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1. Questions to the Cabinet Secretary for Finance and Local Government

July 05, 2017

65 speeches by…

  • Elin Jones
  • Mohammad Asghar
  • Mark Drakeford
  • Jenny Rathbone
  • Rhiannon Passmore
  • Hannah Blythyn
  • Mark Isherwood
  • Rhun ap Iowerth
  • Adam Price
  • Janet Finch-Saunders
  • Gareth Bennett
  • David Rowlands
  • Dawn Bowden
  • David Melding
  • Jeremy Miles
  • Andrew R.T. Davies
  • Simon Thomas
…and 7 more speakers

Elin Jones

The first item this afternoon is questions to the Cabinet Secretary for Finance and Local Government. And the first question, Mohammad Asghar.

Mohammad Asghar

1. Will the Cabinet Secretary make a statement on the use of fixed-penalty notices by local authorities in Wales? OAQ(5)0148(FLG)

Mark Drakeford

I thank the Member for the question. Llywydd, it is for each local authority to determine its own policy and approach to the use of fixed-penalty notices. The Welsh Government supports their use when deployed as a response to genuine problems, issued sensibly, and enforced even-handedly.

Mohammad Asghar

Thank you for that reply, Cabinet Secretary. Last year, Merthyr Tydfil County Borough Council issued only two fixed-penalty notices, and Torfaen County Borough Council 13. However, Newport City Council issued 840 notices, compared to under 300 in previous years. Blaenau Gwent County Borough Council issued over 1,400 notices last year. What reason can the Cabinet Secretary give for the wide inconsistency in the number of fixed-penalty notices issued by local authorities in south-east Wales? And what assurances can he give that they are not being used as a means of increasing revenue only?

Mark Drakeford

Well, Llywydd, the Member is quite right to point to the variation in the way that different local authorities deploy fixed-penalty notices, but that is because there is a repertoire of actions that local authorities can take, including court action, and some local authorities use a different mix of responses to others. And I don’t think it is for the Welsh Government to decide how local authorities should deploy the different responses available to them, and the combination of those responses, in their own localities. I agree with the point the Member made at the end of his question, that local authorities must use fixed-penalty notices as a proper response to genuine problems, and that the revenue that they raise is there to address those problems and not as a revenue-raising measure in its own right.

Jenny Rathbone

Public Health England is arguing that parents who leave their cars idling outside schools should be fined, because of the air pollution problem. And I’m wondering, given that the City of Cardiff Council has very effectively used fixed penalties, using cameras on the back of buses, to prevent cars going into bus lanes, what powers Cardiff council might have to tackle a similar problem outside school gates in Cardiff?

Mark Drakeford

Well, I thank Jenny Rathbone for that question. I saw the advice that the National Institute for Health and Care Excellence, with Public Health England, had published last week, with guidelines calling for clean air zones to be set up outside schools, hospitals and care homes, for example. They don’t, I think, in that document, refer directly to a fixed-penalty regime; they talk about the possible use of bye-laws and other actions to support no-vehicle-idling areas. Given what we know about the pressure on air quality, this seems to me a very valuable report, and I know that colleagues in the Welsh Government will be looking at it, to see whether there are any actions from it that we should think of taking in Wales, including making powers available to local authorities, if that is thought to be the best way of enforcing such a regime.

Rhiannon Passmore

As a former councillor, I know that the Cabinet Secretary for Finance and Local Government will intimately empathise with the plethora of demands that low-level environmental crime places on the caseload of local councillors. And outside of the portfolio of local authority responses that the Cabinet Secretary has already mentioned, including court action, the use of fixed-penalty notices can be an effective tool in helping to tackle low-level environmental crime, which includes dropped litter, dog fouling, and debilitating noise from dwellings and licensed premises. Cabinet Secretary, how does the Welsh Government view the value of local authorities using fixed-term penalty notices as one measure amongst others to deliver a better community for the people they serve? And how can best practice be disseminated?

