Cynulliad Cenedlaethol Cymru

Diolch, Gareth. Sara, if you could just introduce yourself.

Prynhawn da—good afternoon, everyone. Thank you very much for the invitation to contribute today. I'm Sara Pepper, and I'm director of creative economy at Cardiff University.

Welcome. Mark.

Yes. Good afternoon. Thank you for the opportunity to speak. My name is Mark Davyd. I'm the chief executive officer and founder of the Music Venue Trust, which represents the interests of the grass-roots music venues right across the UK.

Welcome. And Pauline.

Thank you for inviting me. I'm Pauline and I'm the chief executive of Ffilm Cymru Wales, which is a lottery delegate, supporting the sector across Wales.

Diolch yn fawr iawn—thank you all very much.

Who wants to start? Gareth?

Pauline, perhaps.

Thank you. Sure. Well, I'd certainly second that it's a deep and profound impact, and also that there's been an awful lot of innovation very rapidly happening across Wales and, indeed, with colleagues right the way across the UK and internationally, in terms of shared information, as the film set, which is my particular area of interest, is, of course, an international business.

I think that what we're seeing is impact right the way across the value chain. So, of course, we know that all of the cinemas have been required to close. Certainly, the independent venues are, generally, mixed arts venues, so they are interconnected with all of the challenges that we are seeing on our screens around theatres and their reopening as well, and with restrictions around the sale of food and drink, which are very important and will continue to be a very important income stream for those venues. So, they are massively challenged right now, and we're not expecting any of those venues that we're working with to return until, probably, October time. That's to do with the practicalities of measures that they are going to have to implement.

From a production point of view, whilst there hasn't been a formal closedown, if you like, of film production, practically speaking, it's been almost impossible for, certainly, dramas and live action—the sort of scale of production that you see in film—to progress. So, we've seen 12 productions across different scales, including shorts, have to pause and reimagine what that content might look like, think about their budgets again and the practicalities of how they shoot—things like not being able to go on location because of restrictions in various authorities, of course; not being able to have overnight accommodation. These are all very understandable restrictions at local authority level that, practically, mean that it's extremely difficult to shoot.

So, we just have the one production, which is an animation. Animation, as with post, has had the ability to continue, because of their ability to do remote working. But post will see, probably, a delayed impact as the consequences of the dried-up pipeline of production move through and they see their work tail off.

Thank you. Mark.

Yes, certainly. Well, I think that, as everybody will appreciate, it's seen a complete shutdown of the sector, which happened from 21 March. But, in fact, prior to that, we were already surveying our members to look at the reaction of the audiences, of the public, and, in fact, there was a huge downturn in trade even before it was official that you had to be closed. In fact, notably, in the last week before closure, one event was due to take place where there were 200 tickets sold, and not a single member of the public turned up. So, the public had actually already voted with their feet.

That closure initially hit very, very hard. Obviously, it means not only the loss of work for people who work directly in each of the venues, and we have 45 venues across Wales, but it also means the loss of shows at which what you might describe as peripatetic workers are able to get work. So, on average, our members put on over 10,000 different shows a year. They normally have three or four different acts performing, so we're looking at the loss of a massive number of performance opportunities, with roll-out impacts for not just the artists, but also crew, production, security, bar staff, all these kinds of things.

The good news, though, and it seems a strange time to say about good news, is that one of the reasons I was very pleased to be invited today was to tell you how effective the support measures brought forward, particularly in Wales, were, and how much that is appreciated by the sector. I'm able to report to you today that, of all the nations of the United Kingdom, Wales actually has the sector that I represent that is the least in debt. A small victory, but that was achieved because of very effective interventions by Welsh Government, extremely fast and effective support from Creative Wales, and we'd also like to thank the Arts Council of Wales. It's a strange thing to be able to come to a meeting and say, but we can genuinely say that—previously, I think, when I've spoken to committees in Wales we've had to say that Wales experiences very specific challenges around grass-roots music venues; this time, we're able to tell you that you experience very significant benefits from being a grass-roots music venue in Wales, and I can tell you anecdotally that several English venues commented that they would think about opening a venue in Wales as a result of the way that this has been handled.

So, there's still an awful lot more to do, but—. The actual impacts were very severe, but the action taken was very, very comprehensive. The total amount of debt that the venues, the 45 venues, are left with actually only comes to about £120,000 extra because of the measures that were taken—which is bad, and it varies between venues that have really come out of this no worse off than they were before, to others that are carrying quite significant debts. But, at the moment, as it stands, because of the action that's been taken, it's been very effectively managed, and we'd like to congratulate everybody for that.

That's good to know. We were going to come on to the Government response in a minute, but can I just—? Sara, is there anything else you'd like to add on the impact on the sector?

Yes, if I may, I'd like to put some numbers to it, potentially. So, I completely concur with colleagues' points previously. The impact has been extensive, and I would say, in some sub-sectors, devastating. Just briefly to remind ourselves, when we talk about the creative industries, we're including sectors that have already been mentioned—television, film, music—but we also think about architecture, design, advertising, publishing, video games and craft. So, it's quite an extensive group.

Obviously the impact—we won't have the time to go into the impact on each of those sub-sectors, but it does vary around obvious factors like the need to coalesce, to be with people, to be in venues and public spaces and so on. But I want to just draw attention to a report that came out from the Creative Industries Federation this week, which described a cultural catastrophe. The report highlighted a risk of a loss of around 400,000 jobs—it's about one in five creative jobs. Now, if we translate that to Wales, where we have around 8,000 enterprises and a workforce of around 80,000 cultural workers, that's around 16,000 jobs, which is a significant number. I think there's a point that's been made— but I will just reiterate again—that it's not just the knock-on to the creative jobs and enterprises in the creative industries. The interdependencies with other parts of the economy—the supply chain, from electrical suppliers to manufacturers to carpenters to painters and decorators—is extensive in this sector. So, the impact isn't just to the creative industries; it's to the wider economy.

My final point, if I may, Chair, and panel, is around the importance of the creative industries not just to jobs—it's very easy to just focus on jobs right now, but this is a sector that does an enormous amount to our national identity, to our culture, to our Welsh language, to everything about the way we live and work. It knocks on to education, health and well-being and so on. And I think it's really important to think about that holistic picture when we actually think about the impact of the creative industries.

Thank you, that's really helpful. So, the next question I was going to ask Mark's already answered, in a sense, in terms of the Government's response. But would anybody else like to add any more from the point of view of your different sectors?

Can I just also remind witnesses and Members that we've got a lot of ground that we want to cover in an hour? So if we can try and keep our answers fairly short. Some of the issues you might want to touch on now, Members will come back to in a bit more detail, perhaps, later on. Gareth.

Pauline or Sara, do you want to add to that? Pauline.

I just wanted to add, and I would certainly endorse what Gareth has just said—. But there does continue to be gaps, particularly around support for freelancers, and that's across provision, whether it's UK Government or Welsh Government—there are significant gaps.

So, studies were undertaken between the British Film Institute and payroll providers. We've seen similar studies done by the Producers Alliance for Cinema and Television and by the Broadcasting, Entertainment, Communications and Theatre Union, and they're all pretty consistent in showing that about two thirds of workers, certainly across film and television, are currently not eligible for the existing schemes, whether it's the furlough scheme or the freelance support scheme. And given the nature of this type of work, where you'll go in and out of jobs, some workers out there may not have worked since Christmas, and it may be a very long time before they still have a job. So, this is what underpins the findings of the Oxford economic study that Sara referred to. It's an extremely concerning picture and does point to a likely contraction of the sector.

Sara, did you want to add anything to that?

Very briefly, to reiterate Pauline's point around freelancers: it's a big issue for the sector. Going back to numbers, of the 80,000 creative workers in Wales, we estimate about 40,000 of them to be freelancers. So, it's not just that there are issues around freelancers, there's a big number of them. And, actually, looking at recovery and going back into activity, we can't lever and go back to business without that workforce. They're absolutely vital. So, they have been missed, they have fallen through a lot of gaps, and we really need to think about a way of supporting them going forward.

That's helpful, and that brings us on, I think, neatly, to the next set of questions that we have from John Griffiths, which are about workforce issues and will enable you to perhaps expand on some of those. John, croeso.

In terms of workforce issues, first of all, are you able to put any numbers on those in the sector who have had their employment interrupted?

I think it's quite—

Pauline. And I'll bring Sara in. Yes, Pauline. I don't mind which of you goes first. 

Sorry. I was just going to say it's actually quite difficult, in many ways, to put precise numbers on it because it's not a sort of centralised sector in the way that you might look at, I don't know, British aerospace or supermarkets et cetera. But I thought it was quite helpful, just again, to draw upon that Creative Industries Federation research. The kind of numbers they were looking at at a UK-wide level equated to, I think it was, five times the workforce of British Airways and two times the size of—which supermarket was it? Can you remember, Sara—across the whole of the UK?

