Economy, Energy and Connectivity Committee

They are welcome to do so.

Diolch. Bore da. I'm Liz Lalley, I'm director of economic strategy and labour markets.

Bore da, bawb. Jo-Anne Daniels, director of economic development operations.

Bore da. Ed Sherriff, deputy director for energy.

Thank you. It was remiss of me, I should have done that.

Thank you very much, Minister, for that. To start, there's been a reference to productivity. How will that be measured and monitored as a target in moving forward? I understand that the Office for National Statistics is developing a new way of measuring productivity. What possible impact will that have on how this will be assessed by the Government?

As I said at the outset, we have set out the target of halving that productivity gap that exists at present in terms of productivity per hour. On gross value added, we have been at about 15 per cent lower than the UK average. So, we want to close the gap over the period of a generation but halve the gap over 10 years. We are undertaking detailed work on the exact measuring framework and some associated indicators that will go along with that main objective. We're in discussions with the ONS. As you mentioned, they have been changing their approach to measuring productivity at a UK, regional and national level within the UK. We will be working closely with them, in particular in terms of how to obtain more up-to-date information. At present, there is a gap in terms of having the productivity figures for nations and regions. There is, I think, a two-year delay and we're in discussions with the ONS about how we can have more up-to-date information about that in this context.

That would be of particular assistance, I'm sure. Tom, I know that you have an interest in this area.

Thanks, Chair. Thanks, Minister, for coming to see us this morning. My question was around the role of universities and high-skilled jobs in the productivity gap. I met with Universities Wales just this week, who were talking to me about how universities in Wales are reaching a crisis point, as they explained it, and how there are some universities in Wales that may have to look at cutting their ability by up to 35 per cent because of funding issues. Given that the high-skilled jobs market is the future for Wales to close this gap, how are you working across the Government with other colleagues to support universities, and view them as strategic partners in building the workforce for the future and, crucially, fixing that funding issue to make sure that Welsh universities can continue to invest in the skills of the future?

It's a really great question. One of the things that we have been focusing on is understanding the reasons for the productivity gap, so decomposing the gap, as economists describe it. So, what are the different elements that are contributing to it? Because it is not a single thing; there are many different elements to it. But you are right; certainly, I think we can draw upon evidence from across the world as to the importance of universities in terms of innovation, in terms of high-skill, high-wage employment, and sustaining and growing that university base and its role in innovation—think about the role of spin-outs, for example, which are also very important elements in contributing towards productivity.

So, what are we doing? In recognising that there are so many aspects to this that are cross-Government, what I have been doing is having a structured set of discussions with my Cabinet colleagues to look at the different contributions that the different departments across Government can make to the productivity mission. You're absolutely right that higher education has an important role to play. The issue of the financial sustainability of the HE sector is a key issue for the Government, which is why we've commissioned the higher education review, precisely for those purposes.

Thank you, Minister.

Kiera.

I wanted to go quite high level. I have got a few questions. I'm interested in how you came to pick this target. What was the driving force to decide on this productivity mission?

It's a really interesting question. There are a range of possible targets that you could use, of course. I think that we were clearly of the mind that you needed to have a single overarching goal in order to have clarity so that you could align your policies—not just your economic policies, as I just said, but across Government as a whole.

I think the reason that we decided to choose productivity is partly driven by the fact that it is the one that is so closely aligned with wage levels. There is such a strong relationship between productivity growth and wage levels, and, therefore, the contribution that increasing wages represent in terms of living standards. Other measures, economic growth—people talk about good growth now, don't they? And I think the reason for that is that you need to differentiate because there are some forms of economic growth that do not deliver the same level of direct improvement in living standards. So, it's the one that we felt was most closely aligned with wider prosperity in the society.

And the other thing as well is that we were mindful of the levers and tools that we have at our disposal, so we don't have macroeconomic policy as part of our responsibility; that is reserved to Westminster. If you look at those matters that are key to productivity—and building on Tom's question as well—the education system, HE, and indeed the wider education system, investment in infrastructure, where at least we have some degree of responsibility, not fully, productivity is the one where we can have the greatest influence compared to some of the other wider economic targets that you could choose.

You sort of touched on it in your answer there, about prosperity, but how do you ensure that the gains from productivity are spread equitably, especially, I think, in my constituency, where there are these pockets of high deprivation like Ely and Splott, for example? How does this target tangibly bring prosperity to communities like that?

Yes, a really great question, and obviously we've set this goal, but the Government has policies in a wide range of areas, including on fair work, for example, and we're committed to ensuring that our economic interventions and policies—for example, through the Development Bank of Wales and the development agency as we build it—are also mindful of the need to develop policies that are inclusive, both socially, in the way that you describe, but also spatially as well, so that we—to coin a phrase—have good jobs everywhere.

And I guess the other target that's been announced so far, or was in the manifesto, is the procurement one, so how do these two targets sit together? How do you see them working together?

I think procurement is one of the levers that we do have, isn't it? And it's £11 billion, I think, of public sector procurement. That's a significant component of the Welsh economy, isn't it, as a whole? I think that Governments across the world, large and small, have woken up to the fact that procurement is one of the most potent levers of economic and industrial policy that are available to us.

So, I think setting the target, as we've done as a Government in the programme for government, of increasing the share of Welsh public sector procurement that is retained within Wales, that's an important contribution to meeting the productivity mission, giving those opportunities to Welsh firms at all levels, and making sure they're available to Welsh small and medium-sized enterprises in particular, through the way that we structure procurement and by giving them support to enable them to access those opportunities. And if they're able to access them in the public sector, of course, that builds up their capability to go for contracts in the private sector as well, and also to secure contracts outside of Wales. So, there are many, many benefits, I think, to having a procurement policy that is aligned with delivering your wider economic and social goals.

Diolch.

Diolch, Weinidog. Janet, did you want to come in?

Mine's further down, really. I'll just throw this in first. So, I was on the same table as Shav. We had a really good round-table session last week with people from all sorts of backgrounds in terms of industry, energy—you name it, they were all here. And the buzzword of the day was 'productivity', wasn't it?

Concerns were raised by organisations such as the Confederation of British Industry and the Federation of Small Businesses, and I think I've raised it with you previously, about duplication. Because there are so many organisations out there all technically working to the same mandate, and these organisations are really keen to streamline that away and work more closely with Government. Have you got any intentions of working more closely with these organisations and with the private sector? Because you need a good business and private sector to work with Government to get our economy really buzzing. Do you intend to do that?

Oh, absolutely. And I've met with most of the business representative organisations already and early on in the new administration, precisely for the reason that you suggest, really. I think building as close a relationship as we can with all those business representative organisations, who represent different scales of business, and they all have a vitally important contribution to make—. As well as the productivity mission, we've set ourselves an aspiration to become the easiest, best place in the UK to start, grow and invest in a business. And one of the first steps that we've taken is to actually ask the business community, 'Well, what does that look like?' Because they will be the experts on this, not us. They know what are the issues, the frictions, if you like, that make life unnecessarily difficult at times. And where it's possible for us, we certainly want to work with them in creating the best business environment that we can.

We don't hold all of the powers, because many of them are reserved, as I described, but where we do hold them, and where it's possible, creating that environment that is empowering and facilitating is definitely where we want to go. And we're going to be working with the business representative organisations to identify what does that mean in practice—issues around planning, permitting, issues around access to finance, issues around access to energy, energy costs, et cetera. So, the first step is mapping it out and then working with the business representative community saying, 'Well, what should we work on first? Because we've got to prioritise, we can't do everything all at once. So, how do we sequence that?' And again, working, co-designing, if you like, with the business community, that's what we're intending to do.

