Economy, Trade, and Rural Affairs Committee

Therefore, we move on to item 2, to note the papers that we've received as a committee. We've received a letter from the Minister for Rural Affairs and North Wales, and Trefnydd about the Official Controls (Extension of Transitional Periods) (England & Wales) Regulations 2021. We've received a letter from the Minister for Education and Welsh Language on the legislative consent memorandum for the professional qualifications Bill. We've received a letter from the Minister for Economy on the border control posts, and a letter from the Minister for Economy on the UK shared prosperity fund. And we've also received a letter to the Minister for Economy on the international agreement, the free trade agreement between the UK, Iceland, Liechtenstein and Norway. And we've had a letter from the director general of economy, skills and natural resources to the Chair of the Public Accounts and Public Administration Committee on ensuring value for money from rural development grants, and we've received a letter from the Chair of the Public Accounts and Public Administration Committee to the president of the NFU Cymru.

Are there any issues that Members would like to raise arising from those papers at all? No.

We move on therefore to item 3 on our agenda, a scrutiny session, a general ministerial scrutiny session, and I'm pleased to welcome the Minister for Rural Affairs and North Wales, and Trefnydd to this session. I welcome you this afternoon, Minister. Could I ask therefore for you and your officials to introduce yourselves for the record, and we'll move on to questions from Members? So, I'll turn it over to you now, Minister.

Thanks very much, Chair, and welcome to you in your new position. So, I'm Lesley Griffiths, Minister for Rural Affairs and North Wales, and Trefnydd. I have three officials with me today. I have Christianne Glossop, the Chief Veterinary Officer for Wales; Tim Render, who is the director of the rural affairs directorate—that's probably not his full title—and Gwenllian Roberts. And Gwenllian is here in her capacity, she supports me in relation to north Wales. And I'm sorry, but I don't know her title either; she's a deputy director up here in north Wales.

Thank you very much indeed for that introduction. Perhaps I can just kick off then first of all with just a general question. Perhaps, as the Minister, you can tell us what your priorities are as far as your portfolio is concerned over the next five years.

So, it's a very interesting portfolio. As you know, I was very fortunate to have some of it in the previous term of Government. Obviously, north Wales is a new addition and Trefnydd. I'll put Trefnydd to one side, and for north Wales, obviously, I have a general overview making sure that all the policies from right across Government benefit north Wales in the same way as they do for other parts of Wales. It's a very specific region, so I work very closely with my ministerial colleagues. For me, I think the big opportunity up here in north Wales is around renewable energies, and if we're going to reach our climate change targets, renewable energy has a massive role to play.

I've taken a particular interest in hospitality and food and drink, because coming out of the pandemic, obviously hospitality has suffered a great deal, and that's been very apparent up here in north Wales, and, obviously, food and drink is within my portfolio.

So, if I look at my specific rural affairs portfolio, I'll break that down into agriculture, into fisheries, food and drink and animal health and welfare. For agriculture, this is a really, really uncertain time. Leaving the European Union, and obviously, the pandemic, has had a massive impact on the sector, as it has with a lot of sectors, but clearly, the uncertainty is causing, I think, a lot of angst amongst our farmers. It's very important that we bring forward the Agriculture Bill. You'll be aware that I took transitionary powers in the UK Agriculture Bill in the last term of Government, but there is a sunset clause. So, I'm really pleased that, in the legislation programme, I've got an Agriculture Bill in year 1; I think it's very important to do that. So, I'm hoping to introduce that—and I'm sure you'll be questioning me on this later on—in probably late spring of next year.

In relation to fisheries, again, a sector that's been very hard hit from those two issues I raised—leaving the European Union and the pandemic—a fisheries Bill is something else that I hope to bring through in this next term of Government; I don't have a year yet in the legislative programme. But clearly, we've had some significant concerns in relation to fisheries. You'll be aware of that cliff-edge we had, when the EU decided not to accept exports—sorry, imports, from the UK, when they reclassified the waters. Ten months on, I'm still having very difficult conversations with the UK Government. But for me, I want to make sure that the fisheries sector is as sustainable as possible, and work very closely with the sector.

In relation to food and drink, next week—and this is a great time for me to be able to plug this—we have our third Taste Wales/Blas Cymru event, a massive event. We won't have it on the same scale as we've had it previously, due to COVID restrictions still, but we've still got a very large international flavour. I think we've got delegates from 17 different countries attending next week—virtually and in person as well, very much bearing in mind the restrictions that we currently have. Our food and drink sector is amazing, and I want to work really closely with it, to make sure that we continue to reap the benefits that we've seen over the past 10, 15 years in relation to the amazing Welsh food and drink produce.

Okay. Thank you very much indeed for that, Minister. Perhaps I can now bring in Sam Kurtz to ask a few questions. Sam Kurtz.

Diolch, Gadeirydd. Good afternoon, Minister. How are you?

Prynhawn da. Very well, thank you.

Good, good. Can I quickly go back to November of last year, when the announcement was made regarding agricultural funding, and the discussions that were then had between yourself for the Welsh Government and HM Treasury? Can you explain to me your belief why HM Treasury's claims that the EU funding that they were including in the financial package was incorrect, and that led to the subsequent decrease in funding that Welsh Government mentioned?

Well, just to be clear, I don't think I personally had any discussions with HM Treasury; I'm trying to think now—it's a long time since then. Most of my discussions were with the Department for Environment, Food and Rural Affairs; the discussions at the Treasury level were made by Rebecca Evans, as the Minister for finance. But clearly, we made a lot of representations to Treasury. One of the difficulties in engaging with Treasury, from my point of view, is we always ask for a Treasury Minister to come to our inter-ministerial group meetings that we have, in relation to rural affairs, and I think that's just not been accepted. It would be so helpful, and I think DEFRA would find that really helpful as well. So, I certainly had a lot of meetings with DEFRA; I remember having a meeting with the Secretary of State for Wales as well.

But in answer to your question, what happened was the spending review, the £245 million of funding that was allocated to Welsh Government as replacement for the EU common agricultural policy funding, the UK Government took the decision to net off a significant amount of funding. It was the outstanding EU rural development plan spend, which was around £95 million. And they also didn't provide the £42 million from the pillar 2 transfer money, which we expected to get—we had made decisions about that in very good faith. So altogether, that amounted to £137 million loss of funding to Wales. We don't know if the Treasury are going to use the same methodology this year, which, unfortunately—. We've really been trying to press for some confirmation in relation to that, but that would have helped us make some decisions, I think, a little bit earlier, but we haven't had any information on that, no indication of their intention. So, again, next week I've got—. No, I think it's the week after now, I'm sorry—the week after half term, we've got the next inter-ministerial group meeting so, obviously, things will become much more apparent following the comprehensive spending review next week.

Thank you. And just on that point of the £95 million RDP funding that was unspent over the five-year period of EU funding, I believe it was, or is it five years and can be spent over seven—I think there was a bit of a technicality on that? Why is that being not classed—

Seven.

—as money if it's unspent within this funding pool?

I'm sorry, Sam, but what did you say? Why is that not—?

Why is that classed as not being part of this if that money is unspent?

I'm sorry, I don't understand your question.

So, the EU funding that HM Treasury are saying is available to Welsh Government, which you're saying is a shortfall of £95 million—if that's unspent, why can that not be allocated towards this funding to make up the shortfall?

So, the way we had given out that funding, it might have been unspent at that particular time, but it will be spent over the course of the period of time that it should be.

Okay. So, that would be in a separate equation then when it comes to final spend.

Yes.

Yes, okay. Thank you, that's helpful.

I'm just wanting to move on then to the sustainable farming scheme, if I may. I'm wondering if a) firstly, you have any pilots in line for that, and if you do, if you have some further information around that; and what you see as the key aims of the scheme with regards to food production and environmentalism.

Thank you. So, the sustainable farming scheme is the scheme that we will bring in once the basic payment scheme finishes. Just to be very clear, I've made it very clear that we won't bring in the new scheme until we're absolutely ready. So, I have committed to keep the basic payment scheme to the end of 2023, which I think was really important in order to bring a little bit of certainty to the sector.

So, we've consulted—let's have a think about this now—three times now in relation to the sustainable farming scheme. We've done a great deal of early work to co-design the scheme. Even during the pandemic, we still managed to reach a significant number of farmers to work very closely on it. What we've made very clear, and you're from the farming community and I think the majority of farmers would say that the common agricultural policy hasn't done what it should have done for the Welsh agricultural sector—it's not made it as competitive as it should be or as productive as it should be. And I think the sustainable farming scheme, in the beginning when we started proposing it, people perhaps understood what we were trying to do around environmental goods and clearly food production—food is not a public good. It’s got a market, and therefore, public goods have to be things that don’t have markets: so, your soil quality, your air quality, your water quality. However, sustainable food production, for me, is really important within this scheme, and therefore, I think we were the only country within the UK that looked to have the word 'food' in all our consultations. If you look at the first one the UK Government brought forward, it didn’t mention the word 'food'. So, I think that was something that changed that for the first consultation. I think that word 'food' was very, very important to have in consultations going forward.

