Cynulliad Cenedlaethol Cymru

Welcome to today's meeting of the Children, Young People and Education Committee. The public items of this meeting are being broadcast live on Senedd.tv. A Record of Proceedings will be published as usual. The meeting is bilingual, and simultaneous translation from Welsh to English is available. We have no apologies this morning. Are there any declarations of interest from Members? I can see there are not.

So, we move on now to agenda item 2, which is a scrutiny session on the Welsh Government's draft budget. Please can I introduce the Cabinet Secretary for Health and Social Care, the Minister for Children and Social Care, and the Minister for Mental Health and Well-being? Can officials please introduce yourselves? So, if we start here.

Bore da. Hywel Jones, director of finance.

Bore da. Albert Heaney, chief social care officer.

Bore da. I'm Alex Slade, director of primary care, mental health and early years.

Bore da. Sioned Rees, director of public health protection. 

You are very welcome this morning. Members have a series of questions, and I'd like to start, if that's okay. I'll start with the Minister for Children and Social Care. So, the strategic integrated impact assessment accompanying this draft budget makes very limited reference to children, and it says that further targeted analysis will be undertaken on children's rights to feed into advice to all Cabinet Secretaries when making final decisions about the 2026-27 budget. Why hasn't the full work on children's rights impact assessments been done already, and why isn't the detail available for this committee and others to scrutinise alongside the draft financial allocations?

Chair, it may be helpful if I take that, because it's a cross-portfolio question, really. So, we have a draft budget that we've published so far. Clearly, there is more work, which Members will understand, that needs to happen to get to a final budget. So, there's an interim SIIA on that basis, which does, as you say, take into account issues in relation to children.

In relation to the approach to SIIAs generally across the Government, we have been looking at how we can improve that process, as it happens. Last year you'll remember that there was significant additional funding that came into the budget in the final budget, which was in relation to childcare, which this committee will have had an interest in, and that wasn't effectively picked up through the SIIA process because obviously it came in at the very last minute. So, we are looking to make sure that we can deliver a final SIIA that does include that fuller analysis.

From the point of view of the children's rights impact assessments specifically, this is a long-standing conversation between committees and Ministers in all portfolios, which Members will understand. The budget, of course, is the funding mechanism for the various programmes that the Government pursues, and obviously that programme and policy space is where there is room to make the children's rights impact assessments, and that's the Government's long-standing approach, as you will know.

Okay. Thank you. I think you've just answered my second question as well, so thank you for that. I'll go straight to Natasha, then, please.

Thank you very much. Good morning, everybody. What area of the health and social care portfolio do you assess to be the highest priority for the unallocated £380 million that's available for the 2026-27 budget? And that's to be decided by January 2026, from our understanding.

Thank you, Natasha. Are you talking about in relation to children and social care, because, of course, the health and social care budget goes right the way across?

Yes.

Okay. So, I think the starting point—and it's important to say this—is to refer you back to what the Cabinet Secretary for finance has already said, and that is that the draft budget that has been tabled so far is the starting point and that there is every intention that the full £380 million that's unallocated will be allocated. Now, from my point of view, we need the budget to be ambitious, and we need it to meet our priorities. Children and young people have always been a significant priority within the health and social care budget, but what I can't do, and I won't be doing, is negotiating the terms of the budget in committee scrutiny process. There is a long process that needs to take place between now and when the final budget is presented, and all parties will have the opportunity to input into those discussions around what the final budget looks like. What I can say, as I say, is that children and young people remain a very high priority for the Government.

But is there any particular area, when it comes to children and healthcare—

Well, again, I have to say, when we negotiated the budget last week—last year, sorry—there were specific areas that we prioritised. Those areas may remain the same, they may change. And that will all come out through the course of the negotiation on how the budget is allocated. So, I can only reiterate what I've said, which is that children and young people remain a significant priority for this Government.

Okay, thank you.

So, I'll ask the next question, and that will be: the majority of public expenditure for children's safeguarding is from the revenue support grant, which sits in the local government main expenditure group, yet the responsibility for children's safeguarding sits with you, so what's your view on the Welsh Local Government Association's evidence that there will be a £200 million pressure on local authority social care budgets in 2026-27? And what is realistic for the child safeguarding system to function effectively in this financial climate, when the committee has already expressed significant concerns about vacancies and turnover in the children services workforce?

Well, thank you for that question. Firstly, can I start by saying that children's safeguarding—well, safeguarding generally, actually—operates very effectively? I know we have some very high-profile cases, which you may or may not want to discuss at some point in terms of the budget, but I think children's safeguarding, largely, is delivered very effectively. And if we look particularly at the Gwynedd child practice review, there was no suggestion, through that review and that investigation, that, actually, the issues that happened in Gwynedd were as a result of staffing levels. So, I think we just need to be very clear about that. What happened in Gwynedd was the result of an evil, manipulative, bullying individual, and was not to do with staffing levels in children's social care. There was a lot to do with not having policy delivered by the practice of staff, individuals, and I think that is something that is being taken into account.

But you quite rightly highlighted at the outset of your question that the vast majority of funding for social care actually comes through the local government MEG and is not my responsibility; it's not the responsibility of the Cabinet Secretary for Health and Social Care either. So, I'm not able to comment on those allocations, and neither am I able to comment on the way in which local authorities allocate their revenue support grant. That is a matter for them. But they know that they have a legal responsibility to deliver children's social services, which includes safeguarding. And, as I say, by and large, I think they do that very, very effectively. But we don't underestimate the financial challenges that they face. And again, I'm pretty sure that will be an area that will be discussed, going back to your first question about—or, sorry, Natasha's question about—the £380 million unallocated.

But what I think is probably important to highlight is that there is significant support that comes from the health and social care budget to support workforce and workforce pressures. So, annually, we provide £45 million through the workforce and sustainable social services grant to all 22 local authorities. That's recurrent funding, and that supports pay increases and measures to strengthen service delivery. We've been funding, as you well know, the real living wage across social care for the last three years. So, we fund the difference in the gap between the minimum wage and the real living wage. We've done that for three years. The recent analysis of that is showing us that we're now reaching somewhere in the region of 85 per cent of all of our social care workers. So, we want to make sure that the next phase of our work is that we reach the other 15 per cent, because the intention is that it does reach all of our social care workers. And beyond that, we invest nearly £11 million in the social care workforce development programme, which supports initiatives like the 'grow your own' initiatives, where local authorities are developing their own academies to grow their own social care workforce, up to, and including, social workers and social care managers. And that participation in the 'grow your own' scheme is growing year on year. And, of course, we did commit to, and we've continued to commit to, retaining the social work bursary, and that's providing nearly £1.5 million a year to make degrees more accessible and more attractive.

Then, finally, Social Care Wales is receiving around £28 million from our budget, to lead on recruitment, retention and workforce development, and that includes the development of delivery plans for residential children's services.

Thank you. Thank you for that answer. Yes, Carolyn.

I'm really interested in growing the foundational economy through care. The business department talks about investment in industry.

Yes. 

But, I think, if we could, especially in Wales, where we've got a lot of rural communities and deprivation, and social care employs lots of women— 

Absolutely. 

—so if we have gender-based budgeting as well, and if we could get some of that industrial business-directed money into social healthcare, to grow the economy that way, it would be a turning point, I think, for us in Wales. Is that something that could be realistic, going forward, if we knock on that door as well?

On businesses. With businesses?

If there is that sort of money there. 

I would say that that sits more with my colleague the Cabinet Secretary for economy, in terms of doing that. But the fundamental premise of your question is absolutely right: social care is fundamental to our economy. It is part of the foundational economy. And if I look in my own constituency at the number of social care workers, and health workers, actually, that are employed in Merthyr Tydfil, in Rhymney, if they weren't there, the economy of that area would be significantly worse. And that's why one of our objectives is to ensure that, when we can, and as we can, and as we have been doing, we uplift the levels of pay and the terms and conditions of those workers, so that we encourage more people into that workforce, because we don't want to be carrying vacancies. Because if we're carrying vacancies, then people are not earning and they're not spending money in the economy, and all the arguments that you're aware of. So, I fundamentally agree with the premise of your question; I think it's a question of how we get there. 

It's how we get there. 

Yes. 

Thank you. [Interruption.]

Thank you. I apologise about the noise, and somebody has gone to rectify that situation. 

Okay, I have a question around placement costs. So, we know the Welsh Government legislated to restrict profit being made from the placements of looked-after children—

Yes. 

—with the aim of easing the long-term financial pressures on local authorities. Yet, the Welsh Local Government Association says that this legislation is already further exacerbating the financial pressures in the short term, pointing to the cost of accommodating children with increasingly complex needs, with reported costs of up to £1 million per child annually.

So, what can the Welsh Government do to support local authorities to meet the costs of individual placements in the here and now, before the legislation comes fully into force in 2030?

Well, again, thank you for that question, and I think, again, it's probably important to have on the record that we recognise how very complex this is. I make no apologies for the policy or for the legislation; it is absolutely the right thing to do. It is a policy and piece of legislation that was driven by looked-after children themselves, who were fed up of being treated like a commodity in a market, and moved around to the highest bidder, basically, particularly those children with the most complex needs. 

But to answer directly your question about funding support, when we started on the transformation of children's social services, we did allocate somewhere in the region of, I think, £68 million, Albert, wasn't it, over three years, to support the transformation of children's services, which included the eliminate programme. So, eliminate, to be very clear, is one element of the transformation of children's services programme. And we know it is a very expensive element, so we are continuing to support local authorities with that. So, there was the £68 million revenue uplift through the revenue support grant over three years, and we have allocated now a further £75 million between 2025-26, up to 2027-28, for that agenda. So, that is going in. So, there is a very tangible level of support coming from the health and social care main expenditure group to support that on revenue.

I think that it is important to point out at this stage that the total spend on children's residential care in 2023 was £198 million. Sorry, in 2016-17, it was £65 million; in 2023-24 that had gone up to £198 million. So, doing nothing in this space was not an option, because the alternative of doing nothing would be far more unaffordable than what we're seeking to do now. And what we're seeking to do now is to improve and reduce costs in the long term, and at the same time improve outcomes for those young people. So, there is a two-pronged approach to that policy.

But what I think it’s also important to note is that there are other funding allocations made to local authorities through regional partnership boards, which is capital funding that supports the development of premises, homes, foster care, adoption services—all of the kinds of things that are needed for children with some of the most complex needs. And I can tell you that via the capital funding, the education and rebalancing capital fund, they have a ring-fenced budget of up to £70 million until 2027 to support that, and to date they've supported schemes in eliminating profit. They've received £1.5 million during 2025-26, and between £2 million and £3 million is currently allocated in 2026-27. That is capital funding, but that's funding that is needed to develop the support that is needed. So, the new children's homes, bringing children back from out of county into county, bringing children who are out of Wales back into Wales.

I did a visit in Ceredigion a few months back and visited a couple of children's homes there, and the director of social services was saying that this was the first time, as a direct result of this programme, that they had now been able to house children who are looked after in Ceredigion directly. They were bringing children back in from out of county, and from out of Wales, to directly support them in a not-for-profit setting back in Ceredigion. So, this is absolutely the right policy, it's the right priority, and local authorities agree with that as well. But we don't underestimate the challenges. We are supporting that in the best way that we can with the funding that we have, and that is being prioritised. And, of course, local authorities have their own responsibility to be contributing to those costs as well.

Did you say that those grants that you mentioned there were ring-fenced funding?

Some of it is ring-fenced. Certainly, looked-after children, children's social care, is one of the five priority areas for funding in the housing with care fund and the integration and rebalancing capital fund. Is that right?

Yes, I was going to say that.

You were going to say that. So, it's one of the five key priority areas, yes.

Okay. Thank you. Okay, we have a question now from Cefin, please. Oh, no we don't, sorry, it's from Carolyn. It's the Cs. [Laughter.]

I think you've covered some of the questions. Mine were on care-experienced children. Out-of-county placements, the cost of those over the last few years has just increased and it takes up a lot of the council's budget, so it's really welcome. And it's welcomed also by the children who are being looked after, the elimination of profit legislation. It's really, really welcome. My question was really about the risk that money will be prioritised into that area and will eliminate the wider radical reform that you hoped to do. So, just if you want to expand on that, really, that you are still looking at that as well.