Mark Drakeford

Well, I agree with the Member that this is one measure amongst others. Fixed-penalty notices are a very familiar part of the repertoire available to local authorities. They were first introduced as long ago as the 1950s. And while I understand some of the concerns that are sometimes raised about them being used as a revenue-raising tool, it’s important to note that, right across Wales, £1 million was raised by local authorities through fixed-penalty notices in dealing with low-level environmental problems of the sort that Rhianon Passmore has referred to, while the environmental cost of cleaning up litter to Welsh local authorities last year was £70 million. So, it is a relatively small contribution to dealing with the problem, and I don’t think it’s an unfair point for me to make to individuals who sometimes complain about the way that local authorities deploy fixed-penalty notices in relation to litter, dog fouling and so on, that the answer is mostly in their own hands, ‘Don’t drop litter and there’ll be no fixed-penalty notice to worry about.’

Hannah Blythyn

2. Will the Cabinet Secretary provide an update on the progress of the north Wales growth deal? OAQ(5)0154(FLG)

Mark Drakeford

I thank the Member for the question. The Cabinet Secretary for Economy and Infrastructure leads discussions with partners in north Wales on a growth deal. Formal submission of a growth bid is expected in the summer, and that will mark the start of formal discussions.

Hannah Blythyn

Thank you for that answer, Cabinet Secretary. Following the submission last August of the growth vision for north Wales, I know, and you’ll be aware, that stakeholders in my region, and across the border, such as the North Wales Economic Ambition Board, the Mersey Dee Alliance, Cheshire and Warrington local enterprise partnership, and the north Wales business council have worked hard on collaborating and coming together to press ahead our plans for infrastructure development, the skills agenda and economic growth for the north Wales area. In addition, in order to complement this work, I was pleased to be able to establish the cross-party group for north Wales here in the Assembly, so we can actually work together more collectively in order to press ahead that agenda in the Assembly, to get the financial and the political will to take our ambitions forward for north Wales. I’m glad you said that we’re expecting progress very soon, because I think there’s been a bit of a fear, despite it being much mooted alongside the Northern Powerhouse, that things have gone a bit quiet of late. So, I will just ask: what political commitment remains to the north Wales growth deal from both the UK and the Welsh Governments, and has any financial commitment been forthcoming as of yet from the UK Government, as it has done previously for the deals in south Wales, in respect of Cardiff and Swansea bay?

Mark Drakeford

I thank the Member for that question. The Welsh Government remains firmly committed to the development of a north Wales growth deal. I’ve recently embarked on my latest round of discussions with local authority leaders. I met with the new leader of Gwynedd and the new leader of Ynys Môn recently, and I discussed this matter with the both of them, and also with the leader of Flintshire council. And I know that there remains an appetite right across north Wales to fashion a growth deal bid that will be convincing to both the Welsh Government and to the UK Government. I can’t speak directly for the UK Government on this matter, although every indication we have had is that they too remain committed to taking these discussions forward. We won’t get to the point of talking about financial commitments until later in the process. There’s still quite a job of work to be done in shaping that deal, in putting forward the proposition, and in calibrating the money that will be asked for it against the realism of what can be achieved. That was the process both in the Cardiff and the Swansea city deals, and I quite certainly look forward to being able to help take that process forward in relation to the north Wales growth deal.

Mark Isherwood

Building on the North Wales Economic Ambition’s Board growth vision document last summer, the team developing the growth deal bid have called for devolved powers to be granted to the region, including skills, transport, strategic land use planning, business innovation, advisory functions, careers advice and taxation. By taxation, they’re not referring to business rates, but to tax increment financing. What consideration have you given, or are you giving, to that call, where such financing, which I believe is available to local authorities in England, relates to borrowing funded by the future growth in business rates receipts resulting from the projects developed through the growth deal?

