Cynulliad Cenedlaethol Cymru

Good morning, everyone, and welcome to a session of the Economy, Trade and Rural Affairs Committee. We start our inquiry into growth deals across Wales, and this is the first evidence-gathering session of that inquiry, and we're basing it on the Cardiff growth deal area.

I have apologies from Hefin David, but there's no substitution. There are no other apologies because I can see all members in the room. Declarations of interest, please. No declarations of interest. The proceedings can be carried out in Welsh. If people require that translation, it is available.

We have questions already laid out. I'd like to thank you very much for the evidence you've provided in a written form to us. Thank you for that. That's informed the construction of the questions that Members will have. I'll invite you first of all to give your name and position within the organisation for the record, please. And if I could start with you, Mary Ann, and then we'll work over? And then, once that's done, I'll open the questioning and the Members will have questions for 90 minutes to you, if you're happy with that. Mary Ann.

Thank you very much. I'm Mary Ann Brocklesby, I'm chair of Cardiff city region—. Pardon me. I'm chair of Cardiff capital region and also of the south-east Wales corporate joint committee.

Thank you.

Bore da, good morning, everybody. I'm Kellie Beirne and I'm chief executive of Cardiff capital region. Thank you for having us today.

Thank you, both. You were last in with us in 2023. I think the evidence was given when this committee last looked at the growth deals across Wales. I would be interested to know how things have gone since 2023—progress and maybe some of the challenges that you've faced since then. So, Mary Ann, if I could ask you to open up, as chair, and then pass over to Kellie and we'll see how we go.

Thank you. Thank you, Andrew. It's always useful to have a time of reflection, and thank you very much for inviting us, because this is part of that time of reflection. And certainly, since 2023, there have been significant progress and changes from what was, in 2023, a city deal of £1.2 million, the vast amount of which went to the metro plus, and there was a wider investment fund of almost £0.5 billion. Both have proceeded at pace since that time. We have now secured the deal for the refurbishment and development of Cardiff Central station, but we've also got the Merthyr interchange and out in Torfaen, at Pontypool, the new station forecourt opening there, which has electric vehicle charging, as well as park-and-ride facilities leading into Cambridge.

So, that, in that sense, has done very much what we told you back in 2023, which is looking at how we make the region more competitive, but more connected, and the transport infrastructure is a key part of doing that, and I'll bring Kellie in to go into more detail. On the other side, with the clusters that we would have talked to you about then, compound semiconductors, you'll know yourself we now have a world-leading cluster based in Imperial Park in Newport. We have deals and investments on which we have partnered with the Welsh Government, with KLA and Vishay. This is now not just for our region but for the whole nation, so the research and development stretches into Swansea, bringing in our major universities. We've leveraged in £112 million of investment, and in that cluster alone it's developed 2,500 jobs directly because of the work that we've done. But overall we have 4,335 jobs that have been created and over 700 skills and apprenticeships upgrading in the region. I could go on, but I'm going to bring Kellie in here for some more detail.

Yes, thank you very much, Chair. So, a lot has changed in that period, as you rightly pointed out—2023 feels a long time ago now. In terms of the city deal, I think last time I attended this committee I did talk to Members about our high-level targets. So, as Councillor Brocklesby has just said, the targets are split across the metro, so £735 million goes to Transport for Wales to deliver the south-east Wales metro, and then the other £495 million sits in what we call our wider investment fund. So, our expenditure to date is over £190 million. As Councillor Brocklesby said, added to that we've got co-investment of around £240 million. Leverage will be many billions of pounds more, because we continue to create that catalytic effect. But we are on target for the lifetime of the city deal to deliver over 26,000 jobs, and the leverage value is likely to be in the region of about £2.5 billion, which is significant.

I think what we've really tried to do is to kick-start an approach. We've got an evergreen strategy, so our investments are made. Yes, sometimes there's grant and subsidy needed, transport infrastructure, housing projects, but we've tried to invest in loan products, debt products, because they fuel the economy but they give us a return, and in equity projects as well. So, as well as spending down the capital, we're seeing returns that we can use to seed future prospects, and those future prospects are really starting to build up.

Now that we are a corporate joint committee—we lifted and shifted the city deal into the new corporate legal entity back in March of 2024—we've got different powers and levers now. We're a statutory public body, so we've got powers around economic well-being, see the city deal, but also see a brand-new investment zone, which is £160 million of new investment plus tax-raising powers, because we can retain business rate uplift. We've got a statutory power around transport, so we've made huge strides forward in terms of a regional transport strategy working with Transport for Wales. And, of course, we've got statutory powers now around strategic spatial planning, so we've just delivered a delivery agreement to set out what we're going to be doing around that.

Now that we are a public body with these different levers, powers, incentives, it is about fuelling the way forward, and we've started to talk to things like the local government pension funds, we've got some initial conversations going with the national wealth fund, private capital, private markets. So, it's leveraging all of that, that strong foundation, that strong platform we've built, to achieve even more in the future. The city deal was a great start, it was a seed, but now it's about the catalytic impact of that programme.

I mean, the garden's looking rosy, the veg is growing nicely, from the opening remarks that you've both made. What projects could you identify that haven't reached the potential that was envisaged for them and have been slower to take root and come to fruition? I mean, there are bound to be some on your danger list that you don't think have progressed as well as they should have.

When you're in a situation of trying to leverage in funds in a way that is both promoting growth but also promoting innovation, there's always going to be a level of risk, an appetite for risk that you may not take if it's purely grant driven, and we were not grant driven. One of the things that we were doing right from the start was rethinking both the ecosystem of the region, but also the cultural way in which businesses interact with governments—local governments and regions—not from a position of being grant-project driven, but in the sense of loan, equity and debt, and the way in which we can build an ecosystem.

I'm going to hand over to Kellie to talk about the specifics, but let me take fintech. So, when we were thinking about growing fintech, it was not necessarily thinking what project, what business, it was thinking where within fintech, which for us is online insurance, we can really leverage inward investment, build on the strengths of the region. The biggest strength we have is Admiral. It's a global FTSE 500 company. At the centre—. And this is what we learned from innovation research: if you have a big country, then satellites can be bought in. They wanted to work with us. In fact, David is on our investment board. They wanted to work with us. They wanted to work with new companies. They wanted to look at ways in which their expertise, their networks, could support that. 

We have Mazuma, for example, a Bridgend fintech company, run by a woman, which has exponentially been able to develop through skills support, through mentoring, through investments and through loans, and bring in jobs in non-traditional areas for non-traditional workers—women with care dependants, for example—and grow the business. That was high risk, given the profile. Some other projects don't work so well, but we recognise you take that risk if you're trying to grow an ecosystem and support clusters. So, over to you, Kellie.

Before Kellie comes in, you said David. I presume you mean David Stevens.

Yes.

Just for the record, that is. Thank you. Kellie.

I'll be very brief, Chair, just to focus in, really, on some of the areas that perhaps haven't worked to plan. And COVID did have an impact. I remember going through those years, and it was very difficult, for example, to get graduate training placements, apprenticeships. So, we had to pivot. We had to change the way that we did that. So, we looked at more boot camp, shorter training courses, short, sharp bursts of rapid upskilling, which suited the market needs and, in fact, still do. Our housing viability gap fund—not every single project that we allocated, because we're susceptible to very dynamic market conditions. We work in a marketplace, not just a stable policy setting.

I think, to be really honest, there were some delays around the whole establishment of the corporate joint committee, because we had to wait for the legislation to be in place. There needed to be some changes to the primary legislation for us to be able to enact CJCs in the fulsome way that our 10 politicians felt they deserved to be enacted. So, that did cause a bit of a delay. I think we've caught up now.

And I guess the other area where progress is a bit slower than I would like, as an officer, is around this whole agenda of multilevel governance. We have devolution to four regions now. We've got four city and growth deals, as you've pointed out, Chair. We've got four corporate joint committees. But we see really rapid progress being made over the border with combined authorities. And I think finding our place in this new setting, this new environment, the Council of the Nations and Regions, devolved settlements, multi-year settlements, spending review, industrial strategy—I think that's definitely something that we need to pursue and understand to a greater degree.

We'll have some questions on that a little later, we will, so I don't want to go into too much of that at this stage.

Of course, sorry.

Jenny.

Thank you. Can I come back to the Cardiff Central project that Mary Ann mentioned at the beginning? You've set aside £40 million, and you're hoping to get approval from the Department for Transport and the Welsh Government. Is it largely a retail stimulation project or a connectivity project? I'd be keen to understand that. Mary Ann, do you want to start?

It's both, I think, and more. The idea is to regenerate the area. So, connectivity, flows of people coming in and out, ensuring that it's a place where—. I'll roll back a bit, Jenny, because one of the fundamental strategies that we wanted to see from leaders is the place driving the way in which we want inclusive and green growth. So, when we were thinking of supporting different projects coming through, how do they enhance the place as a place to be, to live, to work, to relax? That was part of the vision, I think, that we were presented with for the Cardiff Central programme.

Okay. Getting beyond the marketing spin, I represent Cardiff Central, the constituency. We have a vibrant retail sector in my constituency, so I don't feel that this is an area that lacks retail opportunities. I'm more concerned as to how this is going to improve connectivity in the region as a whole. For example, will this upgrade enable a tram to run to Cardiff Airport? Because so much of the metro project is held up by the failure of Network Rail to upgrade the line between Cardiff and the English border that the Burns project is on hold. That's being dealt with by the Welsh Government. So, what is this going to do in terms of improving connectivity in the absence of the fact we're just not able to make progress at the moment on that wider connectivity to the east of Cardiff?

Thank you very much for the question. It will improve connectivity because it will upgrade all of the lines. It will help us spur the core Valleys lines project because it will create greater capacity. We'll be having enhanced platforms. A new platform 0 will be going into the station as well, so, on games days, when there are big events and people are queueing to get on trains, it should really reduce that level.

I think you're right to say, ‘What is it? Is it rail? Is it better overall connectivity? How will it serve the wider region?’ There are certainly hopes and ambitions around linkages to Cardiff Airport, but they're not part of this first stage of the plan. What is part of the first stage of this plan is souping up the core Valleys lines, more trains an hour being facilitated to London, and Cardiff Crossrail, which is a brand new innovation that will serve the Cardiff Central link to the bay really well, because as you know there are plans from UK Government to put in a new UK Government hub and to enhance those services coming together, which will be really important. It'll increase footfall in the city centre and bring higher paid jobs into the centre of Cardiff, which is really important.

I think what we're trying to do is: you come out of the station at the moment and it's all about the north axis. We're trying to flip that, so it's about the southern concourse, as we're calling it. So, you've got the Rightacres development, you've got commercial, new residential, and the really exciting thing is, if we can get agreement now from UK and Welsh Governments as part of our investment zone, this area will be included in the investment zone, and one of our aspirations, driven by our politicians, is for a brand-new innovation district. So, really thinking about creating a knowledge quarter, so you come out of the station, you're hit with companies, learning, skills academies, a collision space where all of this stuff is tightly interconnected, and that will hopefully give Cardiff the reputation as being a genuinely world-class capital city, because it drives knowledge growth, connectivity, but also the jobs we need for the future.

Okay, but looking—. That's great for Cardiff, which is one of the fastest growing cities in the UK. How does it help distribute the wealth of the region more widely? In the sense of, you mentioned that it was going to make better connectivity with the Valleys lines that we've already electrified; how do you envisage this enabling more businesses to think of locating in the Valleys hubs? Because we are in danger of overheating in Cardiff. 

Shall I take this one or start this one? 

I don't think you can place everything on one development or the connectivity. So, we're well aware of that, and part of what we wanted to see was that there were universal benefits across the whole region, and then also targeted funds to support particular opportunities, but also particular gaps.