Thank you. And they made it very clear that some of the barriers are things like regional partnership boards, corporate joint committees, and that for too long now Welsh Government's been working in silos. They want to see a more joined-up approach, so I hope that was raised.

But could you give us an update on progress towards—I didn't even know you were developing one—developing the economic and fiscal commission, including when the membership will be announced, given that establishing the commission was a 100-day plan commitment? And of course, how does that then tie in, or work alongside, or work within, the Welsh development agency? Are we just starting again, setting up these 'chatter boards', as I call them?

No, I think that, first of all, to your broader point, one of the things that we've asked the design advisory panel to look at is this question that you raise, which is obviously very legitimate, which is about the economic development landscape, if I can describe it as such—

It's very complex.

—which is, yes, complex; some would say cluttered. And I think it certainly is something that we are keen to look at.

In the context of the development agency, is there a role for streamlining? Is there a role for simplifying the landscape and making sure as well that all the different parts of the landscape are aligned, where we're all working together at regional, local and national levels? So, that is definitely a key area of the work that we're looking at.

In relation to the economic commission, in thinking about the tools that we need in our toolbox to succeed, we looked around the world at places that have done it, and the Basque Country, for example, in the 1980s was in a pretty similar position, relatively speaking, to us. We were dealing with the restructuring in relation to coal and steel, largely; they were facing similar problems in their steel and shipbuilding industries. They had a relatively similar position in relation to the rest of Spain and the rest of Europe that we have now. Fast forward to today, and the Basque Country is among the most affluent parts of, not just Spain, but the rest of Europe.

They did two things in the 1980s: they created a development agency. Ironically, they came to Wales to design it based on the Welsh Development Agency, but there we are. Now, they're working with us to help us to redesign a development agency fit for the future. But also, alongside it—and this was a key decision—they decided to create Orkestra. And I would recommend, if I could be so bold, maybe, a committee visit to the Basque Country to go to meet Orkestra. SPRI is the development agency; Orkestra is the sister body, if you like. Think of it like doing and thinking. And what the Basques decided is that you need both. For any strategy—this is true in business, isn't it, and it's true in any context—you need the two to work together. So, they created, alongside the development agency, which was the delivery body, an institute of competitiveness called Orkestra, which was scanning the world at the time, and has continued to do so, to see what works, what are the leading edge practices. And that's been part of their success. Alongside the delivery body, they had a fantastic institute of competitiveness, which I think has been a big part of the success.

So, that's why we want to have the economic commission, so we're not just doing but we're also testing ourselves constantly on the evidence, because I think that everything we do needs to be well evidenced, but also looking around the world, horizon scanning. The world is changing, technology is changing all the time. We need to have a critical mass, a centre of excellence, in thinking about how we create a pathway for us to close the gap in the way that I've described.

Thanks. Could we have a paper on Orkestra? Just an information paper. That would be—.

Good idea. I like the reference to the Basque Country. I think we have so much to learn from them on so many different levels.

Perhaps we'll move on to look at energy and all of that aspect. There are so many different elements to the energy field, if you like. The national energy strategy: there have been discussions about having one for Wales, an updated one for Wales. Where are we on that is, perhaps, the starting point.

Well, work has already begun on our national energy strategy, which as we've set out is going to map out our current and future energy needs, looking forward, certainly to 2040 and possibly beyond. There are long-term gestation periods in this that we need to be mindful of, as well as what we're going to do in the immediate and near term. As part of that, I think, as we've set out, we'll be setting out a different framework in terms of the overall target. The previous administration had a target that was specifically about renewable contribution. We're going to be taking more of a whole-system approach, based on our net zero 2040 ambitions, but also looking at the contribution of different energy sources as part of that, and also looking more widely at the electrification of heating, for example, and transport, because energy is more than just electricity generation. One of the issues with the previous target was that it didn't focus on the fact that we have power stations that produce emissions, so you have to be mindful as well of how we decarbonise those through the use of carbon capture and storage and abatement.

And is there a time frame, roughly, for the publication or development of this strategy?

We're expecting to be publishing the strategy in the coming months, and we'll be updating the committee and the Senedd on timescales and work plans in the coming weeks.

Diolch yn fawr iawn. Pwy sydd am ddilyn? Alun.

Diolch. Just to go back in terms of those targets and that approach to renewable energy and net zero, can you outline a bit more in terms of what your thinking is in terms of that, and particularly how that affects community-owned energy production? Where are our priorities in terms of supporting that sector?

Yes, sure. So, as I was alluding to, one part of it is, in essence, working out what electricity demand will be like by 2040, and then, given all the factors that I've just described in terms of electrification as well—. And then part of it is looking at the contribution that individual technologies might make to meeting that target.

But there is another dimension to the work of the national energy strategy, which is key, really, to our approach, which is the question of ownership. So, we want to see an energy system—. I referred to coal a few moments ago; we don't want to be reproducing the mistakes of the past, where we had energy potential, and, really, it was developed without our benefit, without the benefit accruing to us, to a great extent. So, we want to see greater Welsh ownership of our energy system, at all levels, including through the creation of a publicly owned national, full spectrum—shall I describe it as such—public energy company, in the same way that many other countries have stated owned very, very successfully. In fact, leading energy companies are often state owned in many countries across the world.

As well as doing that, we want to have community-owned energy, and we're committed to supporting that, and also supporting direct community energy ownership. Why? Because there is great evidence that that is one of the ways that you can bring bills down, and at a time of a cost-of-living crisis—and energy cost is a big component of that—the means by which community-owned energy—. Because if you own it, that actually is a direct means by which you can then bring bills down for local people, as well as, in the case where we'll have larger scale private sector developments, we've said that, whereas the previous administration had a target of community ownership, we want to turn that into a mandatory requirement on large-scale private sector developments.

Diolch.

Diolch yn fawr. Shav.

We've talked a bit about procurement frameworks previously, and you mentioned in terms of social partnership—. So, I understand that fully, as someone who was there at the table previously; we've been arguing for the need for us to tighten things up in relation to public procurement. But my question, which, in a way, won't be a surprise to you, because I've raised this before, is in relation to grid connectivity. So, you may recall that I have raised some questions around the electric arc furnace in Port Talbot. Now, in light of the UK Government's announcement yesterday—some of the announcements around the Great British Grid announcement—have you made, now, a better assessment, do you think, in terms of some of the possible, genuine, real strategic investments that we may be able to see in Wales? Because there are lots of concerns that have been raised, both in Port Talbot, in terms of the electric arc furnace—what's happening, when it is coming—but also in terms of steel production in Llanwern. Because it has been reported that production has gone to about half of the capacity that it was, and workers have been moved into jobs around maintenance and cleaning, but there still remains that uncertainty about what that future looks like.

I think, also, with the impact that they're now feeling in relation to reduced earnings following some of that de-shifting, what practical intervention have you as the Minister made, or will be making now, because it's all fair and well workers being offered assurances and being told there's a plan coming for a plan, 'We've got a framework coming' and all the rest of it, but what they want to know is in the here and now. So, it would be really good to hear from you, in terms of you personally as a Minister, what reassurance can you give the workforce. Having that future vision, I think—thinking versus doing, versus delivering, and a timetable, clearly—is going to be critical here.

I agree with all of that. Taking the different elements, I think we are liaising and discussing with key UK decision makers. So, in relation to grid connection—this world just lives on acronyms, doesn't it—with NGET, National Grid Electricity Transmission, but also with NESO, the National Energy Systems Operator, in relation to other aspects of the build-out of the grid. So, you're absolutely right that getting that grid plan right for Wales is mission critical. We are committed to working with all of those stakeholders, including UK Government as well, to make sure that we can get an aligned—. There's no point in us having one map and them having another—you want to have a holistic plan that actually delivers, nationally, regionally and locally, the kind of footprint and the investments and the security in terms of accelerating grid connections that we need to see. So, that work is ongoing and it's a key part of our own work.