Mark Drakeford

Well, Llywydd, I certainly agree that both city deals and a north Wales growth deal has to be more than just an argument about the sum of money. It has to be about a wider agenda of driving collaboration, speaking with a single voice on key ambitions. And with that may go devolution of some of the sort of responsibilities that Mark Isherwood just outlined. It will be for the proponents of the deal to make that case. Of course, I am aware of TIF and the way that it operates elsewhere. I met the Society of Welsh Treasurers in local government on Friday of last week and had a useful discussion with them about a range of these issues, including the potential for a shared-gain approach to growth in business rate receipts, where it is possible that local authorities coming together in these city and growth deals can demonstrate that there is an additional flow of income as a result of their combined efforts.

Rhun ap Iowerth

The people of Anglesey would like an assurance that the north Wales growth deal will seek to develop the economy across all counties of north Wales, not tying the eastern counties to what’s happening in England only. There are opportunities to the west also, in Ireland, never mind the rest of Wales, and not just in the north west of England. There is a risk that Wylfa Newydd will be seen to be ticking the box in terms of Anglesey or in terms of the north-west more widely, even. Will the Cabinet Secretary agree that we shouldn’t rely on Wylfa, because if a situation arises where that isn’t delivered, we will be in deep trouble?

Mark Drakeford

Well, the challenge for the people in north Wales working on the deal is to be clear that they are working towards something that will work for the whole of north Wales. When I met with the new leader of Ynys Môn and the leader of Gwynedd, I did talk about the developments at Wylfa Newydd and the importance of being clear that Wylfa Newydd will be part of what comes forward as a significant part of the growth deal, but, of course, the deal is greater than Wylfa. On the other side, in the north-east, I know that, when I talk to people who are responsible for cross-border issues, they are very eager to explain the importance of having cross-border activity with the people in the north-west of England. That is important. But, that’s the challenge, namely to try to create something that works for the whole of north Wales, for Wylfa and for other developments in north-west Wales. It’s crucial that that’s right at the centre of the deal.

Elin Jones

Questions now from the party spokespeople to the Cabinet Secretary. Plaid Cymru spokesperson, Adam Price.

Adam Price

Diolch, Llywydd. Last week, as we know, the Government declined to support the Circuit of Wales project, based on the risk that it could be classified as being on balance sheet and, therefore, would have major implications for the Welsh Government’s budget. Now, I’m interested in the decision-making process that led to this assessment in relation to balance sheet classification, as it could arise in a whole host of other projects in the future. We know, from the Cabinet Secretary’s appearance at the Finance Committee this morning, that his department has amassed considerable expertise running into hundreds of pages in this area because it arose in the context of the mutual investment model. In relation to this specific decision, can the Cabinet Secretary say if the person who prepared the paper on balance sheet classification, which went to Cabinet last week, is part of his team? I’m not seeking a name; I’m just seeking to understand departmental responsibility. Therefore, was the paper in question commissioned by him—by the finance Secretary—or with his knowledge? And did he have sight of the paper before last week’s meeting?

Mark Drakeford

The lead Minister in relation to the Circuit of Wales is, of course, the Cabinet Secretary for Economy and Infrastructure. As part of the due-diligence work on the proposals submitted by the company, officials from my department were part of the work that went on in carrying out that due diligence and contributed to the assessment that, in the end, was put together and led by Ken Skates.

Adam Price

I mentioned the mutual investment model, but I understand, from what he Cabinet Secretary said this morning, that he does not believe that the issue, identified as part of the decision over the Circuit of Wales, has any bearing on the classification regarding the mutual investment model. Could he say a little bit more about why he has come to that view, and, if so, was not a similar approach considered for the Circuit of Wales project? Can he also say if he’s aware, in this case, whether any of the following were contacted to give their advice or guidance in relation to the Circuit of Wales balance sheet classification issue? I’ll read them out slowly: her Majesty’s Treasury public expenditure classifications team; the Office for National Statistics’ economic statistics classifications team; the ONS economic statistics classification committee; and, finally, Eurostat’s committee on monetary, financial and balance of payments statistics.