You know as well as I do that the region is deep with structural inequalities, geographical, as well as within Cardiff, as you'll know yourself. So, it's not as simple as saying, 'We'll go to Caerphilly and that will sort out the inequalities.' But we did set up a Northern Valleys initiative fund of £50 million that was targeted at opportunities that could support businesses, but also to think about ways in which people living in the northern Valleys could capitalise on what was happening in Newport and in Cardiff and other parts of the region, because there was that connectivity infrastructure there, not just railways and buses, and quite frankly, buses are more important for people moving across the region than trains. I think people living in Cardiff think it's trains, but for the rest of us, it's buses. Also, that digital connectivity, which allows hybrid and home working. Would you like to come in, Kellie?

Yes, it was just very quick. I should have said, sorry, that all the 10 local authority areas have also received funding from what we call metro plus. So, that's to bring the early benefits of metro to all parts of the region. In Porth, for example, there's a brand new station, multimodal travel links linked to retail. Pontypool New Inn is a new parkway station that's opened. There have been improvements in Merthyr, the brand new bus station. I was down at Bridgend, in Porthcawl, the other week, at the new interchange that we placed there. So, the benefits of metro, the Cardiff capital region has really taken the lead in making sure that all places see some of that early benefit, that they can identify with the metro brand and what are the improved enhancements to come.

All these are fantastic, but how do we ensure that they are enabling the northern Valleys to have more wealth being generated and distributed in those communities, rather than making it easier for everybody to come get a job in Cardiff? Because this £50 million is obviously a significant investment. Could you just tell us a little bit more about that? Yes, so you've improved the transport in Merthyr and other places, or you're in the process of doing it, but how is this £50 million really going to ensure that this is not just about growing our capital city into a monster that nobody will want to live in?

For a start, it's 10 local authority leaders, Jenny, of which nine are not in Cardiff. And the idea that we could remain as cohesive and clear in our political direction if it was all invested in Cardiff is not tenable, is it?

Okay, so what I'm interested in is what's going on elsewhere.

But I just wanted to make clear that from the political side, right from the beginning, we understand the importance of Cardiff, also the importance of Newport, which is the other city in the region, but how do we share the benefits? So, in terms of Northern Valleys initiatives, let me think what we've done in the last six months. In Merthyr, we've bought a disused brownfield site that will now come back into industrial use for manufacturing by investing £5.5 million, I think, in that site. That was Goat Mill. In Blaenau Gwent, we've got approvals and are working with a business there, Purflux Filtration, which we've invested £5.5 million in as well. Those are just a series of businesses that we've been investing in through Northern Valleys, for example, Zip World. Zip World is a real success story because they have paid back the loan, which is now enabling us, through our evergreen fund, to reinvest in the region. But you've got some more.

Yes, they're great examples, Mary Ann. I guess, Jenny, what we've tried to do is to ensure this stuff doesn't happen by accident or because we've just set up a Northern Valleys fund. So, the investment strategy for the £495 million is to, in the first instance, ensure every single place in the region gets the benefits of metro plus, the housing viability gap fund, and we've got challenge funds, skills investment, full fibre connectivity. And what we've done then is to target the remainder of our funds into things like impact funds. So, we've got a scale-up fund for innovative companies.

Those innovative companies are not just along the M4 corridor. We've made investments in companies in Blaenau Gwent, recently in Ystrad Mynach, in Transcend Packaging, which is a fantastic success story, and in Bridgend. Our strategic premises fund, which is another £50 million, is active all across the region. Mary Ann's just helpfully alluded to some of the most recent investments that we've made through that fund, which have been in the northern Valleys as well. So, as well as that Northern Valleys fund, which is specifically there for the top of the Heads of the Valleys, all our other funds interact and support great projects, because, luckily, they exist right across the capital region, and they're not just concentrated on the M4 corridor. But we've had to have a specific investment strategy in place to put that pattern in, to make sure it's fixed.

We're thinking consciously, all of the time, about distributed inclusive growth, responsible investing, environmental, social and governance principles, how do we drive supply chains. We've got further education colleges in every single part of this region; making sure they're part of this story helps to ensure that innovation is embedded in these local communities. So, lots more to do, and, as Mary Ann said, it's just £495 million, but it's the leverage build-up value that I think we're really keen to now focus on.

Thank you.

Thank you, Jenny. Sam.

Thank you very much, Chair. Good morning, both. I'm going to be focusing around job creation and business support, and that's been touched on ever so slightly there in that answer to Jenny. But in your written evidence, it says that the city deal has created and safeguarded 4,335 jobs. Could you give a breakdown of those jobs protected and those that are new jobs within that figure?

So, I've only got the full figure in front of me at the moment. And just to say, that figure as well is at the end of—. You've got the breakdown—fantastic. That figure was at the end of quarter 3, so we haven't done quarter 4, 2024-25. So, I'm hopeful, Sam, that there will be some additions to that. But, Mary Ann, if you've got the breakdown, and then I think we can talk about distribution as well.

So, of the 4,335 jobs that you alluded to, the direct jobs that have been created are 1,537, of which construction was 1,152. We safeguarded 1,029. Graduate employment through our graduate scheme was 261. There were 93 apprenticeships, which I don't think is a full figure, because as—

We're lagging slightly, aren't we?

We're lagging slightly. And our push around apprenticeships, which was really coming from the 10 local authorities—. I think we all agree that skills development and apprenticeships are key for going forward, to keep that pipeline of talent in the region. Indirect jobs were 263, Sam.

Okay. Thank you. So, you mentioned the 10 local authorities there and, in the city deal document, it mentions the delivery of 25,000 new jobs by 2036. Given, in your opening remarks to the Chair, the difficulties during the pandemic era, are you still on track for 25,000? Has that number been recalculated, or—?

We're more than on track. Correct me, Kellie, if I've got the figures wrong.

No. And I do have them in front of me, I'm sorry, as well.

It's shared with Transport for Wales, but we would expect, on the present rate of progress, that it would be more like 27,100, is it?

It's 26,203. So, very close, Mary Ann. [Laughter.]

So, when you say 'shared with Transport for Wales', how are we ensuring that there are no accountancy errors of duplication, that the city deal isn't claiming success for the job that's Transport for Wales and vice versa—that that job isn't double counted?

So, the jobs that we're counting, Sam, are the ones that relate directly to the projects that we've put in front of you today, so, the 27. That will grow, because, as I say, we're not fully committed or expanded yet.

Okay. So, the Transport for Wales comment then, can you just expand on that?

That was in the initial—

Yes. So, the deal as a whole, as we understand it, the nearly £1.3 billion, is divided into £734 million for TfW, £495 million for us. We're held to account through a UK Government gateway review process for our wider investment fund. So, there's never been any conscious decision to split the targets. So, it's a question that we have as well: how do these get apportioned and how are they reported on? But our projects—. Our major transport-related project is a shared one with TfW, which is Cardiff Central station. That is a major driver of jobs growth and leverage. But what we try to do is just be accountable for the £495 million, and, as Mary Ann said, based on the business cases that we have in train, and those that we have in the pipeline, over the lifetime of the deal, we're looking to achieve 26,203. It's quite an exact figure, isn't it, 26,203?

Okay. And then that's the money that the city deal will deliver, and Transport for Wales's jobs then are separate to that?

Should be. Yes. Yes.

Okay. And then supported in terms of SMEs—735, in the evidence, that you've suggested. A breakdown of these by local authority areas—are you able to give that to the committee?

Yes. So, overall—it differs, as you would imagine—about 40 per cent of that is in Cardiff, we've got 10 per cent in Caerphilly, 7 per cent in Bridgend, 4 per cent Blaenau Gwent, same again Merthyr, same again Monmouthshire, nearly 10 per cent Newport, and RCT, Torfaen and the Vale of Glamorgan are around about 7 per cent. So, it varies across the region. And we've just funded some excellent courses, initiatives, through our cluster growth and development programme, which we hope to keep running. But it is a mixed bag. It's about who comes across the threshold. Different businesses apply for different things, they talk to us about different initiatives. So, what we've always said at the start of Cardiff capital region is that this isn't about splitting the pie 10 ways. It can't be about, you know—. Everybody can benefit, but it's impossible for everybody to benefit to the same degree.

Okay. Just to come back on that, then, are businesses outside of the Cardiff Council area as aware of the support that the city region deal offers as much as those that are based in Cardiff? Because the 40 per cent in Cardiff—. I understand the critical mass that Cardiff presents within the geographical area, but are those businesses in the Valleys, as Jenny was alluding to, and other areas outside of Cardiff, as aware of the accessibility to support as much as others?

That is a good point, and I think, over the lifetime, from 2017, those levels of information, of communication, of the networks that businesses need, have improved. Part of the reason why it's improved is the way that we think of investment packages, and it's recognising that, for a business to go from start-up to scale-up, or to have in-scale support, the money itself and the investment itself is not sufficient. It is about ensuring that they are linked into the networks that will allow them to bring in their own investment, to bring in the workers that they need, to have the resources they need, to have the market intelligence they need. And I think we're getting better at it, Sam, and I think businesses in different—. I can talk about my local authority, but I can talk about the clustering in Gwent, for example: that's Blaenau Gwent, Torfaen, ourselves, and Newport and Caerphilly. We weren't part of the Cardiff networks, generally speaking, and that has been built up over time, as businesses have been seen to be supported in Caerphilly, in Torfaen, in Blaenau Gwent, which means that the business community in those areas, in Torfaen, is starting to see how they can connect to the wider region.

So, because, historically, those areas never looked to Cardiff, it's been a little bit slower to get integrated into it. And I'm from west Wales; the Swansea bay city region deal, Pembrokeshire never naturally affiliates with Swansea as its nearest city, despite it being its nearest city, so I can understand—. So, you're expecting, say, the 40 per cent for Cardiff, that may, over time, change as a proportion of—.

Yes, it should change, Sam. Just to give you some—

Our economic well-being strategy—

That's a good point, yes.

—has been set up for us to think differently about how you address inequality over time within a region that is, to say the least, asymmetrical in growth. And you cannot do that overnight. It's recognising where you intentionally think about bringing in people and businesses and connections that allow all parts of the region, geographically as well as socially, to start to thrive over a period of time.

We took our learnings from places like the Basque Country, where we have developed quite strong links, I would argue, over the last—well, eight, nine years. Why from the Basque Country? Because, like Wales, it's a post-industrial area that had to reinvent itself economically, but, with Bilbao, risked only focusing on the economic development of Bilbao without the hinterland. And they, as we did, developed through clusters. Their driving motivations, I think, were creative co-operation, but also language—which, again, I think, is quite interesting too in the Wales context—knowing that it would be a 20 to 50-year trajectory to get some kind of economic balance.

So, our economic well-being strategy thought about it in those ways. I actually sat in on a conversation with a group in the Basque Country, asking them how they both thought about tracking, monitoring, the policies you needed to put in place, how you needed to work with national government. And that's something that we have very intentionally thought about because it really matters. It matters to me as a leader in Monmouthshire, because we are one of the most unequal in income terms in the UK, let alone Wales, but it matters to every leader that we think about inequality and we think about the sustainability in terms of ensuring that, over the long term, we can show impact and show the benefit to all the people living in the region.

Could I just add, Chair, just very, very briefly? Because Sam is right, and Mary Ann as well: it isn't perfect, and we know trickle-down economics doesn't work—it certainly hasn't worked in the Cardiff capital region—but we're increasingly taking out—. We've got an 'Unleashed' brand. So, we've been taking our fund managers out with us to all parts of the region: CBRE, managing our strategic premises fund; the Northern Valleys, which we do in-house; PwC and Capricorn investment partners. The one we did in Rhymney about 18 months ago resulted in Transcend Packaging coming forward. We've just invested in them; they've leveraged that now through seeking further investment from a big multinational US client. Had we not gone out and done that road show in Rhymney, would we have known about this fantastic company? Probably not. So, much more of that is needed in the future.