And one of the reasons that we want to create a Welsh public energy company, building out, really, from Trydan Gwyrdd Cymru, is to actually bring in these wider questions of grid connection and working collaboratively, where possible, with other stakeholders, including the recently announced, as in yesterday, GB Grid. So, I think it's, obviously, an interesting innovation to have a publicly owned direct grid investor. We will want to speak to UK Government to make sure that we get as much of that investment into Wales and that it is aligning with those areas where we need the investment most. So, that work is ongoing and we're certainly committed to working in an aligned and collaborative fashion.

In relation to Tata, I met with senior management at Tata and the unions in Port Talbot last week. Obviously we discussed issues right across the different sites, including Llanwern and Trostre as well, and we're committed to working with the company and with the unions to ensure that we maximise the opportunities from the electric arc furnace, which is an incredible opportunity in terms of the steel industry in Wales, one of the biggest electric arc furnaces that has ever been created. And our steel industry, when it is up and running, will be producing, I believe, over 50 per cent of the entire domestic steel production of the UK. But, obviously, we want to work to support the company and the unions in making sure that we grasp that opportunity, and we continue to engage with UK Government and with the other stakeholders, particularly on the energy side, to make sure that we can do so in a timely fashion.

Can I just say, in terms of going back to the conversations that we were having in the room last week, the biggest thing that everyone was talking about was the frustration over how slow everything always is in Wales. And I think it's important for me to reiterate the point that having lots of discussions and plans and plans and frameworks and all the rest of it—. They're laudable and they are important, right, however, there is the concern, particularly if we end up in a situation where we have, particularly when it comes to foreign direct investment, people who want to come here and they want to invest, and then what they're hearing is, 'Well, you're going to have to wait for this framework or the following one', and in the meantime, they then go, 'Well, we'll go elsewhere', and then they start shifting their conversations, perhaps, to UK Government, and then we end up all over the shop, and then Wales gets nothing, and Wales just yet again gets left behind. I just think it's really important that I put that on record, because that was something that came up time and time again. And it didn't matter whether it was worker voice, union voice, community voice, the various different employer organisations and others—that was the key thing that they wanted us to make sure that we impressed today.

I think you raise a really central point and I think that Governments right across the democratic world at the moment are asking this very question, and Governments right across the political spectrum, to be honest with you: how can the state build faster, cheaper, with better outcomes for citizens? And I think whether it's in terms of our planning process and permitting or whether it's access to energy, I think that this is a really central question. We were meeting yesterday with the Competition and Markets Authority, and I do urge the committee to look at their report on infrastructure, which really went to the heart of this question, because why is it that civil engineering costs, for example, in the UK generally are much, much higher than they are, for example, in the Basque Country?

We're all going to the Basque Country; that's decided. [Laughter.]

Yes, that's decided. And there's more than one factor. So, it's not just about the regulatory framework, which is often where people exclusively focus, but there are different elements to it. They've made some recommendations to us as a Government, and to other Governments across the UK, and we're committed to working with them and others, including the private sector and other stakeholders, on getting to a point where we can streamline decision making—

That's a word I like.

—and where we can, where possible, work at business velocity in decision making. What I would say is, look, we're not going to get there in one quantum leap. This is a process that will—. We want to make progress at pace, but, actually, getting to that streamlined process whereby we can build things, build infrastructure, get decision making generally—. To not have a system where, at the moment, we know that access to the grid is one of the leading constraints, as well as energy costs. Energy is one of the leading constraints, it would appear, from our early analysis, that's holding the Welsh economy back. We want to move on from there, and part of it is redesigning our systems, and we're committed to doing our part as a contribution to that.

Thank you, Minister.

Alun.

Following on from that question, and I hear it quite often, particularly in the Chamber and here, about plans for plans et cetera—. But we have a new Government, and sometimes different decisions are going to be taken. The idea that decisions are slower in Wales than in the UK, for example—is there any evidence of that, or is it true to say that decisions, perhaps, as you were suggesting, are one of the big bureaucracy problems for Governments anyway? So, is there evidence that decisions in Wales are being made at a slower pace, and what are the particular features about Wales that are problematic, perhaps?

Well, I'm happy to look at that, and I don't want to provide an answer without my officials looking at objective sources. I think that it's possible to look at some sources of information, isn't it, in terms of grid connections, which are not decisions that are within our remit, as it were, but the question of the length of planning decisions is something where there might be comparative data, and we'll look at that.

The important thing is we've committed to improve these situations. So, wherever we are on a comparative basis, we know—because I have the same discussions with businesses—that this does arise in every conversation. So, we have to commit to doing much better. And that doesn't mean that we agree with those who argue that we should just deregulate everything. There is a reason why we have a planning system, and our constituents wouldn't thank us if we just got rid of that completely. There is a balance to be struck in any context, isn't there, between different interests and different drivers. But I think that what we're trying to focus on is can we meet those valid requirements in terms of ensuring that community interests or individual interests are protected through a planning system, for example, but do so in a way that is more rapid and is less bureaucratic and complex, still delivering the same level of assurance and transparency that is needed, but meaning that there is certainty.

What companies often tell me—. That is, getting the answer 'no' isn't such a problem. Getting a hard 'no' quickly is worth a lot. The problem is that things just take so long, don't they, and then you don't have any certainty. If you get a 'no' quicker, that frees you then to move on and refocus, and I think there is a lot of merit in that. So, part of the work, as I said earlier, is working with the private sector, with businesses, to say, 'Well, can we simplify the processes in a way that doesn't get rid of the outcomes that are important, but means that we can do things much more effectively than we are at present?'

Fe gawn ni Janet a wedyn Tom.

Just a quick one. I think, really, if you look at Ynys Môn, that's a really good example. We've got these grid capacity issues, and we've been talking about them here, I think, for about the last 10 years. But we're going ahead now with Wylfa, which was a UK Conservative-funded initiative, to take over the Gwyndod site. Morlais is another brilliant example. We're all aware of the grid capacity. But it hasn't stopped them putting all the underground infrastructure in place, going out for bids and tenders and things. Yes, they will hit a brick wall at some stage, because of the grid capacity, but they're putting the infrastructure in, and I think, if other areas could copy that example, just get on with it—. But then, that should be a huge signal to you that, you know, we've really got to grasp the nettle with this grid capacity issue.

The arguments about pylons have been going on, that I know of, for the last 10 years. Whilst I know it's more expensive to put it underground, mid Wales will go up in revolt if you suddenly put pylons everywhere. And someone, again, has to take that bold decision. Are you going to allow them to go underground? Are you going to actually stipulate—because of the moneys involved, the profits these big companies make—'Right, the decision is they're going underground', or are you going to say, 'No, no, no'? But we've got to get on with the delivery of that energy once it's produced. And it worries me that I just feel that we'll be talking about this in another 10 years. We need really bold, brave leadership, and the previous Governments here have worried me in that no-one, because of the political tensions, has been prepared to put their head above the parapet and say, 'Well, I'm sorry, but it's going to create wealth for Wales, it's going to increase the wages and prosperity for people living and working in Wales, and so a decision is going to be made.' At times, I do despair.

Now, I come from a small business background, but a very successful network of small businesses, and we sit and talk here, whereas I didn't have time to talk in a smaller business. We just got on and did it, and delivered good quality—. Whatever I was involved with, we just got on and did it. If only that mantra was copied at Government level. I just worry. I despair about Wales, that we'll still be talking about this. We need bold leadership now. That's what I'm looking for.