So, the sustainable farming scheme is about making sure that public money—. At the end of the day, this is public money and I think for many, many years, we’ve had £337 million that has landed from Brussels into the Welsh Government budget to give to our farmers with very little scrutiny, if we’re honest. From now on, that money will have to be much more scrutinised by you. So, it’s really important that people understand what that money is going forwards. So, I will be launching a range of interventions, probably next year, to help prepare the ground for the new scheme. We’re going to pilot the process that we use to deliver it, and we’re also going to have a further phase of co-design with the industry to make sure that all types of farms—. And certainly at the moment, I’m not being told that not all types of farms can be part of this scheme, but that will obviously help our proposals going forward and will really shape the scheme to make sure it’s fit for purpose.

Okay, thank you. With regards to pilots then, do you envisage a pilot scheme coming out at any point within a certain area to ensure that this—. As you say, you’re not going to roll it out until it’s absolutely ready, but surely you won’t know that until there is a little bit of trial and error. A brand new scheme, as you’ll be aware, is going to have a few teething problems, as it were. So, do you envisage a pilot at all with it?

So, when you say 'area', do you mean a geographical area or do you mean a type of farm area?

Whatever the Welsh Government are looking at. Is there—

Yes. So, I would say it’s really important that all types of farms are part of the pilot. From a geographical point of view, again—. So, if you think of your hill farms, you’d probably think more of north Wales, so I’m sure there will be a spread around Wales as well. But, for me, the most important thing is the type of farm.

Thank you, that’s incredibly helpful. Do you have any targets in mind for the sustainable farming scheme to increase food self-sufficiency levels in Wales?

I think we have to be honest in relation to self sufficiency. We’re never going to be self sufficient, but I think there is certainly the ability and the potential to increase that. As part of my community food strategy, I’m looking at what more we can do around self sufficiency. I’ve been very keen to promote horticulture while I’ve been in post. It was, and still is, a very, very small part of the agricultural sector here in Wales, and I think there is massive potential there for horticultural farms. So, certainly, that is something that we can look at going forward.

Thank you. And then, just finally, given the United Kingdom Internal Market Act 2020, what discussions are you having with other devolved nations and the UK Government with regard to co-ordinating farming schemes going forward, in terms of our close relations with other UK nations?

So, we have met, as four countries, since November of 2016, and that was done at our instigation. It was myself and my officials who encouraged the other three UK countries to meet regularly, and from that came the inter-ministerial group that I’ve referred to a couple of times. We normally meet about every six weeks, and pre COVID we would go around the four countries; when it was in your country, you would chair that. So, the next one should be in Cardiff. So, even though it’s virtual, I will be chairing it. It was supposed to be on Tuesday, but I think we’ve now got it the following week. We have always made it very clear—you know, agriculture is wholly devolved, so we can bring forward a bespoke policy for Wales, which I think is really important. But what we have done is agreed a provisional framework. That enables effective co-ordination, really, of our four future agricultural support schemes. But we all recognise that we all have devolved competence in that area. The framework will be finalised following scrutiny by each of the legislatures. So, you will have the ability to scrutinise that.

We’ve also got a policy collaboration group, and that’s been established to enable some co-ordination between the four Governments. That meets on a weekly—not weekly, a monthly basis, sorry. So, the framework will enable the function of the UK internal market, but you do have to acknowledge that there will be policy divergence. I think I went on record as saying very early on that, while we would have four different agricultural policies, there probably wouldn’t be a huge amount of difference between the four of them. There will be some difference, I’m sure, but we don't—. We always share; I think we can learn from each other. I’m one of those Ministers that doesn’t think, just because England’s doing it, or Scotland’s doing it, we can’t learn from it; we all learn from each other. At the next IMG, I think Northern Ireland—I think the Minister, Minister Poots, is going to share some of his thinking. So, we certainly learn from each other.

Excellent. Thank you, Minister. Diolch, Cadeirydd.

Diolch, Sam. Before I bring in Sarah Murphy on another area of policy, I believe Cefin Campbell would just like to come in on agricultural support. Cefin.

Thank you very much, Chair, and good afternoon.

Good afternoon.

I want to draw your attention to page 44, top of that page, in the report, and I'm just going to read one part of that paragraph, where it says,

‘food...should not be classed as a public good, and so should not receive direct state funding.’

You will understand—and I have listened carefully to what you have already said on this issue—you will understand that asking farmers to move from somewhere where they're producing food mainly to being responsible for producing public goods is going to be a very challenging time for farmers. Now, some two or three years of assurance is what they've got until 2025 currently. Therefore, do you see that the money that's going towards food production is going to come to an end in 2025, or do you envisage that there will be a period of continuing to fund this, over that time of transition to some sort of new production scheme? I would just like some sort of explanation on that. Thank you very much.

Minister.

Okay. Thank you. So, I've always made it very clear there would be no cliff edge. We've got to manage this in a very clear way, and so what we've set out, following the consultation, is that we'll have that multi-year transition. We'll consult on our approach to that. So, as I said in an earlier answer to Sam, I've committed to keeping BPS til the end of 2023. All of this depends on UK Government funding, so I do give that warning. But, once we've got some clarity, we'll work very hard with our stakeholders to develop an appropriate model for that transition from BPS to the sustainable farming scheme. I'll have an outreach programme to make sure that everybody is absolutely aware of what's going on.

I should say, specifically because you asked about food production, that the majority of farms that we've already engaged with already provide and produce public goods. They're not getting paid for them at the moment. That's unfair. So, I've been on farms where the carbon storage, for instance, just in one field is beyond what I would've ever guessed they're doing. They're not getting paid for that at the moment; I don't think that's right. So, we will ensure that those public goods are rewarded.

I have yet to come across a farm, or officials have not informed me of any farms that we've come to, as part of the work we're doing in relation to the sustainable farming scheme, that don't produce any public goods. We are trying to find a way of ensuring that food production is in that sustainable farming scheme, as I've said. Food is not a public good. It has a market, so you can't have that as part of it. But, at the current time, I have not been told there is any farm that isn't already producing some sorts of public goods, and that's the thing—to make sure that, when that scheme comes forward, every farm is able to participate in it. If they want to. If they want to.

Okay. Yes. Carolyn would like to come in on this specific issue.

I might be coming in at the wrong point, but can I ask the question? You can tell me if I'm wrong. Okay. On page 43, it says:

'The Welsh Government has argued that as food has a market value it should not be classed as a public good, and so should not receive direct state funding.'

But Welsh Government does provide state funding for food purchase and distribution through the free schools meals programme and provided further support to shielding groups through the pandemic. So, that is funded, then, by the state. So, I'm not sure whether that should be brought in now with Lesley or later. So, just a little bit of contradiction there. That was all, really. Clarification on that. Can you hear me, Lesley, because I'm told that my voice is quiet?

I can hear you, yes. I can hear you. I'm just trying to get my head around your question.

Yes. So, on page 43, it says, 'The Welsh Gov—

I haven't got that report, sorry. [Inaudible.]

Sorry. Okay. And I'm just wondering, because I'm not normally on this committee, whether I've come in at the right place or whether it should be discussed later under state-aid funding, but—. So, it says:

'The Welsh Government has argued that as food has a market value it should not be classed as a public good, and so should not receive direct state funding.'

But Welsh Government provides state funding for food purchase and distribution through the free school meals programme. So, there is some crossover there with food distribution. So, it was just, really, clarity over that, really. So—.

Okay. Well, I suppose my answer to that is, you know, social policy is very different to paying people to produce food.

Yes. Okay, great. Thank you. And there was just one more quick one, if that's okay. It's been mentioned to me by some of the smaller farmers—I know you said you are working on it over the next few years—regarding the sustainable farming scheme. Would you be looking at introducing a cap? Because, at the moment, there is a cap of £300,000 for the large farms. So, I've been asked to ask if you are going to look at that as well.

Okay. Yes. As you say, we're working up the details of the scheme. I think for me, the most important thing is the active farmer is rewarded. Because, again, with CAP, that isn't always the case. And that came out very clearly, I think, in all our consultations from a small farmer point of view. That's certainly what they're asking me—to make sure that it's the active farmers that are rewarded.

Based on the outcomes, really, of what they're doing, I guess, then. Great, thank you.

