Cynulliad Cenedlaethol Cymru

Good morning, everybody. Bore da. Welcome to the Committee for the Scrutiny of the First Minister. Can I start by welcoming Mick Antoniw to his first committee as Chair of what we fondly call 'CLAC', the Constitutional and Legislative Affairs Committee—welcome—and to put on record our thanks to the previous Chair, Huw Irranca-Davies, for his help in this? We've had a number of apologies, from Bethan Jenkins, Lynne Neagle, Nick Ramsay and David Rees, and so we will record those. 

In the opening remarks, can I say that we're delighted to have the audience with us today? It's great that you've taken some interest to come along and hear, and hope that you will be able to follow our proceedings. And just to say—this is the point where I have to do the housekeeping rules—I was never very good at it. I didn't want to be an air stewardess, so I'll keep my hands by my sides, but just to say that, should we have to evacuate the building, the ushers and the staff here will escort us to the safest place, so we'll take our instructions from them and follow them. We operate bilingually, so there are headsets available and translation from Welsh to English is available.

I just wanted to say 'thank you' to Hafren theatre and to the Newtown College for the way in which they've hosted us here and also for the hospitality. As a committee, we don't travel light, as you will all see, and so it's to say 'thank you very much' for that and then to welcome the First Minister and his officials and to thank him for coming because, without you, we couldn't have a scrutiny of the First Minister committee.  

The other thing on housekeeping is that, if we've got mobile phones, can we either put them off or into the flight safe mode, not that we're going to be flying anywhere, but apparently that stops interference with the broadcasting? So, I'll put mine away.

We're going to move into the main item on the agenda, which is scrutiny of the First Minister on the food and drink industry in Wales. So, as I've already welcomed the First Minister and his officials, perhaps, just for the Record, First Minister, you could introduce yourself and your officials?

Yes. Carwyn Jones, First Minister. If I could ask Tim and David to introduce themselves and their titles—.

Tim Render, I'm the director of environment and rural affairs in the Welsh Government. I joined the Welsh Government at the beginning of this year, having moved from the Department for Environment, Food and Rural Affairs in London where I was responsible for the food and drink industry—both all the work on Brexit and on exports, so I'm bringing quite a lot of experience to this particular subject.

Thank you. David.

Good morning. I'm David Morris. I'm the deputy head of the food division in the Welsh Government. I've held that role for four and a half years now.

Thank you very much. So, as I say, the main purpose of the meeting is the evidence session on the food and drink industry. We've broken it down into five areas, and those five areas are the current Welsh Government food and drink policy, Brexit and international trade, food industry standards, the promotion of Welsh produce, and then other Welsh Government investment in the food sector. So, those are the five areas that we're going to try and scrutinise you on, but as always happens we tend to drift with how the debate goes and how the scrutiny goes, but we will try.

So, if I can ask—Mike, you're going to start off on the first section, which is current Welsh Government food and drink policy.

Yes. How are the Welsh Government assessing the success of the food and drink strategy and action plan, with specific reference to microbreweries and, perhaps more importantly, what used to be microbreweries, which have grown into quite large breweries? I think of two—Tiny Rebel in Newport and Tomos Watkin in Swansea, which have grown fairly substantially over recent years and now export.

Well, first of all, in terms of what our plan is and how we measure the success of that plan, we produced an action plan in 2014, and that set a headline target to grow the turnover value of food and farming to £7 billion by the end of this decade, and that represents a 30 per cent increase from where we were in 2014. Actually, we suspect that target will have been reached this year. We were at £6.9 billion last year, so projections are that we will have gone past that target, so we're three years ahead of schedule. We do also commission an external economic appraisal of the food and drink industry, and that looks at the performance of many of the industry subsectors.

In terms of microbreweries, there's been considerable growth over the past few years. I've had two breweries set up in my constituency over the past year. We know that there's a huge amount of demand for craft beers particularly. We've seen some very small breweries—Tiny Rebel is an example—that have started off very small and are now expanding at a rate of knots. We know that microbreweries form an important part of our drink offering. At the Royal Welsh, I always notice how many more breweries have started every year since the last time that I was there. I don't have a figure on how much they actually contribute—microbreweries—to the Welsh food and drink sector, but they're obviously growing in importance.

Like you say, in your own constituency, you've had two; in my constituency, I've had two in the last couple of years, but you've also got those that have gone on to the next stage. Is the Welsh Government providing enough support for those to move on to the stage after that? Because both Tomos Watkin and Tiny Rebel are reasonably large breweries now, but there's a next stage. As you know very well, one of the great weaknesses of the Welsh economy is turning small and medium-sized businesses into larger ones.

That's absolutely true. The tendency has been there for many, many years for businesses to reach a certain size and then to sell to a larger business, take the money and go. That's been a cultural problem we've had since the start of the last decade where, at one point, we were even considering whether the resurrection of the Cardiff stock exchange would make a difference, where businesses might want to be listed there rather than in the London stock exchange. We are past that stage now with the digitalisation of the markets.

Well, what I'd say is, as far as microbreweries are concerned, they are surviving and expanding. Some of them are very, very small, but those who want to grow—and Tiny Rebel is a fine example of that—are moving to new premises. They are looking to expand into new areas. As far as the specific support that we give to microbreweries, Tim, any—?

I think what I would say is yes, that scale-up stage for any business is the most difficult, and there's a range of measures that we have: the business clusters—there's one of those around the drinks industry that lets businesses learn from each other—and some of the support for the export to people to go to trade shows and so on to meet buyers. That's available to those. I think it is those people who are in that scale-up stage who benefit most from that, and brewers are among some of those that we have taken to some of the international trade shows.

Okay. John.

Earlier on this morning, First Minister, we went to Hilltop Honey here in Newtown, where we met with the company and Monty's Brewery, and a local food and drink co-operative retail initiative. So, we were discussing some of their ambitions to have more quality local food and drink produced here and in mid Wales more generally. Obviously, if some of those local producers have the ambition and the ability to grow, they can become national and, indeed, international brands. Is there enough help at that early stage, do you think, in helping those local producers through support for food festivals, through general support, to have that critical mass that can then go on and produce the national and international brands?

Well, I believe there is. If we look at Hilltop Honey as an example, we know that it's recently secured a new contract to supply its products into the middle east. It's recently expanded. Having been there this morning, of course, you will have seen that. It was successful in the first round of the food business investment scheme, so it was one of the first projects to be approved under the scheme with a grant award of £240,000. So, there is money available through that scheme. So, there's financial support available, but also, importantly, export support as well. It's not just about the money; it's providing support for businesses to look for new markets, and I understand that Hilltop will be at the Gulfood exhibition soon, actually; it's around about now. That stand has been subsidised by the Welsh Government. So, not only is there grant funding available to help businesses to grow, but also help to provide a presence at the major food shows.

Yes. I guess they've reached that stage, which you've described earlier, with your officials, First Minister, where perhaps they're an obvious target for assistance to grow because they're fairly well-established now. But for the generality of local, very small-scale producers of food and drink at the moment, what is there in place to try and encourage that flourishing that can produce, hopefully, the local critical mass that can go on, then, to provide examples of growth and, as I say, national and international brands of the future?