No, I can't, but I think your point's very well made, Pauline. You know, using examples that compare to other sectors is really helpful here because, whilst we're talking about an industry largely made of freelancers and microbusinesses, they can seem like small enterprises. We don't have the large anchor companies, certainly in Wales, in the same way that other sectors do. But the numbers, as Pauline was just illustrating there, are significant, and, actually, you compare them to other corporate organisations and you can actually understand that the ones and twos make up to a significant number. Just to reiterate, I did that basic calculation based on the Creative Industries Federation—one in five jobs, approximately 16,000, then, across Wales. But as Pauline quite rightly said, it could be a lot more than that, and you think about the interdependencies on other sectors, and it will be more extensive.

That's about 26 per cent of the workforce here.

Gareth.

Diolch. Mark, have you got anything to add from your sector's point of view? Mark?

Sorry, it wasn't translated. Round about 3,500 performances have been lost in the period of closure. I just did some quick maths on a piece of paper there, and it would appear that that would result in around about 95,000 single-session opportunities being lost. That might be bar staff, it might be security et cetera. In terms of the full-time employed positions, we would suspect it's more like something in the region of—quite low—round about 550. But in our sector, of course, large amounts of it do result from self-employed freelancers. So, it's a question of the totality of the amount of work that's being lost.

Thank you. John.

I'm going to come on to some specific questions in terms of freelancers, but before I do, in terms of current employment support for people in the sector, what would you say in terms of the eligibility criteria for employment support and, indeed, in terms of the duration of the schemes? What are your main concerns, then, on those matters? Mark, is it?

I'll bring Mark in first, yes.

Furloughing has been extremely successful where we had full-time employees. The self-employed programme was much less successful, it didn't really address the creative sector as a whole particularly well, but certainly didn't address our workers in grass-roots music venues. We obviously—and I'm sure you're going to hear this over and over again—have deep concerns about the tapering off of furloughing over the coming months, given that the central Government advice and current Government advice in Wales is, frankly, we should not be putting on live music events. So, I think at that point, tapering that down while we still don't have any work for people to do is obviously a major concern.

Sara.

I know we're coming on to freelancers, so we'll talk about that in more detail, but we did a piece of research around the self-employment income support scheme quite early into lockdown, and it revealed that most respondents reported a significant decrease in business, with the majority telling us that work had dried up completely, but what the later part of the research found was that there were lots of people who fell between gaps. That wasn't necessarily just freelancers, but, yes, there were some significant issues there, which do all seem to focus around—there are lots of sectors. I don't know very many freelance lawyers or freelancing bankers. There are few other sectors that operate in the way that ours do.

But to reiterate a point that I made before, undoubtedly, we can't start up business in the same way without this group of people. They're absolutely vital, and it's essential to think about a way of supporting them.

Gareth and Pauline, do you want to add anything to that? No, okay—Pauline, yes.

I was just going to say that it's generally over 90 per cent of our sector that is freelance and micros. Perhaps it's helpful in understanding the relative importance, but, certainly, cinemas have very widely used the furlough scheme. All of the venues that we work with have used it to some degree, but it hasn't really operated for most of those microcompanies. There are a lot of sole-director companies in that mix and, again, they've largely fallen between the cracks, but there have been, I think, 306 companies, Gerwyn from Creative Wales advised us, that have managed to access the economic resilience fund. So, that's certainly very welcome.

John.

I just wonder on that, Chair: we heard earlier that there has been a good level of support from Welsh Government, certainly in some respects, and, of course, Welsh Government has been looking to fill some of the gaps that the UK schemes have left. The economic resilience fund is obviously useful, but do you think Welsh Government has been able to fill those gaps in this sector to a meaningful extent in general?

Who would like to start on that? There's silence. Pauline. 

Well, it's gone some way, but I think that it's a relatively small amount of money for the length of time that companies are trying to bridge, and we don't yet have a sense of how that might continue beyond—as we were talking before, we're still looking at an October date that these companies might be able to survive until with that amount of money. I would say at a UK Government level, the bank-backed loan has been far more useful than the previous loan that they put out, which was much more commercially geared. 

Diolch, Gareth. Sara.

Absolutely, that's a really key point that Gareth makes. For the self-employment scheme, the research that we did explained about having to have been in that employment situation for a certain period of time, so people who had stepped into being freelance or stepped in to starting up a micro and just unfortunately doing it when the circumstances completely conspired against them now will potentially be lost. 

I think some of the schemes that I've had some very good, very positive feedback from industry about were the development schemes that were offered through Creative Wales, because I suppose it's not just about ensuring that—well, it's fundamentally important that we're ensuring that people can pay their mortgage and survive during this period, but we're also talking about recovery and coming out the other side. So, development activity in the meantime, when there's a hiatus, for those individuals and businesses that can function, building capacity during that time, developing ideas, working on—and having the time that, quite frankly, a lot of businesses don't get. That time to build capacity, develop ideas and, quite frankly, think about innovation or think about developing products or services that will enable them to come out stronger the other end.

I'd like to commend a number of organisations: Pauline's is one of those, but BBC Cymru Wales, the Arts Council of Wales, and a number of others who have also come in with a programme of support activity that encourages that development or funds that kind of development work. These aren't grants in the same way, they're about building that capacity to ensure the ability to come back to work. I think that collectively with the action of Welsh Government, like Mark said, puts Wales in a really strong position. 

John. 

In terms of support for freelancers, who are so crucial, as you told us—any views on what that support might consist of and who might provide it? Sara, I don't know, would you like to start on this?

This is such a difficult one, isn't it? I've thought about this a lot in preparation, and I'm certainly sure I don't have all the answers. I'd like to point to activity in Germany because it's always useful to look and see what is happening elsewhere, and I know that in Germany €1 billion was made available for an emergency arts funding scheme, of which €1,000 a month—I certainly knew this was reported in Berlin and Munich, but I'm presuming it's across the country—was made available to freelancers. So, I suppose that's one way of showing an example of what that was. Obviously, that was funded by Government and I suppose under the current situation I can't see where else that kind of capacity would come from to do that. 

Thank you. Pauline. 

I'd like to point to the Film and TV Charity, who've really stepped in—they're a UK-wide body—where others have not been able to, frankly, in the absence of wide enough support from the UK Government, in particular, because it certainly is a UK Government level of challenge, if you like. The Film and TV Charity have made almost £3 million available across the UK. I understand there's been 116 awards, but that's obviously a drop in the ocean when we look at the overall workforce in Wales—116 awards to Welsh applicants. That funding came from Netflix who put £1 million in, the BBC put £500,000 in, the British Film Industry and some private benefactors, and Sky, I believe, as well. They are fundraising to try and do another trawl, but you will imagine that these are one-off grants—they're £2,500—and we're looking again over a very prolonged period of time that people might not have had work.

The truth of this industry, particularly for film but also for television if you've got multi-party finance, is the point at which freelancers and also the service and facility companies actually get paid is when production happens. That's where you get all the funding corralling around a particular piece of intellectual property, and it gets released at the point of production. So, really, that imperative to get back into production is incredibly strong in the absence of a broad enough scheme that works for the creative industries.

Gareth, and then Mark. 

Just picking up on what Pauline was saying, freelancers did fall down the gaps here but, actually, I'm pleased to say that the music venues themselves tried to pick up some of those gaps. Across the UK, we've run a campaign called Save Our Venues and in Wales, because of the support that came from Government, those venues were able to fundraise a great deal for their own workers. So, that campaign has raised nationally £2.3 million, mainly directly from the public through crowdfunding. A number of venues in Wales have sold merchandise. They've had fundraising campaigns in their local communities, and some of that money has been able to pick up people who did fall through the gaps, or find alternative employment for them. We've got a number of venues that have opened up as takeaway restaurants—that kind of activity—so it's been very inventive, and just trying to keep the community together for exactly the reason that Sara said. They need those workers back. 

Thank you. John.

I know time is pressing, Chair, so perhaps I could ask for very brief answers on skills and diversity in the sector, and how COVID-19 has impacted on both of those—skills gaps and diversity. 

Who'd like to start? Pauline.

I think it's a very significant issue. Skills: there's a very clear need for people to be diversifying their skills at this point in time. We've seen a lot of pivoting to online provision where people can—different kinds of content; thinking about exploiting their IP differently; thinking about their business models differently. So, it is a concern to me that whilst there's been obviously a very acute, immediate need for Welsh Government to pivot all of the resources for the rest of this year for skills, certainly as reported from Creative Wales, they've been diverted elsewhere, so there isn't a budget left for skills. So, that's a big concern, I think, that needs to be addressed.

And from a diversity point of view, I think what this crisis has shown is it's kind of amplified any kind of weaknesses or lack of representation. So, particularly, we've seen across all sorts of sectors how that's amplifying access issues for people who are living with disabilities, and also socioeconomic exclusion, BAME communities, et cetera. So, I think we really need to do a bit of doubling down on that, and that will be particularly challenging when people go back into a workforce, looking at how they can offset the additional costs that COVID-19 will require with their safety measures, so they'll be looking at how they can have smaller crews, for example; they will not be prioritising thinking about trainees and new entrants. So, it's really, I think, for the public sector and public funders to put more emphasis on that going forward, to make sure we don't lose a lot of the very good work that's already been done in that area, and we can continue to progress when it comes to social diversity.