Then the other big opportunity I think we've got is around supply chains. Compound semiconductors—you think about it being stitched to the M4 corridor. One of the projects we're working on now through our £50 million Strength in Places fund is to get those supply chains working, because the biggest company we've got outside of the big four semiconductor companies is actually based at the top of the Cynon valley.

Luke, I think you had a supplementary you wanted to put on—?

Yes. Just a couple of questions from me, Chair. I'm really interested to understand that you guys have been talking with counterparts in the Basque Country; you've taken a particular interest over the economic development of that region for some time. And a big part of that, of course, is the co-operative sector, and Mondragon itself is one of the drivers of that. So, am I getting a hint here that CCR is looking to emulate Mondragon and become the Mondragon of Wales? Especially when, you know, again, you mentioned about the economic well-being strategy making you think differently. 

It's the orchestra thing you always talk about, which is interesting, isn't it? 

I am a member of the Labour and Co-operative Party, so I would say, personally, yes, I would like to see different models of business development that could include co-operatives. It's not been something that we have intentionally pursued up to now, but I'm not alone among leaders in thinking through—. Construction, for example: how do we address housing? We have the housing viability gap fund. Kellie mentioned earlier that it didn't go as fast and at the pace we wanted to, (1) because of supply chains, (2) because of developers and having those conversations with them. I think there is room to start thinking about co-operatives for construction. I think the way we're thinking about skills and skills development with our further education colleges and our universities also opens up the opportunities to thinking about co-operative academies. I'm very open to it and I know other leaders are. And through our economic well-being work, it's something, I think, we will be looking at in the future.

So, how long has this economic well-being work been going on for, then? Because it did raise an eyebrow with me when you mentioned that economic well-being strategy, going to the Basque Country, because, so far, from what I can see, a lot of those investments haven't been along the lines of thinking differently about addressing inequality over the region. It's very much been much of the same that we've seen in Wales for the last two decades or more. I appreciate you're a member of the Labour and Co-operative Party, so surely you could be a bit stronger than saying you'd like to see that investment in co-operatives. Surely this is a point now where, as chair of CCR, you say that that investment will happen.

The economic and well-being strategy started—. Let me think back. It started about two and a half years ago. We were, I think, and certainly under my watch have been thinking much more consistently and carefully about inequality and sustainability and addressing inequality. So, the drive between the economic well-being was to start thinking through how we address that systematically. It was not so much, in my thinking, about the models that we can use. The way I think the region develops and has developed through the mechanisms that were first the city deal, and the way we thought about it, is a very iterative process of learning from what's working for us and what isn't working for us, learning too from elsewhere. I alluded to the Basque. I could have talked about Eindhoven in Germany as well, which I'm sure you're familiar with. So, I'm glad you raised that point. I'm going to go back and reflect on it, and I'm going to talk to officers about how we can think about different structures and different ways that we can encourage different types of businesses and growth going forward. But it is progressive and it is iterative in the way that we work.

I appreciate that. That’ll be very interesting, seeing how that develops over the next couple of months and years. My concern is though that we often, in Wales, revert to discussions, consultations, thinking about things, whereas, really, we just need to get on with it. We're not going to address inequality by thinking about how we address inequality. We sort and resolve inequality by actually doing things. So, I really look forward to seeing how that work progresses on co-operatives.

I absolutely agree with you on that, Luke. I think one of the things that we do do in the region is get on with it, as we've explained. But we have to get on with it intentionally. One of the frustrations I have with addressing inequalities is that we're not necessarily intentional or understanding from the data how we can do that, and it can be scattergun, without really achieving that structural change that we need to do.

So, I'm looking forward to seeing that work develop. Just coming back to some of the jobs figures for a moment, Chair, you mentioned the figure of 26,000—. I forget the—

Two hundred and three.

Two hundred and three. So, 26,203 jobs created or to be created. The figure obviously looks great on a press release, but I'm really interested in understanding how you've come to that figure. What are the workings out behind that figure?

Do you want me to start? So, based on the business cases that we have approved at the moment that are delivering, we have to make forecasted projections. We have economists that come in and sit and work through those projections with us and test and challenge them. We have to report those into a UK Government gateway review process, which gives us validation. With some of it, it’s not an art or a science, they are projections and forecasts, but I think it links to the point that I was making around leverage. We quoted figures in the evidence pack, for example, that match funds to date are about £214 million. But what happens is, once you have your match funding and you have a proposition—so, Cardiff Central station, for example, £40 million from us, £100 million from the UK Government and the Welsh Government—that will go on to seed about £1.2 billion of further leverage, from the private sector who are building there, from businesses that will come, and they’ll all create jobs. So, it’s trying to keep track of all that. They’re not directly in our jurisdiction, but we’ve got to try and have systems and processes that allow us to understand that wider impact. That’s how we get that figure of around 26,203. It’s understanding the ripple and the snowball effects of the investments we’re seeding and catalysing through mechanisms like the city deal.

I do take an interest in jobs growth figures as they come out from various different organisations, because we saw with the Celtic free port in this particular area the figure of 20,000 jobs being created as a result of that. That’s been revised down, I think, three times by this point now. There was a figure out a couple of months ago where that had been revised down to 15,000, and Jo Stevens, the Secretary of State for Wales, recently said it would create 11,000. So, you can understand why I have a particular interest in how you come to those figures, because another concern that I have is when we go into these figures themselves, and when we put those figures out there, we potentially are selling people a falsehood.

Yes, and I think, as I say, is it an art, is it a science? Is it about projections? I think the really important thing for us, and what we’ve tried to focus on, is the quality of those jobs. What do those jobs pay? Because it’s easy, isn’t it, to create low-skilled, low-paid work. And again, in some of our sectors around advanced manufacturing, some of the higher end stuff—and we’ll see more of it now with the inception of AI; that’s going to drive higher growth jobs—in some of our sectors, entry level salaries are around £47,000. That’s nearly twice the value of a job elsewhere in the Welsh economy. So, numbers are important, because we’re held to account for targets, Luke, but I think the important thing, getting under the skin of this, is what are the quality of those jobs. And I think, for us, that’s where we’ve tried to place our focus.

And how sustainable they are. Not jobs that are for one year, two years or three years, but jobs that will allow transferrable skills to move between sectors. The compound semiconductor area on its own created 2,500 jobs—very high skilled, but, actually, they transfer across to online insurance. You need that there. You need those kinds of skills. They transfer across into the creative industries—and there are synergies there—which is another area where we’re seeing jobs growth.

You’ll know in the creative industries the jobs are less stable anyway, very much dependent on freelance. But that is something that our cluster, which includes businesses like Whisper, are really thinking through, about how they can stabilise jobs that are created for film, video, graphics, gaming, and stabilise the amount of time and the nature of freelancing within Wales, to keep people here.

We are seeing—and I heard it myself, as did the Secretary of State, when Whisper was opened—people who’ve come back from London, because there are now the facilities, as well as the networks, for them to remain here and work here. It comes back to that point of quality and sustainability that means that you’re building a life here, based on the place you want to live. It’s not just a job.

And finally from me, Chair, in terms of those jobs being created, do you have a geographical spread, as in understanding where the jobs are going to be created exactly?

We don’t monitor that per se, because it’s a difficult thing. For example, when I was looking at one of our foundries in Newport, it’s great to say ‘This is in Newport’, but when we looked at the postcode breakdown of the people that worked there, it was Torfaen, Caerphilly, as far afield as Bridgend. So, as far as possible, we try to keep track of postcode locations, but again, it’s something that we need to work harder at and have more consistent information on.

It's quite hard to keep track of, but I think it’s getting across the message that just because you have an investment in your local authority boundary, it doesn't, of course, mean that you just employ local people. Economic markets are very fluid and don't respect administrative boundaries. So, we're trying harder, but it's quite a difficult thing to get to grips with as well.

I'd like to—pardon the pun, Jenny—connect back to Jenny's point on connectivity, because it is about placemaking on a regional scale, to ensure that we've got the infrastructure in place so that a job created can mean that someone can live in Caerphilly and easily commute, want to commute, they can live in Monmouthshire and commute, and that even if they don't, there is a digital connectivity there. I know in my own council and across the Valleys there are pockets where we're not connected. We're not connected by bus, by train or by broadband, so you're isolated. But to be able to work across the region but to live where you want to is just as important as where the jobs are created, I think.

Thank you. I want to ask a few questions on Aberthaw. I understand that you want to make a statement prior to that. I invite you to make that statement now.

Thank you very much. Thank you for giving me this opportunity. You will know earlier this morning that we shared a statement with the committee, and in that statement we were able to tell you the amount of the settlement for the Aberthaw demolition procurement process. That amount was £5.25 million. I'm not able to say much more at this point, because we are undergoing an independent review, which we commissioned as political leaders. It was set in train precisely at the point that we knew that we were going through a legal process, but we had to wait until the legal process was over before that independent review could start. We are awaiting the findings, which, subject to legal caveats, we will be making public. Is there anything that you would like to add?

I think just to add that we're taking this extremely seriously. We recognise the gravity of it. It's something that we don't come and report lightly. Apologies again for the short notice, but we had clearance, we briefed our internal stakeholders and we felt that it was important to be as transparent as we possibly could by conveying that this morning at this committee. As Councillor Brocklesby has said, we've now commissioned a full independent review—emphasis on 'independent'; that's really important. We've stayed in lockstep with Audit Wales throughout this process. When that review concludes and we have findings, we'll be able to be much more open about what happened and take steps to ensure that this can't happen again.

Thank you for that statement. Can we conclude that the action has now concluded, then? I think you said that the settlement figure is final. 

The settlement figure is final. The action is concluded, but there are still some legal processes that we need to go through. It is because it's concluded that we're able to share that figure.

I'm grateful for that this morning, and I'm sure that committee members are as well. On the review—and I appreciate that you don't want to prejudice the review—are you able to share the terms of reference that were set for the review? As you said, it is an independent review. Who is the independent organisation or person who is undertaking that review?

We have a scope for the review. We'll have to take some advice on how widely we can share some of that, because you'll appreciate that there are some sensitivities and we have to be really mindful of that. There are some welfare and well-being issues that we have to be very conscious of. The appointed organisation that's undertaking this review is Deloitte. 

If you could share that in written form, about the terms of reference, back to the committee I think we would be grateful—

I'll get some advice and share what I can at this time. 

—because I don't think it's unreasonable that the committee would want to have confidence that the terms of reference are capturing and that it is an effective review that's being undertaken.

Has this court case impinged on any of the work that is going on at Aberthaw? Because obviously it is a vast project, and if it is successful, it'll be of huge benefit to the area. So, it's important for us to understand has there been any consequential effect on the progress of the work at Aberthaw because of this court case. 

No, it continues at pace.

That's good to hear. The final question that I would like to ask in relation to Aberthaw is this: when you came before the committee in September 2023, Kellie, you said that £40 million is but a drop in the ocean—

That's still true.

—and I think the words you used were that hundreds of millions of pounds would be required. Obviously, this court case has not helped to instill confidence in the private sector in coming on board as partners with you. How are you progressing in that goal of securing the hundreds of millions of pounds to see this project through to fruition? And ultimately, how are you giving confidence to the private sector, and the independent sector more generally, to come in as partners in light of what's gone on? 

Let's look at the wider ecosystem of CCR. One of the absolute strengths of it is the fact that we have people across the region who are highly valued within their own sectors, like David Stevens, who sits on our investment board and has continued to sit on our investment board during this process. We have Frank Holmes, Kevin Gardiner, who are highly respected not just in Wales but globally, who continue to work with us on our regional growth and on our investment boards, and have continued to work with us to ensure that we're on pace with Aberthaw, that we are continuing to make investment decisions.