Well, there are a number of programmes. First of all, the food business investment scheme; that's been a great success. Thirty-four projects, totalling over £87.3 million of capital investment, have been supported to date. We are looking in the spring of this year to open a further window for larger scale investment. We have the rural business investment scheme as well. The window for that has closed for the current scheme, but that aims to support up to 40 micro and small food and drink producers, giving them support with capital and investment for projects that offer what we would see as a clear benefit to the food and drink industry in Wales. There will be further windows that'll be announced over the course of this year.

We have the food cluster programme—410 active business members. What does it do? Well, it's a powerful engine for driving more growth, for opening up new opportunities and adding value. So, those are just three examples of what's there. It's not all about helping the already well-established businesses. But, obviously, through schemes such as the rural business investment scheme, it's a way of helping those businesses that are small or micro and helping them to grow.

If I may, Chair, I'm just wondering about—. I know that there are local food festivals that provide opportunities for local producers, but funding for that is becoming difficult, as funding for so many things is becoming difficult. Is support for food festivals part of the Welsh Government's general assistance and support?

Yes, we've continued to support food festivals. We've supported food festivals for 15 years now and the model of support has changed over time. So, it's a competitive process, but the majority of food festivals that apply for support do secure support, and we've also encouraged those festivals to think of the wider food agenda as well—so, to be maybe innovative to see how they can engage young people to see how they can perhaps engage in the healthy-eating agenda. So, it's a very popular support, and our food festivals are a great advert for the food industry in Wales.

I've got a number of Members now, so Dai Lloyd first and then Russell and then Jayne Bryant.

Okay. I think that might be something we'll explore, perhaps, in our written report, if that's okay.

Could I just add very briefly, Chair, there was also a suggestion, wasn't there, that there's an initial meeting that they also have to pay for before they go on a trade mission, and that's something that they might be looking for initial financial assistance for, even if it didn't extend to the actual trade mission itself?

Okay. As I say, I think that's something that we can look at when we do our report. We'll have a look at it and we'll wait and see how we can progress that one. Russell.

Dai's covered the point I was going to ask, but what I would add though is that apart from the cost of attending an original trade mission, it was the cost in time because, very often, as a young business, they're just by themselves and perhaps they don't employ any staff, and that's the reason why it was a great risk for them, although they're heavily subsidised, to put in that original investment in the first place.

We'll include that quote in our report to the First Minister, I'm sure. Sorry, did you want to answer, First Minister?

In terms of a businessperson offering their time to come on a trade mission, only they can do it. That's the difficulty, isn't it? They will inevitably be the best ambassador for their own product. So, yes, there is a sacrifice in terms of time, but it's difficult to see how that can be avoided.

I think what they're saying to us is that, as a larger business, they've got more capacity to be able to employ other people to run the business whilst they're away, but it's the initial cost in time, as well as the financial cost, and if they have that support to go on an original, first trade mission, then they're happy to fund future trade missions after that themselves. I think that was the point they were making this morning.

Let me take that into consideration and perhaps if I write back to the committee with further details on that. But what seems to be clear is there's no rule that prevents a 100 per cent subsidy, but there would need to be satisfaction that a particular business was serious about the market.

Okay. Jayne.

Thank you, Chair. What opportunities are there for businesses such as food and drink producers to partner up on projects? Because I know, for example, in Newport, Tiny Rebel work with their local chocolatier producer and we've seen some examples in west Wales where local food producers came together to sell their produce together; that was off their own backs, and that networking seems to be so important. I wonder if there's any support that can be given from Welsh Government on that.

We have the food cluster network, which represents, as I said earlier on, more than 400 businesses but, to my mind, these are incentives that businesses themselves are in the best position to take forward—that they will spot another business that can complement what they already produce, and they seem to be making those links anyway. What I'd say to any business that was looking to partner is up is: go to the Royal Welsh, for example, to the food hall there, where there is support available from officials from Welsh Government and also other businesses, who may well be looking to do the same thing. I think that incentive lies with businesses. I don't think it's easy for Government to say, 'Well, why don't you two work together?' It's up to businesses to make that partnership themselves. 

Is there any sort of help that you can give if they want to come together? Is there any—? Do you think there's any support we can give them on that?

Presumably, they could apply under the existing schemes, as they would if they were individual businesses.

Okay, thank you.

Can we move on to one of the substantial items: Brexit and international trade? Mick, you've got a few—start with a few questions.

Well, First Minister, a few questions around the issue of the single market and the customs union, particularly focused on the food and drink industry. If I could perhaps just start with a bit of an issue that arose this morning, and that is the discussions that may have taken place with regard to replacement of EU grants. It's very clear that a number of EU grants have been very significant in allowing businesses to develop, some local businesses here, but across Wales. There was a concern about what the position is with regard to the replacement of that sort of funding, which has made quite a significant contribution to the Welsh economy.

We know that the UK Government has given a guarantee that commitments made before the UK leaves the EU will continue to be funded to the end of the programme. Beyond that, we have no certainty. What I have to say is that we could not provide the funds ourselves in the absence of any replacement funding for the European funds that would be lost. That's true as well of agricultural subsidy. We're more than happy to commit to ensure that payments continue, but, unless there's a pot of money from which those payments can come, we cannot cover that amount of money. Now, we were promised at the time of the Brexit referendum that we would not lose a penny, and I expect that promise to be kept.

What is the state of discussions on that, because it's clearly something that has been raised? It's an issue, and there's quite a simple response to it—either UK Government is going to make up that differential; I mean, there have been promises, but is there any reason why guarantees can't be given at this stage? 

They won't give those guarantees. They've given guarantees for a particular period of time. Beyond that, nothing is certain.

Okay. Can I take you on then to the Welsh Government's position in respect of the issue of the single market and the customs union? Of course, you'll be aware, in the background, there's a trade as well as a withdrawal Bill—there's a Trade Bill that's going through at the moment. What are the key issues or the key challenges in respect of access, because there are varying, mixed messages coming out, particularly from Westminster—on the one hand, ‘It won’t make any difference, we don’t need to worry about it’. But what are the specific issues that concern you in respect of the Welsh economy? 

There are three major issues that are yet unresolved. The first is, if a hard Brexit leads to tariff barriers, what effect that will have on not just the food and drink industry, but the food and drink industry particularly—90 per cent of our exports go to the single market. Meat, for example, can carry, in extreme circumstances, a subsidy of 104 per cent. It certainly starts at 48 per cent and goes up to 104 per cent. Now, it's obvious what the effect would be on our sheep meat exports if that were to happen, and there are a number of tariffs in other areas as well. So, tariff barriers are the ones that are most obviously talked about, because they would make our goods more expensive in our most important market.

But another, of course, is non-tariff barriers—things such as extra paperwork, extra customs arrangements, extra bureaucracy. They have a very strong effect, particularly on the sectors of the food and drink industry where the goods are highly perishable. The shellfish industry, particularly, is the most vulnerable of all; 90 per cent of our exports of shellfish go to the European single market, the product itself is perishable and, in fact, the shellfish are live. Any kind of delay at the channel ports could lead to a situation where the goods are spoiled, and if they can't export in the same way as they do now, then they will not survive. It's that easy.