Oh yes. So, to be very clear, what we are allocating to local authorities, on the revenue side, is for the whole of the transformation of children's services. So, we have an entire programme that you'll be familiar with, I'm sure. So, the funding is to support the entire transformation of children's social services programme, of which the eliminate programme is a significant element. So, the eliminate programme element will account for quite a considerable amount of that, but it's for local authorities to determine how they spend that within the transformation of social services.

And there's an increased need, isn't there, all the time—

Always. But I think what is, again, important to reiterate—and I've said this when we were being scrutinised on the Bill, so it's important perhaps to reiterate it—is that the transformation of children's services programme is designed to reduce the need for children to have to go into care. So, we don't want to be continually having to build new children's homes. We're looking to expand our fostering and adoption services as a preferred alternative to children going into residential care. But if all of that works in the way that we hope that it will work, there should be a reduced demand on residential children's social care.

I recall, when I was councillor, that wraparound family funding was really important to ensure that, as you said, the whole family support network had help.

Absolutely. 

So, there was help for all parents, children, everybody, to ensure that they could remain in their own home. So, that funding is there—

It's still there, yes. 

Okay. I'm going to ask you some questions now on child poverty and childcare. In Wales, we have Flying Start, not just childcare. How much do you think that is known? When I go out there, they go, 'Oh, in England now we can have childcare from nine months.' In Wales, it's Flying Start. It's that family care as well, which is really important, and looking after the child in a different way. So, I just wondered how much that is known.

So, we've got over £50 million allocated this year for the next expansion of Flying Start childcare. It also says that 20,000 two-year-olds will be offered the free 12.5 hours a week of childcare, and it estimates this to be 66 per cent of the eligible population. What's prevented the delivery of the programme commitment to deliver a phased expansion of early years provision to include all two-year-olds, with a particular emphasis on strengthening Welsh-medium provision? Is this due to financial limitations? And I remember the importance of making sure that there are facilities as well, and people who were employed in the sector—that was such a really difficult thing at the time. So, I just, you know—.

Yes, thank you for that, Carolyn, and you're absolutely right, I think. The starting point here is—. And you will appreciate, as Minister for Children and Social Care, my postbag is quite often full of people raising queries about childcare, and I will come on to that and deal with that in a moment, but I think it's important to set out very clearly: childcare is totally devolved, and we have a very different approach to childcare in Wales to the way that it's looked at in England and in Scotland as well.

So, we have our flagship Flying Start policy, and that has been a very deliberate policy to maintain that when it was stopped in England. It was Sure Start in England, if you remember, and it was stopped. We continued with it and we've continued to develop that. And it was deliberately targeted at the areas of most need—the highest levels of deprivation. We had an ambition during this term of Government to expand the childcare element of that, to meet all two-year-olds. When we were in the co-operation agreement, Cefin, you might remember that we talked about what we could realistically achieve within this term of Government. There was an ambition to deliver through to all two-year-olds within this term of Government. Realistically, we have not been able to achieve that, but we are pretty close to it. We have delivered.

So, we haven't stopped the phased delivery of Flying Start. In fact, we are still doing it. So, phase 1 was from 2022 to 2023; phase 2 was 2023 to 2025; and phase 3 is starting now. So, phase 3 has started, but it will continue into 2026 and beyond. And there are two reasons why we've not been able to do it as quickly as we would have wanted to: obviously, money is one, but nevertheless, there has been a significant amount invested in that—£46 million in 2023 to 2025, another £25 million in 2025 to 2026—and additional funding will be required for next year to enable us to progress with the phase 3 expansion. But another significant element of that, which you touched on, is actually the capacity of local authorities to be able to deliver it. So, even if, and some of them have been told, they can have the money tomorrow, they've said, 'Well, there's no point in us having the money because we can't deliver it. We don't have a workforce.'

Is this happening in England, though, as well? Because that's what we get back. 

Yes, I was absolutely going to come on to that, because we hear quite often people talking about, 'Oh, well, in England, they have this', but actually, in England, it hasn't come without its problems, and I think it's very important to say that, in England, it was an announcement that was made for the next term of Government. So, if you remember, it was the previous Conservative Government that announced it. They announced it to come into being following the election in 2024. We had a different Government that came in then, and actually, what that Government came in and found was that the announcement that had been made by the previous Government to deliver this childcare arrangement in England wasn't fully funded and, in fact, it was all part of the £20 billion black hole that the Government has been having to deal with, and there are huge problems with capacity in England in terms of being able to deliver it in the way that it was intended. But that's a matter for the UK Government for England. We've got to concentrate on what we're doing, and I think it would be fair to say that all of us would have an ambition, I would hope—all of us would have an ambition—to roll out a universal child care offer.

So, we have two types of childcare. We have Flying Start, which is the wraparound child developmental project—not 'project'—

Programme.

'Programme'—that's the word I was looking for. So, we have that, which has a childcare element to it, and then we have the funded childcare offer for three to four-year-olds, which, actually, for the three to four-year-olds is a far more generous offer than anywhere else in the UK, because it's funded for 48 weeks of the year. That means that parents get free childcare for three and four-year-olds through school holidays as well, and parents that are in education and training get it, which they don't get elsewhere in the UK. So, our funded childcare offer for three to four-year-olds is far more generous than anywhere else in the UK and it has been a priority in terms of our funding.

So, yes, we would have an ambition to go further than that, and I think all of us are currently in the process of manifesto setting, aren't we, so we will have to think about what we would like to do in the coming years and what the negotiations around the budget might deliver.

So, the discussions today are based on the budget we have now. There is a little bit of an element of wiggle room. And, as Jeremy said earlier, or you said as well, we can't ask you what you would like to go into the budget, but childcare could be a priority that we could actually recommend even from this committee, or a manifesto. [Laughter.]

Absolutely. I mean, that's a matter for the committee, isn’t it.

Yes.

But, as I said, what unfortunately I'm not able to do is to negotiate the budget here with the committee today. [Laughter.]

Okay. Thank you. 

Cefin, did you want to come in here?

If I can just come in on the back of the childcare issue, and, absolutely right, it is a commitment and it is so important that we roll it out as quickly as possible. But we only can do that as quickly as the workforce allows us to do. I absolutely get that. So, what are we doing about investing in training more childcare workers, early years workers? Is that going well, or are we struggling to find enough people to come into the sector?

There is there is absolutely a programme in the early years and childcare sector to develop training and recruitment incentives in the child and play sector. It is a difficult sector to recruit into. There is a perception that it isn't a career pathway, when it can be, so we've got all of those kinds of programmes of work going on, but much like we see in the social care sector, it is an increasingly difficult sector to recruit into. So, it is not for want of trying, and it's not for want of having the sector on-side and for having Government trying to support financially—as well as with the support of people like Alex, who might want to say something about this. But when we are seeing unemployment levels coming down, it becomes more and more difficult to recruit into these lower paid professions, and we will struggle to see—. These professions are not easy ones to go into, and we've seen this before, which is why we are working so hard to try to raise the pay levels, the terms and conditions and the promotional and progression opportunities for people working in those sectors so that it does become an attractive career choice. Alex, do you want to say something about the work that we're doing in that area?

Yes. Thank you, Minister. I suppose the challenge is compounded across the whole care sector in terms of the resources that are available. Building on the Minister's point about that attractive opportunity, on parity between terms and conditions and pay levels so that we're not seeing certain areas poaching resources from other areas, I think one of the biggest areas of progress that have been made in terms of supporting that directly is the rate review increase. So, from April this year, the rate went up to £6.40 per hour—a significant increase. Also, the Minister made the commitment around an annual review of that rate so that we could maintain that parity, because, of course, there is a relationship between the money in and the pay that is afforded to those individuals, so the funding is a big part of that, and that annual commitment is something that we're looking at now for future years.

I'm really sorry, can I just go back to Carolyn's first question for a second, just so I get something clear in my head? You spoke about keeping children in the family setting so they're not going into care homes, and Carolyn talked about wraparound care. Would that be the team-around-the-family care that is provided, and that's being funded?

Yes. All of the work that we see through Families First, the wraparound—

Okay, so that's still happening.

—it's dealing with those families where children are on the edge of care. So, it's about, wherever we can, preventing. It's also some of the pilots, you've seen the pilots that we're running in Pembrokeshire, and, in Powys, the step-up, step-down pilots that have been hugely successful. We went over to Belfast, didn't we, to see the hugely successful project that they've been running in Northern Ireland. The projects that we're piloting here are very much in that mould, and we're looking forward to seeing the evaluation of that, really, because if that is working here as well as it worked in Northern Ireland, then that is very much a programme that we would want to continue because that is absolutely about working with families to keep children at home.

I just wanted to clarify that, because I'd heard some really good stuff around the team around the family, and I wondered if that was what Carolyn was alluding to, that team around the family, the wraparound care. I was wondering if wraparound care is the same thing, as I've heard some good things about that. Okay. Thank you. Natasha, please.

Thank you very much. I would like to ask about assessing long-term impact, if that's okay, in relation to prioritising children's health. Given the investment in children's health yields benefits over decades to come, what metrics, indicators and evaluation frameworks does the Welsh Government use to actually assess the long-term impacts of budget decisions on children's health outcomes?

We have a plethora of metrics and indicators. So, if you look at the planning framework with the metrics set out there, the enabling actions, we've got a set of metrics that we report against 'A Healthier Wales', which is the long-term strategy that, obviously, has particular metrics for children, but the entire strategy is also relevant to children. If you look at the well-being of Wales metrics, there's a range of indicators and metrics at that macro level across the piece about how budgets fund individual programmes and individual milestones and outcomes. And then, of course, in addition to that, each individual programme has its own evaluation framework, or most do, and metrics. So, I think, in a way, the NHS does not suffer from an absence of metrics.

I think the challenge, though—and it's not a challenge that is particular to Wales; it's a challenge that it's probably fair to say is across the UK, and I'm sure much of the international picture as well—is that most metrics, and most metrics on which committees and Members of the Senedd challenge, rightly, Ministers and the health service, despite everyone's best efforts, tend to be metrics around input measures rather than outcomes more broadly. I can't remember the last time I was asked in the Chamber about whether the net effect of the waiting-list initiative is to improve the health of the nation. People challenge me on how long have people waited, how many people are waiting, which is perfectly fair, by the way, but that is what the experience of health services is generally, that that is the stuff that's measured most readily. So, I think there is a fair challenge that you're giving me and any health Minister who would be sitting here, I think, which is how we move the system into one that, bluntly, does what we want it to do, which is to improve health outcomes, in this context for children, but actually more generally. Clearly, that is what it does, but it is harder, I think, to measure some of that

Having said all of that, if you look at individual policies and individual programmes, and vaccination is a really good example, there's a very, very high correlation between good vaccination levels in particular areas. So, HPV is a good example, measles as part of MMR is a good example—there's a very high correlation between a programme and improved outcomes and prevention. So, it is absolutely possible at that programme level. As a system, it is more challenging for all health systems.

Okay. Speaking of outcomes again, how are outcomes such as the reduction in preventable illnesses or improvements in mental well-being tracked and reported to you?

Well, on preventable illnesses, I've given a couple of examples there.

You did.

You know, MMR, measles is a very, very good example and it's one that's of interest to all of us, obviously. So, in the late 1960s, you had about 100 kids dying every year, and then, when you had MMR come in, basically, we got to a position where, essentially, we'd more or less eradicated measles. We then had, as many of us will recall, a period 10 or 15 years ago, I think, in the Swansea area, where there was a dip in uptake for reasons to do with responses to social media campaigns, and so on, and we saw a rapid increase. So, at that level, there's clearly a correlation and we can measure that and it's the basis upon which we design policy, obviously.

On outcomes more generally, one of the things we are working on, as you will know, is the integrated quality statement for children's health, which I hope we'll be in a position to publish, we're saying, in the spring, but, as you know, Government springs can be quite long periods of time, but in that sort of time frame. That will provide clear expectations of the system and evaluation frameworks for how we deliver across the entirety of children's health. It isn't directly a funding mechanism; it's a set of policy expectations, but, clearly, it will enable Governments to allocate resources based on the priorities in that statement and the performance of the system in achieving those objectives.

Okay. And one area that we talk about a lot in this committee is mental health, so can you elaborate a bit more on that area, please, for us? I know you mentioned MMR—

I might ask Sarah to come in on that.

That's great. That's fine.

Yes, of course. In terms of outcomes, or in terms of—?

Yes.

