exports are booming—a £16 million increase in 2023, which is the latest figure available. Parts of the EU continue to be our biggest market, but we have massive emerging markets, and we do have, with the support of colleagues here, an international presence on this, and we provide direct support within the budget lines for our food exporters—more and more of them—to actually get their message overseas. So, that is a real good success story within this sphere. It's a little bit of money and investment from Welsh Government that goes a long way, because it develops the capacity of individual producers to share best practice, work together. I have to say that some of the best expertise in the UK, if not in western Europe, is here in Wales now, in food and drink, to enable them to access these markets and package their products appropriately. It really does deliver bang for buck.

And if you could follow up, Cabinet Secretary, with the comments with a letter, that would be helpful.

I will do, yes. And just to say that, even despite difficult circumstances, the number of exporting businesses and the value of goods exported from Wales has actually been increasing, according to the latest figures. We can share that detail with you as well. 

Thank you. On this final point, Jenny.

Yes. So, you have told us that you're going to commission an external evaluation of the plan, to be published in the summer, which is after the First Minister is expected to set out her remaining delivery priorities for the international strategy. How will the findings of the external evaluation inform the First Minister's delivery priorities? 

So, we see the export action plan and the international strategy as being sisters, if you like, because they're so integral. Also, when we think about what that means in practice as well, we talked earlier about our international offices. So, they have really important roles, both in terms of ensuring that we're able to establish and grow those international relationships whilst also raising the profile of Wales, but putting us in contact with potential investors as well. So, they’re very much aligned, those pieces of work.

So this external evaluation will look at the value of these Wales offices abroad, as opposed to relying on the UK Government to promote Wales.

We need them both, really. So, our own officers working abroad, we need them to be working hard, and they do, in this space; they come forward with great leads, which then eventually leads to jobs here in Wales. But also UK Government needs to be doing the same for us, because they have offices in many, many more countries than we do.

Yes, the analysis of the export action plan and delivery being undertaken by an external company is actually looking at those very aspects, the four steps that we talk about in the export journey: what’s effective for a business and what’s not, what should we do more of, should we do less of. To reassure, we’re having regular conversations with the researchers to understand their early findings so that we can feed that into the delivery plan for the First Minister. So, although there is a little bit of a timing issue there, very much the types of findings coming out of that initial research are going into our thinking for the First Minister to ensure that that will be incorporated.

Excellent. We look forward to seeing it.

Finished, Jenny?

Yes.

Thank you very much. Thank you very much for your evidence on this section this morning. There will be a transcript provided, obviously, for you to check over and make any observations on that transcript.

Just before you go, Cabinet Secretary, if I could alert you to the fact that there are three letters outstanding from this committee that are awaiting a reply: the Development Bank of Wales, Tata Steel, and Holyhead.FootnoteLink The committee would be most grateful if we could have a reply to some of those letters that have been outstanding for some time.

Of course, and apologies if we have exceeded the 17 working days. I know we've had the Christmas period and so on. But I will chase the team on them today and try and get a response for you as soon as possible.

Thank you, that would be very much appreciated. Thank you, all. We'll move into the next session in the next three minutes, with a bit of luck. Thank you very much.

Welcome back, everyone. We move into the scrutiny session of the Deputy First Minister, Huw Irranca-Davies, and his officials, in relation to his department and the budget lines that have been set in the overall Welsh Government budget. If I could ask the officials to introduce themselves for the record, starting with Richard on my right, and working across, that would be most helpful, thank you.

Diolch. Bore da, bawb. Richard Irvine, Chief Veterinary Officer for Wales.

Bore da, bawb. Gian Marco Currado, rural affairs director.

Bore da. Good morning. Jamie Powell, deputy director of finance for climate change and rural affairs.

Thank you, all. Deputy First Minister, when setting your budget, how have you set the challenges of what you want to achieve as a Minister with the money that you've been allocated from the finance Minister, so that you can meet the goals and objectives that you and your officials have set and the Government has set itself?

I think there are some key overriding objectives, Chair, that we've tried to adhere to in setting this budget, and it's probably fair to say that, even though it hasn't been an easy budget, it's been easier than recent years' experience, where we've had significant cuts into various parts of my portfolio. This time, we've been in a better situation, and it's partly on the back of the wider settlement that we've had of that extra £1.5 billion.

So, within the budget, we've seen an increase of just over £36 million for revenue funding—just short of 7 per cent—and nearly £72 million of capital funding. That has meant that I'm able to line up behind certain priorities. Now, one of those key priorities for me, it won't surprise you, has been some stability for the farming and agriculture sector, with all the pressures that they are under, and that includes, by the way, going through this sustainable farming scheme preparatory phase this year, where there is much work in progress, before we introduce it in 2026.

Secondly, it's what we mentioned in the previous session with my colleague the Cabinet Secretary as well, that support to food and drink businesses. We have a real success story here. It is built on very targeted, very clever investment to support the sector. It works well, but it's also—. My colleague to the right, Richard—. One of the conversations we regularly have across Cabinet is we cannot lose sight of, within my portfolio area—. There are some basics we have to do exceptionally well, and that means the phytosanitary, the sanitary issues, of making sure that what's coming into the UK, and going out, is properly protected, but it's also animal welfare, the protection of animal welfare, both on the farm, but the wider perspective as well. So, the budget reflects that priority as well. It's part of that healthier Wales.

Across all of those are the climate and nature emergencies as well. So, those are very much reflected within the budget. And the final thing I'd say, which was the big pick-out of the budget priorities that we did, is focusing on coastal communities. We have great potential within our fisheries industry. It's starkly different in nature and character and scale from what there is in other parts, in Scotland, in England and so on, but it's a valued part of our coastal communities, not just the economic impact, but in terms of the livelihoods and the maintaining of that social fabric. So, again, as we discussed in the previous session, things such as investing, making sure we've got the quantum of investment there, and things such as fisheries plans and so on, which are an ongoing project—those are reflected.