We came back from MIPIM in February. There was huge interest with working with us. Nobody was put off by what was going on, globally but also across the UK. We continue to work very closely with the Crown Estate and GB Energy to take things forward. And we are setting things up—I'll bring you in here—around the tidal lagoon and the possibility of tidal power that cuts across the Severn. So, we're working quite closely with the West of England Mayoral Combined Authority, carrying on the recommendations of the Severn Estuary Commission. We're setting up a joint venture around that to leverage in. So, in terms of the future of Aberthaw, it does actually look very bright, and we're not feeling any effects from the impact of this highly regrettable procurement issue.

The entry on your corporate risk register—

Before—

Well, hold on, I'm chairing the meeting, so I'll ask the question. On your corporate risk register, it says that there is a very high risk and states that it is almost certain that there will be a result of a major impact in terms of potential significant financial loss and potential reputational damage. But from the evidence you just gave us there, and from visiting trade fairs, that isn't the case.

I wouldn't be so foolish as to say that there is no risk to reputation or to Aberthaw. What I am saying is that we are mitigating it in various ways. And also we recognise that the longer term, as you laid out, potential that we need to start monetising at the pace that will increase confidence in Aberthaw is something that we have to do alongside this legal process. Because if we don't, then it will undermine our reputation; it will look like we cannot deal with something that is very highly complicated but, for the region and for Wales, something that is a huge boost with the potential that we need to bring to life. So, the two have to go on as a parallel track. We have to recognise the high risk, but we still have to operate, and we still have to be seen to be engaging and showing what we're doing and how we can take it forward, which is what I was trying to explain to you.

Thank you. Do you want to bring the chief executive in?

Thank you, Chair. Just to emphasise, it is regrettable. I want to emphasise how seriously we take this. The episode has caused a lot of pain and anguish for many, many people, because, as you can tell, we're extremely passionate about our region. We care about what we do. We're totally invested in it. It matters—it matters for our families, our next generations. But, I think, as Councillor Brocklesby has said, it has to be about the forward view. Yes, it's responsible to have that logged on our risk register. We've just shared with the committee openly and transparently this morning the extent of that financial exposure. Of course, reputation—it is about building trust and confidence, but I can say the team has been out to MIPIM this year, to the UK's Real Estate Investment and Infrastructure Forum. I have to say, hand on heart, the project that I still get most interest in, not just from UK domestic investors, but internationally, is absolutely Aberthaw. That's because we've got proximity to the Celtic sea, two national grid substations, 18 million tonnes of pulverised fuel ash, which has a value, which is unique in the UK. We've got data centre providers knocking the door because they know the levels of connectivity they need to drive the compute power for the future. And I have to pay tribute to the staff, who, under very challenging circumstances, have and continue to do an amazing job in progressing the conversations, the investment opportunities that I feel very sure will make this site a big success.

So, yes, we don't have deep enough pockets for what Aberthaw requires, and you're right, Chair, that we probably are talking about hundreds of millions, maybe even more than that—maybe bigger figures. But I think the intent is for us to get through the demolition, remediation phase, clear the site and, in the meanwhile, start talking up some of the opportunities that we're starting to build. The PFA is the first. We're already doing some low engine head turbine testing. There are big opportunities, I think, around national grid, data centres, absolutely. So, it's about bringing all of this together into a coherent plan, but, for now, we've got to get through the first responsible stages of demolition and remediation because, as you'll know—I know your ward and your area is very close to the site; it's a monster, isn't it—it's 500 acres and, of course, the demolition process is high risk.

Can I just take you up on the point you made? You've already put hundreds of millions of pounds on the table. You then went on to say, 'Even more than that.'

Possibly, yes.

Has the partnership, the city deal, got any figure in mind about what this might cost, because we've suddenly gone from tens of millions, hundreds of millions, to maybe billions now?

But it's not investment, Chair, that I think we have to make. I think our job, and the business case that's been agreed by the corporate joint committee—then it was the regional cabinet—is that £38.6 million is invested in acquisition of the site, clearing the site, remediating it, but then it's about joint ventures, it's about partnerships. It could be about parcelling off aspects of the site, because, rest assured, we won't have the skills and competencies to do some of this. It's about the power of collaboration and hooking into the networks, the bright ideas, the companies, the investors that could work with us to achieve the aims of the site.

Okay. Thank you. Jenny. 

Thank you. So, moving on from Aberthaw, I'd like to discuss, if you could elaborate a little bit more on it, the key driver for the wider investment fund to drive public and private sector co-investment and leverage. I'm much more interested in the industrial projects than the retail—so, things like the SAE Renewables investment in the Uskmouth battery energy storage system seem very exciting, as well as, of course, the semiconductor hub that we've established in Newport. How is the initiative that the capital region has made to set these things up in itself being a catalyst for private investment?

Do you want to take that to begin with? 

Yes, I'll start, Chair, if that's okay. So, yes, through things like our strategic premises fund—it's a £50 million fund—we have clear objectives to leverage and bring further co-investment in alongside that. So, the Uskmouth investment is a really good example where we've made a sizeable investment—nearly £10 million. That sits alongside investment from the private sector—nearly £56 million—but that site has already had some investment through a local government pension fund, bringing in market capital. So, sometimes we bridge, sometimes we're there because of market failure, and sometimes we're there as a co-investor. But the idea, the principle, is we never invest alone; we never just expose our funds.

So, in other examples, Jenny, we've co-invested with the Development Bank of Wales. We're both investors in projects, in things like the compound semiconductor foundry, which was the first investment made by Cardiff capital region. We invested nearly £33 million in acquiring and kitting out the old LG building in Newport, at 375,000 sq ft. Over the lifetime of the project, we anticipate that the tenant, the company that's in that building, will have invested over £375 million. Already, to date, it's nearly £100 million. We've got the Catapult in there, we've just done some front-of-house works. Across the road, you've got KLA with a new £100 million expansion plan on the other side of the road, and, again, all of this is to be contained within the investment zone, subject to approvals, which again brings more subsidy investment and, hopefully, the ability to retain business rate uplift. So, it's the snowball effect, and it's about building a picture, which is why it's impossible to track leverage. We can track co-investment, but leverage is the thing that grows over time.

So, at the moment, you would say you're on target for at least £4 billion of additional investment from local partners and the private sector.

It's probably closer to two at the minute, and that's because we haven't fully expended all of our investment fund or committed it. So, when we're making decisions about what prospects we put in front of our investment board and then our corporate joint committee, some projects deliver more highly on jobs, some deliver more highly on productivity. There may be fewer jobs but higher productivity. Some deliver better on leverage. So, it's just trying to get that portfolio balance right overall.

Okay. Finally from me, your ambition to attract a wide range of pension funds, institutional investors and patient capital in your written evidence, that seems to me an ideal marriage with your ambition to have co-operative housing to beat the private sector big housing organisations who only want to build where they want to build. So, I just wondered, given that there's an obvious mix with long-burn pension funds, for example, who are able to rely on the revenue from rents, how far have you got with that in ensuring that everybody is properly housed?

With the housing viability fund, I think we have already built 1,800 houses.

That's the total, yes.

We still have some money left—

And possibly another.

—and we possibly will set up another fund. We're pursuing—and this was instructed from the local authorities—ways in which we can work with pension funds. We, obviously, have to go through a process of due diligence in the way we do with every investment, and we've been pursuing that over the last year to 18 months. We would expect further down the line that something would come out of it. The Uskmouth is a good example. The Gwent pension fund invested first, but we were certainly in contact and talking to them quite regularly on the way that we worked.

Given that the region has pioneered net-zero, timber-framed housing, which can be built much more quickly than with the traditional methods, I just wondered how we're capitalising on all those innovations from our research bodies at Cardiff, Swansea and elsewhere to ensure that we are able to very quickly, in principle anyway, build the housing that we know is needed.

I think it's a really fair point and, if I'm honest, we're probably not far enough down that particular road yet. We became a CJC about a year ago, so one of our key responsibilities now is a spatial plan for the region, a strategic development plan. So, we’re progressing with that, and I think that’s the place where we set the policy mandate for some of these new innovations, which will help drive that growth.

But you’re right about the role of pension funds. We’ve only just started to explore that. We're still operating under a city deal investment framework at the moment, but the important thing about what Mary Ann said is those proceeds, those recycled funds that are coming back to us as a result of successful investments, and we would expect that to seed, perhaps, a new fund for the future, where we could then talk to other funds, like possibly pension funds, about co-investing in some of those big, long-term institutional projects that I think you're talking about—because you're right, housing is a burning platform, isn't it? We've got a capital city that's declared a housing emergency, we understand rising pressures in respect of homelessness and so on. Now that we're a corporate legal body, I think it's a space that we need to do much more in.

Okay. Just finally, the reinvested funds from your successful projects are less restricted than they have been in the past with the city deal.

Yes.

Okay. Thank you.

Hannah.

Thanks, Chair. I was going to turn to governance and accountability and how you're doing. So, if I can take you back, perhaps, to the start of this session, which might feel a very long time ago now, Kellie, when particularly you were reflecting on the developments and progress since you were last before this committee, one of the things you touched on was the city deal becoming part of the CJC, and I was wondering if you could reflect any further on what you would say the tangible benefits have been to the city deal since it became part of that CJC structure.

Yes. I'll start and then perhaps bring Mary Ann in to reflect from a political perspective, because it is a very different environment. When we were a city deal, we had an accountable body, we were attached to Cardiff Council, a big council, and now we're a corporate joint committee, a public body in our own right. I think the key benefits are the statutory powers. In the past, we haven't been able to act direct or to hold land or assets; that was all done by our accountable body. We didn't have our own balance sheet in the past. So, being able to go for UK Research and Innovation grants, to work with others in partnership, is definitely a big horizon that we're starting to explore, and thinking about how we balance the risk-reward equation around public funds. But we want to try and bring some more commercial enterprise in, so we've got the ability to do that. We could borrow, which is definitely an enhanced power, and I think, going back to how we build new funds for the future, that's important.

I think it's also important to reflect on the extent of governance that we have now, which is vastly different. We do have the corporate joint committee, but we've got a lot of other sub-committees as well. We've got a big total, because we've got statutory sub-committees, we've got legal, audit and governance, we've got joint overview and scrutiny, we've got a standards committee, and we do things like a sub-committee for transport and planning. Then we do an investment board, a growth board, and then we've got our companies, all of which have boards as well. So, the thing we're probably grappling with at the moment, as a new public body that's fledgling and in its early stages of development, is that we've got a lot of governance, and it's right and proper that we do, but how we make it proportionate so that we can continue to do things at pace responsibly. I think it's just finding that pattern at the minute.

Just as a quick follow-up on that, you mentioned the different elements—the governance, different sub-committees and things—so, would those sub-committees include representation from, perhaps, political leaders, local authorities, but also private bodies as well? 

Yes. On things like our regional transport sub-committee, which is chaired by Councillor Andrew Morgan, the leader of Rhondda Cynon Taf, you've got the 10 transport cabinet members. On the strategic development sub-committee, which is chaired by Councillor Lis Burnett, leader of the Vale of Glamorgan, you've got, again, the same representation. On our regional growth board, you've got a mix of politicians, private sector, academia, the third sector community, and so on. And the same with our investment board, which is chaired by Frank Holmes, as Councillor Brocklesby has mentioned. That's part public sector, part private sector. So, it's trying to have a more networked, distributed governance process. So, we've got different perspectives, a diversity of views, which I think is really important to effective governance.

Could I add to this? CJCs have been controversial, haven't they, across Wales? It would be the elephant in the room if we weren't able to talk about that. If I reflect on it as a political leader in south-east Wales, it has been, on balance, a benefit for us as local authorities, because it's given us that accountability and governance structure that wasn't in place with the city deal in the same way. It has also brought into the workings, through that structure, other councillors within our local authorities. There was—I certainly felt it when I became leader three years ago—a detachment between what was happening in the region with leaders and what our councillors, let alone our residents, knew about what was happening in the region that was really good and having an impact. Like the housing viability fund, it was a bit like, 'What have the Romans ever done for us?' People didn't know. So, having a structure that brings in our councillors is giving us a direct line of oversight right back to the ward level. I do think that's important to acknowledge, and it's made a difference.