Okay, thank you very much. If we now move on to another area of policy, and I'll bring Sarah Murphy in here. Sarah.

Thank you, Chair. Hello, Minister. I'm going to be asking questions on the bovine TB eradication programme in Wales. So, it is really encouraging to see that there has been an overall decrease in bovine TB incidents across Wales. However, it continues to put a considerable financial and emotional strain on farming families, and the committee is also aware of the increase of cases in north Wales, which is typically considered to be a low-case area. So, could we have an update on the bovine TB picture in Wales, and understand, from your perspective, what is happening in north Wales that is causing an increase to case figures?

Well, I'm very lucky that I've got our TB expert with us in the form of Christianne, so I will turn to Christianne in a bit to answer some of the detailed questions, particularly around north Wales. But, if you look at the latest statistics, which are published regularly, we did see the lowest annual number of new TB incidents since 2001 during last year. However, as you say, I know how difficult it is for farms that do have TB breakdowns, and I don't underestimate the anxiety that it does cause. I know when they're having their TB testing—. I've been on farms myself where TB testing is being carried out, so I absolutely understand that.

In the 12 months to June of this year, we did see a 3 per cent increase, unfortunately, in new incidents in the previous 12 months, and that's the first time in almost three years that we have had an increase in that 12-month rolling total, when we compare it with the previous period. It is really important that we work very closely with the farmer and with their private vet as well as with ourselves, and we had a refresh of our eradication programme about four years ago, and I'm due to make a statement next month in the Chamber on the next stage of the programme. As you say, we did have the spike in incidents in north-west Wales, particularly, and a little bit in north-east Wales, in this area, actually, which—you know, we did have to have a specific look at why that was. So, I'm going to hand over to Christianne now, because she's much closer to this than I am. Thank you, Christianne.

Thank you, Minister. Yes, we would all agree that the increased incidence of TB in north Wales is really disappointing. We've been running this programme now for a number of years, and we've been applying four basic principles of infectious disease control, because the disease picture across Wales is very different, and so, alongside finding infection quickly when it arrives and stopping it spreading and stamping it out, we've also been doing all we can to minimise the risk of disease appearing in the first place, so, basically, keeping infection out, and, in north Wales, that's been very much our position over the years.

So, to now be in a situation where we can say that, in every area of Wales—. Apart from the low TB area in north Wales and the north part of our intermediate area, in every other area, we've seen an improvement. There's a little bit, there's a tip, around the edge of Pembrokeshire that is a little bit worse, but, if you look at north Wales, that's the area we're most concerned about, and a huge amount of effort has gone into trying to understand what's been happening.

And so, what we can understand from the disease investigation in that area is that we think, perhaps two or maybe three years ago, introduction of cattle into that area seeded infection. Now, when we move cattle into that area, they have to be pre-movement tested, of course, but it's also very important for everyone purchasing cattle to understand the TB history of the farm from which they're buying cattle, and also the history and the TB picture in the area from which they're buying. We've called this informed purchasing or risk-based trading, but trying to understand what the risks are. But we think that's what happened two or three years ago, and, following that, there's been some lateral spread of infection between farms. There's quite a lot of cattle movement—if you look at cattle movement pictures within north Wales, there's quite a lot of local movement, sometimes even within one farming business, because that farm has multiple sites where animals move, but also between farms that are different businesses.

So, what we're doing at the moment—we're doing two things. First of all, on the farms where we're finding infection, we're doing everything we can to bear down on the weight of infection and try to remove infected cattle as quickly as possible. But we're also looking at how we can minimise the risk of further infection being brought into the area by working with the farmers in the area, by actually going in and post-movement testing cattle on a farm that have moved on. So, we're basically doing what we can, but this is a team effort. We're not the ones purchasing cattle into that area. It's, of course, the farmers making their own business decisions to replace stock or to bring in new genetics. So, on that basis we have to work very closely with those farmers and their vets to help them—equip them, really—to make the wisest of purchasing decisions. So, that's about the provision of information about the source farms, but also to have another look at the pre and post-movement testing arrangements. And I think you'll find that, when the Minister makes her statement next month, we'll be talking some more about that. There's a lot of discussion in the industry about the diagnostics around TB, and the tests and the ideal tests to use for pre-movement testing is very much part of that discussion.

Thank you. That was a wonderful answer, a very informative answer. It kind of moves on quite nicely to my next question, Minister. So, with 10,000 cattle culled annually due to bovine TB, could we please get an update on plans for a mandatory system on informed purchasing and ask what this would look like for farmers to ensure they are not disadvantaged by any further outbreaks?

I think before you move to mandatory, you have to look at voluntary. And a few years ago now, probably three or four years ago—Christianne can nod; I think it was about three or four years ago—I gave some funding for all our markets to very clearly display the information that I believed farmers needed when they were purchasing cattle. So, we've really promoted the benefits of informed purchasing to farmers, and to the market operators. We've really encouraged that information to be displayed by our market operators.

In relation to a mandatory scheme, we would need legislative changes. So, we would have to change the Tuberculosis (Wales) Order 2010. That would require consultation with the industry and, at the moment, I just do not have the legal resources to be able to do that. I'm sure you'll appreciate that, with leaving the European Union, the call on legislation has been very—I can't even begin to think how many pieces of legislation have gone through in my portfolio in the last few years. So, I just haven't had the legislative or legal capacity to be able to do that. But, as I said, I don't think we should just sit back and wait for it to be mandatory, there's lots you can do from a voluntary perspective, and we gave the funding. I don't know if any colleagues have been to farmers' markets, but it's really good to be able to see that information so that farmers can make that informed decision before they purchase the cattle.

Okay. And in the update that will be coming next month, will that be part of this? Will we get an understanding of when that might be possible to do, then?

I don't think it will be part of the refreshed TB eradication programme, no. This is something that, once I get the legal capacity to be able to do it, I can look at it. But, for me, the most important thing is that information is there. We gave funding to enable that information to be there, and farmers really engage with it. We can refer to it in the statement that I will make. And what I will be announcing is a consultation on many questions that Christianne just referred to. So, we can engage with our stakeholders around that.

Okay, wonderful. Thank you. My last question, then: could the committee get an update on the roll-out of the bovine vaccination deployments aiming to be done by 2025?

This is really exciting. In the summer, I met with Glyn Hewinson, who is a wonderful academic who is now at Aberystwyth University and is helping us in relation to the TB programme. And he said to me that his answer around a cattle TB vaccine is always 10 years hence. So, he said, whenever he's asked he's always said, 'Oh, we'll get that in 10 years', but he believes we will actually get it in 2025, which might seem a long way off but it really isn't. So, I think it is something that will arrive, hopefully, in 2025, and I do think if it comes to fruition, it will be a very powerful tool in our little toolkit in the battle against this awful disease.

So, the aim is to have a deployable cattle TB vaccine with a test that can differentiate infected from vaccinated animals by 2025, and hopefully that will, as you say, reduce the prevalence and the incidence of the disease. So, there's a huge amount of research and development work going on and we're considering strategies for how we then incorporate the cattle vaccination into our TB eradication programme. Because as I say, it's only, really, three or four years down the road.

APHA, which is the Animal and Plant Health Agency—[Inaudible.]—

We seem to have lost you there, Minister. Can you hear us? No?

—have been awarded a contract—[Inaudible.] So, it's great to be able to say that, hopefully—

Sorry. Sorry to stop you there, Minister—

Can you hear me?

Sorry to stop you there, Minister. We did lose you for probably about 20 seconds, so I don't know whether you just want to rewind a little bit—

I've forgotten what I said. [Laughter.]

—and just tell us what you were talking about, if that's possible. Thanks.

So, did you hear me saying that we should be having it by 2025?

Yes, we did, we did.

You heard all that. Did you hear me saying about APHA? The Animal and Plant Health Agency?

You'd started talking about APHA, yes.

Okay. They've awarded a contract to run some veterinary field trials of the cattle BCG vaccine, and the companion DIVA, the skin test that they do, as well. So, they're going to be conducted on behalf of DEFRA and the Welsh Government and the Scottish Government. And I was just saying that I really wanted to pay tribute to Christianne, because I think this is something that she's really pushed over the past 15, maybe even a few more years than that. We've really led the way here in Wales to try and get this vaccine here, so it is a really exciting time, I think.

Thank you, Minister. That's all my questions.

Thanks very much, Sarah. Before I move on to Vikki Howells, I think Sam Kurtz wants to come in on this issue. Sam.