So, those are some of them, but underpinning all of this is also nature and climate emergencies. The biggest argument I can put for getting quantum of funding into farming, food production and the sustainable land management objectives is also to make sure that this reflects climate resilience, nature biodiversity, because then, in arguing across Cabinet for the right quantum of funding, or sending Jamie out to do the work in the trenches, to argue for that, there's a stronger argument we can put forward.

It's almost as if you envisaged my second question, because I was going to ask about climate and nature emergencies, but you’ve clearly indicated how you balance those priorities. You highlighted the valuable role that, obviously, food plays in adding value here in Wales to Wales's overall economic impact. Processing that food is really important so that the value stays in Wales and it can be attributed to the Welsh economy. How do you look at the budget lines when allocating money to try and expand the opportunity to process more food here in Wales and add that value, rather than export it in primary product and some other part of the UK or indeed some other part of the world gets the benefit from it?

I think that's so important, and I've got to acknowledge we need to do more, and also, of course, there are market forces here that influence. But I think Welsh Government has a role, alongside other organisations out there that work with the agricultural sector. But the investment that we can put into that value added chain, maintaining the value here, is significant. The success that we're having in food and drink—and I’ll bring Gian Marco in in a moment to expand on this a little bit—is because we've tried not only to make sure that the appropriate financial support and rewards are there for the primary producers, but wherever possible we then enhance the production and the value added in Wales, and also build up the networks between suppliers. When you go around the Royal Welsh Show you will see that you go from producer to producer, the most recently packaged, innovative, market friendly, customer friendly ones for particular markets, but also you're using each other's products within it. That's us. That's us working with those producers to say, ‘Let's think about it—you don't need that company from overseas or East Anglia or whatever for your primary product. There's one down the road. You'll both gain.’ But Gian Marco.

Thank you, Deputy First Minister. Just to add, I think, something that might be useful for the committee, because I know in previous years we've had discussions around how the budget is split—there's a specific budget for the food and drink promotion, which is just over £5 million for this year, but it's also worth remembering that some of our activities that are funded by what we've called the rural investment schemes or the SFS preparatory phase are actually targeted at exactly what you were talking about, Chair. So, they're about improving that value, that draw from the wider supply chain for the primary producers, so things like our sustainable innovation scheme that funds Project HELIX, for instance, with some of the investment that we do around agri-tech. So, it's just worth the committee being aware that the funding that goes into that wider supply chain is not just what's set aside for the food and drink line, but is also some of the contribution that we make from the rural investment schemes and preparatory phase schemes.

And I appreciate you can always put more in, but are you confident that what you've allocated to the food and processing sector to add that value is sufficient to meet the demand, or is it a case of you recognise there is greater demand, but you can only work within the envelope of cash that you've got?

I think the genuine answer to that is that we are developing capacity within the food and drink sector, we're developing demand within the food and drink sector to do more and to add that value down the chain. We are certainly capitalising on that, because it's being reflected now in not only our domestic on the shelves here, but actually our international exports. This is one of those classic ones where, if we were to double the funding overnight, I'm not sure we'd have the supply chain of people ready to take advantage of it. So, actually, we're building steadily, very well, bringing people with us on this journey. We are also doing the support of, for example, this year, going ahead, the Blas Cymru brokerage event. That's significant, because that's one where we bring the wheelers and dealers into the room together and we show them the very best of what we do. And we have a good reputation and we try to strike the deals. So, we're maintaining that investment as well. But I think we have the right quantum at this moment. I'd always love to do more, but, actually, in reality I don't think we should outpace ourselves with the idea that there are a thousand companies out there that we're not actually servicing already. We're doing it very well and very effectively.

Okay, thank you, Deputy First Minister. Sam. 

Thank you, Chair. No surprises, Cabinet Secretary, Deputy First Minister: agricultural support is the theme that I'll be going in on, but I just wondered how, in setting the budget, you've taken inflation into account for farming support?

Well, I do note that both the Farmers Union of Wales and the National Farmers Union and others have been calling for additional support, reflecting, actually, a retrospective element of inflation over several years there, not just this year's inflation. Our ask, both within the Welsh Treasury but also of UK counterparts—our starting point was we need at least what we've got and it'd be good to go further, because we also see not the inflation asks, but when I mentioned previously the nature and climate emergencies, which we're asking farmers to do to respond to that as well, as well as good food production—they will add to what they're asking about, what they see as an inflation deficit, and they will invariably say, 'We probably need £500 million or £600 million additional.' It's fascinating that the environmental organisations also echo that call as well. I've been very honest with this and said, to be honest, I think there's a piece here above and beyond the SFS where we need to look at, going forward—and it'll be interesting to see where the committee is on this—based on good, strong, ethical principles, levering in additional funding on top that we can enable people to go forward. 

But, look, what we secured was what we went in for in some hard negotiation. So, we got £356 million for agricultural support. It includes a £17 million contribution in addition to the UK Government contribution, which goes some way to addressing that gap that perhaps the farming unions might address. And most of this is going through to, which I'm sure you'll welcome, the basic payment scheme support, but also other aspects as well. It also allows us, then, to take forward in this year ahead some of those innovations within the preparation of the SFS. So, Jamie, I don't know if you wanted to add to how this is reflected.

Yes, happy to expand on that, Deputy First Minister. In terms of the revenue position that we're discussing today, and the Deputy First Minister's mentioned we maintained the basic payment scheme at £238 million, it's probably worth noting, if we were to put that to one side, the revenue budget has actually increased by just over 6 per cent year on year. So, that's a relatively positive outcome and one of the better settlements across Welsh Government. 