I think the second thing is it has allowed us as local authorities within the region to really think deeply about our position as a region and what we do better as a region than we do as a local authority or at national level and how we work with the different levels. You referred to the Burns commission. It is absolutely fundamental that we have those Burns recommendations implemented as soon as possible. We, within our regional transport plan, have put that in and said, 'That's what we are going to do', and it gives me and other leaders the leverage, using that plan, using our own political networks, to lobby. And we are lobbying hard, both at UK level and the Welsh level, to get those recommendations in place.

I would add, what we haven't had a conversation about to a conclusion that would make sense is, as CJCs, we are the equivalent to the combined authorities, as Kellie said earlier in the conversation—we should have a seat at the table of nations and regions. We are part of the Welsh nation. We are those regions. We should be part of those discussions going forward—collectively, not just our region—on what we want to see done differently. That, I know, is something we in our region, and I have talked with other regional leaders, want to see movement on.

I often think the name 'corporate joint committee' doesn't really help either, but that's by the by.

It doesn't roll off the tongue, does it?

We need to—

That's really helpful, and I think partly answered my next question around—your written evidence says about the residents needing to feel the impact of the city deal and the difference it's making for them—how those lines of accountability work, but also communication. How would residents understand or engage with what's happening? Where would they go to? Where would their point of call be?

That's something that is absolutely exercising the brain of every local authority, and recognising that we do have to up our game on how we communicate. Some of the language we use, for example, the multiplier effects—I can tell you people in my household wouldn't know what that means. How are we actually really making it clear that, because of what we are doing in fintech in Bridgend with Mazuma, it means that women are going back into education, supported by that company, that childcare support is much more flexible, which is helping the sector, that they are modelling and rolling out a different way of working, which allows non-traditional people to come back in? Those are real impacts. That is what we need to get across in Bridgend, but also across the region, that we can do it differently. We need to be able to and want to, and find ways of doing that more purposefully towards our residents and the people who live in the region.

Thanks. I know we're quite pressed for time now, but one final question from me. The CJC’s corporate risk register has identified that there is a high risk that the CJC has

'inadequate organisational capacity and capability to bed in, develop and deliver as a new legal corporate entity'.

Do you think that has any implications for the delivery of the city deal, and, overall, would you say, if you can say, that you feel you're best able now to deliver and make a difference as a CJC structure?

I think that the main problem is that we're established now as a corporate legal body, but we don't have core funding. We've got contributions coming in from our local authorities, which is very much welcome for the city deal, and I guess we've had some small contributions for things like the strategic development plan, the transport plan and, of course, we try and top-slice some of our income, so we're self-sustaining, but there is a gap, and we need to think about how we fill that gap going forward.

We've got a new structure that we're in the process of implementing, so there is some growth there, but it's something we're going to need to look at again, and I think we need, and we're starting to work, on a medium-term financial plan, as a council would, to make sure that we've got that financial resilience and sustainability. So, it's on the risk register for very good reasons. It is a risk, but it's something we're trying to mitigate and address. But, yes, I would underline, as the chief executive officer, that we need core funding, we need core capability.

You had that funding in the first five years though, you did, didn't you? You had revenue funding in the first five years, as opposed to just capital funding, or am I misunderstanding the point?

Yes, Chair, you're correct—for the city deal there was some revenue funding. But we can't mix city deal funding, which is for a specific purpose, with the wider powers that I talk about now for the CJC. City deal funding isn't for a regional transport plan or isn't for a strategic development plan, so we're having to think about our finances overall and how we get on a much more sustainable financial footing. So, we're working in partnership with our local authorities on that, we've had some good support from Welsh Government, but we do have to find an operating model that we'll see—. And it's not just south-east Wales, I don't think. I think this is similar for the other CJCs in Wales. I think it's a problem we have to collectively solve.

Okay, thank you. Luke.

Diolch, Gadeirydd. Just some brief questions for me. From a business's standpoint, how does the city deal fit into that business support landscape that they need to access? Because we've heard it several times as individual Members, as a committee, that the business support landscape is very complicated in Wales and people struggle to understand who they go to and at what point do they go to them and so on. So, where do you see the city deal fitting into that wider support landscape?

You start off.

Yes, I agree, I think it is disparate, I think it's fragmented. I'm not sure there is a single front door. I feel the same about inward investment. When I speak to potential inward investors, I think there's a number of different outlets. We're trying to think about how we bring that together in a more coherent way. So, one of the things that we've been thinking about is how we bring the Development Bank of Wales, the British Business Bank, ourselves, organisations like Alacrity, Tramshed, the National Wealth Fund—. How do we try and create a pool effect so we're not all working with the same people, having similar conversations but in different contexts? I do think that that is a challenge for us, because at the moment we fit because people apply to us for funding, but it's probably not the most strategic way to look at it. So, I definitely think it's something that, as institutions, we have to come together around, and collectively put better ways of working in place.

I was talking to a colleague in Welsh Government, for example. We've got the Northern Valleys fund, Welsh Government have the Tech Valleys fund—is there a way of integrating that and having one front door? I think this is essential and I think, as we evolve, it feels quite urgent as well.

It's frustrating, to be honest, and it comes back to my earlier point of how do we collectively work out where the regions sit and operate nationally, and where they fit with the local authority. I know there's ongoing work with the Welsh Government and the Welsh Local Government Association for a CJC prospectus, but I think we need to drill down more into the practicalities, because what businesses want to see is an easy route in to market intelligence, to business support, to being linked up to investors, to being able to have conversations with the Development Bank of Wales and suchlike, and they don't see it, do they? And from a local authority point of view, as well as a CJC point of view, it's every which way at the moment, and that's something that we need to think about across Wales, not just for our region.

Do you think Government has been proactive enough in this area? 

We're certainly in discussion with them.

But proactive in actually thinking through how do we bring together all these different organisations and make it easier for businesses to interact with various institutions?

I think it's a challenge for multilevel governance—UK level, Welsh Government level, region and local, to all understand where we fit. Definitely.

So, with the Welsh—

I think, from talking to mayors, as I did in Leeds a couple of weeks back, we're not alone. It feels like it sometimes, but talking to a mayor just across the border, that's something they're also challenged by.

So, with the Welsh Government's review on business support that's coming over the horizon now, how involved do you see yourselves in that process? 

I think as we evolve, and now we're a corporate body in our own right, we've just launched a new entrepreneurship programme, we've got our cluster growth and development programme—. We work with a vast array of businesses, even if we don't fund them—it's still about signposting support. We have been engaged as part of that process. We've also been consulted as part of the Welsh Government review on inward investment. So, I do feel hopeful we can have something more coherent, but I think it's going to take a lot of work and upkeep and maintenance, and we probably need much closer relationships to make it work, I think, over the long term.

Okay, great.

I'm just trying to understand, have you engaged with the Welsh Government on their review into business support, or is it other reviews that they're undertaking? Because obviously the Cabinet Secretary is on the record, I think in March, at the Cardiff Business Club, as saying that she's commissioning a review into business support. It's difficult to find many organisations that know what that review is doing, or has it even begun? Have you—?

We've had some initial conversations. We're certainly aware of it, and we know what the intentions are, but, to be honest, we constantly feed information, case studies, stories back. I have been personally interviewed for the review into inward investment, because, again, I think that's an area where we need much stronger co-ordination. You've got UK Government and Department for Business and Trade, you've got, within Welsh Government, the inward investment team that do a very, very good job, and then you've got what we do, and I think, with opportunities like international expo, MIPIM, UK Research and Innovation, one of the things that we could well do is come together as a Wales presence.

So, it's your understanding that the business support review has begun.

We've had some initial conversations. I haven't spoken to any consultants or advisers who've been appointed as part of that, but I know we're expecting it. I know we constantly feed data and information back, and I know that there are propositions on the table about how we can do big international trade events together, which is something that feels like it could be a really important starting point.

Okay, thank you very much. Any other questions from Members? No. Thank you very much for your evidence, including the written evidence that you supplied before the meeting. A Record of Proceedings will be sent to both of you so that you can read through it. If you find anything that you don't recognise and shouldn't be in there, please liaise with the Clerk and obviously they'll try and make sure that it's rectified. Otherwise, that'll be the record of the proceedings today. Once again, thank you very much, and we wish you well for the future.

Thank you very much.

Thank you. Diolch yn fawr.

We'll now move into private session.

We're now back into public session and the second stage of our inquiry into the business and growth deals that occupy the business space in Wales. We've just had the Cardiff city region in, and now we have representatives for the mid Wales growth deal presenting their evidence, and answering the questions from committee members. Thank you for your attendance today, gentlemen. I'll ask you to introduce yourselves and then, when you've introduced yourselves and your positions respectively, we'll move into questions. 

If I go first, then. So, I'm Jake Berriman and I'm the leader of Powys County Council.

Bore da. My name is Carwyn Jones-Evans and I'm the portfolio senior responsible officer or owner for the mid Wales growth deal.  

Okay, thank you, gentlemen, and we hope that the leader of Ceredigion County Council will be joining us shortly. Gentlemen, it was 2023 that representatives from the growth deal were before this committee last, and obviously 18 months, nearly two years now, has happened. There's a lot of activity that's been going on in that two years, or nearly two years. Could you fill us in on the activity and what progress has been made to meeting the goals and objectives of the growth deal? Jake, I'll ask you first and then invite Carwyn to come in after. 

Thank you very much. A lot of the activity we've described in the written evidence that we've submitted, and it should be clearly stated. In terms of how we're progressing with that, I think it's progressing as well as we might expect given some of the difficult circumstances we experience. If you've just had the Cardiff city region before us today, you couldn't have a more different counterbalance to that when you're looking at rural mid Wales, with the sparsity and the rurality that we represent. That is the context that we're very much operating within, and our vision set out some goals that took that into account.

But, nonetheless, progress is, as I say, as good as we might have expected. Things have slowed somewhat generally, economically. Private sector finds it more difficult, and therefore it's more difficult for us to engage positively and proactively with them. We've had to flex our approach as we've gone along, and we continue to do that, to ensure we're best meeting the demands that we see arise that are plugging into our core areas. That said, of course, I think there has been some significant activity that has commenced of late. We're particularly pleased with the phase 1 start at the Elan valley and with the launching of the mid Wales commercial property investment fund, which is a recent addition. That, I suppose, gives an example of some of the flexing that I'm talking about—how we are trying to change things to bespoke them to the demands that we're seeing arising locally.

Thank you. Bryan has joined us now. Bryan, could I ask you just to formally introduce yourself and the position you hold, please, as your two other colleagues did a similar thing at the start of the meeting?

Yes. Bore da, Chair. Apologies for being late. As farmers, we do get sidetracked every now and again, unfortunately. So, Bryan Davies, leader of Ceredigion County Council. So, as I say, apologies for my late arrival.

No problem. I've put the question to Jake and Carwyn; Carwyn's yet to answer. It was 2023 that the representatives from the growth deal were last before this committee. A lot of time obviously has elapsed, and, hopefully, progress been made on various projects. I'll invite you and then I'll invite Carwyn to maybe highlight what progress has been made. Jake has already addressed the areas where he sees progress has been made in the growth deal to date. So, the floor is yours.

Thank you very much, Chair. Jake alluded to some of the projects that are moving forward anyway. I came into this—. I came in as leader in 2022, so I think—. It was hit the ground running to an extent, Chair—very thankful for the work that the officers have been doing in Powys and Ceredigion. If I'm brutally honest, I'd love it if things moved a little bit quicker, but we've got to jump through hoops and jump over hurdles because it's public money as well. But we are definitely going in the right direction.