Thank you, Pauline. If anyone would like to add to—. Gareth.

Thank you. Can I turn now to David Melding? Oh, sorry, Sara, did you want to come in on that?

A very, very quick point, Chair. Just to make mention of a skills census, Clwstwr, which is an initiative between Cardiff University, the University of South Wales and Cardiff Metropolitan University, together with industry. The Clwstwr initiative is looking at developing the screen and news cluster in south-east Wales. So, we're doing a skills census at the moment to take account of all of the skills needs across Wales, because, I think, pre COVID and post, during and post, the skills needs need to be really understood. So, I think, actually, as a sector, we have a job to do to do that piece of work, and I'm very happy to share with the committee the findings of that in the autumn. It's a way from now, but we are doing the information and data gathering for that. 

That's really useful. I need to turn to David Melding here, and just to remind Members and witnesses that we've got three sets of questions that we want to get through in the next 25 minutes or so. So, if we can be as succinct as we can. I know there's an awful lot to cover and it's really difficult to do, but, David, if I can bring you in.

Thank you, Chair. I think the natural flow of questioning has covered nearly everything I was going to ask. Perhaps I could just inquire on this one point. Have any of you been involved in the schemes that Welsh Government designed, and are you going to be involved in any future schemes, or the current one that may be adapted? It seems to me that Welsh Government has focused very much on venues and projects rather than staff, which from all that you've said to previous answers, I think you accept is realistic and appropriate, because just the volume of funds you need to furlough are just so huge that it's not really an option for the Welsh Government.

Mark. I'll bring Mark in first to respond to that.

Basically, David, I think it was essential to do that. One of the things that we are most concerned about is a dramatic loss of infrastructure resulting from this crisis. All of our creative industries need somewhere to take place and certainly, when it comes to the music industry, the roll-out impacts of losing capacity at the grass-roots end would echo down the whole industry for decades, frankly. And when we look at the support that was offered by Government, I think there's a whole other meeting to have about the self-employed and the sole directors, which was a very specific issue, but it was very clear that the physical infrastructure was one of the areas that wasn't really addressed very effectively, frankly, by Westminster and it has been addressed much more effectively within Wales, for which we are extremely grateful.

Thank you. Does anybody else want to respond to David's point? Pauline.

Well, I would just say that they were very quick to put in place, in fact, two levels of taskforce. So, they convened with other funders, ourselves included, extremely quickly and they shared drafts of proposals before they put schemes out there, to get background on that. And in terms of policy development, that's ongoing. We've had pretty much fortnightly now, but at one point it was weekly meetings with them, so they've consulted quite heavily.

It's good to hear. Anything further, David?

No. That's the only point, I think, that's not been covered in the area that I was going to follow up. 

Thank you.

Thank you, Chair. Two quick questions from me. We know, of course, about the issues regarding insurance that businesses have had to deal with in the past, but my first question is this: are there insurance problems when it comes to restarting? For example, are there any instances when insurance companies are saying, 'We will cover you, but we will not cover you if you hold an event or open a venue and it becomes a hub for COVID-19'?

I'll bring Mark in and then I think, Pauline, you were responding to that too.

There's a whole working group on this in the music industry at the moment, Carwyn. The answer is: we don't really know, but we are extremely concerned about it. We've seen very, very inconsistent approaches from insurance companies so far. During the crisis itself, we don't have any examples of any venue in the whole country—the broader country than just Wales—that has managed successfully to get business interruption insurance paid so far, even if they were covered for it. And on the way back, we are seeing—the wildest quote I've seen so far would be 10 times the premium, but we haven't seen any that are effectively saying that the premium will remain the same.

It's very, very important to say that we aren't seeing any that are reflecting that if a venue were to put in place the guidelines that we're seeing from public health, insurance companies would accept that that has minimised their risk sufficiently for them to be covered for infection by COVID-19, which I think is a very, very big challenge to reopening live events, because we must be insured to do that.

Thank you. Pauline, I think you were wanting to come in on that as well.

Yes, I wanted to extend this idea of insurance into production, because essentially there are no insurance providers out there right now that are offering COVID-19 related cover for losses. So, what that essentially means is that you'll only see productions taking place that are able to, effectively, self-insure: so, either they're at a lower level of budget and perhaps they're single-source financed, which is why we are seeing broadcasters, who tend to self-insure at this level, still being able to do some kind of content. And you'll see the streamers, you will see that the larger studios that have a massive economic imperative to fill their pipelines—their distribution pipelines—will, in a very controlled and contained way, be likely to get to production much, much quicker than the independent sector. Frankly, I'm not expecting to see anything between £1.5 million and up to studio level being capable of going into production until this insurance issue is addressed.

Gareth.

Carwyn.

I'll just make a statement. If anyone disagrees with it, feel free, but it seems to me that it doesn't matter what the law says, it doesn’t matter what Governments do, but we won't see a proper restart in the different sectors, apart from those who can self-insure, until there's insurance cover. It's in the hands of the insurance companies for those businesses that aren't big enough to self-insure. It seems to me the only way around that, as has just been mentioned, is for Governments to underwrite insurance risks in some way. So, are we saying, in fact, that reopening is dependent on the insurance companies and not on Governments?

Pauline, I think you wanted to respond to that.

Yes, just to say, I used to be a risk manager in a previous life for insurance companies, and I'm not at all surprised that they're not providing insurance cover, just as they haven't after other major world events or where they have terrorism exclusions, et cetera. So, I think it is at Government level, and most likely Treasury level, and they will be seeing a version of this for every sector. So, looking at some sort of underwriting facility or finance guarantee that they can then provide to pass on to insurance companies that allows them to take on that additional risk and not have those exclusions is going to be necessary.

Carwyn.

Okay, it comes up in the second question, really. It confirms what I said and it does link into the second question. It just seems to me that, in reality, a Government could turn around tomorrow—not that any of them will—and say, 'Everything can reopen', but it won't happen because there is no insurance for many venues, and they can't reopen anyway, regardless of what the law says. So, the answer lies in insurance cover. That seems to be what I've heard.

But moving on, the 2m—. In Wales, of course, it's the law that there must be social distancing of 2m. Given what you've said, all of you, would it make any difference at all if that was reduced to 1m? Would it have any practical effect on the viability of your sectors reopening?

I can see Mark wants to respond to that.

I can do it in the shortest answer possible: no, none at all.

That's what I expected.

Do any of the rest you want to respond to that? Pauline.

It probably would when it comes to cinemas, because there are some cinemas that simply can't open on 2m. They can't get the flow of people through the building, and it would cost them more to be open than to be closed. But that is very much still with that view that they're doing it on a risk that they're going to be back on lockdown. If you've got tickets—. This is not so much for live events, for theatre, with a lead-in time, but if you've got something that's more immediate, like screening film, you could, conceivably, have a phased return to cinema and you would be able to, of course, have more people in your auditorium if it was a reduced measure.

Can I bring Mick Antoniw in here?

Just a point on that. Presumably, in terms of the commercial viability of actually opening in the first place, whether you can get 20 per cent of people in or 40 per cent of people in is actually largely academic until you can actually get close to capacities. The commercial viability doesn’t exist. So, this is really one of these ethereal arguments that's going round, and the reality is, it makes no difference whatsoever, because there has always been a very a fine commercial-viability line within the industry. Is that fair? 

I can see a lot of agreement to that. Mark.

Yes. I think Mick's hit the nail on the head there. Essentially, what we've got is a very low margin of profitability in any case, and when we look at the kind of capacities that we can hit with any kind of social distancing, plus adding the measures that we need to have in place in order to control that social distancing, well, actually, what you've got is a show that's even more expensive and requires a lot of extra staffing and requires a lot of additional cleaning and additional control measures, and then you've got returns from it.

One of the things that's been suggested in one of the guidelines is not only would there be social distancing, there would also be control measures on the amount of drinks that people could have while they were social distancing in order to make sure they don't break their social distancing. I have no idea how you turn that into a financially viable model. It's the elements of what we do: singing, dancing, being close together, and jumping up and enjoying ourselves. If you can't do that, then you can't really host a live music event.

Gareth.

Thank you, Gareth. Carwyn.

I just look forward to watching 'Strictly 2m Come Dancing' when it finally appears on the screen. But, no, I worry about this. Mark, you mentioned this earlier on: it's not a question of what the law says, it's what people feel comfortable with. If you have a cinema, for example, and you want to open, you either have insurance in place or you don't. You can't have no insurance in place. Or you have people signing a disclaimer that basically says, 'You might catch a potentially fatal illness in this building. Could you please sign this form to say that we're not liable?' Yes, it's insurance and behaviour that's going to affect that in the viability of sectors restarting, perhaps more so than the law.