So, sorry, can I just ask: is that the total climate change and rural affairs budget, or the rural affairs budget specifically, the 6 per cent increase? 

That's in relation to the budgets we're discussing in today's session. 

Okay, so that's climate change and rural affairs. So, that 6 per cent wouldn't necessarily be seeing an increase in agricultural finance and support, but it would be seen across some of the climate change elements that the Deputy First Minister is responsible for. 

So, it's across the board, excluding the £238 million basic payment scheme budget.

Okay. And the £238 million BPS, including the rural investment scheme—a total of £355.17 million. You mentioned that, Deputy First Minister. Is that an indication of what's to come for the sustainable farming scheme?

I'd just urge caution a little bit because we've still got—. It's good that we've secured this and I think it's landed well, by and large, even though there would be always demand from the farming community for more. By and large, it's given some stability and certainty, so we can get through to the SFS there. I'd caution against saying that this is an indication of where we're going. We've got a job of work to do in the next three or four months, lining up what the quantum of funding we need is, but also what the individual elements of that SFS scheme are; I know we've discussed this in the committee before. So, don't take this as a cast-iron line that there is a sort of trajectory here. We've got the spring budget coming up; we'll have next autumn as well. I think what we've done here for this budget ahead is to get us to 2026. We will have subsequent discussions about what the quantum of funding we need for that is.

Okay, so in that answer, is there a guarantee that it will not be less than the £355 million earmarked for this financial year? 

Sam, you tempt me into messing up other colleagues and cross-Cabinet discussions—

This is my job, Huw. 

I know, I know. 

You've just caused great nervousness in the Treasury by saying there's going to be a spring budget. [Laughter.]

Well, yes, indeed. 

We might have a run on the pound.

Well, it's inevitable, it's like clockwork, isn't it? These things come around. I don't know for certain, I'm anticipating. Look, what I can say is that our ask this year has been very clear, as it was last year. What we committed to doing this year was at risk, I have to say. We said, 'We will argue for and get this, and by hook or by crook, we'll deliver it.' Welsh Treasury could have turned round and said, 'No, we're throwing everything into other areas of other people's portfolios.' They haven't, we succeeded. We'll continue, Sam, in arguing with the Welsh Treasury and, by the way, with the UK Government because they still face similar challenges on the quantum of funding for different ways to achieve similar outcomes in their farming and agricultural sector. So, I think, together with the Northern Ireland Minister, the Scotland Minister, and the England Minister as well, we'll all be pushing the Treasury, going forward, for what comes next.

Okay. Thank you, Deputy First Minister. An additional £20 million of funding is being provided for wider rural investment schemes. I'm just wondering how does that compare, historically, to those rural investment schemes.

Do you know, I'm really tempted to draw a direct comparison, but one of the challenges with the traditional European schemes, and one of the advantages of them, is that they were long term—they were multi-annual and seven-year duration. So, to try and draw out—. I mentioned in the earlier session that, in a sense now, we're turning a page; we're beyond that. So, I think what this reflects is—. It's an honest appraisal to say we did not make up for the quantum of funding when we walked away from the EU and those multi-annual programmes. It would be great to have those, whatever. But what we are doing within the budgets available is making sure that we've got sufficient for past years, but also for the year ahead as well. It's hard to do a direct comparison, because they're long-term, multi-annual settlements.

Okay. So, how, then, with the multi-annual support plan for agriculture for 2025-29—? You've just said, 'It's hard to do because we can't do multi-annual planning', so that £20 million, it's hard to correlate that to historical stuff, but then, at the same time, you've got the multi-annual support plan for agriculture, 2025-29, which will see three schemes come to an end in March of this year, I believe—the organic conversion scheme, the natural flood management accelerator programme, and agri-tech college farms. So, how do you square your previous answer to me on that £20 million and that it's difficult to do long-term planning and we can't correlate this to what's happened historically, but then you're still able to cut schemes that are part of the multi-annual support plan for agriculture? Do the two correlate?

They do, and I'm happy to give an answer on that. Part of this—and I'll ask Gian Marco to come in, in a moment—is because we still have legacy schemes. We're actually finishing off some schemes that ran over a defined period, and those run up to a certain date, and we're honouring those and are committed to those. Going forward, the SFS will be predicated on actually giving that multi-annual certainty going ahead, as we turn the page into a new chapter. But, Gian Marco, I don't know if you want to pick up on some of the detail of some of the ones that we're continuing to fund and some of the ones that—we changed some of them, but they're under different headings, and some are, indeed, coming to an end because they were at the tail end of the European programmes.

Thank you, Deputy First Minister. So, the multi-annual support plan, which you will have seen, is relatively high level, and part of the reason it is high level is because we've had a one-year spending review, in effect, for 2025-26. So, we, Welsh Ministers, don't know what the quantum of funding is for the sort of period that we're committed to producing a MASP for under the Agriculture (Wales) Act 2023. So, we've tried to give an indication of the broad direction of travel. There are some specific schemes, and you've mentioned some of them, where either we're not continuing them or they're being funded elsewhere. So, to give you an example: organic conversion, I'm pretty sure I'm right in saying, we haven't offered this year. So, what we've done is those farmers who took on the conversion grants are now supported, because they're organic farmers, under the organic maintenance payment. Something like the natural flood management will be funded, going forward, from another part of the Deputy First Minister's portfolio. So, there's some money set aside for that. But, broadly, most of the rural investment schemes that are live in 2024-25 we are able to support in some form or another in 2025-26. And with the MASP, we've tried to give an indication of what the direction of travel is to 2029, with the big caveat that we just don't know yet what sort of budget settlement we might get in terms of the next comprehensive spending review.