I wouldn't despair. I think there are some really great examples of good practice in Wales. For example, the work of Neath Port Talbot council in really massively accelerating the planning decisions in relation to the electric arc furnace is universally held out as an exemplar of how to proceed. I think the issue in Wales, as has often been described, is that good practice is a bad traveller. So, there are plenty of examples in Wales where people have solved the problem that we've just described, right, which is that everything takes too long, et cetera, and there's a lack of certainty. There are great examples where, actually, we do get things aligned, everyone working together and working at pace. The issue, I think, the challenge, for us is: can we universalise that? So, can we actually identify that good practice and turn it into a way of doing business and a way of doing government in Wales that is universally shared? I think we can. We're good at collaboration in Wales, and I think we're good at teamwork. What we've got to do, and we've all—. I think this is widely shared, isn't it? We've got to bring down those silos. We've got to have national Government, local government, the regional tiers, working together, the different sectors. This is one of the reasons for social partnership. So, we can do it, but we've got to, I agree, get on with it.

Business, industry, are worried about the regional side of things. Have you looked at how effective the regional partnership boards are? Has anyone actually valued those? Because I remember life before them, and here, now—they're in the here and now. No-one really seems to know—

Perhaps we'll come back to that when we talk about the development agency.

Yes, okay.

Tom.

Thanks, Chair, and thanks, Minister. I do have a host of questions, so I'll try and keep them short and sweet, because I know we've got a lot to get through.

I'll try and keep my answers short as well, and go against my better nature.

Thank you, Minister. The first one is that I noticed that you launched a consultation on 7 September, bringing together three different energy companies to create a new national energy company. What is the purpose of that, and how do we ensure it doesn't conflict with the UK Government's Great British Energy?

Thank you. A great question. In essence, as I was alluding a little to earlier, we're bringing the existing elements of the Welsh Government's previous administration's work across—the developer, Trydan Gwyrdd Cymru; Ynni Cymru, which is focused on community energy; and the Welsh Government energy service, which supports the public sector, but also the community sector, in bringing forward energy projects, not just on generation, but also in terms of local energy systems. So, what we're, in essence, doing is bringing all those elements together so that we can create a critical mass, if you like, a really powerful centre of excellence—as I called it earlier, a sort of full-spectrum energy company.

Because, if you think about it in different contexts, with energy costs for large industrial users, which is a critical element of competitiveness, there's a generation, on-site generation, element to it, but there's also a grid element, or the use of private wire, for example. So, in the statement that we heard from the UK Government yesterday, there was talk about giving even greater freedom to companies themselves to have, behind the meter, as it's called, private wire systems, where they do on-site generation and they don't have the network costs. Well, we want our publicly owned energy company to be helping to facilitate that—sometimes building energy systems themselves as a company that can provide a more cost-effective energy price, or, in other cases, working with industrial users, and then doing the same on a community level as well. So, it's to give us that capacity of having a sufficient scale and scope so that we can actually have the impact that we need.

Okay. Thank you very much. This is building—the next question—on what you were just talking about on pylons, but also on what Kiera was talking about earlier, about spreading economic growth across Wales. The economy of the future is going to be more energy intensive. Whether that's through data centres or high-tech skills or manufacturing, it's going to be more energy intensive. So, how are you working with the UK Government to map out how you build that grid infrastructure across Wales?

We've spoken about the mid Wales question, and I've spoken directly with Renewables UK, who have very much explained the situation to me that, whilst the Welsh Government isn't the decision maker, the view that the Welsh Government takes on whether the grid should be putting its transmission lines through Wales, or whether it shouldn't, could be instrumental. Now, there are lots of arguments for and against, but, in terms of the economic framework that you're trying to build, if those lines don't go through Wales, you can't build a transmission network through mid Wales. That limits the capacity for those high-energy industries in different parts of Wales. So, really, I want to know what your working is to weigh those different things up when it comes to recommending support of either of the two lines either running through Wales or not.

Yes, a critically important decision, and I've already met with the chief engineer at the National Energy System Operator to discuss the 2030 electricity transmission update report that you've described, and the shift from the earlier north-south proposal that they had presented to the current mid Wales focused proposal. So, I'll be writing, and I accept what you've said in terms of the impact of the Welsh Government's—. Though we're not the decision maker—it's not a devolved area—I understand the point that you make in terms of the impact of our position.

So, before we go any further, we're writing to NESO to ask for some further information. So, there's just some information we need in terms of the evidence base and some other technical questions we have around the proposal, and we'll, obviously, have more to say, I think, once we've received that information. We'll keep the committee and the rest of the Senedd informed as we evaluate the information that we've got back, and then set out how we intend to proceed.

Thank you, Minister. One more, and I'm just shifting subjects slightly to Port Talbot. I've been made aware in the last week or so that there's been a lot of investment in preparing the grid infrastructure to bring the arc furnace online. The number that was quoted to me was that around £150 million has already been spent on the Port Talbot site, getting it ready for the grid infrastructure, but there are concerns around lease arrangements—that that money has been spent, but, actually, there's no lease secured for the grid's energy coming in.

Now, I may be wrong, but the impression that I get is that perhaps the relationship between the key partners there isn't the best, and I'm concerned that if that legal land ownership lease access issue isn't resolved in the near future, we could see more hold-ups to getting the grid infrastructure fully in place to bring the arc furnace online. So, will you explore that issue and hold a round-table with the key stakeholders to make sure that these land access issues aren't going to be a delay in getting the arc furnace online? I'm happy to speak after this. There is a bit more context to that that I don't want to share in a public forum, but I think it's important.

Yes, I'd certainly welcome the opportunity to discuss with the Member outside of this forum any further information he's able to share. And certainly, we stand ready to discuss and are in constant discussion with all of the key stakeholders. So, if there is any need for us to raise any further issues with them, then we'll do so. So, I look forward to having that conversation. Thank you.

Thanks, Minister.

Diolch. Shav.

Just continuing on from that, obviously Welsh ports are really important. The ABP operators would be one of those key stakeholders. I was just wondering, in terms of the Welsh development agency, have you given some consideration in terms of where Welsh ports feature as part of the development of that industrial strategy? Again, that was something that came up quite a few times in the consultation that we had, and with stakeholders around the table as well, that was something that came up.

And then one other quick question as well related to—. Tom mentioned data centres. Now, data centres, a hot topic, it comes up time and time again in the Senedd Chamber. Lots of us have been lobbied on this issue as well. I've got one potentially coming up in my constituency—one of the projects that has been currently called in. People have got concerns about it. Some of them are legitimate concerns, and you've talked to us about the fact that there will be now an ethical framework, perhaps, that will help us. You've also said, of course, that, whether we like it or not, data centres are a part of that industrial future for us in Wales. Do you think that the—? Who ultimately is going to make the decision about where we're going to invest in Wales? So, if I was going to look at a map of Wales, is there a vision for where the different jobs will come, what those different industries will look like? Is it going to be the development agency that is going to make that decision? Is it going to be you that will make that decision? Is it going to be the UK Government? What does that actually look like?

So, one, in terms of data centres, it is important, but there are genuine concerns that people have in terms of environmental concerns, concerns around the use of land, and also grid connectivity. If we put all our money, chuck all our money into that, what about the highly skilled manufacturing jobs? Should we not be focusing on them? So, what is the vision?

I’m really grateful for those connected questions, and I think they go to a theme, which is the importance of always having in our mind the importance of place. I think colleagues, officials, attended an OECD discussion on productivity recently, which made it clear that, actually, place-based economic development is really critical. Sometimes we talk about the economy as if it's somehow abstract, in the ether, but all economic development happens in places, so actually having a spatial strategy is as important as having a sectoral strategy.