Briefly, if you can, Mark, and then I'll bring in Sara, but we've got another set of questions and only a limited amount of time. Mark.

Just to carry on Carwyn's point there, we did an audience survey: we had 30,000 respondents and they were specifically asked about what they thought about 2m and 1m social distancing, and the numbers of people prepared to go went down when it went to 1m social distancing by another 10 per cent.

That's really interesting. Sara, are you 'Sarah' or 'Sara'? I've realised I've haven't been—. I may not have been calling you the right name all this time. 

'Sara', but most people call me 'Sarah'. I'm happy with either, Chair. 

Thank you. Sorry.

A very quick point: I think consumer confidence is really important, but also understanding the very essence of what so much of the creative industry is, which is about experiences. We're talking about the experience economy here and making sure that we can put in place measures that make people feel confident and comfortable with that. Perhaps I'll do some further research and forward this, Chair. I know in Taiwan that quite early they reopened theatres and there were other examples of that around the world. So, how those measures are being put in place, though, I do think we need to do some further research into. 

That would be really interesting to see. So, the last set of questions are from Mick. 

Just a very short question. I mean, in retail, we know, for example, the pre-existing trend of online purchasing is probably going to be accelerated and have an impact on traditional retail. Again, within the media, within the creative arts, the tendency or the trend towards streamed music, towards streamed performances, towards streamed filming, et cetera—the Netflix, the Amazon sort of scenario—is potentially going to be accelerated. What do you think are the longer term changes that are likely as a result of the experience of COVID, and is there any specific view that you have as to how Government should respond to that?

Who'd like to start?

Happy to come in.

Okay, Mark. Thank you.

We had the audience survey we've just told you about. What was interesting from the audience survey is 53 per cent of our respondents said that they would not be prepared to pay for a virtual gig online, so that would destroy one aspect of the economy. We should also highlight that when they say about paying for a virtual gig, typically they would pay one ticket for a household of four, so actually would reduce the potential audience there by a quarter. And they also told us that the amount of money they'd be prepared to pay would be roughly a quarter of the normal ticket price, which leaves you with, if you add all of that together, approximately 3 per cent of the income, so really not a viable model at all.

In reverse from that, 86 per cent of the audience responded they were very eager to get back to a live music experience. So, I don't think that this crisis has destroyed the enthusiasm for the experience—creative experience that Sara mentioned there. In fact, if anything, I can tell you that despite everything, 26 per cent of people said they would be very eager to and would go more often, even if we open the venues right away now. So, that's some indicator of how enthusiastic they are. It's a really interesting trial of the concept of virtual gigs online, but I think we have a very specific experience here that is valued in a completely different way.

Thank you. Gareth.

I do believe—and we've seen lots of examples of things going online in some ways that do encourage a wider audience, a global audience in a different way. I completely concur with Mark's point: this doesn't take away from a real-time, live experience for the live events industry, and many of the creative industries. But we have to remember the breadth of the creative industries here, and the potential for video games, if you like, design, advertising, potentially publishing, although publishing have different issues around accessibility to buy products in bookshops and so on. But, I think all of this does point to an issue that is being regularly discussed, which is about digital skills. So, I guess if there's an ask here, you know, an important flag to wave, is digital skills were important pre COVID, they're going to be just as important if not more so going forward. So, it's not about whether we can do one or the other—although I'd argue for the live sector, there's not a compromise there—but it's about additionality and ensuring that, in Wales, our creative workforce here are as highly skilled as they can be in digital skills. And that's not just the workforce now, that's in education and our workforce of the future, to make sure that we really put ourselves in the best position to drive that sector—a sector that we know is the envy of the world in the United Kingdom—that we drive our creative sector going forward into the future. 

Thank you, Sara. Anything else, Mick?

No, no.

So, if we can bring the broadcast to an end.

A very warm welcome to the three of you.

Croeso. Phil?

I'm Phil Henfrey, head of news and programmes at ITV Cymru Wales.

Who wants to come next? 

Phil, do you want to go?

Yes, I'm happy to. I think there have been probably three big challenges from our perspective. The first big challenge is that we have to earn it before we can spend it, and as a commercial broadcaster, in April, for example, we saw quite significant falls in our advertising revenue down some 40 per cent. Another large revenue generator for us as a commercial public service broadcaster is productions, produced in Wales, of course, of scale. We're also the UK's biggest commercial producer in the UK, and we're a global producer as well. And effectively, over that sort of period, we saw much of that production cease, thus hitting revenues and so on and so forth.

And then the third aspect was keeping our teams safe that needed to work, particularly in news and journalism, and keeping our programmes on the air. And I'm really pleased to say that, amidst all those difficulties, I think we've done that incredibly successfully. I'm really proud of what we've achieved in Wales. I think it has helped to really underscore the vital role that public service broadcasting, and commercially funded PSB in particular, plays in Wales. It plays a vital role in Wales. It plays a vital role in Wales at normal times, and in the crisis, all the more so. As Rhodri's just said, it has underscored the importance, I think, for the audience as well.

We too have seen significant increases in consumption at this time. I think for our 6 o'clock programme, volumes were up 12 per cent year on year, which is very pleasing, and we've also seen something like 500 per cent growth in our online services, which is also absolutely fantastic. I'm really pleased too that we've managed to keep a comprehensive news service on air as well, so, from the very start of the morning right through to late evening, as well as keeping our current affairs programmes on air, not just for ITV Wales, but also for S4C, which again I think has been really well received by viewers.

So on the whole, I would say that the impact has been to really underscore the public service credentials and the value and the vital role that we play in Welsh life, and the real challenge now is sustaining that in a continued lockdown, particularly when revenue streams are so challenged for us. 

Thank you. Owen.

I can have a go at that if that's useful.

Yes, of course.

I think a lot of the focus at the moment, for example, is how you get production back up and running. There are significant challenges both in England and in Wales under the various social distancing rules. And by and large the public service broadcasters across the UK, including BBC Wales and S4C, have acted—and ITV, I should add—together in trying to develop guidelines and operating procedures that are consistent and agreed between the broadcasters. I think Creative Wales as well—it's still finding its feet in terms of it's a new creation, but I have to say that I think the openness with which they have approached the sector, and the quality of the dialogue, has been really refreshing to see, and I think they've got into their stride very quickly, and made some very clear interventions in the sector with a number of the independent companies to support development and to do their best to try and help pull companies through this period when, for many of the producers in the independent sector, they've seen their entire slate frozen or paused. That can be existential stuff, so, having a proactive Government approach during this period is so, so important.

Thank you. Owen or Phil.

I'd echo that, actually. I think that, as Rhodri says, Creative Wales is very much in its infancy. But, again, as with so many things in this pandemic, it's really had its moment, as it were, and it's really responded fantastically well. It's brought the sector together. It's listened to the sector, and listened to the sector's concerns. it has come up with innovative schemes that, perhaps, they've literally had to sort of create from scratch. Actually, I think that, right across the sector, this has been broadly welcomed, particularly in terms of the way it has focused on development and revenue support, as the capital support, it's very unbureaucratic and very responsive, which is what our sector, in particular, wants to see. 

But, stepping away from that slightly, we were all very fast to go into lockdown, although we as a PSB have never really stopped, in some ways. Coming out of the lockdown is a real challenge. As I say, ITV, as a global producer—. The pandemic is at different stages in different parts of the world. So, we've got some sort of knowledge and oversight of what different countries are able to do in different conditions. It's quite clear that the lockdown conditions have a really huge impact on our sector in particular—our ability to restart.

As Rhodri indicated, the 2m distance rule is challenging. In other parts of the world, they are finding solutions to that, or finding ways around that, and combining it with testing and tracing for the sector as well. Italy is a really good example of that, where the sector itself—or the Government and the sector are working really closely to test the sector, so that you don't get the disruption that could potentially happen in the UK. Because that's one of the big barriers at the moment: managing the risk, whether that's to do with insurance or whether that's to do with a local outbreak in your production sector, as it were. So, there are things, I think, that the Government can be doing while keeping communities safe and while keeping people safe. But, the Welsh Government is doing a really good job and listening to the sector and taking that on board.

I suppose that the caveat that I'd have around this is about the pace of change. That's a really important factor. Ours is a highly mobile industry. There's a risk—and I use that word advisedly—that, actually, Wales becomes disadvantaged by this. As productions and companies start to restart production, really what we want to see is Wales open for business. If it's not, then it's quite simple for these organisations and businesses to go elsewhere. That, I think, has to be borne in mind in terms of the pace of change as well. Particularly now that our near neighbour, as it were, is starting to open up, that does give, even within ITV Studios—. Boom Cymru, for example, is one of 16 or 17 production labels in the UK studios family, but that is now at something of a disadvantage operating in Wales, compared with colleagues who are operating and doing exactly the same thing, but in England. That's just one small example in what is a very global industry.

Thank you. Owen.

