Cynulliad Cenedlaethol Cymru

Good morning, everyone, and welcome to our second session of inquiry into the city and growth deals across Wales. Before I go into the main point of business today, which is inviting the Swansea bay city deal to give us evidence on their progress so far, I'll just call for apologies to the meeting, which I believe we have from Hannah Blythyn and Luke Fletcher. I don't believe we have substitutes. Do I have any declarations of interest? The meeting is bilingual, and if people need the translation services, they are provided in this room on the headphones that are provided, and there is a translation service available, should the guests choose to speak in Welsh as well then. All proceedings are broadcast to the big wide world who have taken an avid interest in our proceedings here in the Senedd. Our viewer will be content, I'm sure, with watching the proceedings today, because both of our sets of witnesses are on remote calls into the committee.

Councillor Stewart, thank you very much, and your colleagues, for coming before us and presenting us with written evidence before today's evidence session. I'd ask you formally to introduce yourself and the positions that you occupy for the record, and then we'll go into questions. The session will last about an hour and a half, concluding at 11 o'clock. I'll ask members of the committee at this end in Cardiff to address their questions specifically to colleagues back in Swansea, so that we don't end up having confusion, and that way, then, hopefully, we'll have a seamless question-and-answer session for the public to view and the record to show. So, Councillor Stewart, could I ask you, first, to introduce yourself and the position you hold, and then invite your colleagues please?

Many thanks, Chair. Councillor Rob Stewart, leader of Swansea Council, but I'm also the chair of the Swansea bay city region joint committee.

Jonathan Burnes, I'm the portfolio director for the Swansea bay city deal.

And Craig Griffiths, managing officer for the south-west Wales corporate joint committee.

Thank you all very much. It was 2023 that the city deal was last before this committee and, obviously, presented evidence on progress to date. The city deal in Swansea and west Wales came into being in 2017. Councillor Stewart, could you and your colleagues inform the committee what progress has been made on the city deal since your last appearance before it, back in November 2023, please?

Yes, certainly, Chair, happy to do that, and, again, grateful to have the opportunity today to update the committee on where we are. So, when we came in September 2023, we had three projects completed to the value of about £113 million. As of the end of 2024-25, we've got six projects completed to the value of £210 million. Nineteen projects are in delivery, with an investment value of £761 million, against 17 projects previously advised, with a value of £415 million. Fourteen projects are currently in pre delivery, with a total investment of £403 million, against the 15 previously in pre delivery, with a total value of £711 million. So, significant progress in terms of moving them from the feasibility stage into the pre-delivery stage, and then into the delivery and completion stages.

So, again, as you'll be aware, Chair, we've committed all of our capital, and I know the committee will already know this, but perhaps for people who are watching our session following the capital region's session, our city deal is very different from the growth deal in the capital region. Given that we agreed our city deal with a different UK Government, there were very different terms and conditions applied to it, in that we had to define all of our programmes and projects upfront, which we did, and therefore we've committed all of our resources into those nine transformational programmes and 36 projects. So, we're well on our way to delivering. I'm looking forward, in the next week or so, to be opening 71/72 Kingsway, which is a city deal project in the city centre, creating around 600 jobs.

In terms of jobs so far, while we're on that topic, 896 jobs have been created, and that is against 542 when we last came to see you. In terms of private sector investment, we recorded around £30 million-worth of private sector investment when we last came to see you, and that's up to £133 million now. So, again, good progress being made on that.

We've also had a number of audit reviews and gateway reviews, and all of those have come back positively. In terms of our recent internal audit review, that came back with a substantial green rating for the deal, and all of the five recommendations that that made have been completed. Again, in terms of Audit Wales's assurance and risk assessment, that was undertaken in the period of May 2024, and, again, that found good arrangements in place for the city deal.

I mentioned looking forward, in Swansea, to opening 71/72 Kingsway. We've already, as you know, opened the Swansea Arena, and that has welcomed over 750,000 visitors since its opening, and is contributing well to the local economy and is ahead of its business plan. Pembrokeshire dock infrastructure, which includes a supersize slipway with work-boat pontoons and extensive layout and lay-down space, and renovation of the Sunderland hangar annexes into offices and workspaces, are all completed. In March 2025, the University of Wales Trinity Saint David officially opened their innovation matrix over in SA1 in Swansea, and again, that is a cutting-edge facility around 2,200 sq m in the SA1 waterfront. In Carmarthenshire, Pentre Awel zone 1 is officially now named as the Canolfan and is due to open in the summer of this year, and again, I visited that with fellow leaders in the region recently to see the work that's been done down there, and it's looking absolutely fantastic. The Bay Technology Centre is over 80 per cent occupied now, with several leads progressing as of June 2025.

So, again, good progress being made across the piece, and just totalling that up, we've delivered nearly 80,000 sq m of complete floor space across our projects; 46 tenant companies are in situ with terms agreed; 35,000 additional skills have been created; and 119 courses and frameworks delivered through our skills and talent programme; 230 full-time apprenticeship opportunities have been created or progressed; and 1,078 homes as power stations homes have been delivered, which have leveraged £83.5 million of investment in addition to another £17 million-worth of public and private sector investments. So, that means that we've had over 300 construction contracts awarded, worth over £300 million, including 250 of those contracts going to Wales-based companies. And finally, we've also relaunched the updated Swansea bay city deal website.

So, there's quite a lot to, I guess, digest there. I'm more than happy to say more on those or come back on further points if Members have questions. But if I could, Chair, just ask my colleagues if there's anything else they want to draw your attention to.

Just one thing from me, Chair. So, even though they're our jobs created, they're direct jobs of construction and the operation. We know that there are more jobs created, but until we do the evaluations on the buildings—. We're talking about 12 to 24 months after the buildings are complete and occupied, we will then perform those evaluations. So, we know that the wider supply chain and stuff around the infrastructure will have higher job numbers than we're reporting currently. 

Okay, thank you for that comprehensive briefing on the progress since the last appearance before the committee. Could I just clarify something? You made the point that there's a distinction between the agreement that you have for your city deal and the one the capital region has, and obviously the capital region has moved forward with projects that weren't originally in their bid. Have you found that problematic for you, not having that flexibility, and has it stalled any projects or caused issues over the financing of projects because you haven't had that flexibility? 

I think it's a double-edged sword in that respect. I've got the benefit of being here back in 2015 when we started the journey to negotiate with both Governments. Obviously, at the time, we were negotiating with Theresa May and Philip Hammond; they chose a different approach to city deals to that that had been chosen by David Cameron and George Osborne. So, they forced us, effectively, to define our strategy, our projects, upfront, and I think that did mean that we did a lot more thinking upfront than perhaps other city deals had done. And I think there was evidence at the time that city deals were being awarded money and then taking quite a significant amount of time to decide how they would invest, how they would take that investment forward. So, in that respect, it was probably a good thing that it forced us to crystallise what we felt were the most important interventions for our region as part of the city deal investment.

I guess, as you alluded to, Chair, that has over time then created some challenges because, of course, nobody in 2017 when this was signed knew a pandemic was coming; nobody foresaw a war in Ukraine; and nobody foresaw the sort of cost-of-living impacts and changes that we've seen in terms of inflation in the economy. So, those are things, I guess, that have affected not just city deal projects, but all projects across Government and the private sector. So, I guess one of our challenges has been that we’ve deployed all of our capital into those programmes and projects, because we believe those are the best interventions we can make, but, of course, we’re therefore having to continually make sure that we deal with the cost pressures that come through inflation. And both Governments have been very clear that they’re not reopening city deals, that we have to be innovative in how we attract additional funding, or align additional funding, to do that. So, we don’t have the benefit of a growth fund like the capital region has, where it can invest or decide to deploy in different ways into things that it feels are important at this time. So, it’s a double-edged sword—some benefits, some challenges.

But, on balance, would you say that the Theresa May and Philip Hammond method of setting up your city deal, and asking you to focus specifically on the projects, so that they are clearly defined and, obviously, road mapped to delivery, is a better and more sustainable model than maybe the original concept under which city deals were set up under George Osborne and David Cameron?

No, not entirely. As I said, I think there are benefits to both. I do like the fact that we were able to be really clear, in the early days, about what we were going to try and deliver and intervene, and why that intervention was appropriate. But, speaking with a personal view, as chair of the Swansea bay city deal, I would have liked—and I know we wanted at the time—that flexibility that growth deals have to decide later on how best to deploy some of that capital. So, maybe if we’d have been given the option of defining some of it upfront, and then keeping some of it as a growth fund, that might have been the best of both worlds. 

Okay, thank you. And my final point—you give an extensive list of projects that are progressing and generating jobs in your specific areas. Are there any concerns over projects that were highlighted for delivery, but are flashing either amber or red, either through cost pressures, or, obviously, other obstacles that were unforeseen at the time, that are posing potential delivery issues on those projects?

Yes, there are clearly some cost challenges, and we’ve highlighted that in the written response we’ve given you. But, again, I think, there’s a multi-tiered approach to this at the project level. Project managers are working to value-engineer the projects. Obviously, we’ve got the programme management office that also are looking over the whole programme to ensure that any changes that are made do not affect the deliverables and the outcomes. Because that’s the key thing here, that we may choose to amend the project, or do it slightly differently, but those outcomes, in terms of jobs created, in terms of the impact it has on the economy, still need to be maintained. And, again, you’ll have noted in there that the gross value added outcome, even though that’s a very blunt measure, and not one that we now use, has increased significantly over its original estimate, up to about £2.34 billion from £1.8 billion. So, again, we are continuing to make sure that we hold to the aims that the city deal originally signed up to, so that we do deliver those jobs that we want for the economy of south-west Wales.

Thank you, Councillor Stewart. Jenny. 

Thank you. I want to explore the impact of the city deal. So, the UK Government published an industrial strategy on Monday, highlighting eight areas of priority that they want to see developed. So, focusing on Wales, I note that Swansea University was designated as the lead for the doctoral research centre for semiconductors. What, if anything, does that have to do with the work that you’ve been doing?

Yes. So, look, obviously, Swansea University are one of the partners in the city deal. They helped author and create the projects that are in the city deal. Our digital innovation strand, which is a golden thread that runs through the city deal, obviously will take account of the industrial strategies of both the Welsh and the UK Government, and more recent announcements, as you say, which are really welcome, for Swansea University.

So, we see nothing in the new UK Government strategy to give us concern, nor in the previous Welsh Government strategies for economy. We think, at the time, that there was a lot of thinking, and I guess this is one of the benefits that did happen at the time, that we took a lot of time with our university partners, with our industry partners, to make sure that what we were proposing as a city deal would last the term of the 15 years, so it would be forward thinking in terms of the challenges and the opportunities we thought were going to come from the new economy that we were aiming to create. Part of that is obviously the digital economy, and of course Swansea University is a leader in semiconductors, as is south-west Wales and south-east Wales. So, we believe that there's no issue there, but I know that Jonathan wants to add to that.

Yes, if I could. Myself and the officer who leads on the regional learning skills partnership were part of a working group with Swansea University to establish that bid last year, so it was great to see that announcement earlier this week. We'll continue to work with them and support them, but for us we are looking at growing sectors, and this is one of the growing sectors, not just for our region but for Wales, so we will help support that. There could be opportunities around skills and talent to help pump prime some of those pilots—curriculum development et cetera—but a lot of it as well is around the collaboration. Even though you picked that one example, there are many other examples that we have within the region that already exist—things like biophilic living. There's stuff around the BioHUB, and stuff around Innovate UK with one of their catapults down in Pembroke around floating offshore wind. So, a lot of what we do for the city deal and the wider regional economic growth is keyed into all of those types of projects. For example, I would sit on advisory boards or be part of the bidding process to help support those with the teams around the region. Another example was recently we had a place-based impact accelerator account on net zero. That had to be led by a local authority, which was Neath Port Talbot in our region. So, there are probably lots of examples, which all link in with city deal, that are probably worth highlighting.

Okay. Just sticking with semiconductors for a moment, obviously the manufacturing base is all clustered around Newport. I just wondered whether you had any ambition to have any manufacturing in the Swansea bay area as well, or whether you're content being the research lead.

Look, we'll never say 'no' to jobs, but I think it's picking the things that are most important to you and, as you say, the research, development and innovation part of that sector is where we believe we are leaders. We collaborate with the Cardiff capital region. I meet with the chair of the capital region quite regularly. And again, it's important that we have that consistent, collaborative approach across south Wales in terms of what we do, and making sure that we place our energies where we are best suited.