I think, similar, actually, to what the Cabinet Secretary has said, what we do know is that, with children and adolescent mental health services, for example, at the moment, 94 per cent of children and young people and adolescents who come into that service are assessed within 28 days. And it's something like 60 plus per cent, then, that also start their intervention within those 28 days. So, again, a lot of that has come down too. We've got a set of standards now that go out across all of CAMHS, and everybody in every health board has really worked tremendously hard to meet that set of standards. So, that's what we can do from a Government perspective—we can set those standards and then monitor how each health board is achieving them. So, that's a huge one, I think, for us. 

Thank you very much for that. The detailed budget report outlines a major transformation of NHS services to move care closer to home. How is the Welsh Government ensuring that the specific needs of children and young people are being properly considered within the NHS transformation programme?

Yes. The transformation programme has a number of different facets, and we touched on a key facet in the evidence, which is care closer to home or community, by design—there's a range of different ways in which we're describing it. And I guess, if you take a step back, as one of the key elements of the transformation programme—and it's common to the planning framework, the recommendations from the ministerial advisory group on performance and productivity in the work that we set out for the final year of this term, in a letter that I think we shared with the committee, on improving performance together—there's a common thread in all of that, which is around how we can elevate clinical leadership in the system to be able to drive some of these changes.

One of the areas I think where we've made real progress, actually, is in relation to children's health. So, you will recall, I think, the last time we had a budget scrutiny session, we talked about having just set up the child health network, which was established last year. That is there in order to elevate the voice of clinicians in children's health in the system and to improve outcomes and the sustainability of children's health services. That's an example of how we've been very systematic about making sure that, in the priorities that we are trying to deliver, the needs of children are being reflected. They've established a clinical reference group. They've had a real focus in the year or so since they've been established on working as part of the broader transformation programme to reduce waiting times, and it's had very significant success in terms of paediatric waiting times. So, that's one example.

As part of the transformation that we talk about more broadly in the evidence, which is the moving of care into the community and so on, that programme is being clinically led. The chief medical officer is working together with officials more broadly, but also NHS leaders. I wanted to make sure that it was clinically led, because there are some difficult decisions that will need to be made if we are to speed up the process at which we're moving services out of the most expensive and least convenient part of the health service for most people, which is hospitals, into the most effective, most convenient part of the system, which is primary care and other community-based services. All of those judgments are complicated. They will involve difficult funding choices. We've been talking about them for a long time. We have to make rapid progress on them. It's by making sure that we have that clinical voice at all points that we can ensure that happens most quickly. And children's health services are an important part of that, obviously.

Thank you very much. My final question. The Royal College of Paediatrics and Child Health has warned that Wales has some of the worst child health outcomes in Europe and that inequalities are deepening. What targeted investment is being made in the 2026-27 budget to address these disparities, and how will the Welsh Government measure progress in improving child health equality?

We've talked a bit about Flying Start, so I won't repeat the discussion we've had about that. Obviously, the focus on the first 1,000 days that this Government is bringing is really important. The reason we invest into Flying Start and other early-years interventions is because we know that makes the biggest long-term impact on health outcomes. But there's a range of other—. I think you are asking about targeted investments, aren't you?

I am indeed, yes.

In addition to those, there's also funding that we provide to the vulnerable children budget, to things like baby bundles, to the adverse childhood experiences funding. There's a range of specific lines in the budget that are intended to deliver on that broader health equity agenda. I think it's just worth bearing in mind that one of the key set of metrics in our 'Wellbeing of Wales' annual report is about how we turn the commitments we've made to future generations into practical action. There are some very specific targets in that, which really are about health equity through the lens of children and young people. There are a number of metrics in there around children's healthy lifestyle behaviours, for example.

We recognise there's a lot more work that needs to be done. We had a debate in the Senedd recently around child poverty. That has a direct bearing on health outcomes, obviously. You'll know that we've announced that Wales is going to become a Marmot nation, which is about how we can look at health through the lens of all policy. We passed regulations yesterday to make sure that all those bodies subject to the well-being of future generations legislation now also need to bring forward health impact assessments. That's all about closing that gap in health equity. That is, in many ways, at its most stark—. Rather, the opportunity to do that is at its most readily available in the early years.

Thank you so much, Chair. Thanks.

Thank you. We now have some questions from Russell, please, who's on the screen.

Thank you, Chair. Some questions to the health Secretary. You mentioned a few moments ago the quality statement on children's health. You didn't sound all that confident that it would be published in the spring. Can I just check that that statement will be published certainly before the end of this Senedd? I know you hope it will be published in March, but can I just check it will be published before the end of this Senedd?

I will ask Sioned to give us an update on the detail of the timing of it. We want to do a targeted consultation, for obvious reasons, with key stakeholders, as committee will have an interest in that. My briefing is telling me spring 2026, but Sioned can help us.

I think we're saying spring 2026. The aim would be to get that before the pre-election period. I think we're just conscious of the need for us to undertake the stakeholder engagement and the engagement as thoroughly as possible with regard to this as well. So, it's the timing around that. But we can come back to the committee, Cabinet Secretary, with a firmer date. I'm just conscious that the team are really keen to do that engagement across the piece on this, because it's so important.  

Thank you for that; I appreciate that. Will the quality statement be accompanied by an implementation plan?

I'm conscious this is a budget scrutiny discussion and, in a sense, that's a policy question. I'm happy to answer it, but, obviously, the development of that policy will be a matter for the Government in the new Senedd. Whoever is the committee there will be asking whoever is the Minister here, I'm sure, about how that will be taken forward. But in the broadest sense, we will absolutely be working through the child health clinical network to work with the NHS on how that is implemented, and what that means from a budget point of view on the resources that then need to be allocated to that.

I suppose the reason I asked the question was if there isn't an implementation plan, perhaps a plan that was underpinned by clinicians as well, then I suppose the question is how is a future Government going to monitor progress for health services for children in this regard. I appreciate that will be for the next Government, but we're still talking about putting things in place now in terms of the quality statement. That's why I ask how there's going to be monitoring attached to that implementation plan.

The clinical network that I referred to in my earlier answer are clinicians. So, the plan is being co-developed with clinicians, and the implementation of it will be agreed with the network, who are the child health clinicians, really. That's already baked in, if you like, to how we take it from a plan into action on the ground. I know this is not the point you're making to me, but I don't think any of us think that just having lots of plans is what we need. We want to make sure this is translated into action on the ground. I know that we all think that. The voice of clinicians has been absolutely critical in getting us to where we are through the consultation and how that's implemented on the ground. But from the point of view of budget, I think the important point is that will then inform how funding can be allocated in future years.

Thank you for that. How many children are still waiting over two years for treatment in terms of referral-to-treatment times? 

On paediatric referral, RTT waits of over two years have come down by 91 per cent since the high point in March 2022. My note here, if I'm reading this correctly, Chair, is telling me that there are currently 483—well, in September, which is the most recent figures that we have currently—paediatric pathways over two years, and the vast majority of those are concentrated in two health boards, which are Cardiff and Vale and Betsi Cadwaladr. On the point I was making earlier about the focus that the clinical health network has brought to reducing paediatric waits in particular, 483 is obviously too many, clearly, and we want to get that to zero, but that there's been a 90 per cent reduction from the peak, which I think is positive progress.

Thank you for that, health Secretary. And you want to get that to zero by next March—that's your target. So, are you on track to achieving that?

We've got the plans, the funding is in the system, we look now to the health boards to deliver that. As I say, the vast majority of that issue, if I can describe it in that way, is concentrated in two health boards, and I think all of the issue is in four health boards. What I think we're seeing—and this isn't specific to children, as it happens, it's also true in particular specialties—is that the challenges that remain are quite specific and quite geographically defined. That is frustrating if you're one of the people with that need in that area, obviously, and I absolutely recognise that. But from a policy point of view, and how the Government and the health service can respond to that, that narrows, if you like, the challenge, and so it means that focus can be brought to those particular areas, and additional funding where that's possible. But to be clear, I don't think the only solution here is funding. What we want to see is services being transformed as well.

Sure. So, just to be clear on this, because it's your target to eliminate all two-year waits by next March—

It is. 

So, will that be achieved? Or is it a target?

I'm expecting it to be achieved, certainly. 

Thank you. And the additional investment you mentioned, and in your evidence paper as well—clearly that is a one-off targeted intervention to help you to eliminate those two-year waits. But do you think there's sufficient funding in place to sustain that target, so we make sure that once that target's been met—unless there are unforeseen circumstances, of course—those two-year waits are never exceeded again? 

Well, it is a one-off, but it's a very significant one-off sum, as I think we would all acknowledge. And what we've tried to do with that funding—. The solution to the challenge that we face cannot be injecting pots of money on a temporary basis into the health service so that it can deal with the backlog on a responsive basis. Clearly, that is what we’re having to do at the moment, but it is not where any of us want to be in the long term. But what we are also doing with that money is changing how services are delivered so that the changes that we are seeing happening already are sustained.

But also, crucially—and this is very important—what we're trying to do overall is get the system back into balance. And one of the challenges that we faced for a number of years is, because the backlog has been increasing faster than our capacity to address it, the focus of the system, perfectly understandably, has been on getting that backlog down, and that means that choices are made elsewhere that make the ongoing delivery of that service challenging on a sustainable, efficient basis. So, by putting in the extra funding, focusing on the size of the waiting list as well as the speed of treatment, we are starting to see the system coming back into balance.

If we hit our targets, which I'm expecting that we will be able to, to reduce the size of the waiting list by 200,000, which is 25 per cent, more or less, by next spring, that will have begun the process of putting the system back into balance so that it can be more sustainable. So, it isn't just about saying, ‘Oh, can you make sure there's an extra £120 million next year to do the same thing again?’ That would not be a good indication of how the system is working. I hope that's helpful. It's quite a complex thing to explain, but I hope that's helpful.

Yes, thank you, Cabinet Secretary. I totally agree. That was what was behind my question: we don't want targeted interventions like that again, so is there sufficient funding that's planned going forward in order that that targeted intervention isn’t needed? But I think you've answered that question.

And then my final question: how does the draft budget support a strategic and sustainable approach to developing the child health workforce needed in Wales?

The needs of children's health in the workforce are sometimes particular, but also sometimes a subset of the broader planning that we make. You will see there isn't one—. I know the royal college, for example, is calling for this, but there isn't a single plan for paediatrics specifically. So, many of our existing plans will have elements relevant to child health: perinatal care, community nursing, allied health workforce strategies will all have relevant elements.

I think if you look at what the planning and recruitment process so far has delivered, if you look over the last 10 years, there's been a 48 per cent increase in the number of paediatric consultants. I think what we are seeing is a marked increase. But I think it's really important. I do understand why individual colleges sometimes ask for a bespoke plan for the part of the system that they're responsible for. I do understand why that call is made, but actually, we have one NHS delivering services for a range of different patients, and we have to look at it from that broader point of view, I think.

Thank you, Chair. 

Thank you. I have a quick question on the quality statement. We received a letter from the Cabinet Secretary and Ministers in February saying that the quality statement would be available by the end of this year. Can I just quickly ask: why the delay?

I guess to get it to the best possible position, but Sioned can help with that. 

Yes, I think it's because we were wanting to ensure that we're undertaking engagement with stakeholders, so that includes the clinical perspective of this as well, but also children and young people as well. So, it's enabling us to do that in the right way, and ensuring that we get to a product that really makes a difference at the end. So, that engagement is critical; it's part of the process of doing this.

Okay. Okay, thank you. We now have some questions from Vaughan, please. 

Can I just follow up? So, if the statement is published in March, then there'll be precious little opportunity for scrutiny. It will, essentially, be published and something for a new Government to pick up. And that challenge goes back to some of the questions about how that's planned for in the budget. Because if the final budget is passed in February, that allocation goes to health boards, and if there's then a plan published in March that potentially changes how delivery should take place, it squeezes the time for the system to actually plan for that new introduction of new policy imperatives. And it also goes back to Carolyn's questions at the start about we have a draft budget to scrutinise, not a potential future budget. So, we're trying to understand now about the central planning assumptions about whether you're trying to build in additional capacity, or whether, actually, you expect the child health plan to be about how you draw together current resources and you don't expect it to have an additional resource need attached to it.

Yes.