When I was in Ireland on Monday, I was given the example by a representative of the road haulage association of fish that was crossing the Irish sea through GB and then, of course, over to the channel ports. As a result of a delay in the Irish sea, they missed their crossing in Dover, and the products were all spoiled. Their concern is that that will become the norm in future. So, the more perishable the goods, the more difficult the situation is when it comes to non-tariff barriers.

And the third is alignment: alignment of regulations, alignment of food standards, and alignment of recognition of the protection of particular foods—protected food name status, as it's called now. There's no point in us having a protected status framework for our food if it isn't recognised anywhere else. So, that alignment is absolutely crucial to us to be able firstly to access the market, and secondly to protect the products that we have already registered under the European scheme.

To me, those are the three main challenges that we face, which can be resolved, but, nevertheless, they are where we are now, and they will be there if there's a Brexit that leads to WTO rules.

Well, one of the issues that flows on from that is the whole issue of common frameworks—I'm interested in that—and, of course, alignment is an issue. If we don't have direct access to the single market, whether it be with a customs union or whatever, what might be the mechanism for achieving that alignment? Because the reality is, if the majority of, for example, our shellfish and a lot of our agricultural perishable produce is going to Europe, leaving aside the issues of the potential delays and the tariff access, there is the question of the regulatory side and the changes that will take place from time to time. How do you see alignment actually working if we don't have access to the single market or we're not in the customs union?

Well, in reality, there'd have to be either an overall agreement that there would be alignment in all sectors or a sector-by-sector agreement system. Now, that's particularly clunky. Switzerland does it. When I met with the Swiss, they said, 'Well, we wouldn't recommend it, because it is much more complicated and much more time-consuming than having an overall agreement'. But, the reality is the last thing we want to see is Welsh produce to be held up in the channel ports because they are seen as not meeting the requirements of the European single market. The reality is, even if we leave the EU and the customs union, most of the food and drinks sector will have to meet European standards anyway, because they'll have to export into that market. So, it makes perfect business sense for us to ensure that the European and UK standards are aligned.

What is the status, then, of common frameworks, particularly, for example, around the issues of the Trade Bill? Because there are potentially competing interests. For example, the UK Government could design trade agreements et cetera that do not serve the benefit of the specific Welsh economy. There might be conflicts that exist, and the Trade Bill at the moment, as it's drafted, basically gives an overwhelming position to the UK Government, despite the fact that most of these areas of agriculture and food and so on are very much devolved. What's the state of those discussions, and what are the particular challenges that we've got to actually deal with?

Well, at the moment, the Bill talks about consultation with the devolved administrations. Now, I've said many, many times that I think these issues and all issues to do with trade and with our relationship with Europe should be done via a council of Ministers. It's what happens in the European Union—why not within the union of the UK? 

Now, trade is a reserved matter; that much is true. But, there's an awful lot of negative effect on the Welsh economy if trade deals are done with certain markets. I am wholly unconvinced that a free trade deal with Australia or New Zealand is actually good for Wales. Their markets are much smaller, for a start, than the European single market, and, of course, we know New Zealand, particularly, is a major producer of lamb, and there is a threat to the Welsh sheep meat industry if there were to be unrestricted imports of New Zealand lamb into Wales. The markets are slightly different. They don't serve exactly the same market; that much is true. But, the concern that I would have is that they would be able to wipe out the section of the market in the UK that Welsh lamb enjoys at the moment, and that makes a difference to the sheep meat industry overall.

I've always said that a free trade agreement only works if it is concluded with an economy or a country that has a similar income level to yours, similar wage rates—otherwise there's an invitation for jobs to disappear into that other country—and where there is an advantage in terms of the market size; not exactly the same size market. But, none of this is relevant unless we can get a suitable agreement with our closest, most important market, which is the European single market. New Zealand has 4.5 million people and it's 12,000 miles away. Europe has 440 million people and it's on our doorstep.  

If we fall out—. If there isn't a deal—and there's no clarity at the moment as to whether there is going to be any form of arrangement; in fact, all the indicators seem to be going the exact opposite way—we fall back on World Trade Organization rules. Of course, up to now, that's been very much presented as just another set of tariffs, but they also include the issue of quotas. What analysis has been done by the Welsh Government to look at the impact that the World Trade Organization tariffs and, in particular, quotas would actually have on the Welsh economy per se?

Well, the Cabinet Secretary has met several times with the Secretary of State on this issue. The tariff-rate quota for lamb is being discussed as part of a wider exercise to re-establish the UK as an independent member of the WTO, but there is a difference of opinion as to how that will work in terms of tariff-rate quotas. The UK is in a position where it wants to replicate the current commitments on the EU's schedule. It's a fairly complicated process and it could involve the entire WTO membership of 163 countries. Both the EU and the UK have taken the view that the approach to this should be to split the tariff-rate quotas between the EU and the UK, based on existing usage. But, that's being challenged by existing WTO members; it's being challenged by the United States of America, and it's being challenged by New Zealand. So, we're in a position now where nobody can know what will happen in the WTO, whether it will be simply a question of, 'UK, you take that part, then, of what was a bigger European share and the EU will keep the rest of it', or whether the whole thing will have to be reopened. That will take time.  

What would be the Welsh Government's status in any of those particular negotiations? Some of these areas are completely devolved. Obviously, trade is not devolved, but there's clearly a potential conflict. Do we have direct engagement with the WTO on this? Do we have the capacity for direct engagement? 

No, we don't have direct engagement with the WTO. All the discussions have been through the UK Government. I think it's hugely important that the UK as a whole comes to a position when it comes to looking at the trade arrangements for the future. I know trade is reserved, but I do not think that a new trading arrangement will stand the test of time if there's resentment in one of the UK countries because of the implications and the results of such an agreement. For example, what does that mean for us in Wales? Well, a free trade agreement with New Zealand, in the wrong circumstances, would be hugely harmful to Welsh farming. A free trade agreement with a country that's a major steel producer, potentially, could wipe out the Welsh steel industry. So, these things have to be looked at very carefully. To my mind, it's hugely important the UK Government looks to get the approval or agreement of the devolved administrations. It doesn't have to do it legally, but, sensibly, I think that should be done.

But, consent is going to be required—legislative consent on both the withdrawal Bill and on the Trade Bill. What are the criteria? What are the red lines in respect of, particularly, the Trade Bill, because of our concern about the food and drink industry in particular?

We need to be more than simply a sounding board. There needs to be a structure in place that enables the devolved countries to play a full part not directly in terms of the trade negotiations, but in influencing the trade negotiations. How would that work? Well, it worked pretty well when I was rural affairs Minister back at the start of the last decade. Every month, the Ministers from each administration in the UK would meet in London. We would work out what the UK's line should be at the coming Council of Ministers, and it worked very well. Where there were important issues on the agenda, it would be the UK Secretary of State who would lead in the council itself, but that Secretary of State would then consult with Ministers who were already in Brussels and take their view on what the UK should do, and that worked pretty well in those days. I can't see why that can't be replicated more widely to create a Council of Ministers structure that the UK now badly needs with Brexit coming. 