Mark Drakeford

Well, the reason, Llywydd, that I said to the Finance Committee this morning that I didn’t think the decision in relation to the Circuit of Wales had a direct bearing on the mutual investment model the Welsh Government has put together is a matter of timing as much as anything else. The one preceded the other. We had already developed our mutual investment model. I had already made a statement on the floor of the Assembly here about it and answered questions about it, and we had already had to submit that model to the ONS and to Eurostat to allow ourselves to be satisfied that the way that that mutual investment model had been structured did not run a significant risk of those projects to be encompassed within it ending up on the public balance sheets. We did that, as you know, very much in the light of the Scottish Government experience, where their parallel model has ended up with many, many, many millions of pounds having to be found directly from public capital. So, that work is completed, and we’ve taken that advice. In that sense, I do not believe that it has to be revisited in the light of a completely separate project. As to the Member’s detailed questions as to where advice was sought, I don’t have that information with me. I do know that the information and advice that came from those who had taken that advice was that the risk of the Circuit of Wales being classified to the public accounts was very significant, and that that would have had a very major bearing on the Welsh Government’s ability to carry out the capital investment projects that we have already announced and are committed to providing in Wales.

Adam Price

The First Minister last week said that the ONS are not able to give a definitive ruling until contracts are signed in relation to project proposals, but it is the case that they are able to give a provisional ruling on classification. I’m relying here, Cabinet Secretary, on the ONS official guidance on the classification process, which says: ‘ONS is occasionally asked to provide classification advice on policy proposals so that the government can understand how these proposals would be treated in the national accounts… Any classification decision based on a near-final policy proposal will be deemed as “provisional” and dependent on the proposal being implemented as described.’ So, my question, Cabinet Secretary, is this: did the Government, in relation to this project, seek not general advice as to the risk of a classification, but a provisional ruling, as set out under section 6, Government policy proposals, of the ONS classification process guidelines?

Mark Drakeford

Well, Llywydd, I’m very familiar with the guidelines that the Member has just read out, because in relation to the mutual investment model, that is exactly the position that the ONS have taken. They have provided us with a general view that the model, as we have developed it, would not end up with classification on the public books, but reserve the right, in any particular project that we then take forward through that model—whether it be Velindre or the Heads of the Valleys or whatever it might be—to give us a separate ruling in relation to that project. So, the methodology that Adam Price has read out is exactly the way that the ONS goes about its business. The Government was satisfied, Llywydd, from the advice that we received, that the risk of classification to the public books of the project as presented to the Government was too great for us to proceed on the basis that that had been set out.

Janet Finch-Saunders

Thank you. Cabinet Secretary, I was unable to get a clear commitment from the First Minister yesterday with regard to the inclusion of a clear poverty reduction stream within future local authority reform. Now, your White Paper notes the need for a golden thread that links community-level aspirations with well-being goals to become a reality. So, therefore, will you commit today to ensuring that a golden thread in terms of poverty reduction is similarly prioritised as a reality within your proposed legislation objectives going forward, with clearly marked strategic direction, ambition, objectives and deliverable outcomes?

Mark Drakeford

I’m not certain, Llywydd, I completely follow what I’m being asked to commit to. What I will commit to is this: that local authorities in Wales, by the nature of the services that they provide, are often the final resort of the welfare state in dealing with people whose circumstances are so difficult that they require the assistance of homelessness services, or social services departments or public health departments, too. So, there is a golden thread, it seems to me, already in what local authorities do in making sure that they provide services for those who most need them. My approach to local government, Llywydd, is the one set out in the White Paper. My aim is to provide all local authorities in Wales with a renewed, refreshed and extended toolbox so that they have a greater set of possibilities that they can deploy in the way that best meets their local needs and circumstances. And then we must be more willing than we have been in the past to allow them to make those decisions, to be accountable for them to their local electorates, and to be able to respond to the circumstances that they face and are closest to in their own localities.

Janet Finch-Saunders

Thank you. Of course, this golden thread—your words, not mine—will require close working between community councils, local authorities and other public bodies, public service boards and any regional arrangements, and reform may require reorganisation of public service boards. Your White Paper proposes that they collaborate or even merge across local health board boundaries. Given that the proposals for community area committees have now been scrapped, there is little mention of public service boards in the previous Bill’s regulatory impact assessment. So, Cabinet Secretary, what analysis have you undertaken in regard to the costing of these such changes coming forward?