In layman's terms then, for me, your multi-annual support plan sits on top, and that £20 million that's been announced sits underneath, specifically in this period, where this is the sort of trajectory we'd like to go, but this injection of £20 million this year. So, that comes back then to the ability for Welsh Government to forward plan on these sorts of schemes, because a scheme running for 12 months is no good. And we've seen that with previous historical schemes, around Glastir, where a scheme comes to an end, and—. A farmer in St Clears, in my constituency, had to remove a hedgerow, a historical hedgerow, to get grant funding to replant it to be eligible for the next stage of the grant. Avoiding those sorts of things surely must be a priority. So, how then does £20 million help towards the long-term effectiveness of Government support?

So, I think your analysis is right. Look, we'll have—. Sorry, I probably misspoke, saying the spring budget. We'll have a review of spending during the spring. We'll also see what other financial events, fiscal events, there are in the year ahead. I don't know—

Your diplomacy's very good here.

But you're absolutely right, that what we are in here is working with a one-year budget, with the intention to actually move ahead then. And I think the UK counterparts are very seized with this as well, that we give that stability, not just in the farming, agricultural sector, but in wider sectors that we can plan on a multi-annual basis. This is consistently the discussion that I've had with farmers at the ministerial round-table with the SFS, but also wider out—as I've spoken to farmers—is the need to move to that. So, that's our intention. We're in a year in order to get there.

Okay. And just one final—

The clock is nearly beating us.

Okay, I'm happy, then, for these to go via written questions, if that's okay with the Cabinet Secretary.

Thank you, Sam—much appreciated. Jenny.

You've already mentioned the importance of the Blas Cymru event coming up in the autumn, and I just wondered if you could tell us how that's going to support—. All these people coming together, one of the weaknesses we've got is that we're not processing as much of the food in Wales, and the profits, therefore, are going elsewhere. I just wondered what are the opportunities in this brokerage event to increase the amount of processing going on in Wales and therefore the amount of surplus value retained here.

Thanks very much, Jenny. The brokerage event is very, very important, but it is of a piece; it's not the only thing we're doing. So, the brokerage event is essentially bringing together international visitors to grow both our exports, but also domestically as well. Our past experience of this is they've been highly successful and we anticipate that this one will be as well. But it doesn't look at the issue that you are directly talking about, the processing. There are other things that we do on that. So, the wider support that we give to things such as the sustainability cluster and Project HELIX. If the committee have never looked at it, they always have a presence at the Royal Welsh, so go and have a look at the work they're doing. They do exactly that, that aspect of working with producers to make sure that we are developing not just the value added down the chain here in Wales, but also linking up processing within Wales as well. They work with the private sector as opposed to simply doing this as Government. So, they look for the opportunities, they're very savvy, and then they try to link up people to say, 'Well, can we do it?'

It is worth commenting as well that we've had some notable successes in the past year. The new creamery is opening in west Wales. That is great, that is the market doing what the market should do, and working, interestingly, on a very ethically driven basis as well, with the supermarket chain, in terms of reward to farmers, but also the animal welfare considerations, the environmental aspects of the supply chain within it. We need to do more of this, but we're doing a lot. It doesn't tie directly into the brokerage event; the brokerage event is where we hopefully make a lot of deals.

Okay, which is obviously increasing the income of the people who are producing the foods. The additional funding that you've given for Blas Cymru, how are you going to assess it against performance? What are your targets that you hope to come out of this event?

So, I think it's the—. We assess it very closely in a number of ways: the outputs of the Welsh economy; the creation of those wider economic opportunities. So, things such as job creation, sales growth, innovation of the sort we were just talking about, application of technology, productivity. So, we assess it on a wide range of metrics. Gian Marco, I don't know if you want to add.

The only thing I would add to what the Deputy First Minister said is that, just to be clear, it's not that we've added—. Sorry. It's not that we've put additional money into Blas Cymru; what happened was, because Blas Cymru only happens every two years, we actually took the money out of this year's budget, so 2024-25, because there wasn't an event. So, we did the conference in north Wales, but we didn't do the brokerage. What we've done is, we've put, in effect, that money back in, so that we can hold Blas Cymru this year.

But in terms of the assessments, basically what we do is, we monitor, from the day of the conference onwards, what the participants have done and how many deals get done. I think the current figure for the 2023 event is something like—I've got it in the evidence bit—£38 million-worth of sales that have been secured from that event. So, the return on investment is really quite high from a wider economy perspective.

So, the touchstone for the brokerage event is whether we can achieve at least that and possibly go further.

Can I just check on that figure? Because you said you've just brought the money from the budget forward because there wasn't a Blas Cymru event last year, but in your paper, you clearly say it's an additional £0.5 million. So, it's not new money, it's money that you've allocated and carried over, is that correct?

For that purpose.

So, what happened was, it was in the original 2024-25 budget before we had to make cuts in order to support wider Welsh Government. One of the cuts we made was to take the Blas Cymru money out of the 2024-25 budget, so what we've done in effect is reverse some of that cut for 2025-26, so that we can hold a brokerage event. So, we're not spending an additional £0.5 million on Blas Cymru; we've just got £0.5 million to spend on Blas Cymru. I hope that makes sense.

It's just the paper is slightly confusing. Sorry, Jenny.

Okay. So, I want to just ask you now about the challenges posed by the net zero by 2035 work, chaired by Jane Davidson, which is around how could Wales feed itself by 2035. Obviously, we're never going to run out of dairy and meat; our weakness is in fruit and vegetables. So, how will the local food partnerships start to make the shift that we need to make, because there are so many places where fresh fruit and vegetables are simply not available? I have mentioned to you in the past the issue in Treorchy, where you have a fabulous farm shop, wonderful meat, obviously, but all the vegetables are very poor-quality stuff that comes from Europe, and by the time it arrives here, it's not fresh any longer.