Okay. Some 900 jobs have been created to date, against an overall target of 9,700. Could you just tell us—you're now in your ninth year—how you think you're going to reach that target and how you can assure us of the sustainability of these 900 existing jobs that have been created?

Obviously, in terms of all projects, you have to go through the approvals process. I'm on record a number of times at this committee and others saying how difficult some of those approvals were in the early days with both Governments. Given that we're talking about £241 million-worth of Government money, the amount of assurance and hoops that all the city deals have had to jump through has been probably disproportionate. It took a long time, despite us doing a lot of upfront work, to get to the point where moneys were starting to be released into projects, and of course once those projects had the secured funding you then get into the part where you're actually starting to deliver those, to build the facilities and create the jobs in terms of construction, and then to create the longer term jobs within the project. So, it's a bit of a j-curve in that respect. You start to see an acceleration of the jobs created, and you've seen that over the last year. We fully expect that further jobs will be created on an increasingly regular scale, so that the jobs growth will create over the remaining term of the city deal, will achieve, the 9,000 jobs and, hopefully, exceed that total. But, as Jonathan said, those are just the direct jobs. There is also the work that's going on to identify what we believe are the secondary jobs and the consequential jobs of the investment in the city deal, and again we expect that to be a multiple of the sort of numbers that we're talking about today.

In terms of sustainability, well, that, we would hope—. The work that's been put in to make sure that the jobs and the sectors that we believe our city deal should intervene in—. Because, again, the city deal is there to make sure that we diversify our economy, that we try to invest in smart manufacturing and energy and in other things that we believe that this region can excel at, and, if we get that right, then those jobs should be sustainable for the long term. There is no evidence to suggest otherwise. I guess, though, that we won't be immune to economic downturns or economic impacts that are created anywhere else in the UK or in the world. So, it remains a challenge in this region, as it does in all, but we believe that what we are creating and what we are delivering are sustainable, long-term, well-paid jobs for our region. 

Okay. So, how many of these—

Jenny, could I just invite Hefin to put a supplementary in, please?

Yes.

Perhaps I should have come in with this a little bit earlier, but, when Jenny was talking about specific projects, I just wanted to quickly ask you about the Global Centre of Rail Excellence. I know that the city region had the establishment of a long-range wide-area network gateway there. Has there been any other work with the Global Centre of Rail Excellence as part of the deal? Thanks, Jenny, for letting me come in on that.

So, I'm not aware of a direct link with the deal, because obviously that element of investment in the region is not part of the city deal. And you'll be aware, outside of the city deal, because again it's good to have the corporate knowledge on this one, we were advised at the time not to include transport as part of our city deal submission. So, we were going to make, at the time, as you know, a direct appeal to UK Government for electrification of the lines to Swansea and the creation of the Swansea bay metro. We've since worked on the Swansea bay metro with Transport for Wales, and we've reignited discussions with the UK Government around the potential electrification of the main line to Swansea—

But GCRE is a separate project that needs support, and I was just wondering if there was any thought in the future of supporting that project as an innovation project. 

Well, we will not have any spare funding to directly support it financially, but of course what we will do strategically through the work of the CJC, which will have a broader economic reach, is to bring in all of the elements in terms of strategic transport et cetera. So, that will be done primarily through the CJC, not through the city deal.

Okay. Thanks for that.

You were about to tell us about the discussions you were having on trying to get electrification of the line to Swansea back on track. Those are discussions with the UK Government, presumably.

Yes. Look, we, as you would expect us to, have lobbied UK Government for this to be reinstated as a priority. We've always felt it unfair that electrification goes to Cardiff and then we're back to diesel trains running to Swansea and the west. We hope that, in time, we will get the necessary funding from UK and Welsh Government to see that electrification take place, and obviously we've been working with Transport for Wales, who have done an incredible amount of work with us to work up the elements of the Swansea bay metro—so, the station designs, et cetera, that will need to be delivered. We're very blessed in our region in terms of not needing lots and lots of new track—the track already exists—but we do need the creation of the new stations. But, again, these are not elements within the city deal, but they are ones that we pick up as part of the CJC, so obviously that broader economic and transport—

Okay. They're an important part of the landscape. Okay. Can I just go back to the smart manufacturing? How many of these 900 jobs are in smart manufacturing?

Do you want to pick that one up, Jon?

Yes. So, the smart manufacturing—. The advanced manufacturing production facility and the stuff down in Pembroke Dock marine—the advanced manufacturing production facility isn't built yet. So, in terms of directly attributable jobs in smart manufacturing, very few.

Okay.

So, the predominant focus as to where those jobs are created are around construction and around the operation of the buildings, which are nearing or at full occupancy. What we are yet to determine are things like SWITCH, which is all about the decarbonisation of steel in Harbourside in Port Talbot and the advanced manufacturing production facility and the training centre. Those will be starting this financial year, and they will have, probably, about a two-year lead-time to get them built and then into operation. So, to answer your specific question, once those are on line, that's when the jobs will be created around the wider smart manufacturing. 

Okay. So, in the next three years, you're hoping that that's going to—

It's still within the period of the city deal, up to 2033, but it's some of the later-delivered infrastructure. 

Okay, so—[Interruption.] Go ahead. Sorry, I didn't mean to—.

I was going to say that Pembroke Dock marine is another important point, because a lot of what they've done there for the infrastructure, which Councillor Stewart just highlighted earlier, will enable and bring companies into the port down in Milford Haven and Pembroke Dock, and that will create advanced manufacturing opportunities as well.

Okay. So, the emphasis in this industrial strategy was put on these free ports as well as these deals. So, how do you think the impact of the city deal so far is going to enable you to ensure that people are paying sufficient attention to expanding those important developments?

The good thing about the city deal is that all the right collaborators are working well together. The two projects I just highlighted—supporting innovation and low-carbon growth—and Pembroke Dock marine were part of that Celtic Freeport bid. They were a catalyst, if you like, to help support that. So, we were already on the right trajectory to help support the Celtic Freeport. Now, what we need to do is—. Obviously, the Celtic Freeport is much broader—more land available, more opportunities for businesses—so we need to make sure that those two things dovetail and that the partners are at the table from both the city deal and the Celtic Freeport, having those conversations.

Okay, because some of the concerns that I'm getting from the trade unions is that these free ports will just become warehousing operations for bringing in goods from other countries. So, how are you going to ensure that that is transformed into sustainable, long-term good jobs in your area?

Again, I think that's one that we're discussing at the corporate joint committee level, because, again, the free ports are not part of the city deal. So, if you like, in terms of the economic approach in the region, you have the corporate joint committee, which takes care of, or oversees, all of the economic aspects, and you then have the city deal, which is an element, the Celtic Freeport is an element, and then, obviously, the stuff that the CJC do in terms of transport, strategic planning et cetera. So, we are having those conversations. Our hope would be, again, as the Celtic Freeport proposals progress, that we see not just elements taking place in Neath Port Talbot and Pembrokeshire, but that we get that connectivity across the region and we get benefits all across the region, including in Swansea and in Carmarthenshire, so that we have and we feel the full effects of the free ports.

I know that there are a number of voices out there who are opposed to free ports and who do have genuine concerns that they will suck investment into those areas, as you've outlined, and to the detriment of the surrounding areas. That's exactly the approach that we're trying to avoid in our region by working collaboratively across the four authorities.

I think a colleague of mine will come back to all that later in the conversation.

Thank you. Sam.

Thank you very much, Chair. Good morning, panel. I'm just looking to ask a few questions around the regional spread of the impact. In terms of the achievements to date, how spread out across the four local authority areas are they, and are there certain areas that have sucked in a little bit more investment due to population density or any other specific reasons—specific skill sets within the workforce or any specific reasons?

No, I think—. Look, there's a good spread across the region. As I outlined in the introductory comments, you've seen significant delivery in Swansea, in Carmarthenshire, in Neath Port Talbot and in Pembrokeshire. And then there are cross-cutting projects, which are ones taken forward by all four local authorities—like homes as power stations, like digital—where everybody is seeing an aspect of development of those projects in their local authority. So, to my mind, yes, you will have seen some projects deliver earlier than others, as you would with a significant project and programme mix of 36 projects, nine programmes. So, yes, you'll have seen a couple deliver earlier than others, but that is the nature of delivery, isn't it—we do them in sequence and some in parallel, and, to my mind, as chair of the region, we've seen really good delivery across all four local authorities.

Okay. Just coming back on the nine programmes that you mentioned there—the headline programmes—how have they benefited the whole city region deal?

So, if you think of it like a pyramid, you've got the nine programmes at the top, of which the 36 projects sit underneath, and they allow you then to deliver into smart manufacturing, into skills and talent, into economy and infrastructure, into energy. So, they allow you to make sure you've got a suite of projects that are connected in a coherent way and deliver aspects of what you need to deliver at that programme level. So, again, on the projects, that's why the programme office have done a really good job in making sure that we continue to map the delivery of the projects to make sure that the programmes themselves then deliver and that the deal then delivers what it agreed to deliver in terms of jobs, in terms of economic impact and in terms of the benefit to the four local authorities. Jon, do you want to say a bit more about that, perhaps?

Yes, and I'll pick on Councillor Stewart's area. If we take Swansea city centre as an example, with having office accommodation, innovation space, the arena, it's a catalyst, it's a magnet for many other developments. It gives people confidence that we can invest and do things, not just for businesses, but for the residents of Swansea as well. So, there's that element of a city-centre approach. But then if we take stuff around Pembroke Dock marine infrastructure, having a concrete slipway doesn't sound exciting, but, actually, what that does for the local economy and for job opportunities for the local people in an area of deprivation is really important. So, there are a number of things at play where they're not in isolation—these things working together. But if I flip over to Neath Port Talbot, because you said about the spread, there's an Innovate UK catapult now residing within one of the infrastructures—the bay technology centre. That catapult supports businesses for things like advanced manufacturing, for innovation. So, in terms of the spread, that is a regional impact. In fact, it could be a Welsh national impact, but, for Neath Port Talbot and for the south-west Wales region, it certainly is an impact there for us. So, we want to try and encourage as many of those opportunities, further developments around what we do. 

We've mentioned supply chains a couple of times. Those are one of the key things that we're looking at. Again, Councillor Stewart talked about homes as power stations. We do have a little bit of flexibility with some of the funds that we have within the city deal. So, we've got a supply chain fund, for example. That is looking at technology that goes into homes, decarbonised for added health benefits, reduced costs. We are trying to attract and grow companies within the region to grow and install and build those technologies. That's a £7 million fund. We've just put the first call out for expressions of interest, which we're going through and shortlisting now.

And then there's another example of a property development fund looking at new builds and refurbishments, again, within the Neath Port Talbot area. And, again, there's a £5 million fund there, which has flexibility for businesses to apply to that fund, and then refurbish and build new builds around manufacturing. But they will have spillover effects for students, for other businesses around supply chains of those as well. And every project element has a similar thing—it's not just about building a building or developing that coarse framework; it's the spillover effects of what that has.

And if I draw on one last example, our skills and talent programme, we have now over 20—I think it's 27—current pilot projects that have been awarded. They may start off small with up to 100, 200 people as part of that pilot, but what happens is that those pilots, if they're successful, start getting traction from other colleges, other schools, and then that spreads out. So, we're even, from our first one, Destination Renewables, which was in Pembrokeshire College, having colleges in England wanting to take that pilot forward and actually embed that in the curriculum. So, again, impact isn't just about the region and Wales; it can be further afield as well.

Okay. Thank you very much for that comprehensive response. On the projects that were—. Coming back to a previous answer given, Rob, to the Chair, around the differences between the Theresa May, Philip Hammond city deal that you negotiated, or were part of the negotiation of, would those projects have existed or been completed without the city region deal? Or what's the mechanism that's so attractive within a city region deal to help deliver these projects that were earmarked right at the beginning of the process?

Okay. I'll try and answer that in two ways; if I haven't answered your question, do come back to me. On that one, clearly, I think the UK Government at the time had signed a number of city deals and then they hadn't seen particularly a lot happen in those areas, and they wanted to see faster delivery. I think the response to that was the new incoming administration in the UK Government said, 'We want you to define more upfront so that you can hit the ground running.' I think that was the principle of what they were suggesting. What that did was for us to sit down, then, as four local authorities with our health board partners, with the universities and with the private sector and say, 'What is it in south-west Wales that would make the most impact? What is it that would really change our economy? Where do we need to intervene? Where do we need to innovate? And where can we be excellent over and above any other region of the UK?' So, that was the sort of challenge that we were taking on board.