Mark Drakeford

Well, Llywydd, of course, the costs and benefits of the proposals that we will bring forward will be set out in the regulatory impact assessment that will accompany the local government Bill that the First Minister announced as part of the second year’s programme when he made the legislative statement last week. And there will be a new regulatory impact assessment that reflects the set of proposals that will then be in front of the Assembly. I think the Member makes an important point about local service boards, and she’s right to pick up the fact that there was interest in the consultation about the way that we would maybe realign public service boards so that they are better able to match the new set of circumstances with a greater emphasis on regional working and so on that the White Paper set out. And I definitely do intend to pursue some of the views that came through in consultation, and to look at public service boards in the context of these new arrangements.

Janet Finch-Saunders

Thank you again. Of course, local authorities spending on central administration is set to rise by £11 million this year, whilst spend on roads and transport will fall by £2.73 million, and on libraries, culture, heritage, sport and recreation by almost £4 million. The Welsh Labour Government have talked the talk on more streamlined local government, but these figures suggest increased bureaucracy and red tape. Years of uncertainty over reform and reorganisation has not helped in the slightest. Cabinet Secretary, can you suggest why these costs are set to rise so dramatically, and will you commit to ensuring that there is solid and responsible budgeting in this area?

Mark Drakeford

Well, Llywydd, the single greatest contribution to the rise in that £11 million figure is the figure from Conwy County Borough Council, and the Member, of course, raised that with me in the Chamber last month. To another extent, there are some classification issues that lie behind the figure—just things being classified in a different way. I’ve not met a single local authority leader, Llywydd, who doesn’t tell me how anxious they are to try and minimise the amount of money that they spend on those functions in order to free up money for the front line. The truth of the matter is, as I’ve said here in the past, and I repeated to local authority treasurers again last week, they face even tougher times ahead. The budget available to this Government goes down next year, the year after, and the year after that again, and there is no escaping the fact that those reductions will have an impact on our ability to fund our partners to do all the things that they would like to do, too. So, the incentive and the impetus for local authorities to squeeze as much money as they possibly can out of backroom services, sharing administrative arrangements, being more efficient in the way they produce support services is very well understood in local government, and the reforms that we will bring forward will assist them in doing so.

Gareth Bennett

Diolch, Lywydd. Minister, you’ve just been talking about the local government proposed reforms. One of the issues that I think has emerged, from what you’ve told us so far, is the theme of localism versus the need for systematic and mandatory ways of working, to use your own phrase. In other words, we need councils to be able to operate in their own way to some extent, and that they have to conform to Wales-wide standards in some areas. We had the issue recently in England of whether or not a council could or should have excluded the press from a meeting. Now, there is an issue in Wales of the variability of tv coverage of council meetings, so how far will you go down the road of enforcing systematic and mandatory working in this area?

Mark Drakeford

Thank you, Llywydd. Well, Gareth Bennett will be aware—I know, because he’s raised it with me before—that our White Paper makes a series of proposals that will place greater obligations on local authorities, both to broadcast their proceedings and to make their proceedings available to the public. Those parts of the White Paper, I think, were broadly welcomed in the consultation. We have relied, to an extent, on encouragement in this field in the past. The local government Bill will give us an opportunity to legislate to make sure that standards of openness and accessibility that exist in very many of our councils are made available in them all.

Gareth Bennett

Yes, thanks for that. I think the approach of encouraging first is certainly wise, although at some point there may be a need for actually enforcing what you’ve brought in. So, moving on from that is the issue of when you do intervene in cases if a council gets into difficulties. For instance, there have been long-running pay scandals in local government in Wales in recent years, at least one of which is still going on. Now, I don’t want you to comment on any specific cases, but in general, is there a role for you to intervene in cases where there are long-running problems, which don’t seem to be getting resolved and which may tend to bring local government into disrepute?