Thank you, First Minister. 

I've got quite a few Members who are patiently waiting to ask questions on that particular subject. Simon, and then I'll move to Dai. 

Dai.

Okay, thank you. I'm just looking at the time, and so I'm going to move—. This is a subject no doubt we will return to, I'm sure, but can we move on to the food industry standards? John, do you want to do some—?

In terms of trade deal negotiations, First Minister, and how they will affect food standards in the UK and Wales, what would you say are the main implications?

It's essential that our standards are not seen as being inferior to those of Europe, which would cause a problem for us exporting into the European single market. I think that is absolutely—. Why would we want them to be, anyway? Food standards have increased hugely over the past 30 or 40 years. We can say, I think genuinely, that we have some of the highest standards in the world. We would not want to reduce those standards, but alignment with the standards that will be required in the market that's most important to us is essential.

If those standards were to change at a UK level in a way that Welsh Government thought concerning, would you consider having a Welsh system of enforcing appropriately high food level standards, perhaps similar to the way that it operates in Scotland?

It's already devolved. There's no difference between us and Scotland except for one thing: they have their own agency—

They have their own agency.

—which they set up. Now, we took the decision not to do that, because it carries with it a significant cost for no apparent benefit that we can see. So, the Food Standards Agency advises us on food safety and standards but we actually make the regulations and the laws. So, we have as free a hand as Scotland in that regard.

Okay. So, you wouldn't see any advantage in having an agency Wales-based as Scotland has, even if things changed in terms of the UK standards and approach post Brexit.

Part of the reason why the Scots set up their own agency was because of a dispute over the appointment of the chair of that agency. They decided to set up their own. That issue was resolved. I can't see what advantage our own agency would give us, especially given the cost of setting it up. We're talking here about an advisory body, and that body—we have the devolved powers we need in order to create the food standards that we would want.

Can we turn to the promotion of Welsh produce and start with the Welsh branding? Then we've got a few more others to come under this topic. So, Simon.

Okay? Mike.

Yes. This is almost following on from what I asked earlier. Aarhus in Denmark is roughly the same size as the Swansea bay city region. The big difference is that its GVA is 50 per cent higher. One of the strengths it has got is that, if you go into almost any supermarket, you will find brands like Arla, Castello and Lurpak, which are based in that region. We don't have the same in Wales. What can we do to ensure that we start getting that value and getting that name recognition, whether it's an overarching Welsh cheese/Caerphilly or something different, but some idea of actually promoting the Welsh bit, so that people buying milk, butter and cheese actually know that they are getting something from Wales?

Well, Rachel's is an example in the dairy industry of where a brand has endured. Perhaps it is not always seen as a Welsh brand; nevertheless, it is one of our market leaders.The situation, to my mind, has improved enormously in the past 15 years in terms of labelling. The PGI labelling at one time was fairly lax. There was, for example, a difference between Scotch beef and Scottish beef. Basically—I exaggerate somewhat but not too much—to get your animals labelled and being sold as Scotch beef, they basically had to be in Scotland for a certain number of weeks and qualify on residence. That's why the Scottish beef label was invented, to make sure that 'born, reared and raised' were the criteria on which the status was actually based. So, that was the issue then.

I've certainly noticed over the past few years that many more products are labelled in Welsh—if you go into any supermarket in Wales, they're clearly labelled and successfully so. Is that the case in supermarkets elsewhere? I believe that it is. I was in Dubai in July and there sat, clearly labelled, Welsh lamb, which I was delighted to see. So, I think we are seeing more and more products that are being labelled as Welsh. What we don't yet have is a number of larger food producers. Many of them are small.

The cheese industry was always an example some years ago—people did it almost as a hobby. Most of the people moved into Wales—not all—and they did it as a hobby and they created the Welsh cheese industry. There were a few people locally who did the same thing. There are now cheese producers who are looking to expand beyond being a craft producer. They tend to be younger people—a lot of them. They're ambitious in terms of their product and that's what we're now seeing. A lot of those microbusinesses that were content to remain microbusinesses more or less are now looking to expand. They're not major businesses yet, but I detect more of a desire now amongst the newer businesses to do that.

That was the point—it's almost going back to what I asked at the very beginning. There's a lot of these—we talked about breweries first, but I'm talking about the dairy industry—that really need that push into becoming medium and large businesses. What support can Welsh Government give to give them that push to become those medium and then large industries?

Two things that I mentioned earlier: first of all, there is financial support for capital investment, but market support as well—looking at new markets around the world, particularly helping them to understand what's required in that market, and helping them to understand what kind of licence is needed and what kind of certification, and then helping them to export.

I don't know whether I'd want to call it an 'export' or not, but our biggest market is England and there have been difficulties that they've got a supermarket deal to provide good 'x' throughout the whole of Wales, but actually getting it—. And it could be manufactured in Flintshire, as one example was, but actually getting it over into Cheshire was very difficult. England is by far the biggest market outside of Wales for our goods and actually getting these in there. What more can be done to get the supermarkets to have—? In Wales, you have these blocks of Welsh produce, but they don't necessarily have them in Bristol and Cheshire.

No. Some of it's to do with the way that supermarkets operate. If we look at Tesco, for example, not that long ago—1999 and 2000—Tesco had a philosophy that everything in every shop was the same. They didn’t do regional products. Now they've gone very much the other way, and you can see a picture of the farm that produced your potatoes in Tesco if you go there. But there is a danger, of course, that we end up simply trying to service the Welsh market on that basis and that's what we don't want.

How do you resolve that? Well, there's constant dialogue with the supermarkets. Some of it, I have to say, is helping producers to be able to supply those big markets as well, because for a lot of suppliers, a very big market is difficult to supply. Working with those supermarkets, and I know that Sainsbury's did this at one time, they would work with local producers and say, 'Look, this is what we require. Can you meet that challenge, and we'll help you to meet that challenge?' It's not simply a matter of saying to a producer, 'Right, can you supply all these supermarkets across London?', if they say, 'We can't do it.' So, helping them to be able to fulfil their obligations in terms of supply is important as well.

But, it has worked in the drinks market, with breweries, and I'm thinking of things like Penderyn, where you can get that across England; it's the food market that hasn't really succeeded. I'm not going to push you any further, but I'll just ask you and your officials to look at it.

We will, and we'll write to the committee on that. Penderyn is an interesting example. The market for whisky is very vibrant around the world. Penderyn's challenge is producing enough. There's more of a market for Penderyn. I know that there are plans now for Penderyn in terms of moving—

To Swansea.

—and it's great to see that and, of course, we have another distillery that's near Bangor, which, if I remember rightly, will be able to sell whisky from the end of the decade, once it's mature. So, the market's very, very good, and the challenge in that market is actually fulfilling the supply and demand that already exists there. It's good to see Penderyn, which started off, so myth has it, as a conversation in a pub in Hirwaun, almost as a hobby, into now what's becoming one of our fastest-growing exports.