I think that was really useful in terms of making sure all the partners did that hard thinking, but, I guess, as I said in my response to the Chair, the downside of that is you do that thinking and then the world changes around you and you get hit by things that nobody expected, à la COVID, et cetera. So, what we've tried to do is to make sure that we continually test that the projects are the right ones. Where we felt that they weren't the right projects, we've reformed them or we've refocused them, and we have done that a couple of times during the life of the deal. We're eight years through at the moment, and we've got about seven years to run on the deal, so we're just over the halfway stage, and we will continue to place that critical eye over the projects. But we still believe, even with the publication of the new strategies, with the changes in administration both in London and in Cardiff, that the deal and the interventions that we seek to make are still the right ones and the best ones for our region.

What we're trying to ensure on top of that is, of course, now we've got the CJC structure in place, now we've secured the Celtic Freeport, now we've got the opportunity to potentially deliver the south Wales metro and all the other transport initiatives that we've talked about, that we bring all of those together in a sensible way to give the most and greatest economic impact we can to our region.

Okay. Thank you. That's quite comprehensive. I appreciate that. One final point, on dealing with the closure and job losses at Tata with the blast furnaces, how has the city deal reacted to that?

So, again, we've been supportive to both Neath Port Talbot, to Tata Steel and to the boards that were set up, obviously, to manage that. As Jonathan referenced earlier, we were already delivering the smart manufacturing interventions, we've got the South Wales Industrial Transition from Carbon Hub—SWITCH—project, and the skills and talent project. So, those interventions were ones that were equally helpful, given the impacts of the decisions on Tata Steel. The other projects that we are delivering, obviously, will create, hopefully, opportunities for people to move across, if they do lose their employment with Tata Steel, into other industries, help them to retrain, and, again, we're linked into the programmes that have been set up to help with that. Again, whilst the city deal doesn't provide all of the answers, it is an integral part of assisting, and, again, what we were seeking to do anyway with the city deal should, hopefully, be beneficial to meeting some of those impacts created by the decisions on Tata Steel.

Obviously, outside of that, the Celtic Freeport will really help, again, in terms of addressing some of the impacts of Tata Steel. It's good to see the investment, obviously, going in in terms of Port Talbot port recently, and, again, the opportunities that we have within that region with the award of the licences for floating offshore wind and the potential benefits that will come to Port Talbot there. So, again, in that broader economic strategy, I think there's a lot that we can do to help, but the city deal is playing its part in doing that as well. I know that colleagues want to say a little bit more about that.

Just one thing from me is that Neath Port Talbot Council have a local economic action plan, and, in there, they talk about things like how public sector intervention is critical around land acquisition, around development premises for infrastructure, skills development and research and development. I think the bread and butter of what that plan does in conjunction with not just the city deal, but the other local authorities, the universities, the health boards and the private sector—everybody working together on those—can help support, because it's not just about the Tata Steel employees; it's about the supply chains and the businesses associated with it as well. So, I think having that joined-up approach and that plan in place can help support that, but public sector intervention is needed, both from the city deal perspective and beyond that as well. Neath Port Talbot Council was successful in getting some of the Tata Steel transition board funding through that process. I think it was around about £20 million that they successfully secured to help support that kind of transition, which will benefit the city deal aspect as well.

Right. Okay. I think I've got some clarity on that. Thank you, Chair.

Thank you. Hefin.

Can I move on to risk, please, and for you to explain to us what you mean by a red issue and what that classification means in practice?

Jon will probably say more than I do, but essentially, a red issue is a critical problem that threatens portfolio success, timeline, budget or scope and requires executive action for resolution. So, it’s a serious risk and I’m sure that Members are familiar with risk ratings, but essentially, a red risk is one that we have to address, and it takes us, generally, outside of the tolerance of a project by more than 10 per cent. Again, I referenced in my introduction some of the challenges that are facing all major projects at the current time, which is the tail end of the inflationary issues that we've seen. So, whilst we have a static city deal with a static amount of money in it from Governments, we are trying to manage those cost pressures. I don’t know whether Jon wants to say a little bit more from the project management perspective of it.

I think you've covered the definition. The distinction between the risk and the issue is that risk has a potential of happening, issue is it is happening and it needs a resolution or escalation in place. But I think because the portfolio is quite complex with so many different moving parts, a lot of the risks and issues kind of straddle both definitions. We had feedback from audit a good few years ago now that we needed to rank—red, amber, green—issues as well as risks, because they straddle both the risk—potential—and issue—currently happening—definition. So, we've got that all documented and we have a risk strategy and an issue management plan.

But we do a lot of stuff. When issues and risks come through, we do have a fairly robust change management process. So again, flexibility comes through that. If I wind the clock back four years ago, floating offshore wind was not part of the Pembroke Dock marine initial outline business case, it was around tidal, but then it became more prominent and we went through a change process to make sure that FLOW was part of the PDM solution. So, we do—

Let's have a look at some current issues—I'm just conscious of time, that's all. One is the construction industry and the impact of inflation and access to resources. How is that red issue being addressed and what are you doing to make sure that it doesn't become a cause of project failure?

As I said, in general terms, it's managed at several tiers, mainly at the project level. Where we may see cost pressures coming back through bidder contracts, we may see quotes coming back significantly outside of the allocated budget. Obviously, there is value engineering that takes place in terms of discussing with potential contractors how we can deliver at a lower cost, ensuring therefore, if we can't contain all of those costs then with the allocated budget, what else we can do. So, again, being innovative in terms of aligning funding that may also assist us in that delivery.

But one of the challenges, as I keep going back to, is that it is—as you would expect me to say, as chair—a slightly ridiculous position in that everybody knows that we have been through a period of extremely high inflation and that the sorts of prices we were paying five years ago are not the prices you can get today in the market, and yet we are still living within the budgets that we had five years ago. In that respect, I would have liked a bit more flexibility from both Governments in terms of acknowledging the inflationary pressures that we see, but I think the teams, both at the project management and the programme level, are doing an exceptional job in making sure that we mitigate those risks as best as possible so that we can continue to deliver. I don't know whether Jonathan wants to say anything more in terms of the actions taken.

There are three key mitigations that we're currently exploring and have done for several projects. One is identifying additional sources of funding, so that could be public, private, national government or local. The second one is around the design: can we shave any money off through the design brief? And then, the third one is often through negotiations with contractors, because as we enter in a tier 1 contract and then cascade that down to the supply chains around the tier 1 contractors, it puts pressure on everybody to try and deliver within the envelope of what sometimes was originally set. So there are lots of negotiations around contracts that take place. Those three things, unfortunately, do create some time delays and obviously budget constraints as well.

What was the original inflation figure over the 15 years that the bid was working to? Because inflation would have been there whatever, but accepting the point that with the Ukraine crisis and obviously COVID that's introduced a turbo onto it, what was the figure that the bid was working to over the period? 

I don't know, because I've never seen a document, but I would imagine it's 3 per cent, but you're well over double that in the last few years. The Building Cost Information Service, the construction industry forecast, said towards the end of the last financial year that by 2029 we're looking at building cost increases of an additional 17 per cent in the five years. 

You believe that 3 per cent was the original figure that was factored in. 

Chair, I wouldn't want to mislead the committee. My guess was it was around 3 per cent. I think that would have been a reasonable working assumption, but I'll need to go back and check that. I think the point is that £241 million was the amount that the city deal received from Government; it's a fixed amount. So, the point is inflation would have had to have been absorbed, some of it, as you quite rightly say, over the period, but I think, as you again quite rightly point out, it's been turbocharged in a way nobody expected. And that's the part I get a little bit more, I guess, frustrated with, which is that the reality is we've experienced very high inflation that nobody anticipated, and yet there is no acknowledgment of that in terms of any flexibility of the funding from central or Welsh Government.

I'm happy to move on for the sake of time now. 

Thank you, Hefin. Earlier, in the engagement we had with the earlier questions, you highlighted how additional moneys had been identified from the private sector. I think £83 million you've identified, certainly in the papers that you provided to the committee, but in your earlier remarks to me as well when we opened the meeting. Can you elaborate on that? Because obviously that's welcome investment. To see an increase in that level of investment is something that other city deals and growth deals haven't identified. So, could you explain how you've managed to do that, and what a difference that will make vis-à-vis the private-public partnership?

Jon, do you want to take the first bit of this one? 

The predominant part of that is through our digital infrastructure programme, so working with all the providers for fibre and various 5G networks. So, that's where a lot of that money comes from, and we're in the process. There's a six-year delivery programme for that. We're just over halfway through that delivery period. So, we would expect to see more private sector funding be leveraged within the region for that digital infrastructure. But we also have our Pembroke Dock marine project through the port authority. They put a lot of money upfront into the port infrastructure. But we do a lot of things with industry collaboration. There's another project called the Marine Energy and Engineering Centre of Excellence within PDM. They look at industry and university collaborations. It was partly funded by the Welsh European Funding Office, but also partly funded by the city deal, but that attracts and leverages private sector funding.

One of the things that is probably a bit of a surprise—. We always had a reasonably good target for skills and talent, but through the pilots that we're doing we're leveraging a lot more private sector funding through those. We've had quite a few million pounds through the skills and talent programme. But I would say all projects and programmes at varying levels are all attracting private sector funding, sometimes upfront, but often it's after the building has been built or through the process of the building being built into the operation—things like tenancy and things like that. We do report this on a quarterly basis to identify how much has been secured, where that money's coming from, and then report that through the governance committees. But broadly, what I've just provided you is where the majority of the money comes from.

Do you envisage being able to leverage more money in the remaining period of the city deal? Because obviously there's £83 million identified to date in specific projects around broadband and other connectivity issues, I think you've highlighted. Is there scope to push that number harder and get up to a higher figure? 

We're actually targeting to be higher. Rob, you might want to say the figure.

No, no. It's fine. Go on.  

So, yes, to answer your question. Our investment forecast for private sector investment is now up to £720 million. Our original portfolio target was £637 million. So, we are estimating around £83 million over the lifetime of the portfolio as an increase. Even though it is a double-edged sword with everything costing more, what we're also finding is that investment is going up for the city, both in the public and private sectors. So, in one respect it's a good thing; in another it's costing us more to build these things. We used to have this as a red risk, in terms of the private sector, but because of the amount of money that is starting to flow through and the plan that we have in place, with all the reporting in place, we've lowered that to amber, because we're more confident now, knowing where this money will come from and when it will come in, or when it’s forecasted. So, in summary, yes, we are confident that we will get this. It is difficult, but I think the public sector intervention is helping to support the confidence, if you like, of the private sector to invest.

Just for clarity, you said in the earlier evidence that, obviously, the public sector contribution is fixed, especially the UK Government and Welsh Government contributions. There's no danger that this additional money will dislodge any public sector money. This extra private sector money is uplifting the overall pot and the public sector won't look at it and think, ‘We can shave a bit off our contribution’.

No, absolutely not, I'll give you an assurance on that one. We'd be the first to shout if that were the case. I'm very grateful, actually, for the accelerated funding from the Governments for the city deal, because, again, there was a decision taken a few years ago to accelerate the funding, which has been really helpful. Certainly, from the public sector partners, there is that firm commitment to see through their commitments on these as well. So, no, I see no evidence that anybody's trying to reduce their amount going in; in fact, they'd probably end up putting a little bit more in, especially from a local partnership point of view.

To put a number against that, to date there's £17 million of extra, other public sector funding in addition to the city deal being put in as part of the investment. That is likely to grow, because there is a funding gap with some of the construction cost increases in future projects.

Just for clarity in my own mind, you've got £83 million extra from the private sector, and you've just introduced a £17 million figure there from the public sector. So, cumulatively, you're knocking on the door of £100 million of extra capital coming into the city deal. Have I understood that correctly?

Well, the total new figure would be £1.374 billion. So, yes, it is an increase of about close to, Jon, £100 million.

The difference between the two numbers of the private and public that we just referenced, which are correct, is that the private is forecast up to the end of the deal; the £17 million of the other public sector investment is to date.

So, the public might grow further—that's the point.

Thank you for that clarity—that's helpful. Hefin.

Can I just ask about public engagement? If you go into Gilfach Workmen’s Club, they aren't really talking about the Cardiff city deal—they’re more likely to be talking about Cardiff City Football Club. How are you ensuring that the residents get what you're doing, even if they aren't using the term, and understand what's happening in the area?

Well, obviously, it's a challenge for us, because Swansea are in a higher league than Cardiff—[Laughter.]

I'm a rugby fan, so it doesn't matter to me.