Mark Drakeford

Well, Chair, there are—and quite properly—established procedures that govern the way that Welsh Ministers can intervene when things go astray in local government. That often relies on advice from the regulators, including the Wales Audit Office, and where we have had to intervene, where there have been failing education departments or failing social services departments, those protocols and those ways of doing things I think have generally been effective. They’ve allowed us to identify the places where intervention is needed, and very importantly, they include a pathway out of intervention as well. So, where local authorities are able to demonstrate that they have put right the things that had been identified, then we’re able to withdraw and allow them to resume those responsibilities, and we see that being done successfully at the level of individual services. And in the case of Ynys Môn, in the case of the council as a whole, a successful recovery by that local authority. What I would say to Gareth Bennett is that I think it is very important to learn the lessons from that and, where we have other instances where processes may appear to go on for too long and be difficult to reach a resolution, then we need to look back at that and see whether those processes need to be tightened up and, where they rely on the ability of Welsh Government to intervene, to make sure that those circumstances are clear and cannot be avoided.

Gareth Bennett

Yes, thanks. You’ve cited the example of Ynys Môn, where there was a resolution, and I think you’re right to look at past examples and where there has been success from the Welsh Government to look at that as a way of dealing with cases that come before you in future. Now, again, it’s slightly sticky because I don’t want to refer to a specific instance, but if there is a case where a pay dispute has been in the news quite a lot and it’s been going on for four years, would the four-year mark tend to interest you as a point at which you may need to get involved in that theoretical case?

Mark Drakeford

Well, Llywydd, I think I would put it like this: that even in such a case, there will be a set of rules that are being followed, and I would be wanting to make sure from the Welsh Government’s point of view that the rulebook, as it exists today, is being followed scrupulously. The assurance I wanted to give the Member in answer to his second question is that when that matter does come to a conclusion, what I will want to do will be to revisit that whole process to see whether we think that the rulebook, as it operated, was commensurate with the issue that it was there to resolve. And if we feel in the light of that experience that the rulebook needs to be revised, and a fresh set of arrangements put in place that ensure that intervention is possible in a timely way and which allows issues to be resolved, then that’s the set of lessons that I will hopefully be able to learn from that experience.

Mark Isherwood

3. What were the Cabinet Secretary's priorities when allocating money to the communities and children main expenditure group in the 2017-18 final budget? OAQ(5)0145(FLG)

Mark Drakeford

I thank the Member for the question. The 2017-18 final budget aligns investment with key commitments in ‘Taking Wales Forward’. In the communities and children main expenditure group, that includes an additional £10 million in support of our free childcare offer, an additional £6 million for the prevention of homelessness, and £1.4 billion over four years towards the delivery of our 20,000 affordable homes target.

Mark Isherwood

Thank you. Clearly, this portfolio covers things like families, children, welfare reform, financial inclusion, homelessness and housing advice in the voluntary sector. Getting advice in those areas is not only better for people, but it would actually save money for the public purse. Therefore, given that the Welsh Government had already commissioned, alongside the National Advice Network, prior to the 2017-18 budget, the report now published on modelling the need for advice on social welfare, what consideration was given to provision to take forward its conclusions, which they say now need to be properly framed within a wider policy discussion considering the potential severity of problems, their interconnectedness, and, of course, local insights?

Mark Drakeford

Well, Llywydd, I understand the point completely that the Member makes about the need for good advice services and the way that good advice can allow problems to be solved before they escalate. The way the budget-making process works, however, is that it is for portfolio Ministers to identify priorities within the range of responsibilities that they exercise. We then negotiate together over a budget to deliver on those priorities and it would have been for the Cabinet Secretary responsible to make the decisions in relation to the deployment of resources across the wide range of responsibilities, as Mark Isherwood said, that lies within that particular portfolio. We have embarked upon the start of the budget-making round for next year. I will be meeting the Cabinet Secretary concerned in relation to his portfolio and I’ll make sure that a specific question is raised in that discussion on the point of advice services that the Member has raised.