I would echo what Phil said. I think that there are dangers in the dual approaches, but from my position, I have every sympathy with politicians in trying to plot a route that keeps people safe while slowly opening up the economy.

Diolch, Cadeirydd. Prynhawn da, Owen, Phil and Rhodri. Rhodri, I wonder if I might start with the BBC Wales announcement of the 60 job losses and just ask you perhaps for a bit more detail in terms of COVID-19 and its impact and why those job losses were necessary.

Yes, sure. So, the BBC had already been facing significant savings in any case, about £800 million in this licence fee period. But COVID has done a number of things. It's affected the income from the licence fee, particularly from those who don't pay through direct debit. So, collection has been more challenging, as you can imagine, during lockdown. But, in addition to that, the BBC took, I think, the right decision to delay the reintroduction of licence fees for the over-75s by two months. Again, given the millions of elderly people in the UK, that has a very significant financial in-year impact. 

So, yes, you save some money on some events that aren't happening, like the Euros and those sorts of things, but, when you net it all out, we're about £125 million adrift this year in terms of our expected income from where we expected to be. And then when you add on top of that that there are many costs that we're carrying, staff costs—and the BBC is not in a position to furlough staff, so we are carrying significant staff costs even when we're not able to produce. So, you've got a deficit in terms of the income coming into the business, and on top of that you've got income that you expected to get in to cover costs from commissions that isn't happening.

So, the overall impact on BBC Wales in this financial year is about £4.5 million. That's about 5 per cent of our revenues, and it's a similar order of challenge next year. So, this year, we make the savings by reducing cash costs and content production; next year, we obviously need to be more strategic about it, and so we are looking at headcount reductions of around 60 posts. We'll announce to staff department by department where those will fall in October, because we're also conducting a pan-BBC voluntary redundancy programme as well. So, we need to look at the response to that as well. 

So, there's a whole set of factors here. I'd have to say, we're not bleating about it—if you're reliant on advertising revenue for your income, as ITV and Channel 4 are, then that's a much, much more significant problem. But, for the BBC, there has been an impact and we have to deal with it. And every part of the BBC, including Scotland and Northern Ireland and all parts of the network piece, the network divisions, we're all having to dig deep in-year to balance the books.

Before I bring John back in, Mick wanted to come in on a supplementary briefly. Can we unmute? Can we unmute Mick, please?

Apologies. Just for clarity on that particular point, one of the consequences of the change in the funding of the licence fee for over-75s is—a significant contributor is the loss of 60 jobs in Wales.

Sorry, no. The decision—. The BBC took a decision back in March that it had intended to reintroduce over-75s' licence fees in June, and due to lockdown it took the decision to delay that reintroduction until August. If you delay the reintroduction of licence fees to, I think, off the top of my head, about 2.5 million to 3 million pensioners by two months, you leave a very significant gap in your funding model for this year. So, that is part of the explanation for the deficit.

There are a couple of other explanations. One is a massive reduction in commercial income. The BBC typically generates hundreds of millions of pounds through programme sales and programme production worldwide. Obviously, that came to a halt, so that also leaves a hole. But it's the volatility, the overall volatility in licence fee income, which we don't typically see but lockdown has exacerbated, and that is the major reason that we're dealing with an in-year reduction that we had not planned for.

Okay, thank you.

Thank you. John, sorry.

I'm just wondering, really, Rhodri, whether, on those 60 job losses, you can say anything to provide comfort to the workforce and those concerned with the contribution that BBC Wales makes to our country in terms of the future. Those 60 job losses now, and the other factors you've mentioned, do they put you on a fairly sound footing moving forward, albeit there are so many uncertainties?

I think we are living—like every organisation, we're living with a degree of uncertainty at the moment that is unprecedented, and, in a sense, you operate from—at the moment, it's month to month—year to year, in terms of our planning. And there is a paradox, John; I think you've put your finger on it. There's a paradox that, at a time when the public service broadcasters have never been more important, the funding pressures facing all of them are significant.

What I've said to staff very clearly is we'll look hard at the voluntary redundancy requests first and see where we can make reductions there that don't require compulsory or enforced changes. We're reviewing the way that we deliver news and sport, daily news and sport. The newsroom has developed organically over the years, bolting programme team onto programme team, online onto radio, onto television. As our network colleagues are, as newsrooms across the world are, we're looking at whether there is a more streamlined version of operating the newsroom. So, that may deliver some savings, but, inevitably, we also have to look at whether there are other programme changes we have to make in order to balance the books.

Okay. Well, I wonder if I could ask Owen, in those terms of the job situation, particularly, what your situation is now and moving forward. Phil, perhaps, first.

Well, as I said at the opening, really, we've seen unprecedented falls in revenues, both from advertising, which ultimately supports the PSB, and also in production, whether that's in Wales and the UK or around the world.

What I would say is that our aim has been to pause rather than cancel commissions. So, we are hopeful that we can get back up to scale and at speed, but coverage around cancelled events—as Rhodri says, the Euros, et cetera, you can't replace that. Advertising in April, as I said, was down 41 per cent, and, you know, these are unprecedented times, but we want to come out of this as strong as we can. So, we're continuing to invest in those things that we think are strategically advantageous to us as we look at the future world.

So, this week, for example, our teams in Wales, as they are right across the UK, are training on a new content management system for the website, because we feel that having digital platforms that are fit for purpose is really important to be fit for the future. But there's no doubt that the economic impact on a commercial company like ITV is significant.

At the moment, we are not talking about job losses. Where we've looked to be decisive is in cutting our costs. So, we've reduced our UK overhead cost by some £60 million in 2020. We're reducing capital expenditure by £30 million. There has been a reduction in the programme budget, as I say, because events aren't there. We've also been beneficiaries of the Government's furloughing scheme; some 800 colleagues have been involved in that.

We've also introduced a recruitment and salary freeze for the management board—the ITV plc board. We've scrapped the dividend. So, at the moment, we're doing everything we can to conserve cash and we're doing everything we can to come out of this crisis as strong as we can. And, as Rhodri said, these are unprecedented times and it's really hard to plan too far ahead because there are so many unknowns. And, actually, there are times when I sort of pat myself on the back and think I'm being really strategic, when I've been thinking about next week, because it continues to buffet us, this pandemic, and will continue to do so, I'm sure, for some time to come.

Owen.

We're probably no strangers to cuts, to be honest. If you think S4C's budget was about 35 per cent more than it is now over 10 years ago, and we've shrunk from staff of 230 down to less than 100 now, in terms of administration, we're probably on bare bones.

We're a commissioner—we don't produce in-house—so, we've chosen to retain staff and not furlough, because I need commissioning or I get big gaps and I need to get the cash out to the sector, so, I need to process payments, I need to do all those sorts of things, and I need to broadcast. So, we haven't furloughed and the priority has been, really, to get cash out into the sector.

We are carrying additional costs. We're carrying the additional costs of production. We were meant to move into Central Square with the BBC, in a joint effort, really, to save money. Obviously, that's incurring extra costs for us at the moment, and a loan that we drew down from Treasury to pay for that investment, that's now payable. So, we've seen our income this year come down because of that.

But the priority for me has been to keep us going, to channel money into the sector. The biggest thing, I think, we can do to the sector to support them is actually channel the money into that, which is why, in the space of three months, we've had two full commissioning rounds. We've put about £7 million into the economy during this period, at a time when I've had to take—I wouldn't call it a flyer, because accounting officers don't take flyers, of course, but we've had to take a really careful look at where our productions that have been cancelled or delayed—how much money that's freeing up and how quickly can I reinject it into the sector to keep the sector going.

Thank you. John.

Maybe this is a question for Phil, really, but, in terms of current employment support, the eligibility criteria and the duration of it, what would be the main points that you would make in terms of the efficacy within Wales?

From a Welsh perspective, in terms of furloughing, in terms of the PSB, to put that in some context, it's a handful of people. So, the bulk, the overwhelming majority—some 95 per cent of people—are continuing to work and are not furloughed. It's largely within our production sector, and, actually, in this, I would point to both Rhodri and to Owen, in terms of the work they have done, actually, as a producer ourselves within Wales. As they've been explaining, they have been really quick to make decisions about, 'Well, if that programme's cancelled, what can we do?' They've seen their responsibilities in terms of where could that money go and how can that best keep the sector going. So, we have been beneficiaries of that.

I think, for the sector as a whole—. There's a statistic out there that something like 50 per cent of people involved in the screen sector are freelance, and an awful lot of those—although ITV itself did some quite significant lobbying for pay-as-you-earn freelance, of which we use quite a few, to be involved in Government schemes, an awful lot are not. I'm sure the previous evidence session probably alluded to that. I suppose, if I'm absolutely honest, that's probably where the focus probably needs to be: for those people in that part of the sector. Because, when I was talking earlier about the fleetness of foot of this industry and how mobile it can be, one of the anchor points is, indeed, the great skills and the great talents that exist within Wales. So, you are investing in the future of the sector if, publicly, you invest in those things.