Diolch, Cadeirydd. Thank you, Minister. Thank you, Christianne, for your answers. Bovine TB is a subject that I think we could, as a committee, spent all day discussing, because it's been ongoing in Wales for so long and there's so many things happening now with the vaccine and new testing regimes. Minister, you will be aware that I've raised the Enferplex test with you previously as another tool in the armoury to try and tackle this.

If I could refer to the programme for government that was published earlier by your Government. Under the rural affairs section, it says:

'Forbid the culling of badgers to control the spread of TB in cattle.'

Are there any plans to control TB in wildlife?

So, what we've done—and I've always done it since I've been in post—is we've ruled out the sort of England-style badger cull that we see over the border. None of the science for me, and none of the discussions I have with Christianne and her team, and with people like Glyn Hewinson, et cetera, have led me to think that that is the correct way of dealing with it. You'll be aware of the bespoke action plans that we've had for the last sort of three or four years, where if you have a farm that's in a long-term outbreak, so 18 months plus of TB, we've had these bespoke action plans. As part of those, wildlife is always looked at—if that is what we believe, or what the farmers believe, and the vets believe, is the cause of the TB breakdown. It isn't always, and I think on quite a few of the farms where we've had the bespoke action plans, wildlife hasn't been a factor at all. I will ask Christianne to say a little bit more, if she wants to.

Yes, sure. Thank you, Minister. So, yes, it's been really interesting looking at these long-term breakdowns and we don't want to have long-term breakdowns, of course we don't. And so we're doing what we can to work with the farmer and their vet to deal with them. But it's been really interesting looking at each of those breakdowns and trying to understand the drivers of infection. We've got long-term breakdowns where we have no evidence of badgers on the farm, and we've looked and the farmer's looked, and there is no evidence at all. On other farms, we have evidence of badgers, but no evidence of infection. So, this is a complicated dynamic, and we have had success applying some of the action plans where we have had no intervention with wildlife at all. So, I'm sure you would agree that it's not simple, and each farm is very different, and you do have to understand what's not just bringing infection into the farm, but perpetuating that disease.

You've just mentioned some additional novel tests for TB that are actually testing animals in a different way. So, the one you mentioned is an antibody test, and other antibody tests are available, for example, the IDEXX test, which is part of our programme very much now. So, by applying different approaches to testing, we are in a better place to find those—I call them kind of Trojan animals, the cattle that are holding infection in the herd, but they're not testing positive to the skin test. It's ever so important that we find those animals so that we can remove that source of infection as well. Quite often, that can be the situation, rather than a wildlife component, although we do recognise we have infected badgers in parts of Wales, and we have infected badgers on some farms. But if we look across the whole of the country, and we look at the work we're doing with the action plans, we do find that it's very quick to assume that the badger is perpetuating the problem when it may well not be.

So, we've got to look at this in the round, and improving our diagnostics and our approach in cattle is a continual process. There'll always be a new test, won't there? There'll always be another way of looking at this, and that's why, actually, working with the Sêr Cymru centre of excellence for TB research in Aberystwyth, we're really trying to tighten up on how we approach the testing side within the cattle herd as well as considering what wildlife might be contributing to the problem.

Thank you. And—

Sorry, Sam. Just to be clear on this issue, then, can you just be clear and tell us that, obviously, as part of your policy you have been removing some infected badgers from severely affected farms over the last few years? And if you have, would you say that that policy has been successful on those specific farms?

Do you want me to take that, Minister? Yes, sure, thank you. So, within the action plan work, on a very small number of farms, alongside the survey work to look to see if we've got badgers on the farm, we've gone in and with the farmer's agreement, and under licence, cage-trapped and tested the badgers associated with the farm, actually on the farm—not surrounding farms, just that farm. Now, even that process is very time consuming, it's very exacting and it's very expensive. Some farmers have chosen not to let us do that work, for all kinds of reasons. I'm sure you can understand that sometimes they just don't want to be singled out, they're worried about security, for good reason, actually. So it's only on a handful of farms that we've actually delivered that approach. We're trying to learn lessons, but because the numbers are small, and it's only been running for a very short period of time, to declare success or failure is actually not possible with the tiny numbers that we have. So, we're now really having to look at the cost-effectiveness of that approach, and that's a work in progress.

Thank you. Chair, you came in on exactly the point that I was going to raise there. Is it the case, then, when the trapped test of the badgers, and they've come back as negative, the Welsh Government is undertaking a cull of those wildlife within that area? Is that true? Or is that—? So, there'd be no badgers culled under this programme.

So, the badgers that have been humanely euthanised are the test-positive badgers on that specific farm. So, it's not removing all the badgers on the farm, it's the test-positive badgers, and it's not going wider than the boundaries of that farm.

That's incredibly helpful, thank you. Chair, those are my questions, thank you.

Thank you very much indeed. So, if we move on then to another area of policy, and I'll bring Vikki Howells in here. Vikki.

Thank you very much, Chair. Good afternoon, Minister. I've got a series of questions on companion animal welfare. Firstly, we know that, during the pandemic, lots more families have decided to purchase pets, haven't they? And I know that there has been some concern from the RSPCA, for example, that we've seen an increase in naive ownership, and part of that, of course, then comes back to the way that pets are sourced. So, could you give us an update on the work that the Welsh Government is doing to ensure responsible sourcing of pets, please?

When you say 'lots more', I wonder if you have any idea how many, because I was absolutely astounded when I asked that question. Unfortunately, we don't have a figure for Wales, but across the UK 3.2 million more households have had a pet since the start of the pandemic, which is just incredible. And if you think of the veterinary capacity that's required for 3.2 million more households—. So, I would love to know the figure for Wales. I don't know if we are able to get it. But when I asked that question I was absolutely astounded to believe it, but not surprised; two members of my family, actually, have also got new pets since the beginning of the pandemic. So, you're absolutely right. We have seen a significant increase in that.

Obviously, responsible ownership of animals is absolutely a priority for the Welsh Government and for the Wales animal health and welfare framework group, which I work very closely with. We've got specific commitments in our programme for government. I mentioned at the start, when the Chair asked me about priorities, the five-year plan that we will be bringing forward hopefully in the next month, about what we will be looking at right across—not just companion animals but right across the animal world.

You'll be aware—I know how pleased you were and how much you lobbied me in the previous term around this, Vikki—of the Animal Welfare (Licensing of Activities Involving Animals) (Wales) Regulations 2021, which came into force on 10 September. That now makes it an offence to sell a puppy or a kitten where the seller has not bred them themselves or on the premises. I was really pleased to bring that legislation forward, just before the end of the previous Senedd term. I think that really will improve things significantly; only breeders will be able to sell direct to the new owner. I think there were lots of loopholes that needed closing, and those regulations have certainly done that. We've worked very hard with the local authorities around this, and we will continue to work with the local authority enforcement pilot project that we brought in, to make sure that the guidance is correct, or if we need to improve it we can look at that, and that any advice that is available to the buying public is the most appropriate.

You'll be aware that in the run-up to every Christmas we have a social media campaign, #PawsPreventProtect, and that reminds prospective purchasers of the need to do their research before buying a puppy or any other pet. We will continue to issue that very strong messaging. I know Christianne and her team are always in contact with third sector organisations. Some of them—well, the majority of them—have excellent information. You mentioned the RSPCA; there are other third sector organisations that work really closely with the general public. When we launched the regulations, I did it from the Dogs Trust, and I learnt—I didn't know this—that they offer workshops, if you like, to work with people, not just for where they rehouse pets, but also if somebody has a pet that they've got, perhaps particularly a rescue pet that they're having difficulties with, they help them with that. So, I think we owe a lot to the third sector organisations and it's really important we work closely with them.

Thanks very much. That's really helpful. Turning to the Wales animal health and welfare framework group review now, then, could you give us some information about how the report recommendations are being implemented?

You mean on the breeding of dogs.

Yes, sorry—yes.

We had the review of the regulations, and they were agreed in early 2019, and then of course we had that BBC documentary on puppy farming, and I think that really brought things to the fore then, and really shone a spotlight in a way that was very, very difficult for everyone. So, we had that review, and we're looking to the recommendations now. We're looking at an inspection rating system. We're reviewing the number of staff—the ratio per adult dog. It's really important that we look at the barriers for enforcement, and one of the reasons we gave the funding was because, clearly, that was a barrier. So, we overcame that by the funding. We're looking at all those recommendations and the findings. Already, we have got work under way in relation to that.

I mentioned the funding that we put forward. That was a three-year project. We're probably in the third year now, thinking about it—time goes very quickly. And that's making sure that the inspectors who work within the local authorities have the most appropriate training or enhanced training if that's needed, better guidance for the inspectors and improved use of resources within the local authorities and across Wales. Because we certainly saw—I think 'postcode lottery' is probably the wrong phrase, but you know what I'm trying to say; different enforcement across the country. I know Christianne's team are working really closely with them.