Because if the final budget is passed in February, that allocation goes to health boards, and if there's then a plan published in March that potentially changes how delivery should take place, it squeezes the time for the system to actually plan for that new introduction of new policy imperatives. And it also goes back to Carolyn's questions at the start about we have a draft budget to scrutinise, not a potential future budget. So, we're trying to understand now, about the central planning assumptions, about whether you're trying to build in additional capacity, or whether, actually, you expect the child health plan to be about how you draw together current resources and you don't expect it to have an additional resource need attached to it.

Yes, well, those are important challenges in putting together a budget, aren't they, in any context, I guess. What we are not, unfortunately, ever really in a position of doing is saying, 'Here's the settled policy, and that is the value attached to each of those elements, and that's in the budget.' There have to be sensible assumptions, I guess, about policy in development, which is what we're talking about now. So, there are two challenges. One is how, when that is published, we implement it—the challenges I was alluding to earlier—and how we move a system into one that then responds to that quality statement, necessarily over time. That won't be done entirely within the first year, for perhaps obvious reasons. But that's really about resource allocation within the current envelope. As you will know, the approach generally to the budget is one that has uplifted the MEG, and obviously there's a discussion going on about the funding that is left, although that is, frankly, only about 2 per cent of the entire funding. It is important, nevertheless. So, obviously I would hope and expect to see that an element of that comes to the health portfolio. And then a Government will be able to take advantage of that additional resource to the extent it's needed to reflect some of the priorities in that plan. But I think the point you make is perfectly fair about the sequencing of it. That's inherent, to some extent, in the budgeting process. We just need to make some sensible assumptions, really.

Of course, it's something the Government's got control over, because it's the Government's quality statement, which has been long planned. I just want to understand from the point of view of budget adequacy. Headline inflation is down a bit to 3.6 per cent. That affects the value of the settlement for last year, but also we know that service inflation is often different to the headline inflation that you see in the news. I just want to check what the current understanding is of service inflation across health and social care. If you've got a figure for children and young people's services, that would be great, but understanding that current figure would be helpful for us, because there's then a challenge, isn't there, about how that current figure maps across to your expectations about efficiency savings, and then budget adequacy in the draft we've got ahead of us. 

That's a challenge for all Cabinet Secretaries in their budgets, but certainly it's true for us as well. So, Hywel, can I ask you to comment on that?

Yes, thanks for the question. I think the assumptions being made on a base level of inflation I think are true of all services, but I think the point is right around that impact being differential across different portfolios. I think there's a particular challenge in a health context around health-specific inflation and also unavoidable demand, and then layer on the dimension of additional treatments and so on. If you look at health-specific inflation, if you took something like the consumer price index for health, our most recent assessment of that is running higher, in terms of about 4 per cent, 4.5 per cent. That'll be more relevant for specific areas of the portfolio, such as medicines, for example. So, some of the process that we've been working through currently is actually setting out what that macro assessment is for us in terms of inflation, demand, new treatments, going into next year.

So, it's—

Can I just—

Yes, of course, yes.

And pay awards as well—would that be part of that as well, that you've got to assume any pay awards out of it?

Pay awards would be a part of that as well. So—

At what percent, normally—4 per cent?

No, it was the planning assumption.

So, our planning assumption for next year on pay across Government, is 2.2 per cent, which is consistent across the Government budget.

Okay. Well, if there was a current trade union officer in the room, I don't think they'd suggest that 2.2 per cent is a realistic assumption for pay in any part of the services that Ministers are responsible for to the Senedd. Look, the reason I'm asking is I'm trying to understand, when we're going through the conversations, going back to Russell's questions about £120 million, will that eliminate two-year waits and is it then sustainable. It's also about the draft budget we have, which is the only budget we can scrutinise now. Health service inflation is running at roughly 2 per cent more than the draft budget provides, and that's before you've taken in how much is, what's the impact on, the value of the settlement, given that inflation has run a little hotter than people expected over the last year. The good news is that it's expected to fall in the year ahead. But part of the challenge, surely, is how do you get to balance, when our health service delivery bodies are not able to meet their financial targets as we speak, and we're talking about significant increases in demand, not just for new medicines, but, actually, health population, health outcomes, what that means for the service. Because I'm trying to understand: is the health service, in your view, in the budget that you've got, going to be able to meet those demands with—? And is it about money, is it about reform, is it about both? There's been a view in the past that the health service has got loads of money—it doesn't need more money, it just needs reform. But I'm trying to understand your view: does it need both reform, innovation, and investment?

My view is completely well known, which is that I think it requires both, and we're delivering on both. So, the larger question that you're asking me is: are we in a position where, given the funding available, despite it being significantly increased, it's adequate to meet what we foresee to be the demands of the health service, both from the point of view of patient demand and health inflation? The answer to that is 'no', because we know that is rapidly increasing. This is not a challenge that is unique to Wales, by the way. I think I could find, very sensibly, a way of spending every single penny that's left in the unallocated part of the budget for the health service in a productive and useful way and still not have the funding that I think, in the long term, the health service needs. So, the challenge you set out is perfectly fair, but, in the context of that funding constraint, the task I have is to make the case, when we come to that discussion, for making sure that the health service has as much of that additional funding as is possible.

But that still comes back to how we scrutinise a budget, if your message is that we need reform but also need investment. It's about what can we realistically expect from what's in the draft in front of us. Going back to the previous questions we've had, are we going to be able to meet and sustain the improvements that are set out, as well as the things that aren't come on to? Because that comes back to how the budget's set and how we scrutinise. Because, at the moment, it's hard for us to do a scrutiny exercise on a budget that we expect to change, with demand that we—. You can anticipate demand going in a certain direction. What does that then mean for actual choices within the system? If the system is being asked to deliver in a way that it can't sustainably do, it doesn't just get back to the most efficient way of spend, but whether there's a fair challenge being set for health delivery bodies—

There is a fair challenge being set, and that challenge is specifically not to continue delivering in the way that they are. This is a challenge that has been evident for quite a long time, it seems to me. There are requirements that we have made of the system that simply haven't been delivered, and that has led us, partly, to where we are today. So, one of the challenges that we've been very clear about in this year's planning framework is that there are a set of metrics against which we will measure the system most keenly—they're in the public domain—and a set of 30-odd enabling actions, none of which are new, none of which have been delivered consistently in the past, and we're expecting health boards to do that, and we are tracking where they're doing it. So, part of the public accountability process that we have at the moment is about looking at where are individual health boards in terms of their performance against those measures, and they're measures that are evidence based, they're ones that we know will deliver better outcomes and more value for money, so putting the system back into that more sustainable way of working. So, for example, in your constituency, Llandough hospital has done exemplary work in reforming the cataract pathway. So, they've co-located services and they are now hitting the very top end of the Getting It Right First Time recommendation in terms of the number of procedures on a list. So, that's exactly what we want to see. That hasn't required new staffing or, as I understand it, new resourcing; it's about how the existing resource can be better deployed. Now, we can all point to individual services, can't we? But what we want to see is that becoming the norm. That's obviously more challenging, as I know that you know. So, that's what we need to see: how can we look at evidence-led interventions that we know, if delivered, will improve the service for patients and reduce the pressure on the conversations that we're having this morning?

So, are you in a position where you're going to be able to send to the committee, even after today, the list of those interventions that affect children and young people and the ones where you expect that a different approach to performance and delivery will deliver, in a sustainable way, in those areas where there's new investment needed? Because it's a bit like a moving target, almost, when it comes to scrutiny, and the value of what we can do is affected by that.

It is a moving target. In the context of constructing the budget, it's also a moving target from my point of view, as you'll appreciate. What we want to—. But I'm happy to share the information that we have in the way that you've asked, so there's no question about that.

The challenge has got to be—. Look, put simply, I think what we need to do is make sure that, over time, we can provide sufficient additional resource to health bodies that they can do the transition work that's required to move to a different way of delivering services. Sometimes that does involve, for a, hopefully, short period of time, some element of additional funding, because there's double running, there's that staffing. We talked about moving services into the community. As you will obviously know, what can't happen is we just switch off a service on the Friday and it pitches up somewhere else on the Monday. It's not that straightforward. It requires an element of transition to get there, and often that requires a bit of additional funding.

But what we cannot do is expect that services that are currently being delivered inefficiently can simply have a larger and larger claim on public funds, at the expense of other parts of the public realm. That is not a defensible position. So, we need to make sure that those services are delivered effectively from a value-for-money point of view and, crucially, from an outcomes point of view, so that if that does require more funding in the long term to meet demand, which I can imagine some services that absolutely will, I can then have a conversation with the finance Minister, with Cabinet colleagues, that says, 'These are really super-efficient services, the pathways have been reformed, but the level of demand requires more resourcing.' That seems to me a fair conversation for us to have. It's very challenging to make the argument that services that aren't delivering like that can simply expect more and more funding. That is a very difficult argument to make.

And that wasn't the question I asked.

Sorry?

That wasn't the point that I was making either. It's about how you get there, how we scrutinise what's happening, when, actually, the plans being presented to us, from your own evidence, don't appear to be sustainable, and there isn't enough money to do what the service needs to do without some shift and change.

One of the things that isn't in your paper is about the interface with other services, including education, which obviously this committee has a significant interest in. We spent a lot of time looking at ALN reform, we've had the Cabinet Secretary for Education in with us recently, and one of the points that we know comes up, which we get in our own postbag as well as in the review, is the interface with health. She told us that you were due to meet imminently when she came last to committee. I just want to check, not just whether you've met, but, actually, what that then means for your strategic oversight about how to fix that interface. Is that a policy and practice challenge, and where's the ministerial expectation from you for the system about how it behaves alongside education, which, of course, you'll be aware of from your previous ministerial role? And is there then a budget challenge about delivering that service, so that it's a smoother and a better experience for parents and children? Because, at the moment, it's quite distressing, and the reforms haven't delivered what we want them to. But, like I say, the health interface is a regular challenge that comes up, and it was definitely something highlighted in the recent review.

Yes, and you'll know from your own experience as health Minister that that's a challenge, and has been for some time. So, the meeting is coming up shortly—I haven't got my diary in front of me, obviously—but officials discuss this all the time, which is what you'd expect. So, the challenge is very real. I think the level of demand that we are seeing in the ALN system is probably unforeseen, and the level of cost that that has created in the system, I think, is certainly unforeseen. Whether it was foreseeable is a separate question, obviously. And there are complex questions of interface between education and health here because, obviously, in the usual way, there's a clinical triage element that happens within the health service that drives the allocation of support and resources, and what the ALN reforms have done is change that balance.

So, those are complex questions and they do require a larger discussion. This is something that the Cabinet itself has discussed, looking at how we can improve that interface, obviously. So, it's something we obviously want to do.

Okay. We may want to come back to that in the new year, before the term ends, on how the interface is being managed and resolved. Because it can't just be the responsibility of one part of the Government, it is an interface between significant parts of it and, you know, the leadership perspective that you have is important in delivering that. On to some more general—

Can I jump in a minute on that? So, we need to talk to the business Secretary for the care industry, and then health to talk with education regarding ALN as well. We've had two petitions on ALN and one was asking for ring-fencing of education funding, but specifically ALN as well. So, we're just hoping that that will be a priority going forward.

I just want to support something that Vaughan said regarding budget setting. So, with it being set at 2 per cent at the moment—we're hoping it will shift—it feels to me as well that we're scrutinising something we hope will change and needs to change, and it feels like we should be actually scrutinising the final budget or what could be there. As a councillor, we were just like—. As councils will have to do now, they're looking at a 2 per cent uplift. So, they'll have everything on the table, 'This is what we're looking at now, which is dire, and then, if we get an extra 2 per cent, these are the things we might be able to save, such as leisure services, parks, mother and toddler groups, et cetera.' And it feels like we need to have that idea of what's there, what difference an uplift of 2 per cent will make. It was useful having that conversation earlier, that 4 per cent is needed for health, because of inflation of medicines and all these things. But recruitment as well is also an important part of it, and wages. So, I just think, for us to have a better understanding here, as part of the Senedd scrutiny of budget process, I just feel we need to have that bigger picture. I just wanted to say that, sorry, in support of what Vaughan was saying, because we'd had that discussion earlier. Thank you.

Can I get into children and young people's mental health? The acceleration in the pandemic was an acceleration, not an unique event in itself, because we've seen a shift in children and young people's mental health over a period of time. So, I'm trying to understand what the Government takes into account in terms of evidence and analysis about those causes, but then how that informs the budget choices. Because not all of this is in the gift of the health service, but when a child or young person comes to the health service, at whatever stage they're at, there's a challenge around their service response.