But what I would also—I'd allude to the same thing that Rhodri did as well. The paradox here is that, on the one hand, we are telling you that this whole crisis has underlined the efficacy of the PSBs and the vital role they play within Wales, and that's fantastic. But, at the same time, it has absolutely—not just simply because of the pandemic, but it has really brought to the fore the pressures that we are facing, and indeed the pressures we were facing prior to the pandemic. You could say that what the pandemic has done, certainly from our perspective, is it's amplified all of the threats that we saw on the horizon when we were giving evidence some six or nine months ago. What it's done is it's amplified the competition against us, it has amplified the threats to our revenue streams, and the pace of that change has also accelerated. So, the need for action is now all the more urgent.

So, we went into this pandemic with a big debate about the future of PSB. That debate hasn't gone away because of the pandemic; it has been made all the more urgent. And all of those things that all of the PSBs were calling for in terms of prominence, in terms of making sure that, from an ITV perspective, we get fair value for our content—these things are all the more urgent that they're dealt with, otherwise something that has absolutely been underscored in this debate as being vital for Wales could be lost.

Thank you. John.

In terms of freelancers, then, I wonder if anyone might have some ideas to put on the table in terms of how support might be shaped and who might best provide it? Anybody like to offer any?

Any comments on that?

I think one of the big discussions we've had between the two Governments, between the Department for Digital, Culture, Media and Sport and Welsh Government is—in fairness, I think the Welsh Government have taken a very sensible approach in, 'Look, if the UK Government's going to provide a scheme of support to this, let's ride with it.' Where there are gaps or where there are people who are suffering, they're not being picked up by these very big macro programmes, can we step in to help? So, we know there are certain people who are either new to freelance or, because of the way that they account, effectively are not covered by the various Government schemes. And I think, to Phil's point, that's probably where we need to focus. But I would reiterate the point that we've got an awful lot of people on furlough at the moment. Come October, when this scheme finishes, there are going to be big questions about how we continue to support the sector at that stage. 

Unless it has restarted. That would be the wider point that I'd make, that there's a sort of twin approach here. Experience around the world is showing that you can restart production. Experience across the bridge, frankly, is showing that productions can restart and, again, I think it's that balanced approach. It's really important that we keep communities and people safe, but it's about recognising too the urgency, almost, that needs to be applied, because as Owen's quite rightly pointed out, the furloughing taps are due to be closed quite soon, and it takes time to prepare. So, forward guidance and knowledge about when things can happen will really help the sector prepare for that time so that they can get back up and running, re-employ the freelancers, and make the programmes that, frankly, we all want to be making.  

Thank you. Anything further from you, John?

I don't know whether Rhodri wanted to come in at this point. 

Yes, could I just add one thing to what Phil said, and that's just to draw a direct line between what Phil was saying about the financial position of the public service broadcasters and the challenges facing freelancers? If you take Wales, on the back of an envelope, I'm guessing that it's about £280 million a year that is coming in via the public service broadcasters into the sector in Wales. If you see advertising revenue cut away at the ability of ITV and Channel 4 in particular to commission, then that has a direct impact on the freelance market. So, of course there is training and there is sectoral support we should be thinking about in Wales, but there is also a direct connection between the situation facing freelancers and the overall funding levels facing the public service broadcasters, and that's why that review of PSB is so critical, and for BBC and for S4C, the next licence fee review in 2021-22 is also a critical moment. 

Thank you. John, anything further?

I know time is pressing, as it always is, Chair, so I wonder if I could ask, perhaps, for brief responses to the issues of the skills gap in terms of the screen industries, and also diversity. COVID-19 and its impact: what has been the effect up to now in terms of the skills gap and also diversity?

I'll jump in there quite quickly. I think—and I think I've said this a number of times—one of the biggest and most urgent objectives, really, is to really understand our sector. It's to get the data. We haven't really, as far as I'm aware, got the data to answer your question, and without the data, it's really hard to know what to do. So, the first thing, really, is to get the data and really understand how our sector is made up, where the skills gaps are and, in terms of diversity too, where we need to put our attention. I believe we know where that is, but it would be really good to see the scale of the problem. So, I think that's point No. 1, if I'm absolutely honest. 

I do think too, and again I've said this before, that Government and Creative Wales has a particular role in this. It has a leadership role. Whether that's potentially attaching conditions to support in terms of diversity, I think that can be an important element to demonstrate leadership within the sector and promote change. 

In terms of your question about the pandemic, our sector is very project-based, outside of the broadcasters, and it's hard to plan training ahead. I think the apprenticeship programme is a really good example of that. The apprenticeship programmes work particularly well. We've used it particularly well to help diversify our workforce, but we can do that because I have some visibility of what I'm doing, where I'm going to be doing it and so on and so forth for some time to come. If you're a production company working from one production to another production to another production, it's much harder to tap into those sorts of schemes. So, again I think it's about having solutions that actually work for the sector as a whole as well, and really tailoring it to the actual nature of the sector, otherwise we're not going to make much difference in this. And I think, again, Creative Wales and the Government have got a role to do that. Creative Wales has got a role within Government putting all the education elements et cetera, et cetera together to really put a focus on this, because I think skills, as I've said, is one of the anchor points that roots the industry. Why choose to make something here in Wales? Because you've got the best talent, as well as the best locations, the best transport et cetera, et cetera to make those programmes.

Thank you. Owen or Rhodri. 

I was just going to add, this is something the sector has been talking about for a long time. We just haven't been fast enough. I think there are two things I would point to. The BBC made an announcement on Monday about ring-fencing about £100 million a year of investment in output, where it will require production companies to demonstrate, both in front of the camera and behind the camera, that at least 20 per cent of the staff base and the talent base is from a diverse background, and that's black, Asian, minority ethnic, disability and socioeconomic diversity. So, there is an element here where we just need to be blunter. You can do schemes—and we do a lot of schemes, apprenticeships and traineeships—but it needs to be part of the contract of business now, and we need to build it in and we need to enforce it.

The second thing I would say is that I've been in lots of meetings on diversity across the sector, and there are lots of white people talking about the difficulty we have attracting black and Asian people into the sector. And I think this issue of role models and leadership is really pressing. So, one of the things we're doing at BBC Wales is we're bringing two external advisers directly on to the main board. We've had fora before and we've had panels, but we're recruiting now to bring two members from BAME backgrounds directly on to the board with the right business experience, because they have to be in the room. You can't tackle this issue unless the people that you are talking about are in the room. 

Thank you. Owen.

Sorry, we've lost you a bit. That's better. 

Am I frozen?

A little bit. 

Yes. 

Great. I was fortunate enough to be reverse mentored by a Kashmiri lady from Swansea. The big learning point from that is I don't know what the answers are. So, we will be advertising for our first equality/BAME officer that S4C will be recruiting, and that advert will be out in the next two or three weeks. And the purpose of that person is not to be a political beast, but someone to go out into communities and work with them to try and change the way people perceive both S4C and the sector as a place that will welcome them to come to work. 

That's great, thank you. Before I move to David Melding, can I ask witnesses: are you able to stay with us for five or 10 minutes longer than scheduled, because we are running a bit over time? Phil, is that possible for you? Yes, that's great. With that said, we have got three areas of questioning to get through and about half an hour to do it in, even with that extension. So, with apologies, because these are big issues and there's a lot to be said, but we do want to cover all the areas of questioning. So, if I can turn to David Melding. 

Thank you, Chair. We can probably rattle through mine fairly quickly. The funding provided by Welsh Government, as I think Owen pointed out, has been complementary to the UK schemes, and obviously not to the same scale, and nor could they be, as furloughing. So, how useful do you think the Welsh Government schemes have been, either for your direct use, or more likely for the people you commission? I'm thinking, emergency tv development fund; there's emergency digital fund. What added value have they given in terms of filling in some of the gaps?

If it's useful, I'll just give you one example. So, Creative Wales have been targeting development money at a number of independent companies. And they've done that in consultation with the broadcasters. Now, that might sound a really sensible thing. I'm not sure that was quite how it used to operate. The spirit of consultation, the spirit of actually working with the broadcasters to identify the independence, to have the best chance of being commissioned, testing with the creatives whether the investment decisions look right—I think that's really to be welcomed. And, as I say, it's just refreshing because those doors are open and those conversations are taking place almost on a daily basis.

David, I'd endorse everything that's just been said, really. At a recent meeting that had a wide range of production companies at it, and almost universally—and this, if you know the sector, is actually rare; there were probably 15 or 20 production companies represented at that meeting—everybody praised the way that Creative Wales had responded, in the way it had responded and the speed with which it had responded. As I said earlier, the crisis has put a lot of pressure on a lot of people and a lot of organisations, but Creative Wales have done a terrific job within the realms within which they can affect things. I know they picked their target well. They knew they didn't have huge amounts of money to spend, but to spend it on development was probably the best place to spend it. 