Yes. Jenny, first of all, you're right. We've got a job of work to continue to produce these circular, more local, regional food networks. There are a range of policy instruments in that, including what we can now do with our strengthened approach to procurement, where we can actually take account of environmental, local, economic factors and so on; it doesn't have to be just the lowest value, it can be those wider things. But the local food partnerships have got a key role to play.

So, they feature within the budget lines and what they can do is develop those local networks. So, above and beyond, for example, adding to what's being done by some of the big private sector organisations like Castell Howell, for example. They now are working directly with smaller growers on a horticultural basis, giving them the support that's needed to get them onto the tables, but we need to have that happening in every single part of Wales. So, the local food partnerships are key to that.

We've got revenue funding under the sustainable farming scheme preparatory phase, which will be matched by funding from the social justice MEG to reflect the wider cross-portfolio issues addressed by the work of local food partnerships. So, it's not just building those local economic aspects; it's actually getting good food, nutritious food, to everybody who needs it, in every part of Wales, and that's where the LFPs come in. So, it is noticeable that there's a joint funding bit here going on—there's a bit from us, and there's also a bit from the social justice portfolio.

Okay. But the challenge is, obviously, enabling farmers to diversify to meet the demand from pupils for being able to eat local fruit and veg. So, really, that public procurement is an important part of this transition, but obviously it will benefit families all over the place if we can crack this one.

Yes. And we're starting to see farmers innovating with this, including, fair play, the deputy president of NFU Cymru, who herself now has an enclosed horticultural area, which, in addition to her long tradition in more conventional arable, uncropped farming, is now extending into horticulture. There's more to do in that, but I think we can identify in the budget lines how we're supporting that as well, Gian Marco.

All I was going to say—

Okay. Because one of the challenges that she says—Abi Reader—is that, obviously, we're not paying enough for fruit and vegetables, whether it's the supermarket, or whether it's public procurement. So, how are we going to encourage more farmers to do what we need to do to improve our food security?

You're absolutely right. I think there are two elements to this. One of them is the grants that we are putting out there to support horticulture. We've got the horticulture start-up scheme, which has been running for a couple of years, which we're going to support for next year as well. We've got the horticulture development scheme, which is to increase scale, and we've had some reasonable uptake. Probably not as much as we would have hoped, but we had some reasonable uptake. So, that's one end of it—the support to farms to diversify into horticulture.

I think the other point you make about public procurement is really important. We have conversations, obviously, with our public procurement colleagues and the wider public sector. I think that balance between cost and sourcing locally produced food is a real challenge for a lot of our public authorities. Again, I think this is where local food partnerships and helping to link up at that sort of local government level can be really helpful. One of the things we're working on is the community food strategy. One of the areas we're looking at is the link-up through bodies like the public services boards, for instance, for the local authorities. There's work that can be done there, notwithstanding the recognition that price is a real challenge, is a driver. So, we're trying to help at both ends. We're trying to help with the farmers to diversify by providing support through grants, and we're trying to provide help through the link-up at the procurement end.

Is the budget sufficient to meet the ambition that you have just described?

I think the answer is 'yes', because we're coming at it in a number of ways, but I think it's fair to anticipate that this will need to be reviewed and ramped up as we build those networks, as we build the capacity of the growers. Those could be agricultural growers. They could be community growers who've really got their act together and also want to play a part in this as well. So, we could reasonably anticipate, because we need more—. The reason we need more horticulture is because that production of fresh food that isn't imported all round the world to here, in things that we can do, is an important aspect of it. It's also the economic opportunities and the access to good, nutritious food, in the way that they do, by the way, and have been doing for a couple of decades, even under the old common agricultural policy, successfully in other countries. It's building those networks so the community food strategy becomes very important within that as well. There's a myriad of ways—

Just to cut in there, when is the community food strategy going to be published? Because it's missed a few deadlines.

Yes. It will not be long.

Is that meteorologically long or politically long?

I don't like long strategies anyway.

Before the end of the spring?

I'm in the stage of engaging with officials on bringing this forward in fairly short order. I’m trying not to say a specific date here, because I genuinely don't know the specific data. But it won't be long before we bring that forward.

Meanwhile, we've got these challenges of meeting net zero by 2035. And that means we have to change the food we eat and where we get it from.

Yes, very much. I'm glad you mentioned the work that was carried forward by Jane Davidson and a range of colleagues and experts, who had the challenge of, if we were to aim for net zero by 2035, what would we have to do. They brought it forward last September, we put a statement out in response to it. It was a challenge group, and it really has been challenging. But it's interesting that her reflection that she said to people was that it's not that we have to do all of those things by 2035, but they do show the options of how we would need to get to net zero regardless. And there are some real challenges here, but real opportunities.

Horticulture is one great example. Because if it works within, for example, the farming sector—. I know some farmers will say, 'I don't want to get into horticulture—I want to do what I've always being doing.' But, actually, if it bolsters, through that aspect of diversification, and linking up with a company that will actually do the distribution and getting it onto the shelves and onto the plates in the hospitals and the prisons and so on, then you've got another aspect that sees you through the year where one part of your business drops a bit, because the other one is doing well. It all works, so we do have to get on with this. I think, realistically, though, we're building this, the community food strategy will play a part in it as well, as with our procurement. In years to come, I think we're going to have to do more and more and more.

If I can move now to Hannah and animal health and welfare.

Thank you, Chair. I'll start briefly with a question on animal health. I understand your predecessor told this committee that she hoped a review of the bovine tuberculosis comp—I'll put my teeth in—compensation payment approach would start in 2024, and obviously we're now in 2025. Would you be able to give us an update on the progress of that work?

Yes, indeed. My apologies; the slow wheels of Government. But it's a reflection of resources and other things that we've really focused on over the last year, which have been in the headlines as well. But we have been working on that. We have allocated initial staff resource in preparation for a full review of the existing TB compensation policy, in line with those commitments that we set out within the eradication delivery plan. So, it will be commencing this year. I can give you that commitment. Even though it has been delayed, we will get on with it. But, Richard, you are probably closer to the action on this.