Same here. To be more serious, again, I think that you make a really good point, which is that, actually, people talk about the things that they can see that really matter to them. What we've seen in recent years is people seeing things like the arena being delivered, 71/72 Kingsway, Pentre Awel, the stuff at Pembrokeshire Dock marine and the houses being built in the authorities. Those are real things to people, so, inevitably, as much as we talk about smart manufacturing, energy, investment in skills and talent, all those things being hugely important, it's the stuff that people can touch, feel and see that is the stuff that really excites them and gets them interested—

Sorry, Councillor, but how do you understand the feeling? I imagine members in their wards will be feeding back to you, but across the region how do you gauge public appreciation and the public's understanding of where this investment is coming from, but also, most importantly, how do they influence it? 

We do a lot of public engagement, through a variety of media. You'll be on your social media interacting with people, there'll be the press releases, there'll be the local sessions with communities across the region and with businesses. There are a number of events, like careers events and conferences, where we can engage on different levels with different types of organisations or communities. I've always taken the approach that you can never do too much of that, and, again, as we would do as a local authority in terms of trying to get our messages out about the things that we're delivering and why those are important and what they mean to communities, that's exactly the approach we're taking at the regional level. I think the challenge is a little bit more difficult at regional level, especially, as I said, when you're talking about things like smart manufacturing. That might be not an obvious topic to engage with the public on. But, certainly, using the Swansea example, get great engagement on the arena, remind people it's a city deal project that was able to be made possible with the support of UK and Welsh Governments—people love it, and it's something they've taken to their hearts.

Okay. You mentioned the governance arrangements, and there's an ambivalence towards corporate joint committees in local government, I'm sure—some are happy with them, some aren't. What role does the south-west Wales CJC play in governance and oversight? 

So, we're in the process of looking at options as to whether the city deal would move fully within the governance of the CJC as part of the economy portfolio there. That, we think, is sensible. We know Cardiff capital region have already gone down that road. So, at the moment, city deal governance and corporate joint committee governance are separate, although there is, as I've said, a pretty good argument for them being combined and aligned. Just to reflect again in terms of the set-up within the south-west region, in the corporate joint committees, you have, basically, the same partners around the table, and same players around the table, as you would have in the city deal, apart from the national parks. So, again, it's the same people meeting in two separate meetings. We don't think that's sensible. We'd like to make that more efficient. But the governance in both the city deal and the CJC is very strong, and, again, speaking from a south-west perspective, yes, you're quite right to reflect that across Wales there was a varying degree of support for CJCs, but they are the Welsh Government's preferred regional model, and people are making them work and we want to make sure that we deliver as much as we can both out of the city deal and the CJC.

I stood down as a councillor in 2017, and, around that time, amongst backbench councillors, there was some concern about the ability to scrutinise what CJCs are doing, particularly in this case. How is scrutiny working across local authorities involved in the city deal, and is there an opportunity to scrutinise? When it does transfer to the CJC, will there be an opportunity to scrutinise that work?

I'll bring Craig in on the scrutiny arrangements in a second, but, just in terms of the city deal, we have a simple principle, which is you do scrutiny well and you do it once. Obviously, as the chair of the city deal, it's not for me to advise scrutiny what they should look at, but we'll turn up and obviously engage with scrutiny on whatever they seek to look at. But what we've decided to do is to say, 'Look, we have a regional scrutiny committee, they hold us to account, they will look at whatever aspects of the city deal they feel is important', but that won't be duplicated then by separate scrutiny of the same topic in the local authority. But they can choose. If, for instance, it's a city deal project that's entirely contained within Swansea, for instance, the Swansea scrutiny committee may look at that rather than the city region scrutiny committee, to save duplication. We've made that work. I think scrutiny has been really helpful and really important, and I think it's worked really well. We're now in the process of considering what we do in the CJC, and, I think, if I bring Craig in, he can talk about—

Just before you do, just to follow up on that, just to understand, for example, in your council, do any of your ward councillors in your group ever express any reservations about the way this is done, or are they very happy? 

No, again, we co-produce. It's up to scrutiny. We have different arrangements, I guess, in Swansea to most other authorities in that we don't have a set number of scrutiny committees. We have a programme committee that allows scrutiny to set up as many committees as they wish and to look at anything they wish to look at, so we don't constrain scrutiny in any way in terms of how it works. It might be slightly different in the other local authorities in the region, but the principle of saying, 'Look, if you want to look at homes as power stations, for instance, there's no point in looking at that four different times across the region in four different local authorities; that one is better done, potentially, at the regional scrutiny committee'—. But if you want to take something that purely sits, for instance, within Swansea or Carmarthenshire as a project—Pentre Awel, for instance—you could look at that in Carmarthenshire scrutiny, or you could look at it in the regional scrutiny. They can, if they wish, obviously, have combined scrutiny. That is something they can elect to do. So, again, it's not for me to fetter how they do it or what they do, but I think the principle was agreed early on: just do it once to do it well.

That's really helpful. I’ve often wondered about that since I left local government, how this was working. That’s a very helpful insight. But, Craig, you wanted to come in, did you?

Just as a follow-up more than anything. As Councillor Stewart just mentioned, we've invested a lot of time and energy into the scrutiny process to make sure that the backbench members obviously have an opportunity to be involved in the work programmes of this city deal and also now the corporate joint committee. So, we had a regional scrutiny committee that comprised three members from each of the respective parties for city deal. We've also adapted that model then into the actual CJC itself. But, as Councillor Stewart mentioned, we've recognised the importance of trying to see if we can look at a more holistic approach, ultimately, to scrutiny, given that they're going to be looking at issues that are very similar. One of the proposals we will be looking at, hopefully, over the next couple of weeks and months is to actually create one unified scrutiny committee that will have the responsibility of looking at all of those areas just to make sure that we've got a consistent approach to it and they can look at it from a much wider perspective.

Okay, thank you. 

Can I—? In practical terms it's important as well. So, for the Swansea bay city deal joint scrutiny committee, what we've introduced is periodically we get the projects to update—so, as Councillor Stewart said, both regional and location-based, so they have the opportunity to listen to those and test and challenge, et cetera, and scrutinise. But the thing that's worked really well recently is site visits. So, we've gone to the homes as power stations site in Sandfields. We've recently gone to the Pentre Awel site down in Llanelli. So, that is really good because it's not something that is on a PowerPoint slide or verbal; they can actually go and explore and talk to the partners involved in the delivery of these things as well. And the feedback we've had from that has been extremely positive, and Craig's team has been supporting those activities as well.

Okay. Sam.

Thank you very much, Chair. Moving on to business support, and ensuring that there's no duplication of business support, we've talked about the Celtic Freeport, the CJCs. We've talked about, obviously, the city deal. There are a lot of different bodies. So, how are you ensuring within the scope of the business support landscape that there's no duplication and that it's easy and accessible for prospective businesses and current businesses? 

From a public sector perspective, obviously we're connected in terms of making sure that we've got oversight of the various strands. As I said, I'm lucky enough to be both chair of the Swansea bay city deal and of the joint committee for the CJC with that broader economic view. That allows me as well to look at things like the Celtic Freeport and also the opportunities that we may have in terms of transport infrastructure et cetera, and the work that we're doing with the Port Talbot board to shore up support for—

Sorry, Rob. Can I just ask quickly there—? Given that the Celtic Freeport is a joint venture between Neath Port Talbot County Borough Council, Associated British Ports, Pembrokeshire County Council and the Port of Milford Haven, and you yourself chairing the CJC, and your local authority isn't directly involved in the free port per se—how does that then work? That feels a little messy looking from the outside in.

No, because we don't work on hard borders in that way. So, yes, absolutely right that Neath Port Talbot and Pembrokeshire are the named partners in the Celtic Freeport, but they went forward to bid for that with our full support from Swansea and Carmarthenshire. And as I said, the approach that we're taking is a collaborative one to make sure that the free ports don't act as drains that pull out investment from the rest of the region, but actually pull investment in to the benefit of all four local authorities. So, again, we're trying to make sure that the actions we take in the free port are consistent and aligned to what we're doing on the broader economic strategy, what we're doing in terms of the CJC delivery and the city deal delivery.

So yes, it is, I would guess, a complex set of structures, but these were what we're on offer and we're an ambitious region. If Governments offer city deals, we're going to apply for one. If Governments offer investment zones, we're going to apply for one. If they offer free ports, we're going to apply for one. So, we've been very successful in getting most of those, but it does mean that we then have different structures that we have to work hard to make sure that we have that good collaboration on and oversight of.

Jenny, you wanted to come in on a supplementary? 

I wanted to come in on—. You've mentioned homes as power stations as one of these overarching projects that you've got across the area. I just wondered how successful you've been in getting the supply chain needed for doing the work on converting homes into power stations.

Yes. The guys might give you other examples; I'll give you the Swansea one, because it's the one I'm obviously closest to. So, as an example for us, we started by building homes that were, basically, a passive house standard, but we found through that that we were having to bring in some materials from outside of the UK—not great in terms of the local supply chain, but also not great in terms of the carbon footprint for importing those goods. So, what we did then was revise the standards into a Swansea standard for house building so that we could build something close to the passive house standard, to get most of the benefits of passive house, but to make sure that the supply chain was one that was within a few miles of the delivery of the housing site—so, potentially within south Wales, but within Wales as a whole.

Again, we took the learning from the original aims, modified them, created a new standard, which enabled us to then create a supply chain that was much more local, but deliver some of the benefits. I'm very proud of the delivery of some of the stuff that we've seen already out of homes as power stations, reducing people's energy bills in those homes now down to a few hundred pounds a year. I'm sure all members of the committee, and myself and others, would love to see our energy bills back down to a few hundred pounds a year. But that is really important in terms of how we deliver housing to people who may be on low or no incomes, and removing the 'having to eat or heat' choice. That's a tangible example of how you get to that point.

Okay. So, tell me about the retrofitting programme, because, obviously, that's what housing associations in Cardiff are grappling with—they can't get the skills needed to do it.

Again, we've got some good examples of retrofit both in Swansea council and within homes as power stations. Obviously, retrofit is more challenging, because you're working with older properties. But, again, we've got examples up in Craig-cefn-parc in Swansea where a series of bungalows were retrofitted with batteries, solar power technology, ground heat source pumps, and again delivering really good benefits for residents.

So, again, as Jonathan said, it's not a one-size-fits-all, it's not a one-spoke approach to delivering homes as power stations. Each of the four local authorities has explored different variations of how these new energy-efficient homes can be delivered, and, again, the aim is to take the best of all of those learnings and to upgrade the industry standards to deliver higher quality, more efficient homes and make that become mainstream. And then, as Jonathan alluded to, there are other interventions that we've also put forward as part of that overall homes as power stations programme to help more delivery, but Jonathan can say more about that.

There's probably one point of clarification with homes as power stations: even though the fabrication of the homes—. Whether it's refurbished, retrofit or new builds, public sector, housing association or private sector, homes as power stations is about facilitating the adoption of energy efficient and renewable technologies. So, it's about the technologies in the home—the air source heat pumps, the batteries, the solar panels, and the list goes on. What the supply chain fund will specifically do—the £7 million I referred to earlier on—is help and support its renewable technology supply chain across the region, but it doesn't work in isolation because the fabrication has to be part of that process as well. So, all of the different providers—. And, as you said, not only for the technology but also for fabrication, skills is a massively important part of that construction—

How much are you able to draw down the community funds of the windfarm community funds that are already being generated?

Offhand, I wouldn't know the answer to that.

I don't think those are eligible for these types of schemes—they're usually community benefits more than benefits to local authorities.

No, but it's about community benefits. Community benefits is what we're talking about. Perhaps you could send us a note about the numbers of homes that have been retrofitted and/or built in each of the local authorities, because I think this would be a very useful number to have.

Yes, more than happy to do that.

We have the breakdown, and, just to give you an idea, there's just over 10,000 as a target for retrofit and new builds. We're just shy of 1,000 I think the number is; it might be slightly higher than that now, currently, but when we reported last quarter it was around 1,000. We can get you the numbers and the detail. 

Sorry, it's 1,078 homes at the moment.

Fine.

Right, I'm going to come back to business support. The Cabinet Secretary has said she's looking to review business support to understand what the best business support system looks like in the future. What involvement in that review do you expect as a city deal?

I'm assuming we will have a consultative role to play in that. We'll obviously be keen to feed in any learnings that we've got and to give, as best we can, our advice to the Cabinet Secretary, as she takes a look at that. Again, I've no reason to believe that Welsh Government will not include us in that, and I'm sure we'll supplement that with our own various responses as local authorities as well.