So, you don't have to give me chapter and verse on all the points of analysis; I'm trying to understand how that informs your long-term budget choice, and then going back to the point about the adequacy and the ability to make those choices to improve outcomes for children and young people.

Thank you. So, we've had a very significant year this year for mental health and well-being, because we launched 'The Mental Health and Wellbeing Strategy 2025–2035', and we also did the suicide and self-harm prevention. And in order to get to that point—and it comes back to what we've discussed this morning about producing these quality statements and all the work that we really do in health—it is tremendously co-produced.

So, for us to be able to produce those, there are a lot of published analysis assessments that were done, going into those consultations. And, of course, that includes many people who represent the voices of young people and also young people's voices directly, on what they wanted. So, that was where we got a lot of the analysis of what children and young people wanted from a mental health and well-being perspective.

I'd also say as well that you will know that we have set up the strategic programme for mental health and well-being, we also have the Wolfson Centre at Cardiff University, which focuses on mental health and well-being. We have the national suicide and self-harm research centre at Swansea University. Professor Ann John is a big part of that and she has done a lot of research to show that, especially around self-harm, some of the impacts can come from school exclusions, they can come from mental health issues, they can come from adverse childhood experiences. And then, also, we have got Public Health Wales at the moment developing a mental health needs assessment for babies, children and young people, and that will also be a key document for us. 

So, a huge amount of analysis, and I'd like to say as well, a lot of it coming directly from the voices of children and young people.

So, earlier, in the different discussions, there were points made around the CAMHS performance, and 90-odd per cent being seen within the 28 days of referral, and I understand that you've made an additional annual investment to the service, and you also mentioned the strategic programme for mental health. I'm trying to understand what that means in terms of not just percentage, but the number of people. Because part of the challenge that the health service regularly has is, if you perform to a very high percentage, depending on the volume in the service, there are still a lot of people who aren't getting what we would all want them to. And that then doesn't tell you about their experience; it tells you how quickly they're seen. We often measure time. It's easier to count than it is to measure an outcome, and I understand that very well, but I'm trying to understand whether you think that the money you've invested is at a point where the system is going to be—to use the Cabinet Secretary's phrase—in balance and sustainable, or if there's more that's needed to be done either on service reform, or indeed on additional investment.

Yes, of course. So, through all of that analysis, what's come through very clearly—and this would include the children's commissioner; this would include the Welsh Youth Parliament as well, for the Senedd—is that they wanted preventative measures; they wanted community-based support; they wanted open access; and they wanted early intervention. So, that is exactly what is being prioritised.

As you know, £840 million is currently the budget, ring-fenced. It will continue to be ring-fenced, and always fought for and supported. It's going directly to the health boards who then provide the CAMHS services, and then a huge breadth of services that they take into account. But, already, I think what's made a huge difference is that, in response to a review of the CAMHS in-reach to schools—and we just mentioned the link with schools—we have recently transferred the CAMHS in-reach from Public Health Wales over to NHS Wales Performance and Improvement. So, that's now coming under the broader CAMHS, because we are seeing not only the excellent improvement around waiting times and interventions, but we're also then able to set those strategic, national standards that everybody needs. So, that's going to have a big outcome, and that's £13.6 million to support the learners' emotional needs. 

But it's not just that. I think one of the biggest parts that we've done—and this actually came through the co-operation agreement as well—is the sanctuary model. So, we've now had the sanctuary model that's been worked on by all of the health boards. Platfform run the one, for example, in Barry, and the one in Cardiff, and we're doing an independent evaluation now of the outcomes from those. But I would say that I visited both, and if you talk to people there and the service providers—and I've also talked to the young people there as well—they're saying that this is exactly what they were asking for. It's drop-in; it's every evening; it's outside of those school hours. So, I hope that it's taken that pressure as well off schools and off teachers. This is where it's very much wraparound, and they get one-to-one sessions if they need them. It's very much led by the children and young people themselves. When I went to the Barry one last week, The Hangout, they had a list of expectations as to how people behave in there and things. So, I actually think that the sanctuary models now are going to be a huge step forward, and also then within the mental health and well-being strategy, because we currently have people putting in bids to be able to go forward and be a demonstrator in the open-access services we're providing, and some of those, I believe, will be the children and young people services. So, that's where we're targeting. 

So, you mentioned there, I think, £840 million in the ring fence. Is that the broader mental health ring fence you're talking about?

Yes.

Okay. So, from a CAMHS service point of view, that's part of that. So, I thought I might have misheard what you said, and I didn't want to hear you suggesting that there's £840 million just for CAMHS.

No, no, of course not.

So, you're positive about the sanctuary model.

Yes. And CAMHS in-reach.

And I guess the challenge is, again, from a continuing budget point of view, about whether there is enough to roll out the sanctuary model on a consistent basis, from the pilots that have been done, assuming the evaluation is positive, because that's a future service improvement that also potentially is a future budget pressure. Or is that about a smarter use of current resources, including the way that the CAMHS in-reach model works, and whether from a budget point of view you're content that, within the draft budget ahead of us, there's going to be enough to deliver that, on—as the Cabinet Secretary said—a sustainable basis, where the system is in balance, given what we understand about the demand pressures that we started talking about?

Yes, of course. So, I think you can see this more clearly when it comes to mental health provision, which is that wherever somebody comes into the service, the higher up the need, the more complex and specialist, the longer they've been waiting for help, the more expensive the service is. So, I think that, in mental health and well-being, we'll be able to really now see that movement where we start to move things back from acute and specialist into the preventative space. And that's why I say that having that CAMHS support within schools and also having a sanctuary model is going to be absolutely crucial to this.

Anecdotally—I'm so sorry, I'm going to sneeze. No. [Laughter.] Anecdotally, we know that they're very much working together with CAMHS, which is really good, but we do think that it is taking pressure off CAMHS. So, then, I think that this could end up being a really good example of where we're able to invest the money much earlier. And actually, hopefully, relatively quickly, through our three-year initial delivery plan for the mental health and well-being strategy, we will be able to see that that pressure can be released.

Now, a lot of this will come down to health boards, and that's why this evaluation, an independent evaluation that we're doing—we're not going to just base it on anecdotal—will be qualitative and quantitative evidence, of course, both so important when it comes to this, hearing from the young people as well, and the difference that it's made to them. But already we are seeing brilliant outcomes from this. So, I'm hoping that we will have that evaluation done towards the end of this year, and then this will be able to inform those decisions going forward.

At the moment, the pilot has cost about £2.6 million. So, again, if you speak to stakeholders and people in the third sector who are working often very closely with local authorities, with health boards on this, like I said, it's the cheaper end of service provision, and yet so incredibly effective.

I have one final question, then I need to stop. I appreciate we're going to have to write afterwards because there isn't time, even in the time we have allocated, to get through everything. But the neurodivergence improvement programme, I don't think we can move on without asking the question about whether that programme, again, is delivering the improvements that you expected it to, in reducing not just waits, but then actual treatment and support options, again to improve children's outcomes, and whether, again, you think that the money that is currently allocated and available in the draft budget will mean that it is a sustainable service that is in balance with the needs that it actually faces.

Yes, of course. So, yes, this is a very important issue. It was something that came up when the First Minister went out and met the people of Wales. They said, 'We have to get the waiting times down for children to have their assessments.' We know that it's related to outcomes and attainment and confidence and mental health, honestly. So, that's why we've really prioritised it. When the Cabinet Secretary put the additional money into the system last year to bring down waiting times across the board, that's why neurodiversity was incorporated into that.

And, actually, what we did see is that, in that case, if you did put more money into the system, the waiting times did come down. And we managed to get those waiting times, across all of the health boards, under the four years as we intended. Now, what I decided to do—it's probably one of the most significant decisions that I've made this year, in terms of the budget allocations—the money, the £13.7 million that goes towards neurodiversity and transforming the service and waiting times, is, like I said, £13.7 million additional, and I had to make the decision. As soon as that money came out of the system, the waiting times started going up again because there is so much need. Just as quickly as you can do the assessments, more people are coming through. My intention is that we are going to get to a place where every child and young person who needs an assessment, and is referred, gets that assessment when they're a child and young person. And then we won't have, which is a separate issue, but very much at the top of my agenda, the adult waiting times that we also have in this space.

So, I did have to make the decision. It wasn't a completely popular decision. It was a difficult decision to make. But it comes to the questions that you were putting to the Cabinet Secretary beforehand as well, which is that I've had to decide to take part of the money, almost half of the money. Then, each of the health boards had to submit a plan of how they were going to deliver 30 per cent efficiency gains. Some of them, by the way, are already under the three years. Some of them are under the one year. It's not across the board. I want every waiting list under three years by the end of this financial year.

So, each of them then, based on what they required, have been allocated that additional funding to keep the waiting times coming down. But also to be doing that transformation work alongside it. I guess we'd have to assess where we get to. Again, I'm confident that we will reach this target. And then we'll have to look at the future of the service. But, like I said, the main thing at the moment is to clear the waiting lists. 

Okay. I understand what you're saying about not quite the balance yet, and there are always budget choices to make. I need to stop, Chair, and thank you for not talking over me whilst I—. Thank you for the comprehensive answers. 

We now have some questions from Cefin. I'm really conscious that we've only got five minutes left of this session. So, be very brief, please, with your answers, and brief with your questions. Thank you. Sorry, Cefin. 

Well, that brings us to the end of our marathon session. I'd like to thank you for joining us this morning. We do have some extra questions that we would like answered in a timely fashion, please, because we have a report to write, and our poor clerks are really up against it. So, thank you again for joining us this morning. We'll now take a short break until 11:15.

Welcome back. We'll move on now to agenda item 3, which is the scrutiny session with Medr on the Welsh Government draft budget. Welcome. Please could you introduce yourselves for the record, please?

I'm Geoff Hicks. I'm director of development, investment and performance at Medr.

Good morning. I'm Rhian Edwards. I'm the executive director for investment and policy at Medr.

You're very welcome, and thank you for joining us this morning. Members have a series of questions, and we'll start with Natasha, please.

Good morning, everybody. Firstly, I'd like to begin by thanking you for providing your latest indicative funding figures, as well as the broad funding assumptions for Medr's budget in 2026-27. Drilling into the details a little bit further, I note that the indicative funding has increased to £25 million, or 2.6 per cent, from your previous assumptions and that you've set roughly £11.8 million of this funding in your letter to the committee. Can you please tell us a bit more and give us a bit more detail, please, if possible? Where will the £13.2 million left over be going, please?

Okay. The increase to the budget is £25 million. What we've done with the increase is apply the inherited funding methodologies that we have from the Higher Education Funding Council for Wales and the Welsh Government, as a relatively new organisation, to the way that we calculate the core budgets. So, you'll see in some of the tables towards the back of the paper where those budgets are increasing across academic years to reflect the increase in participation and the increased cost that comes with participation. So, you'll see there are seven areas that we were funded for in the indicative funding letter we received from the Welsh Government, and then what we've done is we've applied our funding methodology across the different parts of the tertiary education sector to review the budgets across that table.

I think the particular one that I'd probably draw the committee's attention to would be to the increase in the budget for further education provision. That's as a result of increased participation costs in further education that were predicted, not least because of the demographic but also because of the increases we've seen in recent years. And it's important to say that it's not just about the increase to that budget around participation, but also the support that's needed for learners in that budget as well.

Okay. Thank you very much for that. Just for clarity, for my benefit, because there are a lot of figures being thrown around on those charts—I'm not going to lie to you, I was trying to get my head around them most of the weekend—and I appreciate where you said that the money is going to be spent, but just for my clarification, and I'm sure the committee wants to know as well, will any of this money that you've just spoken of be spent on the pay between further education institutions, as well as sixth forms? If not, where do you see it being directed a little bit more towards?

So, pay parity, this is, yes? So, yes, we will maintain the pay parity arrangement that we've had funding provided from the Welsh Government for, which is around £14 million. So, that goes into the core methodology for the allocation of funding for both sixth forms and FE colleges.

Great. Thank you very much, Chair. Thanks.

Okay. Thank you. We now have a question from Vaughan, please.