David.

Following on very much from the comments of Simon and Mike, and, quite rightly, we talked about the importance of the European market—450 million people for Welsh products—but the truth of the matter is that right on our doorstep we have a ready-made market of 50 million people. If we could create the demand in that market—I'm talking about England now, of course—then they could pretty well absorb all the products that the Welsh food and drinks industry can produce. A part of that would obviously be creating the fact that Welsh produce is a quality brand. You've just mentioned Penderyn. Penderyn is very, very popular because it started off and it's made itself a premium brand. We've got in Wales a marketing man's dream logo with the Welsh flag, there's no doubt about that—that on every product that we produce and the provenance of where that product comes from—but it's a matter of building that quality brand to make sure that products coming from Wales—any products coming from Wales—are of top quality. Where are the Welsh Government with regard to that, and promoting it purely and even only being willing to support the producers who are producing quality products, rather than just a bland helping of others? Where do you stand on that? 

We are nothing if we are not quality producers; we can't be anything else. We can't be commodity producers. We couldn't possibly compete with New Zealand on price or in terms of the sheer production capacity that they have. Land in New Zealand is much cheaper. The climate is much better. Everything grows bigger there. There's no way of trying to compete with the New Zealanders when it comes to lamb, so we have to say that what we produce is better. We argue that it's of higher quality. It's a different type of lamb: hill lamb is different to the lowland lambs that the New Zealanders tend to focus on, so we've always focused on quality. The reason why we do that is because if we can sell our produce then at a higher price, it puts more money back into farmers' pockets. That's what it's about at the end of the day—making sure that the industry is sustainable. 

But it's not quite as easy—. For some products, there's an untapped market in England—that much is true—but for others, it just isn't there. And I come back to the point I made about Welsh light lambs earlier on. Many of our hill lambs come in at 8 to 12 kg deadweight. There's very little market for them in the UK. Why? Because they're sold as carcasses, and you don't see sheep carcasses hanging in the supermarket, but in southern Europe people will pay for them. The demand for lamb in the UK is for, if I can put it this way, the wrong kind of lamb as far as Welsh hill lamb is concerned, and you can't easily substitute it. So, the export market will always be essential to the health of the Welsh food and drink industry.  

But we've got 54 million people. It's a matter of marketing it in the right way. You can't tell me that we can't change that whole thought of those 50 million people towards Welsh lamb. I mean, I'm absolutely—

We do, but in the UK it's a small market. The market for lamb is small, much smaller than it is in other countries, and the market for Welsh lamb as part of that is also small. Of course there's always scope to increase the market share that we have, but the idea we could do that over a very short space of time and that it would replace the European market is impossible. It's an entirely different type of lamb that we sell into the European market, and there is no demand for whole lamb carcasses in the UK in the same way as there is in France, in Spain, in Greece and in Italy. 

Just following on very quickly from something Simon raised, and that is slaughterhouses. We export most of our carcasses of cattle and sheep into England, but surely if we want to be able to prove the provenance of our products, particularly lamb and beef, wouldn't it be a very good idea to set up a co-operative slaughterhouse where they took all the animals produced in Wales and slaughtered them in one particular place, so that we'd know the provenance of it? 

The nationalisation of the meat industry. That's what that would mean. 

It's nothing that I would be against. 

The problem is, David, you'd be effectively saying to farmers, 'You can only sell legally into this one abattoir at the prices that you're given.' That's the problem. 

It would be a co-operative—

Yes, but it's only one. There'd be no competition. It's basically the nationalisation of post-farm-gate meat production. I don't think we should be hung up on this. It's inevitable that we will see meat processed outside Wales. That's particularly true of beef. It is a nuisance in the sense that it creates a problem with creating the levy—the red meat levy—but what's hugely important is that we're able to show that the animals are born, reared and raised in Wales. In doing that, that's enough for us to be able to honestly label lamb as Welsh and then protect the status that that lamb has. I keep coming back to lamb as a market leader for us. What then is important is that there is recognition of what will be the UK's protected name status structure in the European market and vice versa. That's absolutely crucial. If we don't get that mutual recognition, then PFN status within the UK would only work within the UK, and we need to make sure that we've got that status in as many markets around the world as we can get.

Okay. Shall we move on to local and community-produced food? Russell you've got one, then Jayne, and then—

Yes, thank you. One of the barriers to food and drink producers growing their businesses is the lack of industrial units and start-up units to move into. We heard this morning about the cheese industry, the cottage industry—how they started as a hobby. But we've got the Hilltop Honey example of starting in a garage. They went to a unit, a start-up unit, then they expanded into the premises they've got today. They talked about the difficulties in that journey, but they are one of the luckier businesses, I'd say. A business today that starts as a hobby simply cannot find a unit to go into. Can I ask you: do you recognise that as an issue, and how can the Welsh Government support that? I say that, knowing that there are signs across the road that say, 'units for rent here', but the units that are for rent tend to be not fit for purpose, as the ceilings are too low. Do you recognise this as an issue, and how can the Welsh Government support in this area?

Yes, I have heard it from others in other sectors of manufacturing as well. Building factory units got a bad name in the early 1990s, when a lot of them were built and they were left empty. That doesn't mean that it is necessarily a bad idea, and I think that it is something that we can consider in the future, but the difficulty is creating units that are appropriate for the particular business. To me, the way that you try to resolve that is that you look potentially in the future to creating a food park—a group of units that are suitable for as many food producers as possible. We have our food parks in Horeb in Ceredigion, and in Menai Bridge—I'm not sure that the one in Cardiff is still there. They tend to be hubs to help businesses to promote new products and to test new products.

One of things that I think it is worth us considering in the future is how we can create sector parks where it's possible for a particular type of business to look there and get the kind of premises that they need. There's always a difficulty creating lots of buildings where it's one size fits all. We know that that can create problems—you've mentioned one there already in terms of low ceilings, and of course there will be issues if you're in the tech industry; there are issues with the electricity supply particularly and things like air conditioning. In the food industry, obviously there are the hygiene requirements of that industry. 

I have heard it before. It is something that we are thinking about further, but that would mean clustering as well. You would have to say, 'Well, that particular cluster there is for a particular type of industry and then another one will be over there' because then, of course, you could create those external economies of scale that you would need in order to make the industry more efficient.

And it's not a problem unique to the Severn valley. I thought it was, but it's not. We heard in the economy committee in the last few weeks from enterprise zones board chairs that these are businesses that are in the food and drink and other sectors that are struggling to simply find units to grow their businesses.

Of course, the other issue is the cost of building as well. Once that building has developed, it immediately loses its value, up to about 15 per cent. As a result, it's difficult for businesses to be able to finance those in the first place. So, is there anything in terms of business regulation that can be reduced in order to narrow that gap?

Yes, well, I assume that they can write that loss off. Obviously, that's something that businesses can do. We have a generous small business rate relief scheme, which I think matches anywhere in the rest of the UK in terms of its reach, and of course the support that is available for Welsh businesses generally. One of the things I have heard from those in the Welsh food and drink industry is they value the support that they get in Wales and compare it favourably to support that's available elsewhere.