With regards to me, with transparency and stuff as well, with the economic advisory group scrutinising our work as well anyway, they do point things out, and we do take those on board. I think the cabinet members work well, from Ceredigion and Powys as well. So, we're definitely going in the right direction. I'd love it if we moved a little bit faster, but that's the nature of the beast. I think, with regards to sponsors, the private sector, obviously, the way things are within the private sector as well, we've got to be mindful that perhaps they need to see some of these projects coming through. The interest is definitely there, anyway, but I'm glad of the progress that has been made to date, anyway, Chair.

Thank you. Carwyn.

Very quick comments, just to augment some of those points. From an officer perspective, I think we're very happy in terms of where progress has been at the last 18 months. As Councillor Jake referred, we've got four projects that are actually moving into delivery now. So, I think the last two times I was at the committee we've been saying we're at the door of delivery, but it's actually pleasing to say to the committee today that we are in delivery as a growth deal. We have got projects that are starting to deliver now. As Councillor Bryan mentioned, that does build confidence with key partners externally and with the private sector. Because large-scale capital programmes like the mid Wales growth deal, these projects take time to build and deliver; they take time to scope and plan. The conversations that we've been having two or three years ago in the region—. You know, things change, economic circumstances change, but, as things start to get delivered, that's where confidence grows, and I think we're in a pretty good position, Chair.

It's good to hear that there's an element of confidence creeping in, and, obviously, Jake from Powys, the leader of Powys, highlighted the Elan valley project, and the fund. Are there any areas that you have concerns over that maybe have dropped back since the last evidence session that this committee took off you, back in September? If we start with Carwyn and do it in reverse: Carwyn, Bryan and then Jake.

Yes, I'm happy to start there. So, there are a few projects that are—. We recently undertook a health check across the portfolio. There are a few projects that are in yellow, and there's a couple, or two or three, in the red category currently. That's for a variety of reasons, and every project is different, and it wouldn't be appropriate for me to pull out the exact details of individual projects. But, in general, public sector finances and private sector confidence has shifted in the last two years. The organisations leading those projects that are on the higher end of the risk categorisation have taken the time this year to really take a step back, rethink, 'Right, the ambition four or five years ago was up there. The level of funding and what we can deliver might be somewhere down there.' And there have been conversations in the last 12 to 18 months around, 'Okay, so the mid Wales economy still needs these large-scale infrastructure pieces to be developed and built. The levels of funding may not be immediately apparent.' So, the challenge that I've been setting to the team and to our external delivery partners is, 'Well, what's the strategy, then, in terms of getting the match funding? What's still realistic? What's still possible to achieve within the funding envelope we've got, but also how do we work closer with both Governments in terms of articulating what we require in the region?' So, those two examples are the Trinity Saint David campus in Lampeter—obviously, there are ongoing conversations there, which wouldn't be appropriate for me to go into in detail, but I can assure the committee we are closely talking to the university and other partners there around the potential future for that project—and Aberaeron harbour, and Cynefin up in the Centre for Alternative Technology as well. With CAT, I'm pleased to say we are making progress there, but, as with every organisation, as I say, we've had that 18 months of taking a step back, reviewing where things are. But, across the portfolio, there are no projects that have stopped or have completely died at this juncture, which I'm pleased to say.

Okay, thank you. Jake.

Oh, am I back on voice? Yes. As we go through, clearly, projects do fall out, and we have got two red-identified projects that have been referred to there. We, obviously, through the board, will be reviewing again the projects in front of us in June, the back end of the month. I'm very much the new boy here, just to say; I'm catching up a little, having only been in this post for a couple of weeks now. But, from what I'm seeing and reading, and the conversations that I'm having, I'm absolutely convinced that what we are doing is being able to shift our emphasis and look again at new areas. So, within the broad themes that we have, I am convinced that we will bring things to bear as we come forward. So, yes, you're right to flag the reds, but I think that either some of that can be rekindled, or we can have alternatives that are slotted in. That's the nature of the flexible approach that I referred to at the outset.

Thank you. Bryan.

Yes. I think Carwyn mentioned the Cynefin project in CAT, before Jake's time as leader. We did get in touch with CAT straight away when they were facing financial difficulties. So, it just showed them that we had confidence in them as well, anyway, but it was important to engage with them. And I think that was important for the sponsors to show that we had their backs, to an extent. Yes, so, as Jake mentioned, we've got other projects in the pipeline anyway, but I'd be more worried if all the projects were green. Because it just shows that we are scrutinising properly. I did mention the economic advisory group, but, when we come to decision making as a board, we do rely on input from the officers as well, and if they're not happy with the way things are going they will notify elected members as well. So, it's self-assessment to an extent, but we do scrutinise ourselves very carefully.

Thank you. Jenny.

Thank you. Welcome, and thank you very much for your paper. In that paper, you talk about being continually disappointed by the ongoing lack of any revenue support from either the UK or the Welsh Government to support the deal. I wondered if you could expand on why you're so disappointed on that front, given that the capital is the main driver in this matter.

Do you want to state which one you want to start with that, Jenny?

I beg your pardon. Shall we start with Jake, as you've—?

I'm very happy to kick off on that. From my point of view, I suppose, I'm not continually disappointed—

No. Fair enough. You're a new boy.

—because I haven't been here long, but it is a theme with us. Obviously, there's a huge awareness that this is a capital-based project, but if we do compare ourselves with the Cardiff region that you've referred to that have had large amounts of capital upfront, that obviously provides a clear investment revenue option for them to draw down and to provide support for the projects, whereas the 4 per cent that we're able to draw down on the limited funding that is given to us in annual tranches makes that more difficult.

I think what we're just pointing out here is that if we were able to not only fund ourselves differently, but if we were able to offer some support for the nature of the businesses that we have here. We don't have a lot of the big footloose companies other than perhaps some pioneering renewable energy companies that are looking around mid Wales at the moment—ours are indigenous, home-grown, very small businesses. I think in Powys, we have more microbusinesses than anywhere else in Wales—possibly even including Ceredigion, Bryan. So, that's the nature of those businesses. And we have some larger businesses, we have very few SMEs in between.

So, it's the nature of that funding. If we were able to provide a little bit more of that revenue support in addition to capital, we might be able to tempt them in. And that's one of the reasons that we've looked to set up the commercial property fund under one of the projects that we have there, because that will free up an ability for us to provide a bit more support in a way that suits them and leverage in the capital that we're looking at there. So it's part of our flexible approach. As I say, having just come in really very recently to this, it's not continual from my point of view, but I do see it as an issue, having just now explored this in more detail. Thanks.

Obviously, the whole point of all this is to collaborate and have a bigger bang from the bucks by working together. Councillor Davies, is there anything further you want to add to that, as you're a more long-standing member?

As I mentioned earlier, we're so thankful for the work that our officers do, but they are working flat out. We are the smallest of the partnerships and the growth deals and we do rely a lot on our officers. It's the same officers that do the work with the CJCs as well. If you're talking about the CJC, you're looking at the SDP. In Powys, for example, they review their local development plan. So, they are spread quite thinly. And I'll always speak up for rural areas, where the proper funding isn't there anyway, generally. But more revenue will be great, because, as Jake mentioned, we've got a lot of SMEs in Ceredigion and Powys—probably more in Powys. So, I think that there is an element of we've got to hold their hands more than the bigger projects, because it's more of a personal touch with the smaller partnership.

You may be a rural area, but there's lots of opportunities for you. You've mentioned the renewable energy sector, but we also have a food security problem. As a Cardiff Member, I'm looking to you guys to deliver much more of the fruit and vegetables that we need for public procurement, apart from our population as a whole. So, how are you focusing on that? I see that you have got some mention of the food processing industry, which I don't want you to talk about today because we're going to launch an inquiry into that in the summer. Jake Berriman.

Jenny, I really thank you for that. Obviously, the Growing Mid Wales projects to date have focused in on that added value within the processing, the research around food, and there's some really good things coming out of AberInnovation and the history that we have there with that. It's quite right that the growth deal did focus in on that and is expanding on that.

I think you're alluding to some of the work that we're looking at in Powys in particular at the moment around growing fruit and veg and the horticultural sector and the investment that you have supported us to make in that, for which we're ever so grateful. The pilot projects that we have we think are scalable and it is something that I think we mutually need to support and develop.

Bryan and I have had conversations around how we might look at the planning guidance around horticulture that we've adopted here in Powys, and how that might be relevant there. And indeed, when we're talking about our SDP together and those strategic policies, we're talking about a policy framework that will drive this rural economy. And absolutely, small-scale food, scaled up fruit and veg suppliers, is something we're looking at.

However, I will say we are looking at Birmingham at the moment and not necessarily Cardiff, so I'd really like to explore those further conversations with you, because I totally agree, food security is something that has really crept up on us and is now front and centre. I know of thinking in the Welsh Government, but also here in Powys, and I think, as we flex and change the growth deal, there will be opportunities here for us to pick up some slack in the funding to look at that further, certainly with your support.

We'll come back to that another day. I just, finally, wanted to ask—. Perhaps it's appropriate to ask Carwyn or Bryan Davies. You're the new kid on the block, so obviously, you're able to benefit from some of the learning of the earlier established growth deals. We've just heard from the Cardiff capital region. They only now seem to be considering some of the learning from the most successful co-operative, certainly in Europe, which is Mondragon in Spain, and the way in which they can focus on the needs of their local communities and ensure that the money isn't leaking, it's reinvested in its local communities. I just wondered if you've thought of piggybacking your way, in terms of now that you are also a CJC, focusing on the more holistic approach rather than the tramlines set by a growth deal.

Just for clarity, they're not a CJC.

I'm happy to start on that one. I speak quite regularly to Kellie and my team speak to quite regularly to Kellie's team, and the same with north Wales and mid Wales colleagues. We share a lot of learning. The last few years has largely been in the bureaucratic side of things in terms of how we set up CJCs, share a lot of the pain, share a lot of the technical elements, supporting our officers, because there's no point in reinventing the wheel. But when the Member asks about the wider holistic view, I think that's still early days. We have got fixed tramlines, because, ultimately, from an officer perspective, I can only deliver what I've got resources to deliver against.

I think the comment in the paper, which you refer to, is in reference to Bryan Davies, Councillor James Gibson-Watt, Councillor Ellen ap Gwynn and Councillor Rosemarie Harris previously. I think we're making the point to Government that we're very grateful to receive a large-scale capital fund in mid Wales, of course we are, and we have got opportunities as the Member infers, but there should be a recognition that there should be an element of revenue with it, because we need to employ staff for feasibility studies and there's a lot of upfront work that needs to happen.

So, take the food industry just as an example. Because we've got a regional partnership in mid Wales and we've been working together, we actually lead the Innovate UK agri-food and agri-tech Launchpad for north and mid Wales. Because we exist as a cluster in the region, we've taken a lead on that. So, when it comes to more holistic activities, I suppose, from an officer perspective, we've got a wider vision for Growing Mid Wales. That aligns closely with the Welsh Government’s regional economic framework in terms of priorities. So, it’s a case of, ‘See what the future holds’ in terms of what next week brings in terms of the comprehensive spending review, and see what funding is available to deliver what where.

Jake Berriman, you wanted to come back in. 

You’ve steered the conversation quite nicely and rightly into whether we’re inward looking or outward looking, I suppose. I’ll just flag that I had a meeting with the chair of the Cardiff region last week, with our mutual chief executives. We were discussing the synergies and the role that we might play between regions in supporting each other in unique ways.

There is that outward looking dialogue, looking for partnership, and that’s exemplified in some of the other work that we’re doing around the Severn partnership, and looking at how we can have landscape-scale solutions to some of the problems that we face around flooding in neighbouring areas, for instance, but also the Marches Forward Partnership—Monmouthshire, Herefordshire, Shropshire—and how we can work together to look at investment opportunities and themes like food in collaboration with Ceredigion and the mid Wales region.