And it has to be said, this is quite consistent with the earlier evidence we heard that the scheme design has been imaginative and has involved the sector, and it's been useful as a result. What about the size of the budget? Both the schemes I referred to are now closed. Was the scale of them useful, or is that something that perhaps we do need to revisit, given how important the creative industries are in terms of one of the—well, probably the biggest growth area in our economy in the last 10 years? So, do we need, perhaps, to revisit that and could we invest more, frankly?

Well, of course, we should invest more, David, but I think the question of how the resources of Creative Wales stack up against the other devolved nations—Northern Ireland Screen and Creative Scotland, and Yorkshire Screen as well—I don't have enough information yet about what the overall funding levels are for Creative Wales. But it's really important, given how competitive the landscape is across the UK, that the sector and yourselves are confident that Creative Wales has the wherewithal to punch above its weight. Everything in terms of its culture and behaviour in the last few months has felt on the money, but I can't say that I know, at the moment, what the full operating budget is for the agency. 

The only thing that I would add to that, David, is that it's a voice for the sector within Government as well. Obviously, our sector touches large areas of Government. We've talked about skills; Owen's going to talk about freedom of movement in this crisis. And just having a voice, as the Government machine is considering the next phase of lockdown—to have a voice for the creative sector and making the concerns of the sector and the desires of the sector known is also really, really important. I would argue that it's as important as the funding aspect as well—being that voice for the sector within Government, as Government is making the decisions that affect us in the way that it does is really important.

Owen.

Gadeirydd, if I can say one thing, being that this is for the future, you're asking about the future here, what's obvious is that we're trying to keep training going. I take my hat off to TAC in fairness; they've worked very hard in providing online courses. We've provided some health and safety courses for freelancers for nothing on how to work during COVID. But I think, if you think of the money that goes through us versus the education sector, I can take on two or three apprentices a year. I'm currently talking to the sector about taking on apprentices as part of commissions, and obviously those will be focused on communities that we don't normally get from. But if you think about the whole apprenticeship system in Wales and the money that goes into that, I think that one of the big roles for Creative Wales in the future really is providing that direction about where the training needs to be and then leveraging the money that goes through both the FE and the HE sectors and the school sector as well. 

Thank you. David.

Finally—and I think you've already touched on this, but perhaps you could just briefly confirm—the Welsh Government schemes tend to focus on infrastructure and projects rather than staff base and I think I infer that you regard that as the most appropriate action that it can take, given the scale of what it can deliver, in effect.

It's speed in some ways, David, as well. By investing in what it invested in, it could make the value of that investment count quite quickly—infrastructure is just a slow burn. It's no less vital, but when you've got a pandemic that's disrupting you so quickly, so demonstrably, actually, speed was really, really important, and I think that that, again, is to the credit of the decision makers within Creative Wales that they saw that. And within our sector as a whole actually, speed is always a thing. I think we can always probably speed things up, frankly, and that's been really, really good to see the speed with which they reacted to this.

Thank you. Does anyone want to add to that? Anything further from you then, David?

No, that's fine.

Thank you very much. I'm going to turn to Carwyn now.

Thank you, Chair. There's just one thing that I want to explore. We know that reporters are still able to interview people outside with a longer boom, I suppose. We know that studios are being used; Owen and I were in the ITV studios last night in Cardiff bay, properly socially distanced, I add, but it's possible, with limitations, of course, to use the studio. What I want to explore is the effect of 2m or 1m and whether that makes any tangible difference to the way that you operate. I'll start with you in a second, Phil, if I could because you raised it as the difference between England and Wales. We heard evidence earlier on certainly from some in the music industry that 2m or 1m didn't make any difference at all. The fact that there was social distancing—they weren't arguing against it—was the issue. So, really, the question is this: 2m or what England has, which is 2m with exceptions, I'd argue, rather than 1m-plus, does it actually make any practical difference to the way that you all operate or is it just perception? I'm just curious.

So, I'll probably answer this question in a slightly contradictory way. In terms of what we did, we didn't stop—we just carried on and moved quite quickly to COVID-safe ways of working, which has been 2m. And, as you're quite rightly saying, that's demonstrably shown to be working, and even if the Welsh Government were to advise us at the moment, 'Right, you can move to 1m-plus', we would, probably, I would say, keep to the 2m, because it is working for us. However, it is working for us because we have recalibrated other things. So, what do I mean by that? The studio space, as you saw there—actually, two guests is now the absolute maximum. So, if a programme producer wanted to put three or four guests in that studio and have a big ding dong battle—and there are four political parties in Wales et cetera, as a minimum—it can't. So, that's a limitation, if you see what I'm saying.

A lot of our production facilities were built pre COVID. So, if you have a mobile scanner truck, it's designed for a certain number of people to do a certain number of functions in a certain amount of space. Two metres means that you can't put as many in, so you can't do as many functions, and so you've got to add in the cost or complexity. So, it will make a difference. But the real thing around this too is—. When you mentioned the word 'perception', I think that's a really important aspect of this, because there are perceptions around Wales as well, if I could put it like this. So, within my team at the moment, they know that 2m is safe. Would they, if I said, 'You could go within a metre' go within a metre? They probably wouldn't. And at the moment, if we maintain the current output levels and the complexity within those, then it doesn't need to. If you go around Wales, that perception is different in different parts of Wales. So, say for example, in the east of Wales, I would say that there's probably more of a sense of business as usual. You guys turned up to a studio, whereas 10 weeks ago, we would have been doing that via Skype et cetera, et cetera. But there are certain communities where, actually, they are not in that place, and we've really got to respect that as well. So, even if, as I say, the Government was to say 1m, would that mean that we would turn up in certain communities of Wales and work in that way? Well, we probably wouldn't want to, because that would feel almost disrespectful to that community as well.

So, there are no simple answers, I don't think, to this. I think, for our sector, it’s about genre as well. I'm talking predominantly about news and current affairs. We've stayed on the air throughout, whereas other genres haven't made anything since we went into this crisis and are really struggling to see how they can. So, it's things like big entertainment shows with an audience. How do you do those? Drama, especially. Coronation Street's back on air, Emmerdale is back on the air, but when you watch Emmerdale and Coronation Street, they are very different programmes. There are fewer actors on the screen, et cetera, et cetera. So, if you were making a multimillion pound film, then, obviously, it's going to make a much bigger difference than if you were making a news programme that has been on the air throughout the crisis. Does that help?

Thank you. I'll bring in—. Okay, Carwyn, then I've got Rhodri and Owen.

Just very quickly, I know that our other two witnesses want to come in. The impression I had from what you said earlier on was that, in some way, it was easier to start and maintain a production in England than it was in Wales.

It's not just one thing. So, it’s not just the 2m or 1m, it can be about the ability to travel. So, say, for example, at the moment the five-mile limit, that can be quite limiting. It's not just about productions—where do they base themselves? Do they have to go back to base after each shoot, as it were, because they can't stay on location? So, it's not simply about 2m or 1m, it's the wider lockdown measures.

And it's also, as I say, about testing and tracing. We can send you some information about the Italy experience, but in Italy, the Government and the sector are working really closely together so that the sector itself is traced. So, if somebody does test positive, they are quickly isolated and the rest of the production doesn't have to shut down. Whereas, at the moment, the current system in Wales—and I'm not saying it's any different in England—would mean that, actually, that could be quite disruptive and the whole production might have to self-isolate for 14 days.

So, I think it's about seeing it in the round. There are advantages at the moment for television production that are enjoyed in England that we don't have in Wales. They're small but significant. The longer they go on, they're going to get larger and more significant, if that makes sense. Does that help?

Thank you. Can I bring in Rhodri, and then Owen, please?

Just to pick up on one point that Phil made, which is that it is highly, highly dependent on genre. If you're shooting a factual documentary, you might have three or four people on location; you might have one person on location. If you're shooting Pobol y Cwm or Casualty, you may have between 70 and 150 people involved in that production simultaneously. So, the genre considerations are huge. You were asking earlier about skills shortages, well, one of the critical skills shortages at the moment is health and safety advisers for productions, because the impact of testing, the impact of making sure that the productions are compliant is a whole new extended skill set that's critical within the industry at the moment. But if you take the work we're currently doing on Casualty and Pobol y Cwm to see how quickly we can get them back, what you find very quickly is that the amount that you can shoot per day falls very significantly. So, you're faced with, 'Do you accept an increased cost, do you reduce volume, what do you do?'. 

The 2m versus 1m, the sort of English-Welsh dimension of it may become irrelevant because there may be other routes to production and the idea of production bubbles, which is essentially part of the Italian model where you have a testing regime on location, a group of people within that production who can operate more closely than the rule because of that testing regime. There may be ways that the production sector can get back on its feet with some level of exemption from the normal rules if there's confidence that the testing regimes are strict enough. But we do need to look at this quite quickly because firstly, there's content that's critical for the public service broadcasters, but secondly, if you get disparities between England and Wales, that's not where you want to end up. Clearly, health is the overriding priority, but if we can find a way to get our productions up and running safely with a bit of lateral thinking, then that's what we should be doing.

Owen.