So, let's go back to your point about further education and the challenge, which is, in one sense, a positive challenge—in terms of participation, more young people going into college. But you made the point about the support needs they might have. I just want to understand whether there is adequate funding in the system to meet the positive challenge from that increased participation, together with the support that some of those young people may need to stay, and what that means about the cohort. Is it just the size of the cohort and a population bulge, or is it that we're actually doing better to get more people into further education, and the routes in as well? We've seen, for example, increases in education other than at school, and not all of those are home schooled. I'm trying to understand, from my point of view, what that looks like. Is it just population, and has the share gone up, which is an even better story? And then, as to the support needs they have as well, is the budget adequate to make sure that we don't end up having FE colleges coming back to a future Senedd, saying, 'Actually, we're really struggling because we haven't got enough money to deal with all the fantastic, increased numbers of young people coming into the colleges'?

So, I think 'it's both' is probably the summary. So, it is an increase in participation generally into post-16 education because of demographics, but it is also an increased share of that participation going into FE institutions. And we apply the same funding methodology to sixth forms as we do to FE colleges. But what you'll see is that the increase in FE—the budget increase that we're proposing for FE—is significantly greater than the budget increase for sixth forms, as a result of that increased participation. And we run the funding methodology across both of those sectors, if you like, in the same way, to ensure that we are funding where the learner choice has driven the learner towards. 

I think the support for learners is a really important point. And we're really pleased, in the indicative funding letter we had from the Government, that there was recognition of the financial contingency fund as an example of that, and the additional funding for additional learning needs that was provided to provide that wraparound support for learners. Because it's not just about them participating; it's also around their experience in further education, and also the outcomes that they achieve at the end. 

Having said all that, there is a significant pressure because of that increased participation in FE colleges. And I'm sure, as part of your evidence, you'll hear about some of that. This year, we were able to set aside £21 million to recognise that increased participation challenge in FE, and we're just in the process of finalising the allocations for this financial year from that £21 million. I think it's fair to say that we're expecting a pressure into the next year, as a result of this increased participation, and particularly if we see these trends continuing. So, whilst there is a significant increase to that budget, I think we have to be mindful that this increase, particularly if it's sustained, will generate further pressures in future years. 

Rhian. 

Just to add to that, we're doing some analysis in terms of those enrollment trends, because we are seeing a different type of learner coming into the system. We've seen a significant increase in learners taking up lower level qualifications, which means their progression route could, potentially, be longer in the system. We'd be happy to share that analysis with the committee, because I think that will be quite interesting in terms of looking at data trends over the last couple of years and what that might mean in terms of projections, moving forward. 

We've just done a piece of work on participation post 16 as well, so it's good to hear a success story, but also, at all levels of the skills and ability, because part of our concern across the committee is that people who aren't in education or training are more likely to have more difficult life chances and choices ahead of them. So, if we are seeing people coming in at all ranges of ability, that's a good news story. But we'd also want to see the people who are on a pathway where they're looking at high skills, whether it's vocational or otherwise, because I wouldn't want to continue with the idea that some people have that it's a choice to go there if you can't go somewhere else, whereas, actually, it's a place of choice, and your point about learner choice driving that. 

We've previously heard that the Welsh Government doesn't approve funding allocations decided by Medr. So, there's the overall allocation you get, and you then decide how to move that money around, but that some funding lines are steered by Welsh Government priorities. I'm trying to understand how that works. Is that, if you like, an example of soft power and direction, or is it more than that? It wouldn't be the only area of Government activity where there's quite a significant influence from a Government department without actually directly affecting something. Is it that you decide, 'This is what we're doing. We've heard what the Government are saying—we'll do that', or is there an ongoing conversation with the Government about what that means?

It is probably worth saying that it is an ongoing conversation. One of our roles as the arm's-length body is to understand the pressures and the opportunities in each of the sectors that we fund and regulate, and to then present that information to provide insight to the Government on how they are determining their priorities and insight into the pressures they are challenging. So, that's probably the start of the conversation.

And what you can see, then, coming out at the other end, if you like, in terms of the indicative funding letter, is the Government doing two things. It's ring-fencing some of the budget that comes to Medr for specific purposes. A good example of that would be junior apprenticeships—so, a ring-fenced provision for expanding junior apprenticeships. We think that's a good thing, because junior apprenticeships, for us—

Maybe I'll question you on that later.

Junior apprenticeships, for us, is not part of our core funding methodology, but we're a key delivery partner for that provision. So, having that in a ring-fenced way, directed to us to spend for junior apprenticeships, is the right thing.

And, of course, I've mentioned our inherited funding methodologies. I think one of the things we're very keen to do in future rounds is look at how we review our funding system and the principles that underpin it right across tertiary education. So, whilst I think the steers we get from Government feel right to us now, in terms of steers for additional money and how that's allocated to reflect the pressures that the sector have highlighted to us, I do think there's an opportunity in the future to relook, really, at how those budgets are ring-fenced and the steers that we've got. Because, ultimately, what we want to try and do is ensure that the budget is meeting the needs of learners and delivering for the economy and society. So, I think there's probably an ongoing and mature discussion that we're going to need to continue having with the Government about the ring-fencing and the steers that we're getting. But given this is the second time we've done a budget right across tertiary education, we're probably in the right place this year.

Okay. Well, there'll be an ongoing challenge, I think, for the Senedd, in whatever form that is, if more moneys become unhypothecated. The Government has suggested it might be completely about not just how Ministers' priorities are met, but actually the scrutiny exercise, because Members—well, all backbenchers—like to be able to know there's a Minister who's accountable for choices, but actually how that scrutiny exercise works with yourself as well.

There's just a point about the budget scrutiny and the timing of it, because, of course, there's the challenge of having an academic year compared to the budget year we're in, we're looking at the draft budget, and we had the health and social care ministerial team in just before you came in. So, is it possible for you to set out what the challenges are, whether it's going to be able to set out information earlier to help us in our draft budget scrutiny, in a way where we're not trying to second-guess, that they're doing it like a second exercise in the autumn as well?

Yes. We recognise that it's been quite a challenging process for committee scrutiny. It is quite a challenging process for us. We got the detailed spending plans on 3 November; we then had to do the funding methodologies and the work that you've seen in the presentation before you, to then decide on how we intend to fund the sector, which was discussed only last week at our board, and then to bring back this publication. So, there was a quite a compressed window there.

What we've tried to do in this is to do two things: one is to outline how we intend to spend the indicative budget into the coming financial year, but also to translate that, crucially, to our providers, so they get an understanding of how that would work across their academic year, because that's obviously how they operate, and to inform their own plans. We can absolutely go into greater detail about how some of these budget calculations are determined and, indeed, we published, earlier this year, quite a comprehensive summary of how last year's allocations were made to providers in the sector, which I think gives background context. But I think it's quite difficult for you, no doubt, but it's also quite difficult for us, because until the final budget is set and until we've run the data validation that we need to do, we can't set the individual allocations to institutions. So, there is probably something for us to work on there, in terms of what we can share and when, to inform the scrutiny. And it's not us trying to be opaque in any way, it's just us trying to make sure that we're giving you the information that you need in a timely fashion. 

So, I guess, when the final budget is published, it still has to be voted on—

Indeed, of course. 

—so you can't assume that's definitely going to happen. 

Of course. 

Who knows what the arithmetic will be in a future Senedd, but either way you can't assume that definitely gets published. But at what point would you be able to give a better idea? Or is it just—? Because I guess there's a challenge: the draft budget gets published and then, actually, there isn't a long period of time from publication to the vote taking place. So, it's almost like we're doing a post-budget exercise with yourself, then, to understand what that looks like for providers. And you know, it would be the same for any future committee in the Senedd as well.

Yes. So, the final allocation, subject of course to the budget being agreed, would come through in March, after we've run the data. So, we would then inform individual providers of the budget. Remember, it's for the coming academic year; we've already informed them of the budget that they'll receive in April, May, June and July of the next financial year, as a result of the commitments we've already made. So, they'd have a lead-in in planning. But it would be March that we'd be able to inform providers of the detailed allocations and then turn that into a publication that demonstrated it.

What we've tried to do here is to go to our core lines, right? So, we've tried to indicate, for example, against our core budgets what that looks like from a further education perspective, research, higher education research, higher education teaching, so at that kind of macro level. What we then obviously need to do underneath that is validate the data, understand what that final draft budget, as agreed by the Senedd, would look like, and then translate that into individual allocations for providers.

I guess it's more of a challenge in an election year, where Members won't be here from a point onwards, towards the end of March, to be able to look at that. But it's something for us to keep on talking about, how we can get the best exercise possible, in a way that's genuinely useful. 

Yes.

Thank you. 

Okay, we have some questions from Russell, please, who's on the screen. 

Thank you, Chair, and good morning. So, we're aware that the Government has outlined their draft budget, which indicates that there's £380 million of currently unallocated funding. So, I'm assuming you would quite like a slice of that. How are you making the case for a slice of that additional funding?

So, we have regular discussions, obviously, with officials, around some of the pressures and opportunities for any additional funding. Many of the discussions that we've had, actually, in the lead-up to this budget round, you can see in the Government's indicative funding letter: ALN, I mentioned, and support for learners through financial contingency, as a couple of examples. We also have our regular accountability meetings with the Minister. We've got ours next week, where we'll be talking about progress on delivery against our plan, and also our proposals around this draft budget.

There are four areas that it's probably just worth flagging to the committee that we would identify as pressures, and opportunities, actually, that any additional funding could support. I think, firstly, in relation to the apprenticeship budget, we want to make sure that we can continue to support learners who've already started on their apprenticeship journey. We are on target to create 100,000 apprenticeship opportunities this Senedd term, but we need to make sure that we're continuing to support those learners, whilst also responding to the demand, and the growth, actually, in apprenticeships. So, we think that's one pressure we'll be flagging to Government. 

I've already mentioned the pressure around participation in further education. The information that the team get from colleges around Wales is that that is going to generate some financial pressure, to make sure, not just that we're maintaining the cost of participation, but also the cost of support in FE. 

In higher education, I think there are real opportunities around research that we would look to flag to Government as an opportunity for additional funding, particularly when you consider the UK Government's comprehensive spending review, and the amount of money that may be available for research grants, for research and development in Wales, and the inward investment that could bring. 

And then last, but definitely not least, around adult learning as well. I think there's an opportunity there to ensure that we're growing and sustaining that provision in what have been quite challenging times for adult learning generally. So, we would flag that as an opportunity for Government. 

Now, obviously, that will be for Government to determine if any of those priorities, not just from our portfolio, but more broadly, were to be funded, but those would be an example of the kinds of pressures that we would identify that that £380 million would be supportive of. 

Would it just be the Government that would need to identify those? Because my question was about you making the case, and who you're making the case to. You mentioned officials, you mentioned the Minister. Is there anybody else that you think that you could be, or should be, making the case to, for a slice of that additional funding?

I think it's quite helpful, possibly, that we're here today, outlining what some of those pressures are, so that Senedd Members, as part of their scrutiny, can hear that. And I'm very pleased to continue that engagement throughout this budget process, if helpful, with Members of the Senedd. 

Thanks for that. Have you spoken to members of other political parties, outside of this committee? I ask the question, of course, because for the Government to pass their budget, they need support, potentially, from other political parties or Senedd Members as well. 

Yes. So, we have had discussions with some of the parties, yes, absolutely. I think it's important to recognise that we're an arm's-length body of Government here, so we have a role to play in advocating for the sector, but also in responding to the Government's priorities. But, absolutely, we have a role to play in outlining those pressures, so that when the final budget is agreed, hopefully Members can be well informed about the pressures facing tertiary education.

Thank you. And then, regarding higher education capital funding, you requested providers to confirm if they can spend their 2025-26 allocation by 7 October. Have any communications taken place that would have an impact on your planning for the 2026-27 financial year?

So, that's part of our in-year monitoring of provider performance to ensure that when we draw down the grant in aid from Government it's going to be used effectively by providers. All the indications from the universities are that they absolutely will commit to the expenditure of that £10 million and, indeed, it probably wouldn't surprise you to say that they believe they could spend more. We were really grateful last year, as were providers, for the additional £18.5 million capital investment that Government made, and we worked with providers on how that capital was used to, essentially, alleviate some of the cost pressures that they're experiencing. As part of our regular in-year monitoring, I think, it is another pressure obviously in higher education generally, and the finance directors in universities have flagged that they absolutely could invest additional capital, if it were to become available in year or in future budgets.

Could I just add to that? I think it's important to remind the committee as well that the higher education sector don't get access to the education capital funds the Welsh Government manage, so Sustainable Communities for Learning and the mutual investment model funding. So, higher education currently does not have access to those funds, hence obviously the reason that the capital investment that comes through Medr is so critical.  