Just on that, actually, I spoke to a business in my own constituency where they were offered many incentives to go just across the border into Bristol—and I think similar issues could happen here—but they stayed in Newport because it was their home and they didn't want to leave. I'm just concerned that, if people didn't feel that tug and pull to home, we could lose some of these businesses, particularly when they are looking to expand to go into England.

There's been no evidence of that that I've seen, and I would argue it's because of the packages that we've put in place. Of course, it's a competitive environment, and inducements will be offered. These are the things that we do ourselves. Packages are put together to attract businesses into Wales. Everybody does it. It's a competitive environment. But what we offer that, for example, is not available for a business in Bristol is, if you're an SME in Wales, you get noticed. People know you're there. You're drawn to the attention of Government, you'll be known to Government Ministers, and it's just not possible in England because of its size. We hear this from businesses time and time again: 'Well, we're in Wales because we are so much closer to decision makers', in a way that just isn't possible in bigger countries. I think we need to use that—and we do use that—to our advantage.

Finally, one of the issues that was raised with me, actually at Tiny Rebel brewery was around the issue of skills. They've got people who work for them, but they're quite keen to upskill their workforce and develop them in the future. What more can Welsh Government do to ensure that we've got the right skills in the food and drink industry that are fit for now and the future?

Well, of course we already fund apprenticeships. We made a commitment to that two years ago in our manifesto: 100,000 all-age apprenticeships. What we always look to do is to work with businesses to identify what types of apprenticeships they need, and then see what we can do to help them to provide those apprenticeships. We do that in a number of ways, in order for us to understand that apprenticeships are being created in those sectors.

Okay, thank you. Shall we move to tourism and hospitality? John, you wanted to start that one.

I think, First Minister, many of us will be familiar with the attractions of quality local food and drink produce when deciding where to holiday and where to visit. Many European countries are very good at providing that local food and drink experience, and Scotland I think have got considerable strengths as well. So, I think it would be very beneficial to the Welsh tourism offer if there was more high-quality local food and drink produce associated with different parts of Wales, and coming to Wales. So, what Welsh Government support is there to try and ensure that the tourism offer in Wales and tourism operators are able to provide that quality local food and drink?

Well, we launched our food tourism action plan in April 2015. That plan is used by Visit Wales to help to develop the food tourism action plan, which runs, as I mentioned earlier on, till 2020. There was a fair bit of consultation with food and drink tourism industry representatives to agree the plan. What does it do? Well, it identifies the priorities and informs the development of future food tourism projects and proposals. It raises awareness of the quality of Wales's food and drink offer, and it makes information available about Welsh food and drink to Welsh businesses and visitors to Wales.

Obviously, the first objective is to improve visitor knowledge of Wales's food and drink, to encourage our own hospitality industry to use more local produce and to increase the prevalence of Welsh food and drink on menus, and that's grown substantially over the last few years—you see a lot more of that now than was the case, say, 20 years ago—and also, of course, to identify the skills gaps: where do we need to provide the skills training that the hospitality industry and the food and drink industry actually both need?

Do you think there might be any major advantage in perhaps having quality local Welsh food and drink as one of the themes for tourism for a particular year in Wales? So, you know, we've had various themes. Might that be one of them? Would that give a focus on that quality of food and drink that might enable a significant step forward?

That is an interesting idea, and I think we can genuinely say now that we can do it. We have such a breadth of food producers, such a breadth of products, and, importantly, consistency. One of the things that was lacking in some sectors 15 years ago was consistency. If you had something very good, then it wouldn't be so good the second time around. We do get that now, and that is something I think we need to consider: a year of food.

I think we are all guilty of a year of food when we look around the table, but there you go, we might have to call it something else. Mike.

Of course, there is sub-regional food. I come from a cockles and laverbread area. I think that if we are going to market it, perhaps it's not just Welsh lamb, but we actually need to market the sub-regional food available.

Yes. I think as far as Swansea is concerned, the availability of cockles and laverbread is fairly good, in Swansea market particularly, and there's a fair spread of availability around south Wales. You can buy cockles and laverbread in Bridgend, but only, as far as I'm aware in one place—no, two places—in Bridgend market. So, it's available. Are cockles and laverbread two products that we could spread around Wales? That's possible. It's traditionally associated, of course, with Swansea and the Gower coast of Swansea bay. One of the things I know that Swansea has been keen to do—. I was looking last week, actually, at Swansea's website—the Swansea shopping website—at how Swansea has been categorised into different quarters and the way the market is being promoted. There are opportunities to promote two products there as part of the promotion of Swansea as well, which is being done.

I was thinking specifically of the 'taste of Wales' and if we are going to have that sort of thing in tourism. So, if you come to Swansea, you can go to these places and you can eat cockles and laverbread, which—if you are coming from England or America or Switzerland—you have probably never heard of, never mind eaten.

Yes. Cockles are an easier sell, I have found, but people's palates can be educated. But, it's different. Actually, laverbread is not that wildly different to some seaweeds that are eaten elsewhere in the world. It's eaten in Ireland, but in a dry form, called dulse, which is quite different. But, I know that in Japan, for example, there is a market as well for a similar type of product. So, it's unusual, but it's not so unusual that people might think that it's too strange to eat, and I do think that we have products there that can be market leaders for Wales.

I'm always frightened when I say this, but we've exhausted most of the areas that we wanted to cover. Does anybody feel that there was a question that they wanted to ask that we didn't get to, without going back and opening a huge debate? We have about five minutes on this section now, but I'm happy to move on if people feel that we have got sufficient—to be able to write our report. Okay, fine. Thank you. 

We'll move on, then, to the next item on the agenda, which is questions on topical issues. I have only had one topical question submitted, and that is from Dai. 

[Inaudible.] 

Yes, you're coming in, but Dai is the questioner.

Okay, thank you. Mike on this point.

Ynysforgan roundabout is the roundabout where I join the M4 fairly regularly. Obviously, I use it to go in every direction I travel. I think that, on the M4, there's a drainage problem, or there appears to those of us who drive on it to be a drainage problem. I don't expect you to know much about the drainage problem there today, but could you ask your officials to have a look at the drainage on that section? There's been some resurfacing work, and I'm not sure that the drainage has followed the resurfacing.

The other question—and you could put it on any part of the M4, but I'll just ask for it around Swansea—is to actually do some electronic number plate-taking to actually work out where people are going to and from. Because I have a horrible feeling—and I include myself in this—that a lot of people are using it as a one-junction or two-junction jump. That itself is actually adding to the number of cars on the M4.

Well, we could, but the question is: what would we do about it? There are some junctions where it's far easier to travel on the motorway than it is elsewhere. One exception might be Llangyfelach to Fforestfach, where there's an equally good road that runs parallel almost to the motorway. For the rest of it, coming through Morriston or going down the M4 from Llangyfelach, the M4 is always going to be quicker. So, a traffic survey of that kind we could do, but what it leads to is difficult. One of the problems that exists at the Ynysforgan roundabout is the fact that the Swansea Valley road was built as a single carriageway road, for reasons that escape me. It was a long time ago now—Brecon got a dual carriageway and Swansea got a single carriageway. We know that that road is very heavily congested, given the number of people who live in the valley.