We've also got a very robust training programme for local authority inspectors in place now, and that's being delivered by a project lead who is someone in Monmouthshire council. It's really good that that programme has already started as well. We're also looking at setting up a database, because I think it's important that we have as much information as possible that can be shared, and that work is being undertaken at the moment. I think the tenders might be out at the current time for that piece of work. We're consulting on the amendments to the statutory guidance that accompanied the breeding regulations. That closed, I think, a week after the other regulations came into place. So, there's a huge amount of work currently being undertaken.

Thanks. Just a final question on that: to what extent would cat breeding have a spotlight shone on it as part of all this? Because it's often the dogs, isn't it, that get the spotlight shone on them? And I note that we've taken evidence from the Companion Animal Welfare Group Wales, who highlight the fact that they believe that more needs to be done to regulate cat breeding.

I think you're right. I think whenever you shine a torch on one area, then, invariably, it does spread out. I think it's really important that we share best practice in relation to this, and I was very keen that kittens were part of the regulations that we did bring forward in September.

Thank you.

Thank you very much. If I can now bring in Cefin Campbell. Cefin, you've got a set of questions.

Could you give us an update, Minister, on the seafood strategy for Wales that was launched in 2016? In that strategy, there was a target for delivering an increase of about 30 per cent. So, could you give us an update on whether we've delivered that target and what the latest information is about the strategy? Thank you.

I don't have the figures to hand as to whether we did reach that target. We've certainly, unfortunately, encountered a few difficulties in relation to that.

Perhaps you could forward to us that information, then, as a committee, when that information is available to you. We'd be very grateful for that.

Yes, I'll certainly do that. We've certainly had some difficulties around exporting our seafood—I mentioned it earlier on. With the reclassification of the waters that the EU did, we were unable to export. I think what is really important is that we continue to work very closely with the sector. I remember a couple of events that we had, probably around the time we brought the strategy forward, to promote seafood and trying to ensure that people looked at seafood as an item of food of choice. But I will certainly update the committee, Chair.

Thank you. Cefin.

Thank you very much. About three weeks ago, I visited a company in Anglesey that is developing aquaculture, and there is great potential, in the opinion of many experts, in the sector. So, could I ask you what you're doing to support and promote the aquaculture industry in Wales?

As part of our work in relation to bringing forward a bespoke fisheries Bill, which I hope to do, as you heard me say at the beginning, this Senedd term—. Sorry—

If you're having trouble, Minister, perhaps one of your officials would just take over for a couple of minutes, if that's possible, or are you—?

I'm fine now. Thank you. Sorry about that. As part of the preparation, we did have a consultation called 'Brexit and our Seas'—it was a bit of a theme; we had 'Brexit and our land' and then we had 'Brexit and our Seas'—to see what was required in order to support the industry. Again, it's been hit very badly by leaving the European Union, and, of course, the COVID pandemic.

So, we continue to work very closely. They're very much a part of our discussions in relation to our food and drink strategy for instance, and we have supported them—we were the first country in the UK to support the sector when we were hit by the COVID-19 pandemic, because, clearly, boats were just tied up, and it was really important they had that support. We will be looking at how we make the sector more sustainable, more environmentally active, for instance, more economically viable. We want it to thrive and be a very modern fishing industry. We've had further quotas, and this will be, again, part of our discussions. We've got the joint fisheries statement that I'm currently working on with the other UK countries. That, again, is in draft stage at the moment, but we'll be bringing forward.

We've also got, I should have said, within the food and drink part of my division, a seafood cluster. I'm not sure, Cefin, if you're aware that we have a variety of clusters within the food and drink part of the department, and there is a specific seafood cluster that works very closely with all of our seafood companies. The way the cluster works is that they learn from each other, they share information. I've always been really impressed with the way the food and drink clusters—. I'm trying to think how many we've got now. We've probably got about a dozen, and seafood is one of them, and they will be there at Taste Wales next week.

Thank you for that explanation on sea fishing and seafood. I think the question that I had was more specific about the aquaculture sector, which is a sector that has great potential in Wales, and I was asking about your support for that specific sector.

Again, I can think of several aquaculture companies up here in north Wales, and certainly around the Gower, that we've supported. What we've tried to do is make sure that we develop policy in a very clear direction for them. What we've also been doing to support them is encourage innovative technology to make sure that they keep up—low-carbon products for instance, to make sure they're part of that as well. And also to consider any necessary changes to regulatory regimes that could be needed for aquaculture in Wales.

Diolch.

Diolch, Cefin. If I can bring Carolyn Thomas to ask the next set of questions. My apologies to Carolyn; Carolyn, you wanted to come in on bovine TB, so by all means, ask that question as well as some of the other questions you've got for the Minister.

Thank you. I wasn't sure whether I was permitted to do that. Could you provide clarification—? I've been told that 80 per cent of infections in low-risk areas of bovine TB are through cattle movement. Do you think that's a good assumption, a good figure, 80 per cent?

I'm not sure if I would want to put a figure on it. I'll bring Christianne in, but, certainly, in the north Wales outbreak that we saw, where we saw that rise in incidence, Christianne works very closely—. Each area has a TB eradication board, and Christianne works very closely with them, and it was certainly believed that the cattle movement was part of it, and the purchasing. But I will bring Christianne in because, as I said earlier, she's very much closer to the north Wales increase in incidence that we saw. Christianne.

Thank you, Minister. Yes, that figure relates to north Wales, and it relates to the detailed epidemiological investigations that have been going on up there. Any time we find a new TB breakdown, we want to try and understand where it came from, and in north Wales—. The way we would investigate that is to look at movements of cattle onto the farm over the period of time since the last TB test, and also go back to do what we call a 'backwards tracing' to the farm where those cattle came from to find out what's happening with TB on that farm. So, it's that kind of investigation that helped us pin down approximately eight of out 10 new breakdowns in north Wales to cattle movements. That doesn't mean the other breakdowns are nothing to do with cattle movement; it's just harder to demonstrate. If we look at a high TB incidence area, such as south-west Wales, there, because there's a lot of TB in the area, using new genetic techniques—you may have heard of the whole genome sequencing work that we're doing—we're able to make the connections between one breakdown and another. And in a high-incidence area, it's far more likely that infection is spreading in the locality, and that's why we don't come up with that eight in 10 figure. It's a cloudier picture than it is in north Wales, but it is the north Wales investigation that's given us that 80 per cent figure that you've quoted.

I'm a North Wales regional Member, so—

Oh, there we go—you know all about it.

That's where it's come from—I was just checking. And I know that the North Wales Wildlife Trust, if there are any roadside badgers that have been hit, in accidents, I think they test as well for TB, don't they—any roadside kill as well.

Yes, absolutely, and we're continuing with that. We've just put some further funding into that; that's a really important part of this.

Yes. Thank you for that. And then there was—another sneaky question, sorry. It was just about pets, about dogs. Would it be possible to check for chips in dogs at border controls as well? Is that something that could be looked into as we look at having the border controls movement of animals? Could we just scan to see if there is a chip in that dog, and if they're on a register of lost pets, maybe? Is that something we could look into?

We could certainly look into it.

Thank you. Great, thanks. And then I thought I was going to cover fisheries, but I think that's been done, hasn't it, really—all the questions have been answered so far.

Do you want to ask another question?

No, not at all, but thank you—it's been really informative, actually.

Okay. I'll move on then to Vikki Howells. Vikki.

Thank you very much, Chair. I've got some final questions then on food and drink. So, firstly, when will the new food and drink strategy be published?

Well, I had hoped to publish it next week, at Taste Wales, but, unfortunately, it's not going to be ready for next week. The previous strategy was so successful—you'll be aware of the target that we had to increase the food and drink sector by 30 per cent, from, I think it was 2010-20, and we achieved that much earlier. We've got an amazing food and drink sector here in Wales, and we've got a real long-term vision for it. The goals are for growth and productivity improvement that will really benefit the workforce, and it's an industry that's really got high levels of sustainability. So, I won't be launching it next week, but I do hope to be launching it—I'd like to say before Christmas, but it may be the new year.

Thank you. And what about the proposed community food strategy as well? I know there's been a lot of interest around that, particularly focusing on the idea of cutting our food miles and sourcing our food responsibly.

Yes, so this was obviously one of our programme for government commitments. Work has already started on it—quite a significant amount of work has started. So, what we're doing at the moment is looking at the scope for it. When you start to dig—it's always the way, when you start to scratch the surface of these things, you realise how much work is going on right across Government. So, I've been working very closely with Jane Hutt, as the Minister for Social Justice—a huge amount of work going on there in relation to food poverty, for instance. And what we want to do is bring it all together.