Okay. Thank you. Thank you, Russ. We now have some questions, extra questions, from Natasha, please.

Thanks so much, Chair. I'm just wondering: are there any areas where Medr, if you could wave a magic wand, would rather wish to be able to focus your funding a little bit more in those areas, or are you feeling perhaps a little bit constrained by the Welsh Government's ring-fencing at present? 

Well, I am pleased to report we haven't had any disagreements with Welsh Government around the ring-fencing, and, as I mentioned, there are some good examples of where we think it's the right approach. Junior apprenticeships is a good one. I think, as we mature as an organisation that is responsible for the funding methodologies that we've inherited—so, you know, we inherited funding methodologies around FE, around HE, around adult community learning—one of our big challenges, in the next year really, is to review those funding methodologies and to ensure that we design a funding system based on principles that meet the priorities of Government and also our legislative requirements in the Tertiary Education and Research (Wales) Act 2022.

I think, as I said, this year, it feels right that we're having both ring-fencing of budget from Government for specific purposes and a number of steers about how that additional funding should be allocated. But I do think in future that's a conversation that we'd want to continue with Government, about how we ensure that we're maximising the investment of £1 billion in the tertiary education and research sector to deliver the outcomes and the priorities that Government are setting. We were, ultimately, I think, brought about to effect change here and to try and drive long-term change across the tertiary education and research sector. So, there is always going to be a kind of balance, if you like, between responding to the immediate priorities of the day and trying to set a course for how we deliver those long-term outcomes, which we've set out in our strategic plan.

Fantastic. I'm glad you mentioned research, because you've said it a few times, and I really want to ask you about it now. So, I'm going to go a little bit rogue now, Chair, and I hope you'll indulge me on this. So, core funding for research in Wales continues to lag significantly behind other parts of the UK, which makes it all the more difficult for our universities to compete with other funding sources. For 2024-25, the funding allocation for research and innovation in Wales was £98 million. It was £57 million lower than in England, which is £155 million, and £86 million lower than Scotland. Just for everyone's benefit, the equivalent is £184 million. So, with the First Minister's up-and-coming investment summit in mind, is this draft budget not a missed opportunity to address our historic underinvestment in R&I here in Wales? 

I think it's one of those opportunities that we would flag to Government as real. In order to maximise the inward investment from the UK Government's budget on research and development, we need to ensure that we have the right research capacity in our university sector. And it is right to say that that isn't growing at the moment, and, in order for them to form competitive bids and to bring that investment into Wales, we do need to support that capacity. So, it is definitely one of the areas that we're flagging to Government as an opportunity. The recent Wales Innovation Network report into this was fascinating. The Government found £2 million of targeted seed funding to support additional research capacity. The kind of multiplier effect of that generated additional income of something like £38 million. So, that's the kind of quantum that we can deal with, if we do get targeted seed funding to support research capacity. So, absolutely, it is one of those opportunities that I'd flag to Government and an area that we could attract additional investment.

So, just for my own knowledge, who in Government would you be flagging this to? Sorry to jump on Russell's back now, because I know he asked a question previously similar to this, but I'd like to know who exactly would you be flagging this to.

Well, to officials and, of course, to Ministers across various Cabinet portfolios, because whilst the funding comes to us from the education main expenditure group, there's obviously a high degree of interest in the economy group, and other areas of science would be the other obvious area.

Okay, fantastic. To what extent has Medr been, and will it be, appropriately funded for addressing the financial challenges facing most Welsh universities at present?

So, I think it's important there to say that we were pleased to come to the committee earlier this year, as part of the briefing and evidence sessions you took on the challenges facing universities. I think it's important to remember that we fund universities to about 10 per cent of their income, so it's an important, but relatively small proportion of the total income that universities have—it's a £2 billion income sector in Wales. 

Of course, the main source of income is tuition fees. The Government have increased tuition fees for two consecutive years, which has generated additional income for universities in Wales. And we were pleased—as I know the sector were—that the Government took the difficult decision to propose to implement an increase to tuition fees again from next year, which, again, will generate that additional income. 

So, I think it's important to look at all the ways that universities are funded. It's funding from us, of course. It's funding from international students, which we know is a real challenge. And it's, of course, funding from tuition fees, which drive their overall financial sustainability. They are operating in a challenging environment. Since we were here in May, I don't think anything has changed in that regard. They've had to put plans in place to ensure that they are financially sustainable. 

Okay. I'm going to jump around a little bit. So, stakeholders have reported concerns at the fragility of Welsh universities' financial situations. Noting the additional funding provided via Medr for higher education institutions from 2025-26, how does Medr reflect on the use and any return on investment of these funds?

So, if I just go back to some of the capital funding I mentioned, so the £18.5 million capital funding that was made available in-year, that had—. Capital funding has some specific requirements about it: to invest in infrastructure, digital, buildings et cetera. And one of the things that we did when we calculated the methodology for how that was applied—and maybe Geoff can say a little bit more about that in a moment—was to think about how it could alleviate some of those medium-term cost pressures facing universities. So, what we asked for them to do is to provide a return to us on how that funding was spent, and the opportunities, if you like, for how it would alleviate some of the cost pressures.

More generally, I think it's possible to say that we've just announced a relatively small strategic development fund, which is designed to support collaboration across tertiary education providers. So, it's £5 million that we've made available to the sector. We had over 40 bids—over £13 million requested—to that fund. But, for me, the key there, as part of our evaluation process of which ones we support, is how are they demonstrating the return on investment, and how are they demonstrating the connection back to the ambitions in our strategic plan. So, we've just, in Medr, invested in our social research capability to make sure that we're evaluating the effectiveness of the funding as we go along.

Okay. 

I don't know if, Geoff, you want to say a few words, just abut the capital funding.

Just on the capital funding, it's capital money and it had to be spent on capital uses. We were very clear with the sector that we wanted them to look at capital that would alleviate medium-term pressures. So, some of the things they looked at were about how they were going to reduce their energy bills, for example, and that would bring recurring savings into the system that would then help them with the medium-term issues that they were facing.

Okay. So, some stakeholders have been in touch with me, and they've called for alternative approaches to the allocation of such additional funding in the future, such as allocating on a needs basis, as opposed to allocating based on the size of the university, for example. What are your thoughts on having an approach like that going forward?

So, I've mentioned already that we're very keen to start reviewing the funding system that we've inherited, to bring about the change that we were created for. We need to do that working closely with Government, with providers and stakeholders, absolutely, over the next year, because, of course, we have to operate within the budget in the same way as all the providers that we fund do. So, there is cause and effect in any movements we make in terms of funding methodologies, in moving it from one place to another. So, it's really important that we consider that.

We are interested in how the detailed funding methodologies that we currently apply could be reviewed, and, in that context, it was really pleasing to note some of the recommendations in the committee's report around incentives for collaboration as an example, and how we could ensure that we were designing funding methodologies that supported that.

I think, again, Geoff can probably just say a few words about how we've reflected some of the specific asks of the sector, in terms of determining the different ways of funding and the return on investment.

Yes, I just want to come in specifically on the £18.5 million. When we were made aware of that additional funding, we held a meeting with all the vice-chancellors and all the finance directors of the HE institutions in Wales to go through a number of options, so that we fully understood the implications and impact of each option. We actually did come up with a methodology that applied a floor in the funding, so every university had a minimum of £1.3 million from that investment, so that did take into account the smaller size of the institution, rather than just weighting it all towards the bigger institutions. So, I think we would work co-operatively with our providers in any situation where there is additional funding to make sure that—we're not always going to get buy-in from every single one, but—we understand the implications of every single one.

Okay. Fine. James, in your response just to the question I asked now, you mentioned you need about a year. What is your year? It's only because I'm very OCD with time and I like to set targets, and I appreciate we have an election. Is your year a tax year or September to September or—? 

It's a calendar year, I'm talking about. 

Fine. Okay, perfect. 

So, we have committed to reviewing our funding system first and foremost. We will consult on the principles that will drive that. So, if you think that we've inherited funding methodologies that are based on each of the pillars that we currently fund—apprenticeships, FE, universities—what we want to do is look across tertiary at the system that we have, before getting into the detail of the individual methodologies and the calculations. So, what we want to do, certainly by this time next year, is to have made real strides in how we use our funding system to drive the change that we've set out in our strategic plan.

And will you be implementing it straight away or is there going to be a time for— 

There'll be a consultation approach, of course. And I'm sure the Government will have—the new Government will have—some priorities that they would want us to deliver as well. So, it would be subject to those discussions as well.

Sure. Thank you.

Sorry, if I can just go back to Natasha's first question on university funding, we've seen the education budget. It's seen an increase of about 2 per cent to acknowledge inflationary pressures. Would you be happy to commit to that 2 per cent to universities as an uplift as well?

Yes, so the way that we've had our funding allocated this year was with some specific steers, as you can see in the indicative funding letter, for how that additional funding should be used. What we've then done is we've applied our funding methodologies based on the data that we receive from institutions. So, I think what you can see in our proposals for higher education core funding is that it's a flatline funding line for research and innovation, which is one of those opportunities—[Inaudible.]—that we would place in front of people, but an increase of just over 4 per cent, actually, to the teaching element of higher education, which recognises the additional investment that the Government are proposing to make in teacher education placements.

So, overall—. 

It's just under 2 per cent. 

It's just under 2 per cent. Right. So, it's not quite at that 2 per cent level. 

That's right. 

Okay. 

I just have one other question, if that's okay. I understand from many universities that expanding degree apprenticeships would be beneficial in helping with financial challenges and also the drops in student numbers that we see. However, Wales offers fewer degree apprenticeship opportunities here than in England, which I know, anecdotally, is a factor in Welsh students not wanting to study in Wales, sadly. I also note that Medr is due to develop a degree apprenticeship framework in 2027, but the allocation for degree apprenticeships has remained the same for 2026-27 as it did in 2025-26, at £9.411 million, if anyone wants to know—I'm just going to call it under £9.5 million. As you know, this represents a real cut. So, can you explain how this £9.4 million will be spent? And are you working on increasing the offer for degree apprenticeships and including employers' contributions into those costs, if you are?

Yes, I'm very conscious that's another point that the committee picked up in their recent report. I think, as part of reviewing the funding system, we will absolutely look at how we bring in all types of investment into the different areas of provision that are out there at the moment. I think, particularly around degree apprenticeships—I might ask Rhian to come in in a moment—the key for me is that we are looking across all-age apprenticeships now for the first time. So, rather than degree apprenticeships operating in a certain way and then the wider apprenticeship programme of Government operating a certain way, the creation of Medr gave us an opportunity to look at an all-age apprenticeship programme. We recently consulted on our proposals for how that new programme should look from 2027. That included our proposals around degree apprenticeships and how we'd, essentially, bring them into that all-age and all-levels type of programme. We obviously need to look at what's happening over the border in England.

How will you? 

I beg your pardon?

How will you? You said that you're going to bring it in in 2027, and you said you're working on how to make it possible. What's the plan?  

So, we've just finished consulting on what we're planning to do with the new programme. We'll review the consultation, then we'll put out our proposals for how that will look from 2027. I think, in terms of expanding degree apprenticeships, we've got to keep an eye on what's happening over the border, because obviously some of that will affect the funding that comes to the Welsh Government. And the proposals in the UK Government White Paper around removing level 7 apprenticeships is particularly concerning in terms of any funding streams that come in to Wales for that provision. I think we need to consider the committee's report and the recommendations on that before making any commitments here today about how we might bring in additional funding to support degree apprenticeships. But, as it currently stands, there is an opportunity there and we will look at how we can maximize the opportunity for those pathways to be available for learners, and, of course, for our universities, therefore, to make and expand that provision.

Okay, and when will you be in a position to share the findings? You mentioned, obviously, the consultation and everything else, so when will we be in a position to, hopefully, see it?

Rhian.

Yes, we'll be publishing the consultation findings in January, so more than happy to send that report directly to committee. The other thing I just wanted to add is that I guess it depends on what we mean by 'expansion', because we've expanded the number of framework areas that the programme can currently point to, so now there are opportunities to engage in more industry areas, as opposed to just thinking about volume. But I think, as James said, in terms of the framework that we're developing for 2027, that is a whole-apprenticeship systems approach, ranging from level 2 up to level 6, and, currently, we have a separate degree apprenticeship programme to the mainstream apprenticeship programme, so, thinking about a whole-systems approach, it will be a different opportunity for us.