Thank you. So, you've not had a formal request to do so, you're just thinking, historically, you've been included in these sorts of things, so you're expecting to be included, going forward, from a city deal basis. But, obviously, would you also be included—? You mentioned there as a local authority, and the 22 local authorities, and as a CJC, would those three tiers be all involved in this, do you think?

Again, I wouldn't want to mislead you, so I will need to check whether or not anything's come in to any party within the region. It may have, but at this point, I'm unaware of it, and I've certainly not had anything directly, as far as I'm aware. But, yes, I think there's every likelihood that we'll be consulted as a CJC, we'll be consulted as a city deal, and as local authorities.

Thank you. In terms of the written evidence, talking about a one-stop shop to provide a unified business support portal, digital and physical, I was just wondering—. This might prejudge some of the suggestions you may give the Cabinet Secretary in the review of business support, but what does that look like in practice, do you think? Is that a high-street presence? Is that a digital platform where businesses have login details? What are you envisaging when you think of that?

We're working through that at the present time in terms of how it could work out, but I'm guessing it's bound to have a digital element to it, because most people will want to access services, advice, et cetera, as easily as possible, and that's often via digital. But again, making sure that there is no closed door, which is a way we try to work in the region, so, again, potential for some physical presence. But again, we don't know how that will play out yet; these are just early ideas in terms of how we potentially could respond to that. So, I'm sure we'll have more to say when we've gone through the formal thinking on that.

And just quickly on that, is that business support in terms of just what you're able to deliver locally, or would that include wider business support that's available through the Welsh Government solely? Or even the UK Government. 

If you go to the local authorities, we all have business support teams, we've got a great team here that deals with shared prosperity funding, as well as all of the other potential opportunities that businesses might want to take advantage of. We have our employability teams, et cetera, so there are multifaceted ways in which we provide support as local authorities. It's about making sure that we take the decisions to see how we can do that at a regional level most effectively. Once we've had the time to do the thinking, and we know the questions being asked by the Welsh Government, we'll respond appropriately on that.

Around this review, it's important to get the voice of the businesses: what do they want through that process? If they don't see it as being a one-stop shop and they want something different, whether it's digital or physical, it's that kind of approach. Your point about having a view on the holistic support for businesses at different tiers or different spread, that would be something to get the voice of the businesses as to what they need going forward.

Just to say, Chair, we've recently appointed a full private sector advisory board, so I'm sure they'll want to feed into that.

Thank you, gentlemen. Just for clarity, on the business support point, am I reading it right and hearing it right that, to date, you haven't had any formal correspondence from the Welsh Government in relation to their review, hence that's why, obviously, it's difficult to enlarge on what process might be undertaken to see how you can inform that review?

Chair, that's my understanding. Again, if I get back to my desk and I find I've got an e-mail in my inbox, I'll have to correct my answer, but that's the view that we have at the moment. We haven't had anything formal.

Thank you. That's very helpful, considering that the Minister made this statement in March, and we're now in June, and, obviously, you're significant players in this, and you don't seem to have been contacted yet. But I'm grateful for that.

Thank you, gentlemen, for your evidence this morning. A transcript of the record will be sent to you. The information you've provided has greatly informed our inquiry and review into business and growth deals. If there are any concerns around the transcript, please could you liaise with the clerking team, otherwise that'll be the official record of the proceedings of today's evidence-gathering session. Thank you all very much. We'll now move into private. Can I have a motion to move into private session? Thank you.

Welcome back, everyone. We're now taking the second evidence session of the morning in the committee's inquiry into city and growth deals. We have two witnesses from the north Wales growth deal before us today. I'll ask you both, if possible, please, to introduce yourselves and the positions that you hold for the record, and then we'll go into questions. The session will last until 12:30; there are four Members in the committee room here in Cardiff who have individual questions they will be asking of you, and if we need to at the end of the session we may follow up with written questions for any background information that might help inform the committee's deliberations. Councillor McCoubrey, could I ask you, first of all, to start and state your position? Then we'll move on to Hedd, and he can do exactly the same. Thank you.

Diolch, Cadeirydd. Bore da, bawb. I'm Charlie McCoubrey. I'm the leader of Conwy council, but I'm here as vice-chair of the economic ambition board, and I'm also vice-chair of the north Wales corporate joint committee.

Bore da, bawb. My name is Hedd Vaughan-Evans. I'm head of operations for Ambition North Wales. 

Thank you very much, both. Last time the growth deal came before this committee was back in September 2023. Since then, obviously a lot of time has elapsed. I'd be grateful to understand what progress the growth deal has made in that intervening period between then and now. Importantly, have there been any major issues around projects that were identified at the outset of the growth deal—Trawsfynydd is one that has been highlighted in your written evidence, but on other projects—to cause concern that they might not be delivered as first envisaged? I'll ask you, Councillor McCoubrey, first to answer that, please.

Thank you, Chair. I'm aware you've had a very detailed written submission, and I'm sure we'll have plenty of time to go through a lot of that. In terms of highlights and positive stuff, there are four projects that have moved into delivery, a further six projects that have been approved but are subject to some sort of further legal agreements. It's hoped that they will move into delivery fairly soon. It's important to recognise, though, that we're all disappointed with the pace and scale of the delivery so far.

I think it's really important to highlight the changes we've undertaken recently in terms of our portfolio. We've looked at removing the projects that weren't viable within the timescale of the growth deal, and we've also changed how we work that portfolio in terms of having a reserve list. Some projects have been removed completely, some have moved to that reserve list. I think that's really important because it gives us flexibility to be a bit more dynamic in accepting new projects, and also creates an element of competitiveness in that money for those projects isn't ring-fenced until there's a clear business plan in place.

Since the last review two years ago, we've also lifted and shifted the EAB into the CJC, which has been a complicated process. We've now appointed a chief exec for the CJC, Alwen Williams, which, again, will increase our ability to deliver at pace and scale, Chair. I will wait for other questions on elements of that.

Thank you. Hedd, have you got anything you want to add to that answer?

Thank you, Chair. I'd echo Charlie’s comments that we are disappointed with the progress in the initial years of the growth deal. There have obviously been some external challenges that we’ve all faced in terms of major capital programmes, COVID, the inflation crisis that followed. We have seen a number of projects withdrawn. Some of those have moved on to delivery through other mechanisms, which we’re really proud of.

But I think we’ve really turned a corner last year, in terms of the number of business cases approved, the number of projects moving into delivery. The forecast for the coming years is really positive, with the decisions that the board have taken in terms of removing or moving some of the stalled projects into the reserve list and setting up a really strong reserve list of potential projects that gives us confidence in our ability to deliver moving forward. Diolch yn fawr.

Sam. 

Thank you very much, Chair. In the four and half years since the deal was agreed, the growth deal’s activities have delivered a total investment of £16.6 million, of which £15.3 million is growth deal investment. In terms of private sector investment, how much has been achieved from the private sector? Whomever wants to answer that, Charlie or Hedd. 

I’m happy to start. At the moment, the actual private sector investment is very low—it’s £1.8 million. That’s before projects are actually in delivery. They are further education or higher education projects, and the level of match funding for them is much lower. Of the other six projects that are due to move into delivery, the investment target is £275 million, and 50 per cent of that would be from the private sector. As Hedd referenced before, there was the anaerobic digestion project in Deeside. We did a lot of work on the business case. That subsequently went ahead, but in terms of the business case, they no longer required funding from the growth deal, and that’s a £60 million private investment. So, whilst that doesn’t go on our balance sheet, I think it’s important to recognise the role the growth deal played in bringing that project forward.

Yes, of course. The target was to attract £722 million from the private sector. It's quite short of that at the moment. Was that figure calculated on the bulk of that one project in particular, or was it spread across?

I wasn’t involved in the project selection. I joined the growth deal in 2021, when I became leader of Conwy, and I took on the vice-chair role just over six months ago. We know that Traws was responsible for over 40 per cent of the GVA, and 12.5 per cent of the actual jobs target. That will leave a significant gap in terms of delivery. As Hedd has already referenced, there’s been substantial inflation over the last few years—£240 million in today’s money is equivalent to around £310 million. We know, in the construction industry, that we’ve seen much higher inflation figures, heading towards 40 per cent. So, that remains a challenge. But I think it would be better if Hedd commented on how those initial figures were calculated, and what he feels the impact is.

The £1 billion target that we have for the growth deal is a combination of the growth deal capital, public sector investment and private sector investment. The Trawsfynydd project was a significant proportion of that in the original estimates when the deal was signed—as Charlie has mentioned, roughly 40 per cent of the overall total. So, it was heavily weighted towards one project, which has now been removed, and, obviously, that leaves us with a challenge as a region that we need to meet with the projects moving forward as best we can, and potentially some level of negotiation with Government if that is not possible. We’re aware there aren’t many projects of the scale and impact that the Trawsfynydd project could have had in the region. So, we will be looking at a number of smaller projects and interventions to try and meet that gap. But it was heavily weighted towards the Trawsfynydd project, and it does represent a challenge for the deal moving forward.

Thank you. I appreciate the honesty around Traws's importance. There was disappointment across all of Wales, I think, when that wasn't taken forward by GB Nuclear. But in terms of the jobs created so far on the time frame, where does that equate to where you would have liked to have seen the amount of jobs created by this point in time in the growth deal's lifespan? Are we on track, or is it behind, or ahead?

Hedd, can you take that one, please?

Yes, certainly. 'Significantly behind the original forecasts' would be the honest answer. I think, on reflection, the original forecasts at the time of signing the deal were rife with optimism bias in terms of how mature some of the projects were and how quickly they would come into delivery. That issue has been exacerbated by some of the issues that have already been mentioned around COVID and the delays that caused and the subsequent cost inflation crisis that we're all dealing with. We had hoped and anticipated to be in a position where many more projects were already in delivery and operation at this point in the deal, with a significantly higher number of jobs created. Obviously, in the current position that we're in, we've only seen 35 jobs created, but that's on the back of only one project in operation and three currently in delivery, so we hope to see a significant increase in that figure over the next few years, as more and more projects move into delivery.

Okay, and it comes back to the question around the AD plant that was mentioned earlier: how the business case was developed through the growth deal, yet that's gone ahead without the need of growth deal funding. Is that, in terms of GVA and jobs—? Are they being—? Given that the growth deal was involved in the infancy of the project, is there some of that GVA or job creation being allocated to the success of the deal? Or is that, since it's not required any funding, completely sat separately to this, because surely some nursery work in growing that project to be deliverable must fall to yourselves?

Yes. My understanding is that it doesn't appear on our balance sheet, but as I referenced before, I think it's really important to recognise the valuable work we put in to bring that business case forward. Hedd, can you confirm that, please?

Yes, certainly. That is the current position; because we're not providing funding, we're not accounting for the benefits of that project as part of the growth deal targets. I would be very keen to explore with Government whether it would be possible, because I do think we played a crucial role in enabling that project to secure the rest of the private sector funding, and I personally view that as the ultimate success, that we've enabled that to go ahead without the need for public intervention, which means that funding can be reallocated to other projects. At present, we're not able to account for that in our targets, but we are making sure that it is part of the wider benefits package that we do talk about when we talk about the successes of Ambition North Wales and the growth deal.

Okay, thank you. Thank you, both. Chair.

Could I just seek some clarity on—? You were saying at the original outset of the city deal that there was maybe too much ambition and optimism around the bid that was put together and the projects identified, and I think you used the words that inflation and COVID, for example, had just merely exacerbated that, that they weren't the core problem. Is that fair to say, that there was too much optimism around the initial bid projects, and that's why, from the start, there have been these problems? Hedd, I think you were the one who said that.

Yes, I do think that is a fair assertion. I think many of the projects had overestimated how quickly they could move into delivery, and I think some of that is a lack of maturity and experience amongst some of the sponsors of going through the Treasury business case process—how robust that is and how long that would take. So, I think there was some optimism there. I think there were some projects that clearly had challenging planning timescales that would take longer than was set out, and we've seen that come to fruition. So, I think, in terms of the—. The original forecasts and the estimates of how quickly some of these projects would move into delivery were optimistic, and that has compounded the, shall I say, more general delays that have affected other programmes around COVID and the inflation crisis. So, I think that that is a fair point.

And Councillor McCoubrey, could I just seek clarity around the ability to change the bid, because I think it has been alluded to in the evidence so far that you were hoping to go back to Government and consider some changes, given that Trawsfynydd was such a large part of the bid? We heard in earlier evidence today from Councillor Stewart around the Swansea bay city deal that, actually, the contract between the Government and the growth deals and city deals is very specific and it's quite difficult to renegotiate, whereas when Cardiff set up the capital deal, they had that flexibility. So, are you working on the same parameters as Swansea bay city deal, in that your bid is very fixed, unlike the capital deal in Cardiff here, which does have greater flexibility to drop and chop changes in their bid?