So, we have a very much outward looking, added value approach to what we’re doing. And that’s a long way from where we started, but I think that’s where you were taking us.

I want to come back with regard to the agri sector. With two of our projects that we’re looking at, Tir Glas and Food Centre Wales, where we are looking at processing, food security is important, but I think the input from rural areas, people need to listen to that. Sustainable farming—yes, all for it, but one size doesn’t fit all. We will be looking at the organic side, the same as on the horticultural side, which hopefully will be organic as well. But not every piece of land in Ceredigion and Powys is suitable for growing veg and fruit.

We know that. 

So, again, a holistic approach. We’ve definitely got to do things differently. It’s not all about pulling teats in big factory dairy farms, or big finishing units on the beef side. But we’ve got to realise that, in Ceredigion and Powys, the main industry is agriculture, so hopefully, some of these projects can be tweaked. So, that food security does play a role in the projects.

Thank you. 

Thank you, Jenny. Sam.

I think it's Luke here, Chair. 

Sorry, Luke, yes. I hadn't turned the page. 

Diolch, Cadeirydd. I just wanted to touch on public and private sector investment. But I was just going to try and get some clarity to begin with as to whether Ceredigion council and Powys council are contributing any capital funding to the growth deal, or are the council providing just revenue. Carwyn, I imagine you’re probably the best one to answer that one.

Both local authorities contribute £100,000 each of revenue annually towards the running of the mid Wales growth deal. As set out in written evidence, we can top-slice 4 per cent of the capital fund of £110 million, which equates to about £4.4 million in quantum overall for the lifetime of the deal. That equates, over the 15-year period that we’re running the deal, to about £300,000, £360,000 annually. We’ve got to top up that figure to effectively have a portfolio management office. That’s where the revenue contributions from the two local authorities come in. We’ve got an annual budget of about £550,000, £600,000 currently to employ staff and resources and help support project development.

From a capital perspective, neither local authority has provided a blanket overall contribution to the growth deal at source, but both local authorities lead on a few projects each. For example, Powys council leads on the advanced manufacturing centre in Newtown, and will be expected to put capital funding into that to bring that forward. The same goes for Ceredigion leading the food manufacturing innovation centre down in Horeb. There will be a capital requirement there.

There are no figures yet in terms of how much local authorities will be giving in, because that’s yet to be discussed and decided as part of the business case development process, and subject to each local authority’s internal processes. But there is an expectation that that is where the match funding contribution from the local authorities, in a capital sense, will come in at a more project level.

Okay. That's helpful. So, just to be clear then, basically they are technically capital contributions that are consequential as a result of councils running projects. Yes. Great. Lovely.

If I could turn to some of the written evidence that was submitted, in that written evidence there was a statement saying that the availability of and appetite for additional investment have shifted considerably, requiring significant rethinking in some projects. Could you just expand a bit on that statement, please? Again, I'm not sure if Carwyn is the best person to come to here. 

Yes, from my perspective, working with the lead chief execs and individuals in the external organisations—. So, if I take an example, the higher education sector is one classic example where the economic, fiscal environment has changed in recent times. So, to take the green futures innovation park by Aberystwyth University, it's a £40 million-plus overall total project cost, which can understandably cause a bit of concern in terms of where the economic headwinds are going in that particular sector. But I'm pleased to say that the university there is taking a very pragmatic and sensible approach, thinking, ‘Where do our strengths lie? What do we need to try and achieve and deliver into the future? What were the elements that we were trying to achieve from the vision two or three years ago, and what can we still deliver within that environment?’

I think that appetite and confidence generally have changed. They haven't gone, it's just there is that degree of caution in terms of there being less readily available public funding sources. So, we're coming off the back now of the UK shared prosperity fund having entered its transitional year, so there's less funding. As Members will be aware, we've had a three-year period of fixed allocations where we knew what we were working with; we've had a transition year announced for 2025-26, but we don't know beyond that. So, as officers working with external organisations, it is difficult to plan for an unknown entity when it comes to funding. The levelling-up funding was the big capital fund available to us in recent years as well, and we’re not aware currently of any other big capital funds on the horizon, but there are ongoing conversations with Welsh Government and UK Government colleagues. Obviously, there are some Welsh Government funds from the regional side of things, but budgets generally are smaller than they've been.

Funding is less readily available, which does cause concern for a lot of organisations delivering these projects, because we're not talking a couple of million in projects, we're talking tens of millions in these individual projects, and we've got smallish organisations in mid Wales that take on a lot of responsibility and risk. So, that understandably does make them pause and think. But, from my perspective, that’s potentially a good thing as well, because they’re rethinking their financial strategy. They’re not going to be overly or wholly reliant on the public sector for their match funding.

So, organisations like the Centre for Alternative Technology, they've done a lot of good work recently, fundraising down in London. They're fundraising like mad, but that's a good thing, because rather than saying with the growth deal, 'Okay, circumstances have changed, there's less public funding available, we can't deliver anymore', all of the projects are saying to us, 'No, we still want to deliver this because this is the right thing to do for the region, and we will find a way of delivering it', and they're working hard on that point.

Yes, I think that this is where the economic advisory group comes in on the private sector as well, and also the link with the regional skills partnership, because if you speak to a lot of these companies, recruitment is an issue. So, with regard to these projects coming forward, we need to make damn sure that the jobs are filled as well. So, it's important to have that early engagement. 

Great. Diolch. So, coming back to what you said there, Carwyn, about the difficulty in securing some of that public sector investment, to date, then, how much public sector investment has been secured by the growth deal?

Private. Private, I think you mean, do you, Luke?

It's public, I'm asking for.

Public? I think it's about £18.4 million of public funding that's been secured to date. For private sector funding, as I'm on the subject, about £22 million has been secured to date. 

So, I think it's fair to take away from some of the evidence that we've received already from you that that's just not hitting the mark in terms of allowing the growth deal to reach its ambitions. 

Yes, there's still a significant way to go in some projects. Cumulatively, we're not overly concerned at this point in time, but there's a fair bit to go in some projects and that's why they're towards the lower end of that risk table in terms of where they're at currently, but they're still in the deal, because they've got a viable strategy to deal with that. And, as I said, they're in the zone now exploring things like the infrastructure bank and other funding sources. And as Councillor Jake mentioned, there are other players now in the region as well that will be looking to get in on some of the action as well.

I think that, as confidence grows in terms of something like the growth deal, if you talk to the private sector and say, 'Oh, I've got about £4 million a year for something here', it doesn't really engage it or attract interest, but cumulatively—. As I think the Member Jenny Rathbone mentioned in terms of the whole rationale and ethos of the growth deal, it's collaboration, bringing these organisations together, and a little bit from a lot of people actually compounds, and when that starts compounding, as we're starting to see with the growth deal, then you've got organisations that are able to—. So, as investment decisions are announced and ministerial visits happen, there's more interest, and the communities and sectors that those projects are serving are becoming re-enthused and re-engaged again. Because we can talk theoretically, we could talk in workshops two or three years ago about the potential of an advanced manufacturing centre or for skills in Newtown, but until the day that we start making funding decisions and announcements and actually say, 'This is happening', that's when different partners start to say, 'Well, actually, we want to be part of this.'

All the projects are there because they make sense and they're needed, but they need to move from the land of being self-fulfilling prophecies to being deliverable projects. So, some of them are already there, some of them are on their way there; others will need a bit more work, as you said, but they're still there because there's a viable plan for each one currently.

Okay. Jake.

Yes, just succinctly, obviously the more mature the projects that we have and that you can see here, the smaller the gap, and the less mature or the more immature the projects are, the broader the gap that we have. I think we need to be very realistic here, and I think you're steering us in that direction, in not being too confident about overachieving or achieving the ambition and misdirecting. But at the same time, we have to demonstrate some clarity of vision and some confidence in order to attract additional investment into the area. So, we don't want to be hesitating; we want to be clear-sighted and we want to be bold and, in that way, we will make sure that we close that funding gap. So, I don't want to mislead you here by showing overconfidence and you thinking that we're arrogant about our approach, but we do need to demonstrate confidence in order to attract investment.

No, I appreciate that it's the catch-22 situation, but on that point around meeting that minimum investment from the private sector in the region, you're confident that you're able to at least get to that point. 

Yes, I think we are and I think, if you look at leverage, if you look at where we're leveraging the difference, so the investment in the Elan valley centre for instance, the leverage there, the difference between the amount that is going in publicly and the return on that investment or the leverage of the overall project, I think, is something like 3:1.

And I'll just give a little bit of an indicator in terms of a sector that I'm far more familiar with and that's social housing. And you'll know, through the social housing grant that the Government provides here in Wales, that it is vitally supportive of the sector, and those contributions there leverage in large amounts of investment in providing housing, which are much needed for local people, but also that's the whole supply chain that we have there: some of the advanced manufacturing we're having around off-site construction is being fed through that supply chain, and local jobs, training, skills and development. So, you can really see how, within that sector and others that we're looking at here, the investment you're putting in has clear leverage potential and we have to have faith that it will do so.

Great. Diolch.

Okay. Thank you. Sam.

Thank you very much, Chair. Good morning to the panel and thank you for joining us. I'll be asking a few questions around the impact and understanding the impact of the growth deal. Taking on board the answers you've given so far, could you just outline what specific outputs and impacts you feel have been achieved in the three years since the growth deal was signed specifically? And we'll go with Carwyn to start with.

Yes, so technically, because, as I said, we've only moved into delivery this year, we haven't delivered any outcomes or outputs as of yet. But the point to mention there is all the projects are committed to deliver the outputs and outcomes that we've agreed and signed off on. There is a bit of a lag, as with funding programmes. So, our teams have also come off the back of delivering the UK shared prosperity fund. So, whilst that was closed down last year, some of the outcomes and impacts of that are only being realised now, for example. But in relation to the growth deal, we are on track; we've got a benefits realisation framework developed for the portfolio overall. We will be submitting that to both Governments next month now, with an update across the portfolio, 'This is where we stand, this is where we sit, this is what we're going to deliver against.'

In relation to outcomes and impact, we haven't undertaken an economic reassessment of the figures this year, because largely the focus has been on the financials, the viability, the deliverability of the projects. But we have got independent external economists working for us, who look at all the business cases and do those independent checks. We're still confident in terms of what we've said that we're going to deliver against overall, and that's what we'll be saying to Government in a few weeks' time.

We have got ranged estimates, because as Members will appreciate and know and understand, the way that the Treasury five-case business model works is that you start with a strategic outline case, then an outline business case, then your full business case, and things iterate all along. So, at a portfolio level, it's very difficult, as you can imagine, if I've got different projects at different levels of maturity. In some areas of the portfolio, I've got very high confidence that those projects will deliver the outputs and benefits that they've said that they're going to deliver, which are things like the Elan valley, phase 1, and the mid Wales commercial property investment fund, we've got a very high interest in that, having launched that up in Abermule in Powys the other month. We know broadly the gearing of that.

As the officer with the responsibility for this, the handbrake that I've got to manage the impact and output pieces, if we start to see that some projects are not delivering what they said they were going to, or as projects start to develop, then that's something for the board to consider, whether they're still happy, confident and comfortable with that. Because if somebody's promised 1,000 jobs somewhere and they're only delivering 100 jobs, is that still acceptable, and what are the other outputs and outcomes that they're going to deliver?

My team's job is to ensure that we don't reach that situation, that we've got an ongoing dialogue with the projects, that at the outset the figures and benefits that they've got are realistic, and that's what we've got is a culmination. At a portfolio level, we've aggregated all of the individual project estimates up towards the portfolio level, rather than trying to do a top-down approach of saying, 'We're going to deliver a million jobs', which has no basis in reality with the projects. We have worked with the projects, built the portfolio upwards, which is why we're pretty confident in our figures. They're ranged estimates; we haven't promised an exact figure to Government— 

Okay.