The drainage issue I can look into for the Member, but, as I say, I'm not sure what a traffic survey like that could be used for. It would tell us perhaps where traffic is going, but I'm not sure we could do anything about the traffic itself.

You might be right, and you probably are right, about Llangyfelach to Morriston, but from Morriston to Birchgrove—you have actually got the distributor road, which is one of the best-kept secrets in the area, which has a very limited amount of traffic on it, for example. If you saw that a lot of people were going from Birchgrove to Morriston and then coming off there, you may well start pushing people onto the distributor road.

We are, I think, having a dialogue about shortcuts through the lower Swansea valley now, aren't we?

Yes, but—

Of which you will have better knowledge than me, incidentally, living in Morriston. Clearly, there are some examples where there is an alternative, but how you actually—. You could use signage, but how you—. Obviously, people make their choices as to which route to take.

I think that if you saw that there was a problem, you could use signage. If there isn't a problem, then you don't need to use the signage. But that would identify it—that's the point I was trying to get across. If there is an alternative route that people could be using, rather than clogging up the M4, then it may well be advantageous to direct them, especially when you've got distributor roads. Port Talbot is a classic example. You've got the Port Talbot distributor road. When you drive along that, most of the time you'd think the world has come to an end. There is no other traffic on there at all.

I wouldn't say that to David Rees, actually. [Laughter.] But we do find, of course, that there's a gap between a road being built and the use of it. On the distributor road in the old copper works area of the Member's constituency, I wonder whether actually the capacity exists to take more traffic anywhere, particularly at certain times of the day, and whether congestion on the M4 would simply be transferred to congestion on the distributor road. Yes, I think there is a case for saying, when there's an accident, or when there's a bottleneck on the M4—on that part of the M4—is there a way of signposting people around it? But I suspect there would need to be some kind of survey of the traffic capacity of the distributor road.

Okay. I think we're opening up now. Mick.

First Minister, this debate really brings us back to the crux of transport policy, and that is that we've got to get cars off the road, we've got to get more people onto public transport, and we've got to invest in public transport. And you will have seen recently the concerns that have been expressed about the underfunding in Wales of the rail infrastructure, almost to the tune of £1 billion. I wonder if that's an area where representations are being made?

Very much so. We have said that we believe that we should be able to direct Network Rail. We can't. It's one of the reasons why the metro is being set up with the structure that it has under Transport for Wales, because we need to make sure that we don't have it so that Network Rail just don't do as we ask; that would bring the metro into disrepute.

I think the key with transport policy is—well, there are several things. First of all, I, as Members will know, have a fairly encyclopaedic knowledge of the rail industry and trains in Wales—he's smiling at that. So, I'm a great supporter of the rail network, and a great supporter of the metro, but there are areas of Wales where you do need to have road improvements, and here we are in Newtown. If we said to the people of Newtown, 'Well, actually, we've got a railway line anyway; use that rather than the road', I don't think it would go down too well in this part of Wales.

It's a question of getting the balance right and planning for the future. But it's more than simply providing more transport; it's about the way people work. Two things: ensuring that more people are able to work at home so they don't have to travel in the first place, and, secondly, more flexible working, so that people are not all travelling at the same time, which we know—. I see the effect on the road where I live: when the schools come out it's suddenly jam-packed for half an hour and then it disappears. So, I think, yes, we do need to provide, to my mind, road improvements, but not just that. Public transport improvements as well are hugely important: creating a system where people can feel they can move seamlessly between light rail, heavy rail and buses in the urban parts of Wales; improving the service on the Cambrian line here, so that it's more predictable and more frequent in the future; but also thinking as a society as to how we create a scenario where people have to travel less, where you don't have to physically travel to a meeting. It's very easy to do it now, of course, through video-conferencing.

Okay. John, on this point, and then I know that David's got one on another form of transport, and I know that, then, Russell's got one.

On this point, Chair, I think it's relevant right across Wales, including in Newtown, that there are those peak points in terms of congestion on the roads, as you say, around school times, around travel-to-work times, and we now have the Active Travel (Wales) Act 2013, of course, in force in Wales, First Minister, and I think it's an opportunity, for example, to get schoolchildren cycling and walking to school much more often, rather than being dropped off in mum and dad's car. And I know it's a question of distance, but, very often, fairly short distances are involved, and, you know, it's one way of reducing that congestion at peak times, because, as you say, at many times of the day, that congestion isn't an issue, but it certainly is at peak times. We have the active travel Act now, and we have to implement it to help deal with these problems and reap the other benefits from it.

I agree, and I think it's hugely important to focus on the school run and creating safe routes to schools that involve, for example, in time, building physically separate cycle lanes. You know, we live in an era when people are very uncomfortable about the thought of children being on the road with lorries. He and I belong to a generation where we were thrown out on to the road without helmets, and that was the way things were then. But now, there's so much traffic. I mean, this road—the traffic on this road has increased incredibly since the supermarkets were built at the other end of town. I wouldn't want a child of mine to be cycling on a road with an artic going past. How do you resolve that? Physically separate cycle paths and cycle lanes. That's why the active travel Act was so important, to make sure that the local authorities understood that it's not simply about road improvements, but that when you're looking at transport improvements, you consider bikes to be a mode of transport, not a form of leisure, which was the case before. He knows this as well as I do, that it was simply seen as a form of leisure, not as a mode of transport. But, of course, I suspect that most of the traffic going through Newtown is long-distance and people heading off down towards Welshpool, down towards Shrewsbury and beyond, and you can't transfer that traffic and a lot of the freight onto the rails. As a result of that, we need to have in some parts of Wales a bypass around a town like Newtown to ease the traffic, as there is no other alternative that presents itself.

Okay. Do you want to move to yours on the airport?

I could take the pressure off you just a little bit, First Minister, because I want to talk about—

I don't think he is under pressure.

—one of the Welsh Government's success stories, which is Cardiff Airport. It's been a great success story. But is there anything you can do to encourage tour operators to include further destinations from Cardiff? It's quite depressing, really—you open a brochure or you go online and there are so many more flights going from Bristol. Now, Bristol is really at capacity. Anybody flying out of Bristol now would find it not a nice experience compared to Cardiff. Is there something the Welsh Government can do to encourage tour—?

The devolution of APD would make an enormous difference—

I'm sorry—

The devolution of air passenger duty. Not just to Cardiff. We have an airport not very far away here—an airfield in Welshpool, which I've flown into. It's not going to become a massive airport, clearly, but it's got potential for perhaps getting more light aircraft in. The same is true of Valley. APD could help Valley as well to become a hub for Anglesey. So, APD would make an enormous difference to our ability to attract more routes.