Yes, Chair. I think we've got a meeting scheduled for 17 July to have discussions about where we can build flexibility into our deal. Hedd will probably be better placed than me to talk about how that compares to the situation in the other areas that you've mentioned, but internally what we've done with that reserve list is really important, because it struck me when I joined the growth deal in 2021 that these projects were set in stone, and it took a long time for them to work through whether they were viable or not.

Hedd talked about planning, that's a really significant challenge for us, because you may have a fantastic programme to bring forward but it falls at the last hurdle, and that certainly was the case with the Glynllifon project. So, flexibility will be required and I think, looking at the targets in light of the inflationary challenges, the cost of things and the projects that have fallen out, like Trawsfynydd, there needs to be a wholesale look at what we're trying to target. And I would make the point as well that there's an awful lot of emphasis on new jobs. In the current climate, I think it's just important to look at protecting existing jobs as well. There's no point creating 4,000 jobs in one area when you're losing 4,000 jobs elsewhere. But, I'll pass over to Hedd as he'll have a bit more detail than me on where we're up to. 

Thank you, Charlie. In terms of the flexibility, we are quite fortunate as a deal that our deal was signed at the portfolio level and programme level, rather than individual projects. So, the board does have the flexibility to make decisions around individual projects and whether they are withdrawn and then the decisions around replacement projects. So, we have that flexibility and we've used that flexibility already to remove some projects, to bring new projects forward and to now establish the reserve list. 

What is fixed are the targets that were set in 2020 in terms of job creation, GVA and the investment. And, as Charlie has alluded to, those are some of the challenges, particularly in terms of inflation and how much £240 million is worth these days, but also specifically when we talk about Trawsfynydd and the impact that that has on our ability to meet those original targets when it was such a high proportion, particularly of the investment target. So, we have some flexibility in terms of those individual project decisions, but the targets that we need to deliver on are fixed.

Okay, thank you for that. In your written evidence, you highlight that it's the second year now that there's been no ability to draw down funding, and that that has caused problems. Could you give us a taste or an example of how that has caused problems for the bid, and why has it happened for the second year running that you haven't been able to do that drawdown? I don't know which one of you would like to take that. 

My understanding is that, obviously, we're behind schedule in terms of what we're delivering, so the argument was that we don't need that money at this stage. Last year, it was more of a postponement; the concern this year is that that money disappears over the period of the actual deal, that we don't actually get the full £240 million. And it is a 15-year project, so whilst we're behind schedule, it would be useful to know that that money was there and that we're able to count on it in future years to catch up, essentially. I think that we're seeing a lot of projects coming together on a roll now. So, for the north Wales region, we'd want to ensure that that quantum of funding is ring-fenced and still going to be spent improving the economy in north Wales, Chair.

Okay, thank you. Just for my understanding, because it's the second year that hasn't happened, you actually lose that money now you do, do you—it comes out of the pot?

I think we need a bit of clarity around that. I'll let Hedd answer that one, Chair, if that's okay.

Yes, thank you to Charlie. Yes, I think it's clarity that we are seeking from both Governments. When the letter for the first year came, it was made clear that the funding was still available, and it would just be re-profiled in later years. That sentence was not present in the letter this year, implying that there was a level of risk to that, and that's the ambiguity that we hope to clarify with Governments, because obviously that would have a long-term implication on the deal and what we could fund and our ability to hit the targets. So, we understand the decision not to allocate the funding this year. We hope that won't be the case—sorry, this financial year—due to the progress that we are making, but we just want clarity that that funding still remains available to the deal, because we want to deliver for north Wales, and obviously if that wasn't, there would be some significant decisions the board would need to make around which projects it can support or not.

Okay, and on the revenue funding, you've highlighted that that's a big disappointment and that it causes problems to work up projects. Can you give us a taste of the impact that that has had in not having the ability to draw down revenue funding to support projects?

I'll hand that one over to you, Hedd, if that's okay.

Thank you. Yes, so our original bid did include revenue funding, and that was looking to allocate specifically a skills programme. So, obviously, there's a clear link between revenue funding and the ability for programmes like this to realise benefits, and skills is probably the most important part of that, because if we're not creating the opportunities for people in the region to take advantage of these new jobs through training, through targeting disadvantaged groups or deprived areas, that's a real struggle. And our regional skills partnership, our higher education and further education institutions do a fantastic job, but they are constrained by the lack of revenue funding.

In terms of wider project implications, then, yes, the ability for projects to access some revenue funding to de-risk development opportunities would be beneficial, particularly for public sector projects and sponsors that have their own revenue challenges, which are well known. And I think, in general terms, with the portfolio management office and our team, while we are able to top-slice some of the growth deal funding to contribute to those costs, it doesn't cover everything. So, you do find yourself in a scenario of constantly seeking and applying for other revenue sources to beef up the activities of the deal—things like the shared prosperity fund, for example. And that, obviously, does take time and capacity away from the primary focus, which is delivering the deal.

So, there are a number of knock-on consequences, and obviously earlier growth deals, earlier city deals, particularly in England, and some in Scotland, did come with revenue. And, obviously, the recent investment zone announcements do include the ability to use significant revenue funding as well. So, I think it is a well-accepted fact that revenue funding does add real value to these kinds of initiatives, so it is challenging for us as a region when the growth deal is all capital.

Did I understand that correctly, that you are able to top-slice? Because in the evidence that we received from the mid Wales growth deal, they're able to top-slice 4 per cent for revenue funding. I think you alluded to that, Hedd, but just for clarity, is that the case in your growth deal as well?

Yes, it is the case. We top-slice 2.15 per cent of the deal for revenue funding.

But you could top-slice up to 4 per cent, could you, or are you capped at that 2.15 per cent that you just said? 

It's a decision for the board. We clarified that with both Governments. So, it is a decision for the board. We did increase it to 2.15 per cent two years ago; it was originally 1.5 per cent. And obviously, the more we increase the top-slice, the less funding there is available for projects. So, it is a bit of a balancing act, and we're trying to make sure that we use the growth deal funding as effectively as possible. Particularly when we have challenges around some of those original targets, we're keen to make sure we don't top-slice too much and take that funding away from projects, but we do have that flexibility.

And finally from me, obviously, the UK-Welsh Government contribution is £240 million. You've alluded, as have all the growth deals and city deals, to the impact of inflation on that sum, because it's a fixed sum. Can you give us an example or a feel for how big a hit inflation is making on that contribution, given that, obviously, it's a fixed sum of money over the period?

I think, Chair, in pure inflation terms, on the buying power of £240 million, you'd need £310 million in 2025 compared to 2020, so it's been degraded by about 25 per cent. So, I think, as a ready reckoner, what we can do with that money now is 25 per cent less than it would have been in 2020, which is clearly a significant impact.

And are you aware of what level of inflation was based on the original submission, because there wouldn't have been a zero figure, surely? There must have been a baseline that would have factored in the inflation figures.

I'll have to go to Hedd for that one, Chair, as I wasn't involved.

I don't believe there was, Chair. I believe all the projects were anticipating moving into delivery quite quickly. They would have factored in some level of inflation into their original cost bids, but I would certainly say that it would not have been at the level that we have experienced to date, and would have probably been underestimated anyway. We have been seeing between 25 per cent and 40 per cent inflation in some project costs, and it turns into a bit of a vicious cycle, if you will, because those projects have two decisions to make, really: they can either seek alternative funds, seek more money—and we've made some decisions to allocate additional funding to get projects into delivery, which is a risk for us as a deal, because that means less money available for other projects, to hit our targets—or they look at de-scoping and re-scoping the project to fit within the financial envelope.

All of this takes time, and we've had it on a number of occasions, but by the time you've found the additional money or done the re-scoping, the replanning, costs go up again, and you're in a bit of a loop that is quite hard to break sometimes. So, it is a real operational challenge for getting projects into delivery. And, of course, I think the BCIS is still forecasting another 17 per cent rise in construction costs over the next five years. So, the longer it takes our projects to get into delivery, the bigger that issue will become.

Okay. Thank you. Jenny.

Thank you. I just want to look at the reasons behind the decision to drop the Trawsfynydd proposal, because, obviously, it's quite important to the overall original ambitions. Could you just explain the reasons that GB nuclear gave when they decided not to include Trawsfynydd in its initial roll-out phase back in May last year?

Hedd, are you able to take that, please?

Yes. You'll forgive me; I don't have the detail of that decision to hand. But, essentially, when Trawsfynydd was originally proposed for the growth deal, it was agreed with both Governments at the time that it was the prime candidate for first-of-a-kind small modular reactor deployments as a new technology. As things have progressed, obviously, the technology has become more advanced and there was, essentially, a policy decision to look for bigger deployments, larger sites, which, effectively, ruled Trawsfynydd out of that initial tranche of sites to bring forward, but I don't have the specific details to hand.

Don’t worry about the specifics. That's fine. Was one of the weaknesses of your bid the fact that Trawsfynydd is located in an area of relatively low population and, therefore, low demand for electricity, because, clearly, there is energy lost every time you send it down the pipe? What was the basis of the Trawsfynydd bid? The fact that you've got good grid connections is, obviously, one of them.

Yes. So, we as a region are very supportive of the Trawsfynydd bid. Obviously, the current or the previous nuclear facility is being decommissioned at the moment, so it is a site with the capability of deploying SMRs. We have a lot of expertise in the region in nuclear and a lot of workforce that have either moved on to other nuclear plants or could be retrained, and the opportunity for high-skilled, high-value jobs of the nature that a nuclear facility and SMR deployment at Trawsfynydd would provide in a rural area, which doesn't have a great deal of similar opportunities, is significant. If that project does go forward by other means in the future, it would add significant value to north Wales in general, but to that part of rural Gwynedd as well.

Okay, but it's off the table at the moment. So, I had a quick look at the reserve list that was approved by your economic sub-committee, I think, recently. I'm struggling to see how some of them link into the five growth deal programmes. I can see the H2 project to kick start the hydrogen economy. Could you just explain—? Clearly, that is one of the UK priorities that was announced on Monday. How's that going to be done and where?

Hedd, do you want to take that?

Thank you, Charlie. So, hydrogen is obviously a massive opportunity, I think, for the north Wales economy, particularly around transport and particularly around industrial decarbonisation. We have one project on the books already in terms of the Holyhead hydrogen hub project, so that's an existing growth deal project. We had the New-H2 project, which was looking at industrial decarbonisation in the Deeside area. One of the original project sponsors did pull out of that project, and the partner sponsor is currently preparing an alternative proposal for the board to consider, which is why we moved that project to the reserve list.

But we're very much looking at how we build and start to establish the hydrogen economy in north Wales. It is a very challenging space in terms of the balance between production and demand. You need enough demand to enable production to be delivered. It's very difficult to secure demand when there isn't a viable source of production in the region. So, it's very important for the growth deal and for the region, but a really challenging one for us to crack.

Okay. I just need to understand what are the things that you're actively looking at, because I was assuming the reserve list had now become the active list. In the discussions that took place in March with both Governments, what were the parameters that were set there?

I think that the importance of the reserve list is two things. It's one to allow other projects to come forward, clearly, over the span that a growth deal entails. There will be other opportunities and there may be decisions to be taken at to which are the better opportunities. I think the element of competition was important in that there was an onus on the proposers to bring forward a business case before we allocated that funding. So, I think that was really important as well.

The key thing for me is that we're flexible. Circumstances change. We've talked about the impact of inflation, the impact of COVID, et cetera. We need to be in a position where we can pivot. That's certainly what you do in private industry—you try and be a bit more flexible and look for new opportunities as and when and not just kind of back the same horses despite how far back they were in the field, if you'll excuse the analogy.

Absolutely. We don't want to just be doing things the private sector will do anyway.

No, exactly. Opportunities do change. I'm more comfortable with my own portfolio, but perhaps an example of this, within Conwy, was Stage Fifty. It was a film project. It was actually on land that my authority owns. We put a lot of work into pre-planning that. It was looking like a really successful project—they had the finances in place. That basically fell because of the writers' strike in America. There were no productions made for a couple of years and they rely on a pipeline. So, what was a very exciting project fell because of something that was happening on the other side of the Atlantic. There were new investors who were keen to invest in that. The tariff issues around the film industry has kind of put the kibosh on that at the moment. So, partnership working is hard; we can do everything we can and we can work really hard to be in a position where things are deliverable, but you are then susceptible to outside elements that can just take that all away. I'll hand over to Hedd.