For me, it's how we increase local food and produce, getting it into our public services, so making sure it's on the plates of our children with their school meals, on the plates of our patients in our hospitals. Because I think we do have a real opportunity here to do that; the potential is to deliver so many benefits. So, early days—obviously, we're only five months into a five-year term of Government, but I'm very pleased with the progress that we've done. The food division is one of those teams—like most of the teams in Welsh Government—you ask a huge amount of them, but we have had one official working very closely on this, because I think it is really important that we get as much information out around the scope so that we can then put, pardon the pun, the meat on the bones.

There are lots of relevant factors and issues that do go right across Government. Sorry, I've just—. Can you hear me?

Yes.

You can hear me. Sorry, it just came up—my internet was unstable.

We will consult, and I don't know when that will be, but I am pleased with the progress that's been made to date.

That's great, and I'm really pleased to hear about the work you've been doing with other Ministers as well. Have you been keeping an eye on the growth of community food pantries as part of that, because I think they've got tremendous capacity to address food poverty, food miles and food waste—so many different things?

Yes, absolutely, I'm keeping an eye on that. It's interesting, I went on a farm visit not expecting to hear about the amazing—what were they, fruit and veg boxes, I suppose is a better way of putting it? So, I spoke to the farmer and her husband, who isn't the farmer, and he's been focusing on that because they've got a farm shop and he's been going to an area—I think it wasn't far from Bridgend actually Sarah—with these boxes of fruit and veg that were excess, to work with some deprived areas to make sure they were going there. So, as I say, once you scratch the service, you realise the amount of work that is going on in relation to this, which is fantastic.

Great. And then my final question was around the UK geographical indication scheme and just to ask you really what work the Welsh Government is doing to support Welsh businesses with that.

Yes, we're doing quite a lot of work, making sure that food and drink businesses are aware, first of all, that it's a new scheme—it's obviously replacing the European Union scheme. So, Gower salt marsh lamb was the first new product, not just in Wales, but it was the first one in the UK, so it was great to have that, closely followed by the Cambrian mountains lamb. So, we had two very, very quickly. So, what we're doing is offering support. So, if any company or organisation wants to seek this, officials will work closely with them to make sure that they're aware of everything. I know we've got some more applications in for a couple of—. I think there are either two or three that are awaiting scrutiny. I'm not sure if I'm allowed to say what they are, but they're very Welsh, and I hope they'll be successful in seeking the status as well. We've got some others. I think there are two going through scrutiny at the moment and I think there are quite a few that are really close to being completed, ready for submission. So, I hope that we'll have a little family of them very soon.

And do you think the Welsh Government needs to work to raise brand recognition around those or does it follow naturally from having that status awarded?

I think, certainly, the previous scheme from the European Union: protected geographical indication lamb; PGI meat—they sell themselves, don't they? They don't need the Welsh Government to help them, I don't think. I think they help themselves. They're there, out there, and the success of getting the PGI shows how amazing the product is. I think what they need our help with really is in the beginning. So, when the Gower salt marsh lamb became the first one, it was the first time I'd met them, and when I went out there and you actually see the lamb on the salt marsh and the difference in the taste, it's brilliant that they were the first one, but they did that work themselves and we supported them as best we could. But it's easy to sell and I've found this—I've been very fortunate to travel to other countries to sell Welsh food and drink and it sells itself. But I'm really proud of the food and drink sector and the resilience. There are nearly 250,000 people, if you think of every part of the sector, working across Wales. So, it's in everybody's interest to do what we can to promote it.

But I think people are more interested now in where their food and drink comes from. You look in the supermarkets where you see Welsh products, and again, the supermarkets, I think, have been really good at stocking Welsh produce. You see people literally searching to make sure that the food they're buying is from Wales. And I think more people are interested in the story of that food, and that's what's so great about the UK GI status now—because it tells a story. So, when I met with the farmers in relation to the Gower salt marsh lamb, they tell you their story and I think people are really interested in that now, in a way perhaps they weren't, I don't know, 10 or 20 years ago.

Thank you, Minister. Thank you, Chair.

Thank you, Vikki, and I know Cefin Campbell wants to come in on this matter. Cefin.

Diolch yn fawr. Minister, in terms of food and farming, as you know, our rural communities are facing unprecedented challenges, given the imperatives of responding to issues like climate change, the loss of biodiversity, diet-related disease, food inequality and food security, and in parallel to this, the need to sustain and revive economic and cultural life in rural Wales. So, can we be assured that the community food strategy, promised in the programme for government, will comprehensively and urgently address these issues?

As I said in my earlier answer, there’s a great deal of work being done around the community food strategy, but it is early days. Obviously, we’re five months into a five-year programme, but I’m very pleased with the progress that we’ve made. It’s really important. It fits in with the sustainable farming scheme, of course it does. So, yes, you have my assurance. I mentioned I was working with other ministerial colleagues to make sure that everything is encompassed in there.

Okay. Thank you.

Diolch, Cefin. We've just got a few minutes left. Perhaps I can just ask you a very general question to round this session off. In five years’ time, when you look back, what will you have hoped to have achieved as a Minister and as a Government?

Gosh. So, I started off with priorities, and it is important you look back, and sometimes I think in this job you don’t get time to look back and look at the achievements, if you like, of the Government. So, I would say that the food and drink—. I mentioned the action plan that we had from 2010 to 2020, to grow the industry by 30 per cent. Of course, you can’t do it on your own—you’ve got to do it in partnership, which I think Welsh Government is very good at, and I think because we are a small country, we work very closely with our stakeholders. So, I think that achievement of growing the food and drink sector by 30 per cent a year earlier than we planned, I would hope to do that again over the next maybe—. So, you look at five years, halfway over a 10-year strategy, how much would you want to grow it by? So, I suppose, if you could continue to grow it, and make sure we are producing more of our own vegetables, I think horticulture is an area where I would like to see some significant progress over the next five years in relation to that. I would hope that we would be able to eliminate puppy farming, and I think the regulations that we’ve brought in—. I would hope we’re well on the way to our target—I think it’s 2041, Christianne will remind me—of eradication of bovine TB. I would want to see some significant progress in relation to the eradication of bovine TB. And I would like our agricultural sector to be resilient and competitive and productive.

There we are, Minister. Thank you very much indeed. Our session has now come to an end. Can I take this opportunity on behalf of the committee to thank you for your time this afternoon? It’s been very useful to have you giving evidence to us as a committee. There will be a transcript of today’s meeting sent to you in due course for accuracy, and if there are any issues, then, by all means, please let us know. But can I thank you and your officials for your attendance this afternoon? Thank you very much indeed.

Diolch yn fawr.

And now we'll take a 10-minue break before our next session. Thank you.

Welcome back to the meeting of the Economy, Trade, and Rural Affairs Committee. We move on now to item 4 on our agenda, which is scrutiny of the Minister for Finance and Local Government. May I extend a very warm welcome to the Minister? Thank you to you and your officials for being with us this afternoon for this scrutiny session on the Subsidy Control Bill legislative consent memorandum. Just for information, this legislative consent memorandum was referred to this committee by the Business Committee on 14 September, and the closing date for publishing the report is 4 November. So, may I ask the Minister and her officials to introduce themselves for the record, and then we can move straight into questions? Minister.

Thank you, Chair. Rebecca Evans, Minister for Finance and Local Government.

James Fenwick, senior state aid policy adviser.

Thank you.

And I'm Gawain Evans, I'm finance director for the Welsh Government.

Thank you very much indeed for those introductions, and perhaps, then, I can just kick off with some very specific questions. Now, in your written statement that accompanied the Bill, you said that the UK Government's approach to subsidy control caused the Welsh Government some serious concerns, as it didn't reflect issues you had identified in the policy development process. What engagement have you had with the UK Government on the Bill since its introduction, and what amendments will the Welsh Government be seeking to the Bill as it actually progresses through Westminster?

Thank you, Chair. So, following the introduction of the Bill, I met with the Parliamentary Under-Secretary of State in the Department for Business, Energy and Industrial Strategy, Paul Scully, on 29 September, and that followed up from a meeting that I'd had with him previously in the year. And our Welsh Government officials are engaged on a fortnightly basis via the BEIS devolved administrations subsidy control forum. However, as a reflection, I would say that these meetings really have been nothing more than an opportunity for the UK Government to outline their position and their intentions moving forward. They haven't really been meaningful in the sense of opportunities for us to influence the development of the Bill, unfortunately, and that's why we're seeking amendments in a number of areas, and they're areas that I've raised with Paul Scully previously.