—we've given a range, but that is part of an ongoing piece that we will continue to monitor and evaluate, and, yes, keep a very close eye on.

Okay, thank you. Diolch, Carwyn. Bryan, I saw you had your hand up there, and on the point that you made previously about the speed of funding, and which Carwyn alluded to—I'll use the term 'lag' there in regard to funding—just in your answer, if you could touch on that side of it and your frustrations in terms of seeing that in terms of slower delivery because of lag.

I think it's nice to see the cwm Elan project coming forward now, because confidence will grow with other projects. I think it will be like a snowball effect. Anything with public money, you're going to have that lag anyway, probably, Sam, but things are definitely going in the right direction. And it's a job, really, with regard to the investment you're putting into it, how does that equate to jobs. And what Carwyn mentioned, if you're guaranteed 1,000 jobs and it's just 100 jobs at the moment, you've got that multiplier effect with other small businesses. That will benefit them, whether it's a cafe in the area or whatever, or different suppliers. We'll always have the argument that things move slowly, Sam, but that's just the nature of public money, anyway. But, with regard to the projects going on to the next stage, we've got to be sure, as board members, that they're ready to progress as well. We do scrutinise ourselves, as I mentioned earlier, and to me that scrutiny is a good thing.

Okay. Carwyn alluded to that he was confident, going forward. In terms of your position, how confident are you that you can deliver on the intended impacts of the growth deal over the next seven years?

It's a job to put figures on it, but I think it'll be better than what the figures forecast at the moment. I think, again, it's down to the confidence that other people see in these projects as well. I think, hopefully—. I did mention recruitment. If these projects, if a lot of jobs come because of them—. This is where the SDP comes into it as well. So, should we be building more houses in rural areas because a company is very productive and if that company is going to increase the people who work for them? It all links together, anyway, which is the whole purpose of these partnerships.

Diolch, Bryan. Jake, coming to you, obviously, you're slightly newer to this, as the mid Wales growth deal in itself is the youngest out of them, and your tenure as leader of Powys is relatively new, so how have you perceived things in terms of the impact of the growth deal since taking up the leadership?

The growth deal means different things to different people, doesn't it? For some, it will be just an opportunity for funding. For others, the work on skills development really is to the fore and very important. In some respects, it might, for others, just be a brand, that they see something is going on and it generates some marketing and some interest in the area, and it just gets people's attention to confirm that we're not just a sleepy backwater, that we're open for business, and they'll come and explore opportunities with us.

But, coming into this as I have now, I will admit that reading the targets around GVA, for instance, and the uplift that we anticipate there, I will honestly say that that looks like a stretch. We would need to see a compounded annual growth rate of somewhere between 6 per cent and 7 per cent to achieve those figures, and I think that is an ask, given where we're at at the moment. But I think it's important to set ourselves stretch targets. That's a thing we used to have in local government, and you may not get there. So, you've got your target and you've got your stretch, you're always pursuing that, and I think that shows some ambition here, which describes the nature of the partnership we have. We just need to keep a sense of realism about that, and I think probably, across governments, we are realistic about that, but let's not lose sight of the ambition that we need to keep front and centre of this project.

Okay, thank you. Just a more broad question for, I would say, Jake and Bryan here. Obviously, there's only so much you, within the growth deal, can control. A lot of economic levers are outside of your control, and the economic confidence is outside of your control. You can offer so much, but wider economic confidence obviously lies in Cardiff Bay and in Westminster. Are you finding that there's more discussion, or it's harder, or business confidence in looking to invest, looking to come to an area, is different now or where you wouldn't expect it to be? Would you say that, actually, you're doing the best that you can in a more difficult national context, and international context, in fact, and so you're content with what you're doing, but there are things outside of your control that make things slightly more difficult? 

If I can just start with that, obviously, financially, it's very difficult, isn't it, wherever you are, internationally, nationally, regionally and within areas. We're seeing huge flexes in terms of trade, and the impacts on the farming sector are very clear. Uncertainties within the farming sector are very clear at the moment, and it's a sector that feels itself under siege, and, of course, it's a sector that underpins the economy here in the mid Wales region. But I do think—. You say: am I content with what we have? I think that we could always have more support and freedom, I think, from the Government here in Wales, and consistency of approach. Bryan and I are absolutely adamant that there are some real opportunities here in mid Wales to have something that is distinctly different from anywhere else in Wales. We are the middle bit, we are this green lung, this green resource, and there are real opportunities there that build on the strengths that we have. And actually, we have a very strong partnership and personal relationship that is forming here, and we think that this is the right vehicle in which to express that, but I think we can do more individually. So, one of the things that I'll be looking to do in my tenure over the next two years, if it lasts that long, will be to set out a very clear vision for Powys that we are open for business, and I know Bryan has the same view. And actually, by just saying those things and portraying that confidence and using the LDP that is in gestation now with us to describe that, obviously aligned with 'Future Wales', is really important to us because it really puts a note on the door to the outside world, to our partners, to everyone else, to the private sector, that we are open for business; we are a place for you to come, live, work and play. So, I think we can do more in that. You asked whether we're doing enough; I think we can do more and I will be doing more.

Lovely. Thank you, Jake.

Yes, what happens in, say, America, does have a knock-on effect, when it comes to tariffs—beef imports, that had a knock-on effect on the price of beef on the hook straight away. Grid capacity—that's another issue. James and Jake and myself—. We are sort of stuck between north Wales and south Wales, where there's huge investment in the grid, and nothing in between. The public perception then is we're going to flood mid Wales with pylons, but for that economic growth you need energy as well. But from the perspective of the UK and Welsh Governments, possibly, Sam, we need some direction and guidance with regards to hydrogen, green hydrogen production, because I think we're wealthy when it comes to natural resources, but we need a clear vision from Welsh Government, more than UK Government, really, where we're going on hydrogen, because to me, that is the future, more so than anaerobic digestion plants, for example. And again, when it comes to agricultural implements, they are sort of shying off hydrogen at the moment; they're going towards more methane-powered tractors, for example. But if we can have that direction from Welsh Government I think that will sort out a lot of our problems, to tell the truth.

Lovely. Diolch yn fawr, Chair.

Hannah.

Thanks, Chair. In terms of governance and accountability now, if I may, obviously, people in this room will be familiar, broadly—some more than others—with what the growth deals are and what they're about. But, to a general member of the public, they probably wouldn't have much of an idea about what the growth deal does and what it could mean for them, so I just wondered what you do to engage with residents around the growth deal, and what are the lines of accountability and communication if it comes to any questions or concerns with regards to it. I'm just going to pick on somebody first; I'll go for Bryan.

Yes. Thank you very much for the question. We've got a newsletter that goes out quite often—I think it's monthly, Carwyn—and at any public events we do make quite a lot of publicity about the growth deal as well, anyway. Engagement, obviously, with the sponsors is important, but they've got a role as well to engage with the public, especially when it comes to private investment as well, just to get that message out. I think CAT, as Jake mentioned earlier, they've been doing a lot of public engagement already. Again, once you see these projects coming through, you will have more public engagement as well. I think officers are stretched when it comes to resources and time, so, unfortunately—. If we had more revenue, we could engage more, possibly. But, yes, when we see these projects coming through, especially with the Elan valley, where that had quite a lot of publicity—. It was nice to see Dame Nia Griffith there opening the next stages of that as well. Again, there's a role with UK and Welsh Goverments in publicity.

Thanks. I don't know, Jake, Carwyn, if you've got anything to add.

Not really. We've really ramped up the comms, because we've had things to stand in front of, as spades go in the ground and we start to do it, and I think that will broadly develop understanding. I alluded to brand management around this, didn't I, earlier, around developing that brand and using it to promote opportunities where we can, whether that's the two of us handshaking in front of various activities—. Of course, we're up for doing that, and we want to indicate that, across mid Wales, there are opportunities. So, I think it is that ongoing development. Now we've got something to showcase, it will really accelerate, and I think the public understanding of it will be clearer. I think there has been a little confusion, but it has got much higher transparency here than, say, for instance, the CJC, which you might want to come across in a moment.

You did segue quite nicely into my next question there, Jake. In your written evidence, you do say that there are currently no plans, as you say, to lift and shift the growth deal into the CJC, as it's, in your words, not deemed to be a beneficial step for the region. I wondered if you could expand on the thoughts behind that.

Yes. Just to say, I had a really interesting discussion with your previous witness, Mary Ann, last week, and we have very different views about the role and purpose of CJCs and how they can shape opportunities. For some, it's a fantastic vehicle to do that, and they've demonstrated how they've got strength across the 10 partners also there in putting their activities via the CJC. For us, we have a CJC effectively with two principal parties, Bryan and myself, and our two authorities. The national park in Bannau Brycheniniog is a constituent in that as well, but it's two principal authorities. We think we can deliver more swiftly, with greater agility and less cost, by operating in a voluntary way, which we do with great success over things like education, as I say, and with this. For us, it's less relevant than to others. We can see how it has a purpose elsewhere, but we don't think one size should fit all, and we welcome the opportunity to continue our relationship broadly outside of the CJC.

Okay. Bryan.

Yes. Being a small partnership does have its challenges, but it does have its pluses as well. I've come across Jake a few times and we work well together, same as I did with James as well, and that goes for the officers as well. That engagement between officers and elected members is so important, and I think possibly that works better with a small partnership.

Just to give you a little practical example: the SDP, strategic development plan, it's one of those things where we're committed to producing a replacement local development plan; we have a 'drop dead' date. We did ask to have the 'drop dead' date lifted so that Bryan and I could carry on work with our planning teams on an SDP without focus on anything else. We were told, unfortunately, that we had to continue with both. We didn't think that was very sensible, and I maintain that view, but we are where we are. But an SDP—. Let's say we know that the broad costs of that are around £6 million. We would have to share that cost between our two authorities, largely; the park has no money to speak of. So, that would be a shared cost for ourselves. You split that £6 million and resource to produce it across 10 local authorities in the Cardiff region, and you have a whole quantum of difference in that. So, you know, what works for one doesn't work for others. On an ongoing basis, if we have support and collaboration of the Welsh Government, we will find effective solutions to the issues that we share together across the region.

Again, coming back to staff, with regard to the chief exec and 151 officers, essentially, they're working for free, really. If you were a bigger partnership, you could invest in creating those senior roles as well anyway. We're so thankful to our staff, I must say.

And just for clarification, does the mid Wales CJC have any oversight in the work with the growth deal?

Yes, they get reports. They're reported across to the CJC, yes, they are.

Yes, especially when it comes to the economy as well.

Great. The final question from me, Chair, is: are you confident there is not a risk of duplication of work or roles with it?

No, I'm very confident. Again, we are reliant on our staff, and it's just smarter working as well. Definitely, there'll be no duplication. That's something that, as leaders, we will be pressing the point on anyway.

Thank you, Hannah. We had some questions on business support we'd like to ask, but sadly the clock has beaten us. Are you happy, gentlemen, to take those as written questions that we'll put in a letter to you, so that we can get your insight on business support and the view that you need to present to the committee, please?

Yes, happy, Chair.

Indeed.

Thank you very much. Thank you, gentlemen, for your evidence this morning. A transcript will be sent to you of today's evidence session. Please liaise with the clerking team if you're unhappy with any parts of that transcript. Otherwise, it'll be entered into the record as the official record of the meeting. Once again, many thanks for your written and verbal evidence to support this inquiry that we're undertaking. Thank you very much.

Diolch yn fawr.

Thank you, Chair.

I invite members to take note of the papers before them. I think it's called papers to note, isn't it? I should get the right title on it. 

Noted.

Noted. No questions or observations. No.

Can I have a motion to move into private session, please? We'll move into private session, then. Thank you.