So, yes, thinking about ports, and surrounded on three sides by sea, as we are, we have these fantastic natural and industrial assets—ports of different scales, and many of them actually of global significance. So, how do we build on what's already there, but think about the adjacent possible? Certainly, what we're seeing around the world, because of the critical importance, increasingly, of energy, is we're seeing power shoring, as it's called, which is industry locating close to energy sources. Often they are located because of marine energy at ports. So, it's a bit like the industrial revolution again. Place is becoming important, energy is critical in that, and ports are actually critical. We've been there before in our history. We are there again, and we actually have a very, very good base on which to build. And certainly we already are looking strategically at the importance of ports, and I've visited many of the ports in Wales already looking at specific projects. We want to get them accelerating on the path to investability and implementation.

I think that, yes, identifying investable projects at different scales in different parts of Wales, that's part of the work, absolutely. I think that the development agency will certainly have a role to play there, but so will Government, because if you think about putting together projects, yes, there's an economic development purpose, but they involve planning, they involve transport infrastructure. There you do need a cross-Government approach, so there will always be an important role for Welsh Government, even with the creation of a development agency, to make sure that we plan for those developments and we bring all the elements together in a more streamlined and less bureaucratic fashion than previously.

In relation to data centres, yes, as I've set out, we need a policy that enables us to maximise the benefits and minimise the downside. And I think, for me, policy is not the enemy of development. Actually, sometimes it's the best way to ensure development, because if we're to—. As with any industry or any development, the best way of ensuring that you maximise the economic opportunity is making sure that you take the community with you, that people can see the benefits and also can understand that there is a framework that actually can get the balance right. So, where there are issues, not just in relation to data centres, but other developments in relation to the environment, land use, et cetera, people need confidence, don't they, that, actually, those are properly being assessed as part of a consistent framework. And if you get that right, actually you can accelerate development, because people feel that we're putting them in the right place, we're scaling them according to where the opportunity and where the need is, and we're factoring in the legitimate interest that communities and citizens have as well.

What struck me, as somebody from Maldwyn, is that perhaps there's another David Davies for this century to make the most of our ports. Just in terms of the point that Tom was making with regard to NESO, perhaps it would be an idea for us to have sight of the correspondence with regard to the relationship and the grid connection, and so on, in mid Wales.

Sarah, did you want to come in on energy?

I've got four questions. I'll keep it short. What is your energy plan for the provision of nuclear power generation in Wales, because it's been about 11 years since Wylfa was shut down, and there's been quite a gap? So, I'd like to know what your thoughts are on that.

Sure. Obviously, the work itself in development of the national energy strategy, as I said, will be looking at the likely contribution of different technologies. Like pretty much all of the different stakeholders in the energy system, I think the consensus view is that Gwyndod is now happening, and so that needs to be factored into our planning in terms of the energy system. As I said, we're taking a whole-system approach, so that will be factored into our thinking in terms of energy supply versus energy demand.

Thank you. I wanted to ask why there is a total emphasis on onshore rather than offshore, because there seems to be a rush to build onshore turbines, especially in Welsh communities. As you say, you've got to get the Welsh communities on board with this infrastructure, but I feel that they are going to pay a price if there is industrialisation of these lovely communities. Again, it's all part of the mix. Why is there emphasis on onshore as opposed to offshore? I just noticed that, apparently, of the 30 per cent of wind, 18 per cent was offshore and 12 per cent of that power was onshore. So, on offshore and onshore, offshore seems to come to the fore more. That was my question.

Thank you for the question. These are the questions that we'll be looking at in the context of the national energy strategy, again, looking at the different contribution of different technologies, including onshore and offshore. Offshore is a fantastic prize that we want to seize—both fixed and floating offshore wind. We have a particularly unique potential in terms of floating offshore wind. And in the context of floating offshore, we don't just want to host the turbines of floating offshore wind off our coast, we want to build the turbines and have as much of the supply chain here as possible so that we fully benefit from it. We'd like them assembled in our ports as well. So, let's make sure that we do that.

There are other technologies in terms of marine energy, tidal stream, et cetera, where, again, we have the second largest tidal range in the world. I don't know where the first is. I always quote that we're second. [Inaudible.] All right, okay, there we are. Second is not bad for a nation of 3 million. There are other technologies as well, and what we're doing, in essence, is we're looking at the entire mix and asking as objectively as we can—not putting our eggs in any one basket, considering the existing onshore that we have already built out—what contribution should new onshore wind or solar play. These are the questions that we're asking ourselves. We'll be setting out our proposition and, obviously, look forward to engaging with you further on that basis.

I just wanted to ask who pre-assessed the areas of wind generation with regard to the environment and the impact on rural communities. I just wanted to ask if it's true that, for strategic energy parks, environmental impacts are not actually properly assessed. The Welsh Government has complete devolved authority over all onshore wind projects, meaning that they can fast-track applications through planning reforms like the Infrastructure (Wales) Act 2024.

If I may, I think I might need to write to you on some of that, because I think that the pre-assessment process predated this administration. Indeed, it goes back many, many years now, so we'll have to get officials to respond to you on that. In relation to the infrastructure Act, again, it predates this administration, but I think, broadly, it does create a new planning framework. Let me write to you specifically in relation to that. Obviously, looking at the planning framework is part of the work in terms of energy, getting the balance right in the ways that I described earlier. Certainly, we'll be taking forward work in that area as well.

Thank you.

If I could just add a couple of preliminary points—we will write, as the Minister said—I think the pre-assessed areas were based around visual impact. That was one of the elements of the planning process, looking at the mapping and if the visual impact was deemed to be manageable. The rest of the planning system does pick up environmental impact, impact on communities, et cetera, et cetera. Planning policies 17 and 18 cover that with respect to renewable energies. There still is a wider planning framework that applies to those projects inside the pre-assessed areas, and outside the pre-assessed areas as well, but we'll provide some more detail on that.

Thank you very much.

We, as a new Government, are committed to taking a fresh look at this area, and we'll bring forward our own proposals in due course.

Thank you very much. The last one: we have, as we all know, the most expensive electricity in the world. The system cost of wind is high, as opposed to the price. Bearing this in mind, why is it 100 per cent renewables—is this right: 2035, 2040; is it 2040 now?—when gas is much cheaper and is still very much part of the mix, a very important backbone of the mix. This is my question: why is the price of renewables used rather than the true system cost, in comparison to gas, which is a much lower cost?

This is a very important question. We'd probably need to run a seminar to give it a proper answer. In relation to the 2035 target, as I said earlier, we're moving to a different basis, which actually does allow us to factor in other low-carbon technologies, including nuclear where that decision has already been made, and abated gas, which uses carbon capture and storage, and other technologies as well. So, that's part of the answer.

I think the issue in terms of cost is partly to do with this issue about public ownership. I think that there is evidence that countries that have had a strong publicly owned element within their energy system seem to have done better, whatever technology that they've used. France has gone down one path, there are other countries that have gone down others. But certainly, my proposition to you would be that having a publicly owned energy company is one of the ways in which you can actually deliver lower cost, both to customers and to businesses. We're seeking to do that in our own way, within the limits of our power, but also potentially working with the UK Government, where we can, through our own publicly owned energy company.

Thank you, Minister.

Okay. I think we have done enough on energy and grids and so forth. Can we move on to something that's quite exciting, I think, namely the new national economic development agency? You referred to the Basque Country, and I agree that there are many lessons that could be learned from there—I know that from personal experience. But perhaps the first thing, before going to questions, is to get an update on where we are in terms of this new agency. Members of the board of directors have been recently appointed, of course, so, yes, perhaps we'll start there.