I think we have to accept that for many years Bristol has done well. Bristol has been a successful airport: it was well run, it invested at a time when that didn't happen in Cardiff Airport, and Bristol did march ahead of Cardiff, there's no question about it. We didn't start off from the basis of looking to buy the airport but rather to persuade the then owners, Abertis, to actually invest in the airport. It got to the point where we were offered the airport. We bought it at market value; we've not had it valued recently, but I suspect it's worth an awful lot more now than it was when we bought it. The investment is there for everybody to see. It's much, much better now. I believe that, before we bought the airport, it was fully believed in the airline industry and the travel industry that the airport would close, so what was the point of looking to Cardiff for new routes, because it was going to close down anyway? That was widely believed. It's not believed now. Getting Qatar Airways in has been a huge, huge boost for the airport—a daily flight, and for that I have to give credit to Roger Lewis because this is his doing as somebody who worked very hard on getting that route into Cardiff. And now other airlines are sitting up and taking notice.

With the airport tax, I've heard that the reason that they will not devolve it to the Welsh Government is because of the proximity of Bristol Airport. Is that right or—?

The reason why they won't devolve it is that they regret having devolved it to the Scots, and as a result they won't devolve it to us—

That's what I mean. Obviously, you've got Newcastle and Edinburgh. The same argument could be used for that.

Exactly. The reality is, to my mind, that Cardiff's strength lies in long haul. Bristol has great strength in short haul. For me, we even said, 'Look, devolve long haul APD to us; that's less of a threat to Bristol.' Of course Bristol Airport are going to be nervous about it and oppose it, for obvious reasons. I don't criticise them for that; they have to look after their own interests. But I believe that long haul APD would make an enormous difference to the ability of Cardiff Airport to grow, without it being a threat to Bristol.

And because we're in—oh, sorry.

I just wanted to follow on from that. One part of Cardiff Airport that hasn't been openly discussed to a massive extent is the extra development of freight, a fundamental part of the Welsh economy. Other publicly owned airports—Newcastle and so on—have built an entire freight distribution network around the airport itself. I think that, at the time that Welsh Government took over the airport, freight had virtually disappeared from Cardiff. Is that part of the economic strategy?

It is—well, the freight had disappeared before that. It is something that Roger Lewis, the airport chair, has discussed with me many times. He is very keen on getting more freight into the airport. I don't think the previous owners were that keen. At one time, it was a distribution centre for one of the—I forget which one it is—postal companies that brought a flight in from Liège every morning. That disappeared, and I don't think that really at that point much was done to increase freight.

Now, what the airport has done is focused on increasing footfall first. Why? Well, the more footfall you've got, the more sustainable the shops are for a start, the more sustainable the facilities are. Just by getting people through the airport that helps, of course, the sustainability of the airport, but the airport is now very heavily focused on freight and developing freight opportunities. We have—[Inaudible.]—for example, which does fly freight into the UK, and that's where the airport has got a lot of potential.

Looking at the passenger side, it's growing well. Freight now is the next challenge.

Okay. I'll carry on now then. Because we are in Russell George's constituency and also for those—no, there are no regional Members here for Mid and West Wales—but because we're in Russell George's constituency, he can have the last topical question, even though he didn't give me notice beforehand of it. But you can now ask your question. 

Thank you, Chair. Can I ask, First Minister, about your plans for health provision in mid Wales in particular, because we know that this is an issue that really exercises people that live in this area? We know that there are the Future Fit plans across the border in Shropshire, and we know that Powys has no district general hospital of its own, so there is a fear that people will have to travel further for their health provision following changes across the border in Shropshire. Certainly, in terms of this area, if you have to be transferred to a district general hospital, it's an hour away, and could be further away after Future Fit's consultation comes to a conclusion.

Perhaps you could also talk about Welsh Government's provision of healthcare in rural areas. Newtown Hospital predates the NHS itself. It was built before the NHS was formed. What plans might the Welsh Government have for a new facility in Newtown? I accept that wouldn't be accident and emergency facilities, but an integrated service and a new hospital in Newtown as well.

Well, it's a matter, of course, for the health board to come forward with proposals. It will always be the case that people living in Powys and other border counties will rely on some services being provided from England, and we're certainly not looking to prevent that happening in the future. Powys doesn't have a DGH. Geography's a problem: where would it go? If it went to Llandrindod or Builth then it is still a journey over the mountain in the winter to get to it. People in Brecon will still go to Merthyr and people living in Crickhowell will still go to Nevill Hall. The geographical question is all-important when it comes to where a DGH would go. That said, what is the underlying philosophy of Welsh Government? It's (a) to provide services as close to home as possible, and (b) to make sure they're safe and sustainable. That will always guide the decisions that we have to take, and we expect the health boards to be guided by those principles as well.

But in terms of—and I'm not suggesting that there should be a district general hospital in mid Wales. I accept your answer in terms of geography and population, but there certainly has to be a solution if it takes an hour and a quarter for somebody to be transferred to their nearest district general hospital, and there has to be greater provision in towns like Newtown, which doesn't even have a 24/7 minor injuries unit. Surely some of these services can be supported. Powys health board alone would need support from the Welsh Government in terms of building some of these services up, albeit not being a district general hospital.

It would, but, as I say, it's for the health board to determine how services are provided. It's not just about money, it's about getting the people. A&E is a particularly difficult area. A&E consultants are few and far between, relatively, and you need at least seven of them to run a 24/7 rota. So, it's for the health board to determine in which way it can provide those safe and sustainable services and to ensure that, where people need immediate transfer, there's a way of doing that, even using the air ambulance, which is there to provide exactly that kind of service.

Would the Welsh Government look favourably on proposals from Powys health board for a new-build hospital in Newtown?

Well, as the Member full well knows—

You don't have to answer that.

—it's a matter that would have to be determined by Ministers at the appropriate time. But there is no reason why such plans can't be developed in order for the health board to make a bid.

Okay, thank you very much. First Minister, can I thank you and your officials for attending this morning, especially after your heavy night last night at the Oxford Union debating society where you won—

When you say 'heavy night', Chair, I just want to make sure that—[Laughter.]

Debating—a heavy night debating. [Laughter.] If you listened, I did say 'your heavy night debating'—where you won, so well done for that. I thought I'd just put that on the record. No, seriously, back to the business: we'll send you a draft transcript to check for accuracy and then there are a number of points that we'll write to you with, and also with a copy of our findings for you, as is standard practice. So, just to say 'thank you very much' for your attendance this morning—or this afternoon now.

Committee, we have item 4 on the agenda, which is the paper to note. It's the report and the answers from the First Minister at the last committee, which we held in Cwmbran. So, are Members happy to note that? Okay, thank you very much. 

If we can now move a motion under Standing Order 17.42 to resolve to exclude the public from the remainder of the meeting. But, before, I ask you to formally do that, I wanted to once again say 'thank you very much' to all of you for coming. I hope you have had a flavour of what does go on. I don't think the First Minister was under pressure at all, because I hadn't got my little spotlight. That's when he knows he's under pressure: when I start to shine lights. But I'd like to say 'thank you very much' to you all for coming, and once again thank Hafren theatre for their hospitality here, and for the fact that we've probably disrupted all of their proceedings today. So, it's to say 'thank you'.

Now, I formally move the motion under Standing Order 17.42 to resolve to exclude the press and public. Okay, thank you very much.