Okay. What I'm trying to understand is, Trawsfynydd having gone on the backburner, you've got £51 million to play with, what are the frontrunners that you're going to hope to deliver in the next few years, because otherwise this boat will have sailed?

Hedd, do you want to take that one?

Yes, thank you. So, we obviously have the remaining growth deal projects that are moving into delivery and we would expect to have 10 of those in delivery by the end of this financial year. And then there are a couple of others that are subject to a further review in the autumn. Then we have the reserve list, and there is currently £51 million of unallocated funding, which the projects on the reserve list are able to compete for. The reserve list projects, in total, would be seeking more than £100 million of funding. So, we have more projects on that reserve list than can be funded through the growth deal and, essentially, it is a competition to bring forward the most mature proposals so that when we make an investment decision, there is confidence from the board that those projects will move into delivery and we won't have the delays. So, essentially, any one of those reserve list projects can now come forward and present their business cases and demonstrate—and will need to demonstrate—that they make a viable contribution to our targets in terms of jobs and match funding. Crucially, they will need to demonstrate and provide confidence to the board that they will move into delivery, and that is the key determining metric—that we need to get those reserve list projects into delivery in the next two or three years to ensure that there's enough time for that benefits realisation to happen.

Okay. So, with the low-carbon energy proposals, what's on the books at the moment? We heard that Swansea bay have got a homes as power stations work stream. Clearly, all our homes need retrofitting. Is this something that you're actively looking at?

We don't have a project—.

We don't—

Sorry, Charlie.

No. Sorry, I was passing the buck to you.

We don't have a project of that nature in our growth deal at present. So, our low-carbon energy programme consists of three projects that are moving ahead and into delivery. So, we've got the Cydnerth project, which is the investment to expand the Morlais tidal zone off the coast of Holyhead. The funding agreements have been signed this week for that project, so that will move into delivery imminently, which is really positive. We have our clean energy fund launching next month, which is looking at funding for businesses and community organisations around decarbonisation, green technology, smart energy systems. We have our Egni project, which is a second building on the Menai Science Park with a focus on growing businesses in the low-carbon energy sector. So, those three projects are definitely moving forward. Then, we have the Holyhead hydrogen hub project, which is experiencing some issues around establishing that pipeline of viable customer demand to enable the investment decision to go forward. We're working with them and with the Welsh Government closely on that. So, we'll be reviewing that project as well in the autumn. Those are the four projects currently in the pipeline.

On the reserve list, you have two projects in the low-carbon energy space. So, you have the New-H2 hydrogen project, as we mentioned before, and we have a quarry battery, which is a hydro battery proposal in Gwynedd for a significant energy generation facility there. Those are the projects currently under consideration. 

You've got agri-food and tourism in your growth deal programmes, you've got Mam Môn, the best agricultural land in Wales, probably. Horticulture is one of the biggest food security problems Wales faces, and indeed the whole of the UK. How are you capitalising on that?

It's actually the portfolio I hold. I think it is an area where we need to do more work. The project in Glynllifon was a really exciting project. It was about creating hubs and incubators to really promote Welsh produce. Unfortunately, that fell on a planning issue, but we have pivoted that. The information we learnt from the initial planning was to look at creating a much more sustainable sheep milk cheese product, and looking to develop that produce here. A challenge we have, when we go out to look for projects, is that there was a bit of a dearth within the agricultural sector itself. There were quite a few projects that sit within tourism, but, actually, getting those projects to come forward is quite challenging.

I definitely think it's an area that we could do more with. I think we have amazing produce in Wales, but I don't think we do enough to highlight it. One of the reports we did showed that we only grow 4 per cent of the vegetables we consume in Wales, which is clearly a crazy situation, and that was obviously not the case many years ago, so there's work to be done there. Getting those projects to come forward and how you develop them—. And I guess it harks back to what Hedd was saying about the growth deal: is it a revenue stream where you bring projects forward, or are we just there at the capital side handing a cheque over for a mature project? But it remains a challenge. 

You've got the food innovation place in Llangefni. Surely they ought to be able to come up with some doable projects. Polytunnels is all you need, plus the skills.

I agree. The Glynllifon one was really positive. I think that the new project that will replace it, which will be subject to a change request, will be really exciting as well. But it remains that fundamental issue. It's how do you drive change so that these projects do come forward and say, 'We've got a project we'd like you to fund'. It's that eternal battle.

What is the role of the ambition board to really drive this through? You've got to really make sure that all your partners, when they come up with a proposal, then do the number crunching and get the specifics together.

I absolutely agree. But, as Hedd said before, a lot of organisations are struggling with the revenue. Do they have the revenue to actually work these streams up? So, it's a kind of more fundamental question, isn't it, about who's actually driving that change. The growth deal at the moment seems to me that we've got capital and we can say, 'Yes, you've got a project', but who's got the responsibility for actually coming up with these ideas and driving them through to fruition? So, that needs a bit more joined up thinking, in my opinion.

You've got six local authorities and one health board. Between you, you ought to be able to drive these things through, shouldn't you? 

I definitely think we need to do more work on that. I think we need to create a demand. If we come back to the vegetable issue, it should be relatively straightforward, you would think, to create that demand. Again, if we look at the CJC moving to a more regional style of working, then perhaps there is that opportunity there. But there certainly needs to be more partnership working across the public sector to create the environment where you drive that demand forward. 

But obviously, time is not on your side, is it? 

No. But again, are we referring to the growth deal here, are we referring to the project, the north Wales landscape as a whole, or Wales as a whole? 

Thank you. Hefin. 

Can I ask about public engagement and how you ensure that the public are not only fully engaged, but understand what you're trying to achieve?

I think that remains a challenge at all levels of government. Even as a local authority, we spend a lot of time trying to engage with the public and the responses tend to be fairly low. Obviously, with the growth deal, we use all the usual channels. I think, as we move forward to the CJC, there'll be a bit more awareness from the public that we've got a whole new layer of, essentially, local government there. But engagement, I think, absolutely remains really difficult across all levels. Obviously, you'll see some Wales-wide consultations that get really low numbers of responses, so it remains a challenge. Hedd, do you want to give some specific details about what, as officers, you're doing with the growth deal?

Thank you, Charlie. I think we've got a really strong online profile, in terms of what's out there. The website we've improved significantly over the past few years; we're on all of the regular social media channels, and there's a lot of engagement there; we do a quarterly public newsletter; we do an annual report, which is really focused on the wider public, rather than being a programmatic quarterly update, which is really about telling the stories and the case studies of what we are delivering; and we're a partner with Business News Wales, which gives us that platform, with a dedicated section for north Wales. 

I agree with Charlie that it's very difficult to engage the wider general public around what something as big as a north Wales growth deal is delivering. A lot of the interest is more specific, around what is happening in their local area. We see much higher levels of engagement when things are happening around projects within individual areas, and, obviously, that responsibility around that engagement is what the project sponsors drive. We don't have the resource and the capacity to do that on a local level across six local authorities and multiple communities. But we do make it a requirement for our project sponsors to have comms and engagement plans, and, obviously, that will generate a much higher degree of interest.

We see a great example of this now with the Enterprise, Engineering and Optics Centre building in Wrexham, now that that building is built and is quite a visually striking building in the centre of Wrexham near the Racecourse. There's a lot more engagement—there's a lot more interest in what that building and that facility will be delivering for the region. So, I think it will get easier the more we get into delivery—the more people can see tangible things that are being delivered for the benefit of north Wales through the growth deal.

One of the things that they said in—. It was funny, because the Swansea city deal linked it to sporting activity as well. One of the things you will see is that people won't necessarily engage with a website, but if something's happening on the ground, they'll engage with it. Councillor McCoubrey said something quite interesting: that the transfer of the growth deal to the CJC was another layer of local government. Did you mean that pejoratively?

No, I didn't. Clearly, it has got its own statutory powers. It has taken a considerable piece of work to get to where we are today. I think there are real opportunities to be had working at a regional level. Certainly, from a Conwy perspective, we're slap bang in the middle, geographically, linguistically, and in terms of our economy, and I think there are things we can drive through, so I'm really keen to embrace that.

It's very clear, if you look at the Audit Wales report on the sustainability of local government, that we aren't sustainable unless there are major changes. So, I embrace the opportunity to make changes. Our residents don't recognise what—. My daughter lives a couple of miles away from me—she lives in Denbighshire and I live in Conwy. Our residents just want to see results, don't they? They're not bothered as to who delivers it. So it wasn't pejorative at all.

I think the other issue is the process of local scrutiny and the ability of members in your authority to do that. I know you've got quite a rainbow coalition going on there, but I imagine that local members will be feeding back to you their ability to scrutinise what you're doing through the CJC. Are you confident that you've got the right governance structures in place to allow that kind of thing to happen?

I think it is always a challenge. Members worry about the loss of their localism, but I think we all recognise that there are some decisions that can be taken at a regional level and need to be taken at a regional level, certainly around major transport projects and certainly about larger economic projects. But there is, absolutely, a role as well for that localism of understanding your patch, and it's just how you differentiate and separate those two things out.

Procurement would be a good example. I don't care who bought the laptop that I'm using in front of me—we just want to know it's the best value that we've got. The clever bit is just disassociating those two things—it's making decisions that can be made at a regional level where you do not need that absolute foot-on-the-ground, specialist knowledge, and then reserving other decisions where that local knowledge is imperative to a smaller level.

I think that works on an economic level as well. Conwy council has spent £24 million of shared prosperity funds over the last three years, but a third of that was on economic development. That has worked really well. We were able to create some really positive results. And some of those were actually quite small-scale projects, but, for me, it's really invaluable when you know the business, you know who they employ, there's a level of governance there that, just because you actually know that and you know their role in the community, you can have confidence moving forward. So, as with most things in life, it's a balance, and finding that appropriate balance will be the clever bit. 

That's fine, and a comprehensive answer. One of the things you've done though is transferred the growth deal into the CJC and then decided how the right governance structures are going to be in place to support delivery. Wouldn't it have been better to have done it the other way round—get the governance structures in place first, and then transfer it to the CJC?

I often make the point as local authorities that we're law takers not lawmakers. Clearly, there were guidelines as to how we could move forward. There still needs to be more clarity on the role of the CJCs. We've been told that in the autumn there'll be a menu for CJCs to select from. It'll be up to each CJC to decide what's right for them. So, there's still some uncertainty about that. I think the model we've taken for governance at a CJC level is that combined governance scrutiny. I think it'd be impractical to visit six local authorities on a regular basis. I don't think that'd be an effective way of doing it. There is a model for that already in terms of how we work with the fire authority and the police authority. These things are quite complicated, and there is still work to be done, but I think we've proceeded in the right manner. But time will tell, I guess.

Okay, thank you.

Thank you very much. Sam.

Thank you very much, Chair. Looking at the business support landscape, I'm just wondering how the growth deal fits in within the wider business support landscape and ensuring that there's not duplication in terms of what you're offering and others are offering. Whomever, Charlie or Hedd.

Again, that really interests me. I know a while ago we did a bit of an audit with the six local authorities about the different business support that they offered, and there was lots of different schemes going on. I personally was really interested to know which worked the best, essentially, because there seemed to be lots of activity, but not much measurement of how well they were performing.

As I said before, Sam, I think there is something really special about that local knowledge where you understand your community, understand those businesses. The shared prosperity fund, I think, for us, has been really transformational. In Conwy, that will be audited, we will come forward with our job figures, but there are other projects that we have all voluntarily joined in at a regional level in terms of education, skills, training. So, I think, for me, it'd be good, moving forward with the CJC—this is a personal opinion—if we could look to standardise what we're doing, but also have that hyperlocal thing where you don't go from one extreme to the other—that you recognise some things are better done at regional level and some things are better done at that local level—

Could I just ask there, Charlie—forgive me for cutting across—is that across north Wales, when you're talking about the regional level of there being some more uniformity and business support, or are you talking of Wales more generally, and then, in areas, having that local on-the-ground knowledge?

In the particular context of this meeting, I think I'm referring to the CJC, because the question was about what we do in north Wales. I think there is a role for local authorities on that very local level, but there are clearly bigger projects that I think could be delivered across the region. The real clever bit and the skill of this is untangling that and working out what you're best doing regionally and what you're best doing locally. But I think the point I was trying to make, Sam, is that I don't think we benchmark enough with local authorities in terms of learning from each other—what's working well in one region might equally work as well in Conwy. With the CJC, you do have that ability to take a step back and share that best practice and what's working well. Whether that's delivered at a local level or whether it's delivered a regional level, it is about learning from each other, I think.

Okay, that's helpful. Hedd, do you have anything to add there?