Certainly, the advisory panel on the design of the agency has now been formed. We tried, to the greatest extent possible, to have representation from a broad range in terms of background and experience. So, we're very fortunate that there are people who have had experience in leading businesses on a global level. But we also thought it would be vital to ensure that small to medium-sized enterprises were represented on the panel. We've tried to have a range of geographic representation as well, and in terms of different elements of diversity. We are fortunate, I think, to have a panel of the calibre that we have, all working free of charge for the benefit of Wales. I'm looking forward to meeting them in their first meeting.

The preparatory work has been going on for some months, of course, in terms of looking at best practices across the world, and looking at those countries, and we referred to some of them in our written evidence to you, that are excelling in terms of development agencies. Not that we are going to emulate them exactly, our context is different, but there is scope to learn from the best and from the range of those that we've been looking at. And there is specific work being carried out in different areas, in different contexts, in order to provide a framework and context for the panel's work.

Is there a timetable in terms of when see the agency—? I think I saw a reference to that—hopefully there could be some elements in place by next summer.

In terms of the panel itself, we've set an initial timetable of six months. That is, if more time is needed, of course, we'd be open to that, but that gives you some rough idea of the panel's work, and, of course, they will be producing an interim report as part of that work.

I have said that my expectation is that the agency will be operational, in some form—and we have to be clear and careful here—in some form, possibly in some kind of shadow form or an embryonic form—. MVP, I think, is the term now used. Minimal viable proposition. That is, in some form or other, because we have to be practical, don't we? I don't think that we can start from the outset with the whole range of activity that we would expect the agency to undertake by next summer. But I have to say, at the same time, that that is all conditional on the recommendations that we receive from the panel, and that I will have from my officials. If there are any practical reasons that I'm not aware of at present that that is not possible, or that it doesn't make sense in practice, then, of course, we would have to accept that. But I have conveyed the message that I'm very eager to see activity, even on an initial scale, as soon as possible.

Fine. Thank you very much.

John, did you want to come in?

Thank you. My first question is really basic. Thank you, Minister, for coming. How will this be different from running the same functions within Government?

Well, I suppose that is the exam question, really, that we're asking to the panel, actually, and I can give you my answer, but we'll obviously have the panel's view. What's the business case, effectively, is the question that you're asking. I think it partly goes to one of the themes of our morning so far, which is this question of moving at a greater velocity than central Government or, in our case, a national Government is able to do. And I think there's plenty of evidence across the world in this context where most Governments, certainly of nations of our size, have development agencies, and they have them because they are a very effective tool for working faster, also creating, through creating an arm's-length agency—. I think the general view is that you're able to, if you like, get the best of both worlds in the sense that it is still connected to Government, so it's not completely independent.

So, as I was saying earlier, when the development agency, through its account managers, through its relationship managers working with the business, identifies a problem that, actually, only Government can solve, then it's able to use that relationship to get a cross-Government solution. It's able to pick up the phone, basically, to someone in the transport department, or what have you. But at the same time, it is arm's length from Government, and so it's able to adopt not just speed but maybe an ethos, a way of working, a culture that looks more like the private sector. And therefore, the private sector, in partnering with the development agency, is able to work more effectively with the development agency.

So, I think that's one of the main drivers—that greater agility and that greater business-like focus that development agencies are able to create across the world. Government, as any Government should do in a democracy, sets the parameters. We've set the national productivity mission as the overriding key performance indicator, if you like, for the development agency, but the development agency then is the delivery body that is able to deliver in a much more fleet-of-foot way than is possible always to do in central Government.

Thank you. Can I ask another question? One of the criticisms of the WDA was that it chased inward investment rather than supporting indigenous firms. How are you going to stop the new agency from doing the same thing?

I think it's a really pertinent point and I think, in creating a development agency for the Wales of today and tomorrow, being clear as well about what the previous WDA didn't get right is an important part of the process of thinking, isn't it? And I think that, for me, it's about balance. So, any nation in the world is going to welcome global investment. Even the United States of America, one of the most successful economies in the world, welcomes global investment. So, you do always want that. It's about getting the balance right.

And so I think the criticism that was made of the agency and the Government policy at that time was that it was too exclusively focused on inward investment, almost as the saviour coming over the hill. Whereas actually, ultimately, global investment helps. It helps you build on existing strengths, it helps you build a foundation for new areas of work. But ultimately, the core driver of any economy is your own capability.

So, my take away from all that is that you need to be strategic. So, rather than just saying, 'We'll take anything from anywhere, no matter whether it fits with our economy or not'—well, if it doesn't fit, it's not going to be rooted. It may come, but then it'll also go very, very quickly, because it doesn't connect to anything. Whereas I think, if you look at some of our global firms that are successful and have built something significant and wider, it's either because they're connected to natural assets or they're connected, in the case of our steel industry, to generations of knowledge and skill, or if you think about the compound semiconductors cluster—and one of the companies, of course, was a great university spin-out, or they're globally owned—actually, they are deeply embedded within their economy. And so the dangers that sometimes can come from an injudicious reliance on inward investment don't arise in that case, because it actually is part of a wider ecosystem. So, be strategic and then focus on the other side, which is critical—scaling firms. Already in our work we've identified energy costs as a key constraint that's holding us back.

The other area is business dynamism—our own businesses, and the extent to which we have high-growth firms within Wales at every level, small to medium, medium to large. And so the development agency, at the core focus for it, will be about increasing the number of high-growth firms that we have. If we get that right, then we've built a foundation—a foundation on which global investment is a really good additive, but the core is the base that you build yourself.

Thank you. Can I ask one last question, if I may? How will north Wales businesses, ports and colleges give evidence to a panel that's—. In other words, how can we keep this not Cardiff-centric?

Yes, I think that's a really absolutely critically important point. As I said in my opening remarks, we have this national productivity mission, but there's no point us closing the gap in one part of Wales and there's still a chasm somewhere else. We need every part of Wales to be part of this, and every part of Wales has a great contribution to make.

I've made many visits to the north of Wales already and there's a great advanced manufacturing cluster in the north-east, the fantastic port of Mostyn, and there is great work across the whole of north Wales in terms of our energy sector. So, that's got to be right at the heart. The agency, I firmly believe, needs to have strong regional departments, teams, within it. It needs to work with regional partners. But even at this stage, you're absolutely right. Whereas the panel will obviously decipher itself how it wants to engage with different stakeholders, we'll certainly want to ensure that there is—. We've already begun to discuss with regional partners how we can get the regional perspective. We have Halen Môn's co-founder represented to create a north Wales business perspective, but we want to tap in to the collective intelligence of the whole of north Wales, as well as other regions as well.

Thank you.

Alun.

I'd just like to go back in terms of the development agency and the framework that they would work within. Possibly my biggest concern is accountability. How do we balance the accountability of a development agency with that swiftness of action—that not going back to the Minister to have every single thing agreed? I see it every day in connection with health, where we have unpopular decisions taken by boards at an operational level and the Minister being unable to intervene in those, even though they might be incredibly damaging to those areas. I don't want to guess your answer, but I guess there's something around at what level that strategic framework is detailed enough and has enough scope for the Minister to intervene, where there are questions about bodies going rogue or not following the strategic framework that is set.

Yes, I think it's a really, really important question and, again, it's about getting the balance right, isn't it? No Government should outsource its economic policy in total, but the delivery of it. And you should encourage even delivery bodies to think strategically, but ultimately it's for Governments, accountable to the Senedd, to decide what are the broad parameters of economic policy and to set the direction of travel through a remit letter, for example. I've set that out in a remit letter to the development bank, and we'll use similar methods to ensure that there's clarity about roles. I think maybe what went wrong with the previous development agency is that the development agency forgot where it was in this context. I was going to say 'hierarchy'. I'm not a naturally hierarchical person, but ultimately Ministers and Governments have to set the goals, accountable to the Senedd, and then the development agency is a delivery body.