Indeed. Diolch, Deputy First Minister. As the Deputy First Minister has rightly said, the TB compensation review is part of the five-year delivery plan. So, it's very clearly in our sights as an activity. The other facet that we will benefit from, undoubtedly, is the fact that we now have the new TB governance arrangements established. We're able to draw upon the world-class expertise of the technical advisory group on the one hand, and the fact that we now have the TB eradication programme board in place—farmer led, chaired by Radnor farmer Sharon Hammond, and made up of industry representatives, including the farming unions. So, we're be able to have that governance alongside the policy development, building on previous work. Because we should not forget that TB compensation questions have been raised in the past as well with regard to options and possible arrangements. So, it is in the TB five-year delivery plan, and we have it firmly in our sights. And, as I said, we will benefit from the governance arrangements that are now in place as well.

Thanks for that. Just remind us which point in the five-year delivery plan we're up to now. 

It was first published, from my memory, in March 2023. The reason it sits fairly firmly in my memory is I think it was in about week 2 after I joined the Welsh Government in this current role. So, I was able to provide that launch, if you will, of the five-year delivery plan at that point. 

Great. Thank you. I'm just going to turn to animal welfare. 

Before you turn to that, Sam indicated for a supplementary on the TB point. 

Thank you very much. It's on the Pembrokeshire pilot project. Will continuity of funding for that project be coming forward?

In a word, yes. 

Yes, it will. And thank you for that, because I'll tell you one interesting thing over the last 12 months, 15 months: that has garnered a heck of a lot of interest beyond our borders, including from other Ministers in other parts of the UK who want to come and see that. And of course the other thing, which is providing a challenge for me and for Richard, is the demand to take the lessons from it, if not the exact model, and take it wider within Wales, that autonomy that it gives the farmers to work with the data, work with the chief vet, work with their on-farm vet. So, we may have made a monster here, but it's a good monster. 

Fund the monster. [Laughter.]

I'll move to animal welfare. The animal welfare plan for Wales 2021-26 sets out a timeline for delivery of programme for government commitments on animal welfare. Are you confident that the budget allocations will allow the completion of those commitments by the end of the plan, next year? 

Yes, but I'm going to qualify it slightly. We've delivered two of the four existing PFG commitments already. We will meet that third as well, which is that big piece that we consulted on previously on the licensing regime of homing centres, breeding centres, but also the second part of that wider aspect of things like pet parlours, pooch saloons, whatever they're called, and so on, all of those things as well. We will do that with a very small team, and it's within the budget, as long as we stick to the priorities within that, because there are always additional demands to do other things. 

There is still work to do on the cages one, but having said that, what has changed is that there is a piece of UK-wide work now that is being done on this on the animal welfare side of cages, which wasn't there at the start of that process. That has now started and we're keen to be involved in that. I wonder, Richard, if you want to touch on that, because that is fleshing out some of the evidence around it right across the UK.

Yes, absolutely, Deputy First Minister. You'll be familiar with the animal welfare committee. Previously they were characterised as FAWC—the farm animal welfare committee—now AWC. They are independent experts in the field of animal welfare across both companion and farm animal. The UK Government and the Scottish Government and ourselves have commissioned the animal welfare committee to look at the evidence relating to alternative systems—non-cage systems, if you will—for laying hens.

It's really important that we hear that evidence from the independent experts, because, as I'm sure the committee will fully recognise, we need evidence to be able to develop policy. So, that evidence relating to alternative systems will come from the animal welfare committee. That piece of work is in their work programme for this year, so we will look forward to the animal welfare committee bringing that forward to us.

Once we have their report, their evidence, we will then be able to assess what it says from the point of view of alternative systems for laying hens. But I think, if it's fair to say, Deputy First Minister, that obviously means that the work that we're looking at in terms of the programme for government and the animal welfare plan for Wales is a bit pinched, if you will, because we must have that evidence to move forward, but it pinches the timelines. It would be folly for me to say that we'll be able to do everything within the envisaged time frame that was set out when the animal welfare plan for Wales was written, because I'm sure the committee will appreciate that things change and we have to flex and adapt accordingly as a result.

Just before we move on, Jenny has indicated a supplementary.

I wanted to ask about the continual closure of abattoirs and the impact that that has on the welfare of those animals that are being slaughtered.

We're very mindful of that. I'm fortunate to live in a Valleys town that still has a thriving abattoir, which has had support as well through Welsh Government funding, including the installation of equipment and so on over the years, and it's doing really well. But we have lost many. Of course, there is a market out there. There are areas in which we can actually support that sector, but we can't stop every single commercial decision for a closure, sometimes for companies that are not based here, solely in Wales, but are global companies that say, 'We're closing a processing facility'—we've seen them over the years.

It's a tragedy for those communities, because what we do want is that local network of processing, rather than animals travelling massive distances back and forth. So, there are things that we can do, and that we do, but we have to work with the commercial sector as well, small and grand, to say to them, 'Work with us on this. We need that local infrastructure, from livestock rearing through to slaughter, through to processing'. That's the best way; that's the way we keep the gains.

And there's money in the budget to assist, where practicable.

We've done over the years support for, for example, abattoirs to transition through installing CCTV cameras—things like this. There isn't a round of that going on at the moment specifically within the budget, but we do always keep these under review, if there's additional funding needed within particular sectors. We've done it before. Richard.