Okay, thank you, Chair. 

Thank you. We now have some questions from Cefin, please.

So, in terms of the funding allocations, some items are ring-fenced, so what's your understanding of how the Welsh Government decides which funding lines are ring-fenced, and do you expect any changes to ring-fenced funding lines for 2026-27?

So, we have one additional ring-fenced funding item in the indicative funding letter from Government, and that relates to the provision of conservatoire training in Wales, which is an additional ring-fence. Again, we believe that's a sensible ring-fence, because it's for a very specific purpose, in the same way that I explained earlier that junior apprenticeships, we think, is a really sensible ring-fence. We're not anticipating any further changes beyond that. We're dealing, I guess, with both clear steers from Government about how they want us to allocate the additional funding though our methodologies, which we've put into our indicative funding proposals, as well as the ring-fencing.

I think that the real—. And it's going to be an ongoing discussion, I think, for us as we look at the funding system, but the real opportunity is to think about the outcomes that we're trying to generate through all of the provision across tertiary education. The biggest area at the moment of ring-fencing is in relation to the funding we've received from the economy main expenditure group, so, the £145 million for apprenticeships. That funding is there for a very specific purpose, but there may be opportunities in the future that we would like to explore with Government, really, about whether there is a better way of ensuring that we're delivering the right provision to get the right outcomes for learners, responding to growth, responding to demand, rather than just having these ring-fenced budgets. As I said, I think it's the right approach this year. This is only the second year of Medr's operation, and we are looking at all of those individual budget lines across the methodologies, but I think there's an opportunity to look again in the future.

Okay. So, in terms of how the ring-fencing works, if you don't spend the allocated funding, I guess you send it back to Welsh Government, yes? So, in terms of degree apprenticeships, which we mentioned earlier on, is there a way of maybe not underspending and creating a better system that makes them more attractive to employers and so on, so that it does contribute to developing high-level skills and boosting the economy and so on?

Yes, absolutely. I'm pleased to report that we haven't sent a penny back. I think, again, the opportunity of having a budget and a reach like we do is that we can look at where individual funding lines or allocations are not maybe hitting the kind of profile, the financial profile, and then look within year to look at where are the opportunities and where are the pressures that we could reallocate to even within that ring-fence. So, on apprenticeships, for example, we have a network of 10 providers. We were able to make an additional £4 million available for delivery earlier this year. The team engaged with that provider network and they actually identified over £7 million of opportunities. So, I wouldn't want the committee to think that it's a question of, if we don't spend it, it goes back to Government. What we can do is we can be quite nimble and agile around reallocating or repurposing the funding within the ring-fenced budget to make sure we are delivering those Government priorities.

Which is exactly the conversation we have with apprenticeship providers in terms of profiling at the beginning of the year, working with them, monitoring, understanding whether there's any fragility in those profiles, and then looking to reallocate to providers who have increasing demand, obviously, against the profile they originally submitted.

Okay. Moving on now, then, to adult and part-time learning, £80 million has been allocated. You mentioned this earlier on as a 'nice to have' element of your work, on top of the basic commitments that you've made. How do you view adult and part-time learning moving forward in terms of future allocations?

It's incredibly important, particularly when you're thinking about skills and the changing needs of the economy and the need for us to support learners at all ages throughout their career and development. And some of the things that we fund through our adult learning budgets are hugely important to Wales. The personal learning account investments following Tata Steel, for example—there are some wonderful examples of how our funding has helped support people coming out of Port Talbot and retraining and reskilling and moving on into new employment. They're a really important part of our funding approach.

It's probably important to say that there are two elements of funding that make up the £80 million you mentioned. There's the adult community learning support, which is predominantly spent through local authorities and supports provision there. The majority of it comes through our part-time further education budget, so a significant proportion of our funding—£74 million, approximately—goes into adult learning there.

I think what we would like to see—particularly with new legislation on the way, and I'll maybe talk about that in a moment—is that we can sustain and grow that to help people upskill, retrain, reskill at stages beyond the traditional 16 to 19 educational route. And with the commencement of the section 94 duty on Medr expected by Government next year, that will put a different kind of onus on lifelong learning as well in Wales, which I think is a really welcome thing, but it will obviously come with a cost. So, I think what we want to do is make sure that Government are well informed about what that likely cost is and what that will mean in terms of the expansion of part-time provision and adult learning provision generally in FE, and also in adult community learning. So, we're committed to doing that.

Can I just add in there? When we're thinking about the future design of the apprenticeship programme, we've got to be really careful as an organisation not to think about things at a programme level; we have to think about things at a system level. If you think about what apprenticeships is doing, it's about skills development, and we need to think about how that funding aligns with the funding that we're putting into adult learning in terms of thinking about the skills requirements of this of this country. So, even though we're talking about budget line level in this conversation, we constantly have to think about how those budgets apply to a system level thinking, which is really going to have the economic impact that we want to see.

On the £80 million this is currently invested, when the new duty comes into place, we want to be really careful we're not displacing the activity that already happens. There's quite a lot of PLA activity, occupational qualifications in the workplace, really skills-related activity, and there's a risk without further funding that we displace that activity to replace it with the provision that's in the duty. So, that's part of our work with Government, so that we can understand the implications of the duty.

Okay. Diolch.

Thank you. We have time for one very quick question from Carolyn. Sorry. [Interruption.] Have we? I thought we were—. No, we haven't. We do. We have time. 

We did an inquiry into post-16 education and training, and we heard about competition between sixth forms and further education. One of the recommendations was for Medr to consider how current funding streams may incentivise competition or collaboration—so it's pupil-centred, really, thinking about the pupil, rather than getting that funding to keep the school going, or whatever. Is that something you've considered?

Yes, absolutely. As part of looking at the funding system, we will want to look at how we deliver the long-term ambitions we've set out, and balancing that, of course, with learner choice and making sure that the learner has a choice in terms of the provision that they're moving into. But I do think that there are opportunities for greater collaboration between our providers, and particularly thinking about this on a place-based approach. What is the right type of structure of provision in Cardiff might look quite different to the right structure of provision in Powys, as an obvious example. As part of reviewing the funding system, we want to ensure that we're considering how we incentivise that collaboration, as opposed to competition. 

Okay. The role of Medr filling data gaps on learner pathways has been raised, because having that data would really help with planning and budget allocation et cetera. Stakeholder responses to the Finance Committee's consultation on the Welsh Government's draft budget talked about data as well. So, how are you looking to fill data gaps on learner pathways?

It's incredibly important for us. I'll maybe talk about a couple of things there, but we're currently not the data controller; that function is currently undertaken by the Government. But we will be, from April next year, the data controller for post-16 education across a number of systems. What we will be doing in the next couple of years is then reviewing the collection of that data, working with our provider network to ensure that it's collected in a way that doesn't create a burden and is as simple and straightforward as it can be—and, crucially, that we can then use it to make evidence-informed decisions, particularly around things like our funding allocations.

One of the pieces of work that we've already started is looking at tertiary mapping—so, understanding where our funding goes in terms of the provision at an individual qualification level, for example, across Wales so that we can understand where there are potential overlaps, potential opportunities for consolidation, or indeed where there are areas where there is a dearth of provision that we would want to fund in the future. That data is going to be crucial for that. 

Rhian, earlier you touched on that we need to know what jobs are out there and creating those career pathways so that young people—and parents, who are very influential—and education providers can help direct those young people into what's out there, inspire them into the right jobs that are in their area. We heard about the Cardiff compact; Anglesey are doing something on that area as well. It's to ensure that we're employing people locally, in local jobs, keeping the Welsh language going. It's just knowing what's available. How are you working to do that?

I can pick that one up. We have a co-ordination and performance team, and one of the key tasks that that team is looking at currently is provision mapping. You'll know that the Minister for Further and Higher Education commissioned us to do a specific piece of mapping in higher education, but we are actually looking at the whole tertiary sector to understand that exact thing—what is currently being delivered. We then have an employability and skills team that is working with the regional skills partnerships to understand the labour market intelligence coming through, so that we can map what's the skills demand versus what's the provision and where we might have a disconnect, which, then, is an opportunity for us to work with institutions to think about different ways of stimulating innovative collaboration to respond to those.

It's not a quick piece of work. We've started the analysis on part-time, we're now moving into full-time; we'll be starting the analysis of school sixth-form provision into next year. But we're quite confident that towards the end of next year, we'll have a really good picture. We need to think about how we publicly present that, because actually, in terms of your point around impartial advice and guidance, we want more transparency in terms of what that offer looks like. We'll also be responsible for the formation of local curricula as a result of the Welsh Government providing us guidance. That, again, will be a really crucial role in terms of us having strategic conversations with providers around what that local curricula looks like and how learners have access to the offer.

They've asked if it could be simple, like on a website, so that parents can access it, as well as young people.

The other thing that's been brought up is work experience—a shortage of work experience, and how difficult it is as well. For people who would like to provide work experience, it's complicated. Can we make it simpler so it's consistent and easier for people to have it? And insurance is an issue. And we've heard about how young people who are training to perhaps be electricians or plumbers or whatever are doing their course, it comes to the final year, when they need to get work experience with someone, and that someone's not able to provide it because it's the insurance or it's too complicated. That's one example that we've heard. And people learn in different ways as well. We've heard that for young people, maybe before they get to 16, if they've had a bit of work experience at an earlier age, there are different ways of learning that might have helped them with career choice and confidence.

One of the great things about our junior apprenticeship programme is that it does provide that kind of path—a slightly alternative pathway perhaps—for those year 10 and 11 learners who might want to then progress into vocational training. I think that's a really important expansion that we're pleased that the Government have allocated additional money for this year. We would want to expand that in due course, subject to the available money, right across Wales. Because I think that's a really good example of that kind of pathway for learners into something that is right for them.

Rhian might want to come in in a minute around work experience particularly. There are challenges, obviously, that employers raise with us. I was at a regional skills event in south-west Wales a couple of weeks ago, where they were flagging some of the challenges that they faced in terms of apprenticeships, for example, and the cost of bringing in apprenticeships, and the risk associated, particularly with SMEs in Wales. I think, as part of our design of our new apprenticeship programme, we want to think about what are the right delivery models for that.

There are some really great examples out there of shared apprenticeship schemes. Cyfle is an obvious example from the construction sector that takes some of the risk away from those SMEs. They employ the apprentices, and then they get work-based learning experiences across a range of different employers, which is a fantastic model. As part of reviewing our apprenticeship programme, there is an opportunity to think about those alternative delivery models that are particularly designed to support SMEs in Wales, and maybe mitigate some of those challenges that they're currently experiencing.

Who would drive that, though? Could you do that?

In terms of setting the delivery of the apprenticeship programme, absolutely, yes.

Just to clarify, we don't fund work experience, that sits with Careers Wales. What we do fund, though, within our programme values within further education, for example, is some headroom to allow institutions to build work placements in as part of the programme of activity. So, it is work experience, but more programme-orientated, as opposed to, 'This is a week in the calendar year within which somebody will do a work experience placement.'

The other thing I just wanted to flag is, obviously, there's significant reform at the moment in terms of qualifications within the 14 to 16 space, the introduction of VCSEs, which would be more vocationally driven. So, we need to look at what opportunities are presented there. The junior apprenticeship programme is obviously a targeted intervention as well, and we know there are some really good examples.

You picked up, obviously, the competition between schools and colleges, but, actually, there are some really good examples of collaboration between schools and colleges within the 14 to 16 space, which I know the pathways report also picked up as being an opportunity to possibly expand. What that is doing is perhaps one day a week, as opposed to the junior apprenticeship full-time model, those learners are going into college and having a different type of vocational experience, which will then stimulate their interest in pursuing that vocational pathway.

Do you work with Qualifications Wales at—? Okay, because I've got an issue with the review of that as well. I'll shut up now. 

Thank you, Carolyn. Are there any other questions from Members? No. I thought we were running behind, but we have finished well ahead of time, which is very unusual for this committee. Thank you for joining us this morning. We really appreciate your time. We'll send a transcript for checking in due course. Thank you.

I'll now move on to item 4, which is papers to note. We have five papers to note today, full details of which are set out in the agenda and in the paper pack. Are Members content to note the papers? Yes.

Moving on to item 4, I propose, in accordance with Standing Order 17.42(ix), that the committee resolves to meet in private for the remainder of today's meeting. Are Members content? We'll now proceed in private.