I know that Liz—. I've been talking way too much. So, Liz, this is something that we've already done some thinking about, about what's the relationship between economic policy and a development agency. And Jo-Anne, maybe a reflection in the context of Business Wales as well and how you get the balance right between delivery, strategy and policy.

So, the thinking has begun, but the advisory panel will give some advice to the Minister on the function and potentially the form, the type of vehicle. And I think, on the back of that, then, we need to work out how that governance and assurance works. But I think that it is an absolutely key point and one that we've been alive to from the very beginning and have been thinking about it. I just don't think we have an answer yet because there are many unanswered questions, but we will keep you updated.

If I could add—. You've referenced the examples of health boards, but of course across Wales now we have a number of arm's-length bodies—Natural Resources Wales, Medr, Qualifications Wales are just three that I can name. So, there's a growing body of experience, I guess, and knowledge and understanding of the challenges that accountability brings. And while the nature of that needs to be specific to the vehicle that you're talking about and the extent of the length of the arm and so on, I think that there's that experience to draw on in thinking about how we would approach that in the context of an agency, and what those right and proper interactions and relationships are.

A follow-up question to that is the relationship with the Development Bank of Wales, of course. I take it that it's the same thinking in terms of how they're going to be interwoven, and reinforce one another, that that's in the offing as well.

Yes, certainly. That is, my starting point would be an expectation that the development bank and the new agency would operate in tandem, but with complementary contributions, and collaborate on working towards the same aim ultimately. But we have commissioned work that looks at the landscape in terms of access to capital generally, that is, beyond just the development bank, looking at the private sector as well, just to see where we are now. And, of course, we will be asking the advisory group on the agency design—in this context, as in the broader context in terms of the economic development landscape—how they see the relationship between the different bodies that are in that space.

And as I said, I have set out the remit letter—I've certainly signed it—which sets out how we as a Government want the development bank to contribute—even now, before we establish the development agency—to closing the productivity gap that we've mentioned, and focus on the question of high-growth businesses, the scale-ups, whatever the Welsh word is for that. I wonder what the Welsh word is for 'scale-ups'. But you know what I'm talking about. So, ensuring that their work is tailored as closely as possible to our economic strategy. That work is proceeding already, because we don't want to wait for the development agency; we want to use the different elements that we have now.

Thank you very much. I notice that time is moving on. So, Shav.

Just quickly, you've talked about this remit letter. I'm assuming this in relation to what was in the Plaid Cymru manifesto about reforming the bank of Wales. Is that what we're talking about here? Because that was specifically around the financial products and the offer, and it talked about better placing, helping medium-sized businesses.

I was just wondering: in terms of that letter, is that, then, the starting point? Does that mean that we are talking, really, about reforming the Development Bank of Wales? And if that is the case, what's the timescale in terms of the return? And how does that then factor into the considerations of the new development agency? How does that all work? It's good to hear that you've also said about making sure—going back to what Alun was saying about retaining powers—and not being in a position where, potentially, this agency could go rogue and lots of terrible things end up happening. Are you then, in relation to that as well, in practice—? When it comes to investment decisions particularly, or when it comes to business support offers, or recruitment offers, et cetera, will those types of things stay with the agency, or will it be back with you as the Minister?

Yes, certainly, the remit letter is one mechanism, of course, whereby we can ensure that, in this case, the development bank is delivering in alignment with Government policies across a whole range of areas. Through regular engagement and co-designing different interventions, of course, there are other means by which we can also ensure that. And there is a whole range of issues that we want to work with the development bank and other parts of the landscape on, in terms of ensuring that our financial investments are in line with our policies in relation to fair work. But also, we want to support the co-operative and employee-owned sector as well, and we will be discussing with the development bank what more can be done in relation to that area, as well as work with other partners.

So, yes, in terms of accountability, it's critical, isn't it? And I think that there is a benefit, as I described, in creating independent institutions that have specialism. They have specialist knowledge, they work in a particular context, and therefore it's a better fit, whether it's the development bank or the development agency, for them to work in a different way from being delivered from within Government. But you are right, Shav, that there is always something to be mindful of in those circumstances, that you do maintain accountability. So, agility and autonomy, but it is within a framework, ultimately, and you need to make sure that there's clarity in terms of the goals, the key performance indicators, and that there is a means by which you hold those delivery agents to that, and do that in a transparent way so that you can scrutinise. As I scrutinise the delivery bodies, you can scrutinise me and the delivery bodies.

So, yes, it's something to be mindful of, and there is a sweet spot, isn't there, because, as I described earlier, if a body becomes so far removed from Government, it actually loses some of the benefit of actually being able to—'leverage' is not quite the term—but to access other parts of Government in order to solve problems. But it also starts to drift away from the goals that have been set for Government policy, and that has happened. That did happen, I think, under the old agency. And there are other examples across the UK that you can think of. That's not going to work, is it, ultimately, because Governments need delivery bodies that are going to deliver the outcomes that the Governments have said are critical, and are accountable to Parliament and all the rest of it.

I've got one quick other question, and that is: where are the staff going to come from? And how much is all of this going to cost us, I guess? How quickly will it happen? Is it going to be the panel that will make that decision? Are the staff going to come from the private sector? And does that mean then that they're going to have greater flexibility in terms of setting their pay, terms and conditions, their pension arrangements, et cetera? Are they going to be somewhat aligned with the civil service, or are they going to be a little bit like the arm's-length bodies that have their own different structures, and then it becomes really difficult to deliver pay equity and fair-work arrangements across the board, when we're looking at Wales? Going back to some of the points that Kiera was making as well around equality, we've all talked about good jobs, you've talked about fair work, what would that look like?

We've no predetermined, definitive and detailed answer to those questions yet. I'll ask my officials to answer more substantively, but I would just say that it's important to stress that we were very, very keen to have your successor representing the trade union movement on the panel. We thought that was absolutely critical that we had a worker and trade union voice, consistent with the values that we share as a Government and that are more broadly shared, embodying the best tradition of partnership working. I think it's one of the lessons, dare I mention, from the Basque Country as well. One of the lessons—

I hope we're going. You can come with us. [Laughter.]

One of the lessons they said—. I asked the former First Minister, the Lehendakari at the time, I asked, 'What was the absolute reason for your success?' And he said, 'It's quite simple, Adam, all together or not at all.' 'We worked across party,' he said, 'we worked across the political spectrum and also we had a social consensus.' So, the unions and businesses together, all working together—that was the secret ingredient. We can do that in Wales. Having a worker voice more broadly, a trade union voice, was absolutely critical on the panel, but in relation to questions relating to our own workforce, then I don't know whether officials can address those questions.

I would say that I think it's a bit soon to answer that. I think the thinking about the function and, therefore, the form will drive some of those decisions, ultimately. I would stress, though, that the panel will make a recommendation and it will be for the Minister to make a decision, ultimately. I would also stress that we are very conscious that there's a lot of change for our colleagues across the Welsh Government and—

There are only so many civil servants.

That creates a bit of uncertainty and we are very keen to do all that we can to keep people involved throughout the whole process to try and alleviate any concerns that might generate as much as possible.

No doubt we'll have future opportunities to pursue it. We've got a quarter of an hour. I think there are a couple of issues—I'm looking at Kiera and Tom in particular—in terms of employment. Then perhaps we'll come to Cardiff Airport afterwards.