Yes, absolutely. As you described, Deputy First Minister, we've supported food business operators in installation with capital expenditure—CCTV being a really good example. And I think we should put it on record or note that, in terms of the programme for government commitment, CCTV in slaughterhouses has been met, and we're grateful to colleagues who work in the Food Standards Agency and to the food business operators in ensuring that that commitment and that legal requirement now, with regard to CCTV in slaughterhouses, is in place. It's really important that we're able to say that—to recognise that. And also to then assure ourselves and consumers, whether they're in Wales or elsewhere, that those animal welfare standards are being upheld. It's a crucial part of what we're here to do from the point of view of ensuring that animals in Wales have a good quality of life from cradle to grave, if you'll pardon the mixed metaphor.

And as I say, in terms of the work with regard to food business operators and slaughterhouses of whatever size, the Welsh Government do not operate alone here. As I alluded to a moment ago, the Food Standards Agency have a key role, as do veterinarians who are employed directly or indirectly to the FSA in pursuit and conduct of both animal health and welfare standards, but also food safety. So, again, I would like, as CVO, to put on record my thanks and appreciation and recognition for that hard work that not only assures animal welfare standards, it also monitors health conditions that may be seen in animals going into the abattoir, and gives us early warning sometimes there, and underpins that food safety element that we all rely on from the point of view of the food that we have on our plates on a daily basis, thinking on a farm-to-fork basis.

Okay. I'm grateful for that clarity. I'd like to go back to Hannah, the principal questions that she's going to ask.

Thanks, Chair. If we can remember and go back to, Deputy First Minister, how you kind of started the answer to my first question around that caveat around is there sufficient funding, will it depend on other pressures, and other things that may arise, I think one of those things I just wanted to touch on that came out of the Petitions Committee, but it's been raised in the Chamber, is around things like a ban on Greyhound racing, so would you say, given the budgets we have now—I'm just using that as an example—the budgets we have now means there is no scope for anything else in this Senedd term?

So, the budgets we have and the allocations we've agreed on here are sufficient to deliver the programme for government commitments, and I'm being very clear and very specific on that. And that includes, by the way, taking forward the consultation on the licensing of all the animal welfare establishments, so there's sufficient to do that.

You just led me to my next question, actually, around that the recently published summary of responses on the national regulatory model for animal welfare establishments and activities demonstrates support for further regulation. If a new national model were to be
chosen, will the draft budget allocations be enough to cover that work?

Yes. We're confident that that is within the budget.

Thank you.

Thank you, Hannah. Just before we go on to our final section, obviously, the key thing about keeping abattoirs open is number of stock, and that's critical to keep processing numbers up, so that the abattoirs can function, because the decision to shut an abattoir very often is lack of stock, it is, and anything the department can do to assist that is obviously hugely important, it is. Luke.

Diolch, Cadeirydd. If I could just come to fisheries, the fishery management budget remains relatively unchanged, but there is the additional £1 million for capital funding. How do you envisage that being spent?

So, a couple of ways. One of them is a real practical revisiting of stuff that goes back to my previous incarnation—I'm the ultimate recycled Minister. So, one of the things we do need to do is to invest in vessel monitoring, so part of the allocation there of the £1 million is £300,000 for capital funding to the Wales vessel monitoring scheme, which provides financial support to the fleet there, so it includes, for example, the purchase of inshore vessel monitoring systems, IVMS systems as well, so that's one significant part of it. The other aspect, the £700,000 capital, is to the fifth round of the Welsh marine fisheries scheme. So, that opened for applications now on 13 January. What we're looking to do is to have sustainable growth within the sector, help those coastal communities prosper. So, that's the broad split, Luke, of funding there.

Okay, so you mentioned round 5. What lessons were learned from round 4, then, and have been taken forward into this budget?

We've learnt some lessons already of the previous stages, so one of the changes that we've made is a reduction from a two-stage process—and this is based, by the way, on stakeholder engagement as well. So, reduction from a two-stage to a one-stage process going forward, simplifying it. Secondly, combining the revenue and capital funding, so there's more flexibility within it, which, again, is basically to do with co-production in this approach, then learning lessons together. We've also got a broader, rather than a very specifically targeted approach in some areas, so, again, it allows a greater flexibility in bringing forward some proposals.

So, we've learnt those lessons already, and I suspect they'll probably be ones that we'll keep on learning as each one goes forward, and adjust our approach, but based on working with the sector.

I was just going to add very briefly that the main lesson has been to put capital into it, so the first round we did was revenue only, and the big feedback was that what stakeholders wanted was capital. So, last year, we were able, through the fourth round, to offer capital, but we basically did it at risk, so, this time we've set aside a specific amount of capital for the scheme, which the Deputy First Minister has just opened. So, hopefully, with the support that we're putting in place to applicants, we'll see an increase in applications, particularly for the capital.

Okay. So, thinking about the revenue, then, for fisheries management, you mentioned in your paper that the fishery management plan procedure is going to be evidence hungry, essentially. That indicates to me that it'll take a while for some of these management plans to be coming into force or into place, but, obviously, as they do come into place, would that—? I say 'obviously'. When they do come into place, does that equate, then, to a need for more revenue down the line?

It's a reasonable anticipation. So, as we identify those evidence gaps that we need to fill, as we actually bring forward things like annual stock assessments—this is the meat and drink of fisheries, annual stock assessments, what are the likely yields, what can you actually take out, what's also maintained and so on. It's really detailed work. As we bring each fisheries plan forward and as we ramp this up and as we intend to grow, you can reasonably assume that demand will increase. So, what we'll have to do then, as we get to each annual consideration of budgets, is we're going to have to look at that going forward. 

Yes. So, it comes back to what you said earlier about the continuous need to review this particular budget, but I suppose one of the concerns I might have is that the freeze in revenue this year might impact, then, those fishery management plans coming online, whether that's wanting to develop them, or even just bring them into force. Is that a reasonable risk to identify?