No, nothing to add. 

Thank you. The Cabinet Secretary is looking to undertake a review of business support. I'm just wondering whether you've been asked to take part in that review, and whether you're aware of the review. Charlie.

Not personally, Sam, no.

No. Okay. That's a recurring theme on that. But if we imagine that you should be included in giving some sort of direction on that review, what would you be looking for in that? I know you've spoken about a sort of CJC level, but, in terms of wider business support, what would you be looking at from your experience?

I think—, I'm a bit of a data freak at the end of the day. So, there'd be two things for me that would actually be hard evidence about what works and what doesn't work. It would need to be from the actual business community as to where they feel the gaps are, and, again, what they felt worked well, what they felt didn't work well. And it's that comparative analysis, isn't it? We could have something in Conwy that I think is amazing, but, actually, when you compare it with something that's happened in Wrexham or elsewhere, it could be better. So, I think that knowledge sharing, data driven, would be really important to me personally. 

Okay, that's helpful. And then one final point: obviously, what you're offering in terms of the north Wales growth deal must be—. Coming back to the AD project, which was birthed through the deal and then went and flew on its own two legs, to mix metaphors, there obviously must be some successes that you're achieving in business support and signposting, so are there more examples that you've that you're aware of? 

I referenced before that I think the work that Conwy and other local authorities have done with the shared prosperity fund has been really, really effective. I think some of those smaller interventions have been really impactful. I think it is important that we look at job protection, sustaining what we've got, rather than it all having to be shiny and new and new jobs, because, as I say, if you create 4,000 jobs in one area and you lose 4,000 jobs elsewhere, that's really not that beneficial.

So, we can spend money. We're quite good at spending money very quickly. It just depends on the complexity and what you're trying to achieve. And I think the growth deal was about hard-to-develop projects, where there was a gap there, and hard-to-deliver projects are, by definition, hard to deliver. So, spending money is easy. Spending it wisely is a bit more challenging, I would suggest.

Okay, thank you very much. Thank you, both. Thank you, Chair.

Okay. Jenny.

How do you ensure that the growth deal is going to be benefiting the region as a whole rather than just being concentrated in any particular area? 

I think one of the strengths we have in north Wales is a commitment to regional working, but we absolutely have to recognise there are substantial differences across the region, both in rurality from east to west and linguistically, which brings its own challenges. So, in terms of—

Well, it's own richness as well. We don't want to all be the same. But I think it's about in terms of the population benefit—how do you ensure that wealth is being spread? 

One example I could give is that, when we were looking at the figures, we looked for jobs creation per £1 million, and there was a recognition that's much more difficult in rural areas than in areas such as Deeside and Flint, industrial areas, so we set figures that are 50 per cent of what it would be, to recognise that cost. I think, when you move to regional working, there has to be an understanding that the jobs might not necessarily be in your authority. Again, it's slightly easier for me in Conwy, because, within half an hour, I can be in Chester; half an hour the other way, I can be in Holyhead. So, there is an element there where, if there are jobs being created in Flintshire and Deeside, it would benefit the young people who are going to colleges here. But it does remain a challenge. Rural areas are a unique—. I think that was a big disappointment with Trawsfynydd as well—it was one of those few big projects that could have been a real game changer for that area. Within agri-food and tourism, for me, tourism is incredibly important. It brought £1.3 billion into Conwy. But it's still low paid and a lot of that's down to seasonality. The tourism talent network looks to grow food tourism and create a real experience that people will come for that's not weather dependent, because the issue with seasonality is too many people in the summer and not enough people throughout the year, and that creates a knock-on effect for us in that hotels are quiet in the winter, and therefore restaurants don't open.

So, there are a number of challenges, and I think it's just moving away from that idea that, 'It has to be in my patch' or it has to be really readily accessible. We do have good transport links along the A55. We need to look at creating better transport via rail so people can get to jobs that maybe aren't on the doorstep, but they've got good, cheap and sustainable transport to access those. But I think, most of all, it's about the six leaders recognising the differences, celebrating the differences, and working collectively to try and find solutions for that.

Okay. Clearly, better transport—things like the Fflecsi buses, electric bikes—are these the sorts of things that you're trying to find connectivity for the whole of the region?

Absolutely. We would like more frequent train services. We would like to have more accessible sustainable transport. We know that finances aren't great. But, again, if we look at the CJC, then the regional transport plan is one of the responsibilities. So, you're looking at a situation where it's a bit more joined up. You've got the CJC looking at economic development, the CJC looking at regional transport, looking at planning, moving forward as well, about where we zone things, where we create the enterprises. So, that, on paper, looks like a much more promising way of delivery. But we recognise all these things cost money, don't they?

Right, but you've now got money on the table for transport announced in the spending review. How quickly are you getting on with commissioning improvements to the rail lines, tram services, these sorts of things?

The CJC will bring forward its transport plan. Obviously, rail is not a responsibility. We will look at the funding that we get for our bus routes and stuff. So, yes, we need to crack on. But, Hedd, have you got any details on the specifics of that?

Not on the specifics, I'm afraid, Charlie. 

Okay, all right. I'll move on to—. In your written evidence, you mentioned working in partnership with Flintshire and Wrexham councils to deliver the Flintshire and Wrexham investment zone. Could you just explain to us how this is different to the board that you are the vice chair of, Councillor McCoubrey, because there seem to be an awful lot of different organisations falling over each other? 

Obviously, it's located within Flintshire and Wrexham. It comes under the auspices of the economic ambition board. The jobs will be created in Flintshire and Wrexham in designated sites; there's £160 million of allocation there. There's really promising education and skills there. So, I'd like to think that that education and skills could be spread out across the region—again, the people living in Conwy are 30 minutes down the road from those jobs and would be able to commute to access that work. The representatives will be very strongly Flintshire and Wrexham, and growth deal as well. So, I think it's about assisting rather than lots of different bodies being involved. It's just about how we drive it forward as quickly as possible.

Obviously, you presumably want to pick up any learning to apply that to the other four local authority areas, don't you?

Yes, absolutely. And again, we've talked about the changes—. I've referenced before the challenges with rural areas. But, certainly within Conwy, 80 per cent, 90 per cent of our population lives along the coastal strip, but we have virtually no heavy industry—it's all smaller, small and medium-sized enterprises. And it strikes me when you go to sites like Tata, British Steel, there's this supply chain issue. We're never going to get heavy industry to come and move to Conwy, half an hour up the road—they want to be next door to each other. That remains a challenge for us as well. What we can attract in Conway, and Denbighshire, to a similar extent, is very different from what you're going to attract to Flintshire and Deeside. But if we can recognise that jobs 30 minutes away from my residents is equally as important or as advantageous, then I think that's a positive thing.

Okay. Just moving to the other end of the of the region, what involvement, if any, have you had with the Ynys Môn free port?

All the leaders have obviously—. We're really pleased; we've written a letter in support of it. There's a number of projects that are complementary to it. Hedd, are you okay to take up the specifics of those projects, because there's a number of them, isn't there? 

Yes, and I'd like to know how are you going to prevent it just becoming another warehouse operation, of people using the free port to import goods from elsewhere?

Thank you. Obviously, the main difference between the investment zone and the free port is that the corporate joint committee has a statutory role in the investment zone. We've been designated the accountable body, so we have a formal role there. We're not for the free port. That is Ynys Môn's, Anglesey's, responsibility, but we are a member of the shadow board, so we're involved in those conversations and we're updated. Obviously, we're really interested in the projects that will come forward, particularly those that are linked into the growth deal—so, particularly around the port, the Egni project in M-SParc, the Holyhead hydrogen hub, and our digital interventions. And, obviously, our regional skills partnership is working really closely across all three big interventions in north Wales: so, growth deal, investment zone and free port. And I know that Anglesey share that aspiration that they get high-value, high-quality jobs for local people through the free port, and it's not just warehouses and it's not displacing existing businesses in north Wales—so, looking at attracting new businesses, new opportunities, aligned to their low-carbon energy proposal around the free port.

Okay. Obviously, not displacing activity from elsewhere is really important. How do you ensure that all these projects are complementing each other, rather than people trying to compete against each other? So, things like your reserve list, I find it a bit odd that you don't have a clear idea of what your priorities are, giving them the green light to go ahead and work up the project in something that's doable.

Again, it was putting the onus on those projects to move at pace and speed and bring forward their business plan. If we had made a selection, at this stage, as to what we thought was most viable without actually seeing that business plan, I think we're going down the route of where we failed before, where something on paper looked like a really promising project, but, then, as you worked through the various stages, there were unidentified issues and, suddenly, it was, 'Well, that's not going to go ahead.' So, I think we need a good pipeline, we need a good supply, and then we need to make those hard decisions, or actual funding decisions, at a later date.

In terms of the number of projects there, which exceeds the actual funding, well, there may well be difficult decisions to be made as to which projects we do support, if they're equally as good. That would then give us the opportunity to judge them on the merits of how they fit into the overall situation, as you say, about being complementary, not duplicating. But until we're at a stage where we've got viable business plans then I think it'd be premature to allocate money, and it would stifle competition and maybe create a situation where we missed out on something that would be better.

So, whose job is it to chase progress on any of these projects, just to make sure that everybody is getting on and meeting their milestones?

Hedd, do you want to go through that one?

Yes. So, that would be our responsibility in the portfolio management office. So, we have programme managers in place who are responsible for their projects in those areas, and we engage regularly with the project sponsors; we attend project board meetings. We're very aware of the issues, and all projects face issues and delays, and, when you look at them individually, most of the time they are issues that are logical, you understand why they've come up, you understand what the sponsors are doing to try and resolve those issues, and you help them work through them. But they tend to be primarily issues around planning or funding, which can be complex and take a long time to resolve, if resolved at all. So, we will continue to do that, and we will do that with the reserve list projects as well, but, obviously, what we will not be doing is allocating funding or ring-fencing funding to those individual projects until we have a much greater degree of confidence that they will move straight into delivery, therefore de-risking things at a portfolio level.

Okay. But you don't see it as your job to pre-empt some of the challenges that are bound to happen, and helping them get over those obstacles?

Yes, absolutely. We do that on a day-to-day basis with the projects. We're trying to foresee risks that they might not necessarily have thought of themselves. We try and work through, collaboratively, the challenges that they're experiencing, whether that's looking at change requests, to bring things within the funding envelope, or to move things forward in terms of seeking alternative funding sources. There are a number of examples that we could go through where we've done that. But it takes time. It takes time to work through complicated issues on complicated projects, but that is certainly what we do on a day-to-day basis with our portfolio.

Okay. Thank you.

Thank you, Jenny. One final point from me, if I may. You've alluded to the fact that you've got a meeting now in July to talk to—I presume it's UK-Welsh Government about a reappraisal of some of the projects. Given that Trawsfynydd has dropped out, and that was 40 per cent of the investment and 12 per cent of the jobs, I think I'm correct in quoting, are you also walking back from the original totals that were at the start of the growth deal, where there was an uplift of £2.4 billion in GVA and 4,200 jobs, or is it still the target, despite the revision, to hit that 4,200 jobs target and the £2.4 billion lift in GVA across the region?

I think the conversations have to be about realistically what you can hit. Obviously we've referenced the fact that the buying power isn't the same as it was, and it would be incredibly difficult over the timescale to find a project that comes along that replaces 40 per cent of the GVA. So, we would like to think that we are ambitious and we will try and do our best with everything that comes along. But that's a once-in-a-lifetime project, Trawsfynydd, for the region that we're talking about. So, there needs to be just a sensible, realistic conversation about what is deliverable, or else you're just setting yourself up to fail, essentially, Chair. 

So, it is fair to say that there will be a walk-back from those original GVA and jobs numbers.

I don't want to pre-empt the decisions, but I think it's reasonable to have those discussions, isn't it, to present the evidence, to present the difficulties that we have and try and come to a consensus. 

Thank you very much. Thank you, both, for your evidence this morning—this afternoon now, should I say? It has greatly informed the ability of the committee to understand what's going on with the growth deal, and obviously we've taken evidence from the three organisations that are delivering in other parts of Wales, city and growth deals.

The Record of Proceedings will be sent to you, and if you have any concerns over that transcript, please do liaise with the clerking team, as that will be the official record of the meeting. And if we need to follow up with any written questions, we certainly will be in touch. But, once again, thank you for your written and oral evidence, it has been very helpful.

Diolch, pawb.

Thank you. Diolch yn fawr.

I invite committee members to look at the papers to note. Any observations from the papers to note? No.

Can I have a proposal to move into private session, please? We'll move into private session.