So, one area would be amendments specifying the parameters for the Secretary of State for BEIS's call-in powers, restricting their use for intra-UK cases where there could be a perceived conflict of interest, so, for example, a proposed subsidy close to the Wales-England border or where the potential beneficiary is active in an industry that is really heavily represented in England. And then we're also seeking commensurate powers to call in any subsidy or scheme in the UK for the First Minister, to decrease the power disparity that currently exists in the Bill. And then we would also seek amendments that would allow Welsh Ministers also to propose streamlined routes in priority areas. Currently, this is the exclusive competence of the UK Government, and streamlined routes, of course, are designed to bring added value through lighter touch processes. The lack of ability for Welsh Ministers to take advantage of this process to develop routes under which Welsh schemes could be raised will place Wales, we think, at a disadvantage to England. So, those are the areas that we're particularly keen to see amendments brought forward in.

Thank you for that information. Now, the written statement released alongside the LCM states that the Welsh Government and other devolved administrations wanted agricultural and fisheries subsidies to remain outside the scope of the subsidy control regime. Can you set out the reasons why you consider that these subsidies shouldn't be included within the scope of the regime and how you think they should then be regulated?

Yes. So, this is another area where I and officials have been raising concerns with UK Government for some time, and this is really because agricultural subsidies are already regulated through a tried and trusted process via the World Trade Organization agreement on agriculture, and it is actually for this reason that the agricultural subsidies were excluded from the general subsidy controls under the UK-EU trade and co-operation agreement. In addition, the inclusion of agriculture within the wider UK subsidy control regime would inevitably lead to an additional administrative burden and potential restrictions on both Government and agricultural recipients. So, as I say, we've repeatedly asked the UK Government for the reasons as to why they would want to include agriculture in the wider regime, given that there are already very effective controls at UK and international level, but we haven't yet had an explanation of the rationale behind this approach. But, of course, we're going to continue to proactively engage with the UK Government on this to try and continue to ensure that the views of Wales are taken into account during the design of the subsidy control regime.

Those discussions are ongoing.

Yes, officials continue to attend the bi-weekly meetings with the UK Government. And I don't know if officials want to make any reflections on those meetings.

Yes, Mr Fenwick.

Thank you, Minister. Yes, as the Minister has outlined, we have these regular meetings both on a bilateral and a quadrilateral basis with the UK Government, and they have been very illuminating in outlining what the position they were intending to take has been. They've asked for the Welsh position on this and the wider devolved positions on numerous occasions, but we've yet to see any reflection of those positions appearing in the UK's position in terms of how it was initially developed and how it has evolved into the Bill. We've talked with the UK Government on numerous occasions early on as the Bill was progressing, and yet none of our requests appeared in the amendments to the Bill that the UK has proposed and have been put into the next draft of it.

Okay, thank you very much.

If I could just ask Cefin Cempbell to ask a few questions.

Diolch yn fawr iawn. Thank you, Minister. So, the LCM sets out the Government's concern that the Bill around the subsidy regime lacks sufficient detail. So, if you could explain to us what level of additional detail you think is needed in the Bill—and can you give us examples of additions to the Bill that would provide us all with sufficient clarity?

Yes. Thank you. So, UK Government has indicated that further information will be provided in secondary legislation and a suite of guidance, and we've been really keen to impress upon the UK Government the importance of developing that suite of guidance in partnership with the Welsh Government. But no early drafts have been shared with us to provide us with any kind of insight into how they envisage the resulting regime looking, which is obviously causing us concern, as the UK Government is essentially asking the devolved Governments to sign a blank cheque, with no explicit provision for further opportunity to scrutinise or input into that detail as it's being developed. But examples of additions required include making publicly available the detail on the forms of subsidy that the UK Government considers to be more distortive and then more likely to be subsidies of interest or potential interest, or less distortive and therefore open to the streamlined routes process. Information that has been provided on initial thresholds for certain forms of subsidy, such as £315,000 over a rolling three fiscal year period for minimum financial assistance, is a good start. However, in this particular instance, the UK Government has hinted that the threshold may vary for agriculture and for fisheries, without giving any clarity about what the alternative may be. So, at best we only have part of the picture there.

And because the Bill contains such wide-ranging regulation powers for the Secretary of State, it also creates a lot of uncertainty as to how the regime may operate in practice and how it could potentially change over time. For example, clause 11 empowers the Secretary of State to define a subsidy and a subsidy scheme in regulations. And obviously these are key concepts. There are regulation powers at Part 4 of the Bill that empower the Secretary of State to make important changes to the referral process to the Competition and Markets Authority, including the information that must be provided and the timescales for reporting on a referral. And clause 86 gives the Secretary of State broad consequential amendment powers, and there are no regulation-making powers conferred on Welsh Ministers and there are no consent or consultation requirements on how any of the Secretary of State's regulation-making powers are exercised in the Bill as drafted. So, clearly there's a real power imbalance, which is at the heart of several of our concerns about the Bill.

If I could just follow on from that, the Institute for Government has suggested that, in order to create a subsidy control regime with buy-in from across all the devolved nations, regulations resulting from the Bill should be made by the UK Government in consultation with the devolved administrations. So, is this an approach that would allay your concerns about the level of detail in the Bill? And if so, have you raised it with the UK Government, and what response have you had?

Yes, so any consultation would be welcome, but it would have to be on a truly collegiate basis, with the regime developed from the ground up on an iterative basis with all of the parties involved. The UK Government has claimed that the policy development so far has involved frequent consultation with devolved Governments, although, from our perspective, they have been, as I've mentioned, little more, really, than opportunities for the UK Government to outline their position and set out their intentions moving forward, with actual minimal involvement for us in the construction of the proposed regime. And actually, when UK Government has provided us with draft documents, the deadlines for our inputs have been too short to provide a reasoned and considered response, or the drafts shared with us have been just so vague and so general as to provide us with minimal insight into the development of the policy.

So, we've been keen—and I've mentioned it at both of my meetings with the Minister—that we have to be properly engaged, particularly in relation to any guidelines and guidance that flows from the legislation. And again, it's just important to note that no regulation-making powers are conferred on Welsh Ministers, and there are no consent or consultation requirements on how any of the Secretary of State's regulation-making powers are exercised in the Bill as drafted. So, this is a real void and vacuum at the moment and something that I would hope the UK Government would seek to address as it moves forward.

Okay. Thank you very much.

Okay, thank you, Cefin.

If I can now ask Sarah Murphy to come in. Sarah.

Thank you, Chair. I'm going to ask some questions now about the impact of the Bill on Wales. One part that really stood out in the report for me was that it says that the UK Government’s impact assessment anticipates that the Bill will have a positive regional impact overall, although most aspects of it are unlikely to have specific regional impacts. It kind of relates, I suppose, to what you just said. First, it's extremely vague. I don't know what kind of impact they're relating to. It could be anything. And also, what does that mean—regional impact overall but not specific regional impacts? So, I was just wondering, have they given you any more information as to what they're referring to there, or any examples of regions?

This is a real area of concern for us in the sense that there's no proposal for the Bill to include any equivalent to the regional aid guidelines or to the assisted areas map which was in place under the EU state aid regime. They were absolutely instrumental in being able to help offset structural disadvantages in more disadvantaged regions of Wales. The absence of this approach risks a concentration now of prosperity in the wealthier parts of the UK, pulling investment away from the areas that need it most and actually, it's the polar opposite of levelling up.

I mean, it could be argued that the proposed subsidy regime might allow more flexibility for the Welsh Government to support economic development than under the EU state-aid rules, but this is by no means clear, given the current uncertainty around exactly how the new regime would operate in practice. And in any event, a more flexible regime would not necessarily equate to a positive impact for Welsh investment. So, that's a key area of our concern. And also there's the fact that the proposed regime also introduces legal uncertainty. For example, the aid intensities provided for under the old EU regime, whilst it was more restrictive, it did at least provide legal certainty to awarding authorities and to beneficiaries who were looking to invest. But it does appear now that the new regime will mean that awarding authorities are making judgment calls, and that obviously could lead to uncertainty for beneficiaries and lead them to taking their investment elsewhere.

Of course, some of this detail may end up being fleshed out in regulations and in guidance, but as drafted, the Bill doesn't give us a formal role in the development or the content of what are essentially really key pieces of the jigsaw to ensure that investment can be targeted. Because at the moment, it can't be targeted, and that is the big concern—that we no longer have those assisted area maps. So, I guess the jury is out on part of that question at the moment until we have more detail and see what all of this will mean in practice.