What I can say is it's not going to slow it down in the year ahead. So, what we've guaranteed within these budget lines is the work that we know we've got to do in the year ahead with the fisheries management plans, and the evidence and so on there. Going forward to subsequent years, we're going to have to think again, because there will be more of a demand in new areas of the fisheries management plans, and we will have to make those decisions then across our budget about how we can get the money into it. But, for now, it's not going to slow down anything, because we know what we've got to do in the year ahead. We've put the budget into it, we're confident that we can deliver it.

As I say, one of the really good things about this is it's a really good, open dialogue with the stakeholders as well. They understand where we are, what we're trying to do, working with us on this to grow the sector. But they also understand our limitations. So, there's a real, frank dialogue on where should we focus now, where do we go next, and not do it all at once.

So, you're confident the allocation within this budget year will see you through.

Yes.

I think, just to add to what the Deputy First Minister said, the publication of the strategic approach to fisheries at the end of last year has really helped, because it was done in co-operation with stakeholders, but it's made it clear that the focus for us will be around the fisheries management plans, around the statutory requirements of the Fisheries Act 2020. So, that's given a real focus for the work.

I think the Deputy First Minister's absolutely right that, for me, one of the big unknowns going forward, beyond this financial year coming up, will be the requirements for developing and implementing the new fisheries management plans, particularly around the evidence requirements. There's an opportunity there, as well, because we've got some great facilities in Wales at universities, et cetera, that do this work, but there's undoubtedly going to be a need to review that budget beyond 2025-26 to see what the requirements are.

Okay. Great.

Thank you, Luke. Final question to Sam.

Thank you very much, Chair. Just sticking with fisheries, the economic development officer for aquaculture at Pembrokeshire County Council—you'll be aware and your team will be, Deputy First Minister, of this—their role is supported and funded by the shared prosperity fund, but comes to an end in February. They've been made aware of the fifth round of the Welsh marine fisheries scheme, but that doesn't open for a number of months, leaving this individual and the good work that they're doing and the vital work that they're doing in fisheries and aquaculture and the economic opportunities in this with a funding gap for a number of months. I think your team would be aware of that, but I just wanted to make you doubly aware of the importance of what one individual is doing, but she's been able to bring across the aquaculture remote classroom from Ireland to develop with local schoolchildren their interest in aquaculture, seeing the future opportunities in that. So, I was just wondering if you were firstly aware—. But I can see Gian Marco making notes furiously. Just views on those funding gaps that could be closed due to funding streams opening and closing at different times.

Sam, look, I'm really happy to take that away and have a look at that with Gian Marco and colleagues and our specialists in the fisheries department. We are aware of it; it’s not the only one, and it’s a function of those annual and sometimes bidding-in application processes. They’ll never be entirely absent from the landscape, but it does beg that question, once again, of how we get to the more certainty of a multi-annual basis; rather than year by year, can we get to two years, three years? We’ve done it in some areas of Government this year. Can we get there on a more coherent basis? Because it is to do with also keeping the expertise within that area. But I’m happy to take that away if we can get some more details, Sam, from you as well.

Yes, I think they’ve been in touch with your office, but I’m happy to pick that up as well. And due to your succinct answers, Deputy First Minister, I’ve got time to go back to my original agricultural support questions.

But specifically around Farming Connect, I’m just wondering how much you’ve allocated to the Farming Connect programme, and whether there’s been a change on 2024-25 in the draft budget.

Yes, so, on Farming Connect, we’ve allocated £11.3 million for the year ahead, 2025-26, which mirrors last year, 2024-25. Now, in a spirit of frankness with the committee, the original planned allocation for 2024-25 was £12.6 million. It was reduced to £11.3 million when Welsh Government actually announced its spending plans. It’s always the issue of priorities. There was a decision there, quite clearly, well publicised, to invest more in some of those core things such as schools and social care, the NHS and so on, which all of us rely on, including the farming community as well. But what we do believe, Sam, is that what we’ve got here is sufficient to provide the range of services that Farming Connect does, and they do play a valuable role. I know that, occasionally, they get some criticism, but, my goodness, they’re integral to—

Yes, and I appreciate that point on delivering the role, but are they funded sufficiently to be able to help develop the transition towards the sustainable farming scheme?

Yes, they are. So, we’ve mapped it. As you know, the sustainable farming scheme is mapped against the objectives of the SLM objectives. Can they deliver against that? Yes, they can. Can we move from where we are now to the SFS introduction in 2026 with Farming Connect playing a key role? Yes, we can. Let’s not forget that they still have out there—. In addition to their actual specialists in the field, which are in the hundreds, they also have the mentor programme—over 90 individuals. So, all of those are key to the SFS transition, and there’s sufficient within this, well managed, to actually do this for Farming Connect. As we transition to the SFS, they’re going to be key to it, Sam.

Okay, and then just one final point, coming back to Jamie’s earlier comments in my questioning around the 5 per cent, I believe you said, increase, if you take away the BPS payment. Was it 5 per cent or 6 per cent?

[Inaudible.]

Six or 7 per cent. How is that then split amongst the portfolio? Is it 50:50 rural affairs and climate change? Is it 60:40, 30:70? Has work been done to determine the split within the department as to how that is seen, or do you, as Deputy First Minister, rural affairs, climate change, see it holistically, and it’s not one against the other, it’s just one pot of money and, ‘I spend it in the allocation areas that I want to’?

Your second point is absolutely correct.

Okay. 

Thank you for that succinctness, because we’ve run out time, we have. [Laughter.] Everyone happy with the questions they’ve asked? No more supplementaries? Okay. Thank you, Minister. Thank you, officials, for your evidence this morning. There’ll be a transcript provided to your good selves for accuracy. If there are any issues, please do come back to the committee. Thank you once again. 

Thank you very much. Thanks, everybody. Thank you. 

The committee will now move into private session. Can I have a proposal for that, please? Thank you.