Employment, did you say, Chair, we're moving onto? That's fine. Just a couple of quick ones, then. I'm jumping about slightly. Just on the business support one, just a quick question. Prime Minister Andy Burnham has said that he is wanting to explore a warehouse tax in an attempt to rebalance the economy from the high streets to the online retailers, but an awful lot of high-street retailers utilise warehouse space. It's a vital part of their supply chain. So the tax will impact high-street retailers as well. I wanted to know what the Welsh Government's initial considerations were on the warehouse tax and whether it's something you would potentially be supportive of or not at all. I know we're still in the formative stages of this at a UK Government level, but I would like to know your initial feedback on that. And then I've got a question about employment.

I'm glad you raised the issue more generally of business rates, because I think this is part of our approach in terms of making Wales an attractive business environment. We made our announcement in relation to the 30 per cent cut in business rates, which has been very strongly welcomed across Wales.

In relation to the specific proposal from the UK Government, as you say, at this stage, it's a tentative or outline one. I have to defer to my Cabinet colleague the Cabinet Minister for Finance, who leads in this area. I'm not aware of any specific modelling that we've been able to do based on any proposal that, even at the UK level, as you said, is quite high level at this stage. As a Government, we've said that we're implementing the 30 per cent cut because we thought that was the most impactful thing that we could do in the first instance, but we are open to ideas from wherever, really. We're particularly interested in ideas from the business community in Wales. But any ideas that can help us achieve our objective of creating that more attractive business environment, particularly for our small and independent businesses, we're very interested in hearing those so that we can bring forward further proposals in the future.

Obviously, as you alluded to, we've got to be careful. We live in a world of unintended consequences, don't we? So, in bringing forward proposals, any Government has got to be mindful of the potential impact in other ways.

Thanks, Minister. I appreciate it's still in its formative stages, but I just wanted to ask the question.

But moving on to employment, in my previous role, I worked in the third sector, and I worked for a small third sector charity in north Wales. One of the most impactful projects that we were running, as a self-funded company, was where we got UK Government shared prosperity money to do an employment programme. We took, over the course of two and a half years, 55, I think it was, individuals who were long-term unemployed, gave them a paid work placement, upskilled them, trained them, gave them well-being support, interview techniques, job search support, and we got more than half of them into work by the end of their six-month placement with us. It really demonstrated to me the power of the third sector, because of the social value aspect that the third sector has running through it, in being a key partner in being able to support people who are the hardest to reach in terms of getting back into the employment market.

During my four years in the third sector, I always felt like the third sector was not appreciated as a key strategic partner, either by the Welsh Government or by the UK Government. I wanted to know what your thoughts were around using the third sector in the achievement of bringing people back into the employment workforce and tackling the issue of people not being in employment, education or training, which is an incredibly important issue right now.

I'd be very interested in sitting down with the Member and understanding more of his experience in what the third sector could contribute to what is, certainly, a very important area.

We are obviously waiting for the outcome of the Milburn review at the UK Government level, which will be very important for us in Wales as well. Some of the tools and levers in terms of the range of support, as you describe, are reserved. We are looking forward to hearing what the direction of travel is, and also the question of whether there is scope to devolve more of those employment-related powers and budgets, so that we can design, in Wales, the kind of support that is necessary, given the scale of the problem.

We've commissioned, as I think I set out in a written statement, some work from one of the leading academics in this area in Wales, to try and understand what works. I'd be very interested in maybe arranging for you to feed in to that work. I know I've engaged with other Members here as well—it's an open invitation. I know that this area is of real interest to members of this committee. So, that's an invitation to other Members as well—if you'd like to feed in to that process of research, and if you're aware of any interventions that are good practice. We want it to be a better traveller. So, let's do that in this context as well.

Certainly. Thank you, Minister.

Kiera.

I've got some questions first on NEET young people, and then employability support. First, given the large amount of young people not in employment, education or training, do you think the young person's guarantee is working? Do you have any intention to review it? Secondly, what will this Government be doing differently to the last Government to tackle or reduce the amount of young people who are NEET? And then thirdly, how are you working with the Minister for education and the Minister for—I'm trying to get his title right—higher education and further education to tackle this issue across departments? Sorry, there were a few questions there.

As I said in the debate that Shav Taj was able to secure earlier this year, it's certainly the case that current policies—and I don't say this in a party political manner at all—under the previous administration here, under the UK Government level, clearly are not working, because of the rising levels of youth unemployment and NEETs that we are seeing. I think that that has to be an important element of honesty as a starting point. We all need to think and act differently in this context.

I think one of the things that we've been keen to ensure is that we have enough flexibility to be able to redesign our approach. Part of it is getting the balance right between supply-side interventions, as they're sometimes called, which have an important role in many contexts, particularly for those that are particularly far from the labour market—. But the role of the demand side is important as well. So, how can you create or generate the jobs so that there are those first-rung-on-the-ladder opportunities where we—? Certainly, there's enough emerging evidence to suggest that something structurally is going on in the labour market that is palpably different. To Tom's broader point, there's a lot of evidence from across the world on active labour market interventions and job subsidy—even if they are temporary work placements et cetera, working with employers in different sectors to guarantee a certain level of first-job opportunities. This is an important part on the demand side.

These are the questions that are at the forefront of our minds and are part of the thought process the UK Government is going through, as well as things like the interrelationship between different parts of Government—thinking about the role of mental health, which is a factor for some people, including young people, but, actually, right across the age spectrum as well. We need to recognise that the existing interventions have not worked to the extent that is necessary. We need to come forward with new ideas, based on the evidence, that have a greater likelihood of having the impact that we desire. We need, because it's cross-Government, to see more of those powers devolved to us so we can work in the joined-up way that is necessary for us to deliver the outcomes that we want for people who are currently experiencing unemployment and economic inactivity.

Diolch yn fawr. And finally, a quick question from Leti.

Thank you. It's on Cardiff Airport. What are the plans to improve public transport connections to Cardiff Airport?

This is something that directly falls to my colleague the Deputy Minister, but, obviously, everything is connected—or it should be, which is the point of the question. It is something that we have discussed, and I will leave it to him to address the specifics around the public transport connections to the airport.

I hold the responsibility for the airport. It is a strategically vital asset for Wales in terms of economic development. The evidence is pretty compelling that having an airport with global connections is one of the key determinants of economic prosperity. It really is important that we maintain and grow those international connections. I will be doing everything I can to ensure that we support the airport in that vitally important work.

It's great to see that their recent success has won plaudits within the industry. So let's celebrate some of our success. In Wales, we hide our light under the bushel and we apologise to the bushel. Let's not do that. Let's celebrate the success. But part of ensuring the growth and success of the airport is making sure that it has the right transport connections. It is one of the assets of the—. I don't know if you've had the same experience; I've had friends who've arrived to visit and they just can't believe it. It's such an easy airport and experience to navigate. I think it's won plaudits as being the friendliest airport in Britain. But we need to get those connections right, and we are working on that as part of our strategic plan as well.

Diolch yn fawr, and you will be able to pursue that further next week with the Deputy Minister for Transport.

Fantastic, thank you.

On that note, may I thank the Minister and the team of officials for attending?

Can I thank you all for attending today? I hope we weren't too harsh in this first meeting like this, and we wish you well.

Thank you very much.

And may I come with you to the Basque Country?

Oh, yes. We're taking it for granted—

See you at the airport. [Laughter.]

Yes, separation of powers, and all that. [Laughter.]

I'll write to him. I'll get him to come up—[Inaudible.]

Okay. Thank you very much.

Sorry. Could I just come in as well? If we're writing to the Business Committee, can we ask if the intention—? Like, is there a family-friendly element? Because I feel like neither of the proposals are family-friendly for different Members, and my understanding was that that was part of the reason this is happening.

Okay, we'll do that then.

Yes, I think I—[Inaudible.]

If everybody's content, I'll go on to the Standing Orders.