Thank you. And just a quick follow up, then, because you've mentioned, obviously—. I think a lot of what's coming through today is that we are waiting, there's secondary legislation and guidance coming, but in the meantime, has Welsh Government been able to undertake an analysis of the potential impacts of the Bill on Wales? If so, what are your findings? And as you just said, especially for disadvantaged areas that did receive the additional support from the EU state aid regime.

At the moment, it's very hard to make that analysis just because we have such an absence of information. Our real concern is that it will mean that investment is pulled away from those communities that need it most. You probably will have heard some of my colleagues referring to Merthyr competing with Mayfair, for example; it just means that that previous system that we had where we could direct investment to the areas of disadvantage no longer exists, and it's a key area that we're continuing to press the UK Government on.

Thank you, Chair.

Thank you, Sarah. Minister, I notice that the LCM sets out that the Welsh Government is calling for Welsh Ministers to have powers to make referrals of subsidies to the Competition and Markets Authority, a power that the Secretary of State for BEIS has under clause 60(4) of the Bill. What representations have you made to the UK Government on this, and have they indicated whether they would support this approach?

This issue has been raised several times by myself and by officials. I've raised it in the meetings I've had with Minister Paul Scully, and officials have raised it regularly in their official level meetings. But the UK Government's response really is that the regulation of subsidies is a reserved matter and is the exclusive competence of the UK Government. Our counterargument is that the regulation of subsidies has huge implications for a swathe of devolved policy areas, and that's why devolved Ministers must have parity of esteem with regard to referrals. Otherwise, the Bill really does risk undermining devolution. But unfortunately, this argument hasn't been successful.

Looking back to our general approach to this, prior to the imposition of the UK internal market Act, the Welsh Government argued strongly that subsidy control or state aid was a devolved matter, and that policy should be developed collegiately through the frameworks programme that was being developed. That's the kind of collegiate way of working that we would like to see going forward, and it's certainly not too late to develop that, but it will require some movement, I think, on the part of the UK Government.

Okay. The LCM also highlights that the Welsh Government believes that engagement with devolved Ministers should be mandatory in relation to guidance made under clause 79(5) of the Bill. What type of engagement are you actually seeking from the UK Government in relation to this, and are you seeking an enhanced role for the Welsh Government and other devolved administrations above other stakeholders?

Section 79 empowers the Secretary of State for BEIS to issue guidance about the practical application of the subsidy control regime and its

'principles, requirements and exemptions in different descriptions of case (including different descriptions of persons benefiting from subsidies).'

This gives the Secretary of State the power to essentially construct the whole day-to-day workings of the regime as they see fit, with no requirements to consult beyond paragraph 5's requirement to

'consult such persons as the Secretary of State considers appropriate.'

So, we're seeking a framework-type policy development process, as I've mentioned, to ensure that the guidance is truly developed with devolved Governments on a collegiate basis, with a clear requirement that this is reflected on the face of the Bill.

As the Bill is currently drafted, the Secretary of State isn't even required to talk to devolved Governments if they don't deem it appropriate, let alone take our positions into account when drafting. So, we want to see a firm, explicit commitment within the Bill that any guidance relating to the subsidy control regime should be subject to consultation and consent by devolved Governments, as we will be bound, of course, to follow the guidance as a public authority. Change in the guidance, and any changes that follow—obviously, that will have the potential to impact upon our own economic development plans or approach. That's why we need to have that proper engagement. As economic development is devolved, we should have the ability to scrutinise large wholesale changes of such an important regime, because obviously it makes up a large proportion of how we deliver our funds. So, I think there are strong arguments as to why devolved Governments should be able to have better influence on this particular area of work.

Okay. Thanks very much indeed for that, Minister. If I can now bring in Vikki Howells. Vikki.

Thank you very much, Chair. I've got some questions, Minister, around the concern the Welsh Government has about the Bill not including mechanisms to support disadvantaged areas. I know you started to cover this in your answer to Sarah Murphy. Firstly, if I could just clarify from your answers to Sarah that I would be correct in interpreting that the Welsh Government would like to see support for disadvantaged areas being brought into the Bill.

Yes, we'd like to see support for disadvantaged areas, or a mechanism to allow that to be developed, because currently there's no mechanism to enable disadvantaged areas to compete with more prosperous ones, and the lack of any power built into the Bill there doesn't help to ensure that our voice is taken into account in terms of our particular concern about disadvantaged areas. So, yes, that's one of our key concerns, really. And as I say, the Bill as it stands has the exact opposite effect, enabling the concentration of investment into more prosperous regions of the UK by removing the limitations that were previously placed upon these things. So, yes, that's the key concern, really—that it could draw investment away from the areas that need it most.

Thank you. And if we look at the explanatory notes to the Bill, they state that guidance to be developed on the practical application of the Bill may set out how subsidies can be used to support disadvantaged areas, and may define areas that would be eligible for support in this way. So, if guidance is used to cover this topic, what role would the Welsh Government expect to have in the development and scrutiny of that guidance?

We’d want the development of the detail of support for disadvantaged areas to be done on a quadrilateral basis by all four Governments in the UK. All four Governments, I think, can offer some unique insights into how the regime could work in practice. So, from our perspective in Wales we have a huge breadth of experience in terms of managing the dispersal of EU structural funds and the use of EU regional aid, and that could really help avoid any pitfalls for the future and help ensure that the resulting regime is fit for purpose for the whole of the UK. So, I think we have a lot to offer if a collegiate approach is developed in terms of our expertise and our long history in this area.

Thank you, Minister. Thank you, Chair.

Thank you very much. And finally, if I can bring in Sam Kurtz. Sam.

Diolch, Gadeirydd. Good afternoon, Minister. State aid expert George Peretz QC states that Schedule 3 to the Bill is

'replete with important constitutional issues'

as it will allow for challenges to subsidies provided for by devolved primary legislation, whereas Acts of Parliament are exempt from such challenges. How would you respond to this conclusion from George Peretz QC?

I would agree with the conclusion, essentially, that Schedule 3 to the Bill poses several potentially quite important constitutional questions, particularly in relation to the apparent departure from the general position that the judicial review of devolved legislation is not generally possible on the common law grounds of irrationality and reasonableness or arbitrariness. Notably, this departure only appears to apply to devolved legislation, not UK Government legislation, and I think the UK Government themselves have acknowledged that Schedule 3 does require an LCM. Schedule 3 reflects the general sense that the Bill is asymmetrical in terms of application and the allocation of powers and functions. It does unfairly disadvantage devolved Governments in comparison with the UK Government, and adversely impacts on the devolved area of economic development. So, yes, I would agree with the assessment of George Peretz QC.

Thank you. He also goes on to conclude that the subsidy control regime under the Bill will be more permissive than the EU regime. Do you agree with his conclusion as well there?

Would be more—?

Permissive. A wider scope.

Yes, I would agree with that also. When you look at the fact that it doesn’t give us the opportunity now to target investment, in that sense it’s permissive, in the kind of response I gave to Vikki Howells about pulling investment away from the areas that need it most. So, there are opportunities, I think, yet for the UK Government to deal with these matters through the application of amendments to the Bill, and we’d be keen to work with them, if we can, to provide any information or advice as to how we see things working in practice. So, as I say, I’ve met a couple of times with the Minister. Officials meet regularly with the UK Government on these issues, so they’re not unaware of our concerns.

Thank you, Minister. Finally, the Bill, as it stands, doesn’t provide the Welsh Government or any other devolved administrations any involvement in the appointment to the subsidy advice unit, the new committee of the board of the Competition and Markets Authority that is established by the Bill. So, what’s the Welsh Government’s view on this, particularly given that the Secretary of State is required to seek the consent of the devolved administrations before making appointments to the Office for the Internal Market?

We feel that it’s vital that the subsidy advice unit is representative of the whole of the UK, so it is the Welsh Government’s view that the Bill should clearly carve out a role for devolved Governments in appointments. The fact that such a requirement would also bring parity of esteem within the appointments process for the Office for the Internal Market does add weight to that argument again. As I say that, I reflect that much of the comments that I’ve made this afternoon have been about parity of esteem and the imbalance of power as it currently sits within the piece of legislation.

Thank you. Diolch, Gadeirydd.

Diolch yn fawr iawn. Thank you, Minister. We've come to the end of our session with you. Can I take this opportunity on behalf of the committee to thank you and your officials for giving up your time this afternoon? It's been very helpful in, obviously, us scrutinising this Bill. So, thank you very much indeed for being with us this afternoon.

Pleasure. Thank you. Thanks.

So, we'll move on to item 5, and in accordance with Standing Order 17.42, I propose that the committee resolves to exclude the public for the remainder of the meeting. Are all Members content? I can see that all Members are content. The motion is agreed and that brings the public part of this meeting to an end. Thank you very much.