I'd agree. I mean, fair play, the BBC have quite a strong role amongst the broadcasters in coming up with ideas, and I think the crew cohorts that Rhodri was talking about is a very good idea.

I think, to take this up to macro level, Carwyn, I think I'd probably start with the fact that the 2m in Wales is statutory, whereas over the border it's a, '2m-ish, use your common sense'—whatever that means—approach, which has made it more difficult here. I think the nations probably have gone into a competitive safety model, almost: who can be the safest on COVID. Now, I'm not going to ever knock that, but it does mean that local authorities and communities are very nervous about having people from outside in their areas. This is very genre-specific. There are certain things that we have, through struggle, carried on: live broadcasting, things like Heno and Prynhawn Da, materion cyfoes—what the BBC have done with news has been fantastic. But you try and run a big outside broadcast and it's very, very difficult. One: getting social distancing together from the post-production point of view, the people working in the vans, but also getting things like overnight stays sorted. So, productivity certainly has gone down at a time when costs have gone up, and I think those are some of the macro issues that we're facing going forward.

That's helpful. Anything else from you, Carwyn?

Very, very quickly, it's quite clear from what our witnesses have said that social distancing is the issue in the sense that it is necessary but that does create hurdles that have to be overcome inevitably for broadcasters. What I'm trying to draw down on is whether it makes any material difference practically as to whether it's 1m or 2m, or whether social distancing itself is the issue.

If I take BBC Wales as an example in terms of our news services and our radio services, whether it's 1m or 2m doesn't make much difference. They're working safely remotely; they can stay working safely remotely until social distancing is at an end. There are some risks that you take with that or there are some welfare issues that you need to manage through that, but I don't think if we move to 1m in Wales that we would substantially change the way we deliver our news and radio services. As I say, in other genre, social distancing rules are critical. 

Yes. I'd echo that. That's exactly—. As I was saying earlier, for our news and current affairs, we've been working like this and we can continue to do so, but for other genre that have, in effect, gone into shutdown, it is very, very hard to restart at the moment. 

Owen.

Yes, I'd agree. That's what we're facing on many of the areas we're trying to get back running now. Some of the bigger productions, large outside broadcasts, they are very difficult with the current rules.

Just to follow up on Carwyn's point, though, does the 1m or 2m make a difference, or is it just the fact that there's social distancing full stop?

I think 1m would make a difference. When you've got people working on equipment in very confined spaces, on outside broadcast in particular, yes, it does make a difference. Physical capacity is very limited, which obviously isn't so much of a problem if you're in a studio.

Anything further from you, Carwyn?

No, that was the question I was going to ask.

Well, it's over to you, Mick, but if you want to ask a supplementary on this before we move on to your own questions, that's great.

Well, the only supplementary on it, of course, is—this is all within the context of what is the actual risk from the difference between 1m and 2m, because all sorts of things become a lot easier the moment you take away any of the requirements that are set for that—have you yourselves actually carried out any sort of assessment of what the risk implications are of those changes, if there are any?

I think from a BBC perspective we follow the Government guidance. Clearly, we look at the science ourselves, and we look at what's happening internationally, but we will not deviate from the guidance we get from the respective Governments.

Yes, the same for ITV.

And that's for S4C as well. We're at the stage where every single broadcast, every single production, has a risk assessment, but we will always follow the Government guidelines.

Okay. I just thought it was important to put it within a context. In terms of the future, we've seen within a number of areas that the pandemic has had, or is likely to have, an impact on future behaviour. We've seen, for example, in retail, online shopping—more and more people obviously doing that. So, the pandemic may effectively reinforce that trend and speed up that process with consequences. I'm just wondering, in terms of working in an industry that in itself is in continual technological change, do you see the pandemic as having any impact on the direction of the industry, whether it be increasing the position of organisations like Netflix, Amazon and so on—those big online producers—as opposed to your own industries and so on? How do you see the pandemic impacting, if at all, on cultural behaviour, cultural change within the industry?

Who'd like to start with that? Rhodri.

Just a couple of things. I think there's no doubt that the big streamers, the Netflixes and the Amazon Primes, have seen a major boom from this period. I think any major global networked business is sitting pretty, to some extent, in this period. It will be the same for Spotify, it will be the same for Amazon's retail business—anything that is internet driven and isn't reliant on physical hardware is in a better place. The only thing I'd play against that is that I do think, being glass-half-full about it, that the importance of British nations, local, whatever you want to call it—the importance of home-grown media at a moment like this is incredibly clear—probably clearer than it's been for 60, 70 years—and if you allow those platforms to decline and unravel, and simply allow the global players to come in and occupy that space, who are you going to rely on in terms of trusted information at a time like this? So, there's a paradox. I think public service broadcasting has demonstrated what it can do, but the global players are getting bigger, and they're getting richer, and they're becoming evermore ambitious, and that is where Governments, of all colours, come into play in terms of how we think about the future and how we protect the role of public service broadcasting.

Thank you. Owen or Phil, do you want to add to that?

Yes. You talk about trends, and one of the trends that the big screen has introduced is very high production values, and very high production values, I suspect, are quite sticky with the audience. I think we were the first broadcaster in the UK to screen a drama that we made in lockdown, and I suspect when this is over people will want to go back to glossy, high production-value dramas. So, I think some of these things won't go away, but I think one of the big changes is that people become very used to user-generated content. People are far more tolerant to lower production values on certain types of content, and that offers opportunities in the digital space. There are clearly, I suspect, possible deficiencies across the sector in just the ways we work; a lot of industries are seeing this, and I suspect that—. We wouldn't want to step forward into the past when all this finishes. There are things that we have done that we'll probably want to continue doing. But I will pick up on Rhodri's point that if anything's come out of this, it's the importance of PSBs. In busting the myth, sometimes—the streamers seem all-consuming, but they actually produce so little content compared to what everyone else produces, and they don't touch the stuff that touches the lives of people every day, like news, like current affairs and local content.

So, if there was any lesson to Welsh Government in terms of direction or support, would you have any specific recommendation to make?

Only not to be complacent. I think we're going to see advertising revenue falling out of some of the PSBs—we've seen it already. I think we're going to see the print sector—. We're going to see what was already a long-term trend of decline in the print sector potentially accelerated as a result of lockdown and what that's done to circulation. Yet you have to fight to keep an ecology, and if anyone is complacent about the challenge, they should look at what the streamers are doing. They should look at the level of investment they're putting into those products, and look at their global scale, and you have to step in if you want to protect what the UK and Wales has at the moment.

Thank you.

Phil or Owen, do you want to add to that?

Yes. I think I've mentioned it on a couple of occasions in this and in previous hearings, there is a—. As Rhodri has said on numerous occasions, there is a paradox here, at a time when people's understanding of the value of PSB, particularly in Wales, has never been greater. The threat to that PSB has also never been greater. Put bluntly, the rise of the streamers and the internet is threatening the creation of commercially funded PSB in Wales, and given what that contribution is, that should concern everybody and everybody on this committee is a voice for Wales in the debate. Pre COVID, we were asking questions about the future viability of PSB, and the situation's only been exacerbated. Viewer behaviours are continuing to change and the strength of the streamers is only getting stronger, and the threats to our revenues are only growing too. So, action to safeguard what we have in Wales and indeed in the wider UK is really, really crucial, and I referred earlier to that kind of pace—it's really urgent. It was pretty urgent before January; it remains urgent. That's not to say that ITV hasn't got a sort of self-help plan; of course it does: we're a global producer, we're investing in digital, we'll continue to invest in digital, we're continuing to invest in our programmes and competing in this new landscape, of course we are. But when I look at—. I'll just bring it back to the analysis of the viewer in Wales, and you kind of think, 'Well, there are hundreds of commercial television channels available to viewers in Wales, and enjoyed by viewers in Wales, but there's only one ITV Wales that's actually producing news and current affairs for Wales.'

There are many UK news organisations providing news that is consumed in Wales. There's only one ITV news, commercially funded, that is providing news and current affairs for Wales. There are lots of production companies in the UK and indeed around the world that make productions in Wales. But there's only one ITV that bases several hundred people permanently in Wales, creating and telling stories in a Welsh context. And put simply and put starkly: without intervention, all of that is at risk.

Great, thank you very much.

I'll keep it brief; it's a fairly macro point. We are a fledgling nation at a democratic level, I think. If there's been any gain from what's been a fairly ghastly few months for a lot of people, it's that people are starting to understand the role of the National Assembly and the Welsh Government. This is a chance for us not to throw that away. If it wasn't for the PSBs located in Wales generating news in Wales, we would have the danger of what we've seen up until this episode—the domination of the press that is probably to the detriment of what is a well-educated electorate. I think, as a nation-building exercise, a focus on the strength of the PSBs actually is, as Rhodri says, not one you take your eyes off. 

Thank you. Anything else from you, Mick?

No. Thank you very much for those answers—very helpful.

Thank you.

Diolch.

Content just to note? Diolch yn fawr.