David Rowlands

4. Will the Cabinet Secretary make a statement on the savings anticipated as a result of the Welsh Government's new model for local government? OAQ(5)0147(FLG)

Mark Drakeford

Well, Llywydd, as I said in an answer to an earlier question from Janet Finch-Saunders, the associated costs and benefits of the new model of local government will be published in the regulatory impact assessment that will accompany the proposed local government Bill, on introduction. The First Minister announced in last week’s legislative programme statement that a local government Bill would be included in the Government’s programme for the second year of this Assembly term.

David Rowlands

I thank the Cabinet Minister for that answer. But, following on from a number of comments you’ve made earlier, do you not agree that there have been many attempts to reform local government in Wales, including the aborted attempt to institute the Williams commission recommendations, and that the present arrangement of 22 local authorities has proved to be financially and strategically unacceptable? Quite apart from the fact that we have 22 chief executives on highly inflated salaries, with, of course, 22 sets of attendant staff, the authorities are not large enough to institute any infrastructure projects because their budgets are inadequate. So, does he not agree that we need real change to local government, not the incohesive arrangements now in place?

Mark Drakeford

Well, the Member is right enough in the history that he set out about attempts to reform local government in Wales. I think he’s over-harsh on the extent to which local government in Wales has been able to live within its means and has been able to contribute, together, to some major strategic programmes. But, quite certainly, the need to come together in order to be able to discharge strategic responsibilities on a wider footprint is what lies behind the 10 local authorities that came together to form the Cardiff capital city deal and the four local authorities that have succeeded in getting a city deal for Swansea. By coming together in that way, they are undoubtedly able to work better across their borders, to create budgets to which they are all able to contribute, draw on money from central and Welsh Government budgets, and do a better job of the sort of responsibilities that the Member identified.

Janet Finch-Saunders

The Wales Audit Office has previously highlighted the spend by public bodies on external consultants—£56 million last year—and noted that if they do not manage consultancy services effectively, they can be an expensive way to deliver our public services. Meanwhile, the NHS Wales Shared Services Partnership—NWSSP—achieved over £20 million in procurement savings in 2015-16, over £27.5 million in 2014-15, and £26.9 million in 2013-14. Given the scale of those savings, which are exemplary, one can only imagine what could be achieved at local government level across Wales. So, therefore, Cabinet Secretary, how will you seek to encourage the roll-out of best practice within the NWSSP across local authorities through your own reform proposals?

Mark Drakeford

Llywydd, well, I completely agree with what the Member said: that NHS shared services have been a conspicuous success story. Members here will be aware that it took 10 years to move from the original pattern, in which almost every health organisation in Wales provided all these services for themselves, to a point where we have a single shared services organisation for Wales. Part of the reason why it took that length of time is because there are people involved in working in all of these services, and you have to take account of the perspective of the people who work in these services. In our White Paper, we specifically asked the question as to whether or not there was more that NHS shared services could do to work for local authorities in this area, or whether it was better that local authorities develop their own model of shared services. There is some reluctance in local government in Wales to move down the shared services route, and there is a need for the message to be heard clearly by our local government partners that the move to shared services is a journey on which they are all embarked. I will be prepared to be understanding and pragmatic with them about the length of time it will take to reach the point where there is greater shared working, but no local authority in Wales should be in any doubt at all that we are all on this journey and they are on it too.

Dawn Bowden

5. Will the Cabinet Secretary make a statement on the payment of the foundation living wage by local authorities in Wales? OAQ(5)0155(FLG)

Mark Drakeford

Thank you for that question. Local authorities in Wales are taking a range of actions on lower pay. Some pay their employees the living wage, some are planning to introduce it, and others are moving closer to it by removing lower pay points.

Dawn Bowden

Thank you, Cabinet Secretary. You’ll probably be aware that Cardiff University Business School recently carried out a survey of those employers across the UK who’ve chosen to become accredited living wage employers, i.e. paying the foundation living wage, which is of course £8.45—almost £1 more than the UK’s national minimal wage—and ensuring that the contractors that they use also pay the foundation living wage rates. The overwhelming majority of those surveyed identified that not only did the benefits far outweigh any costs, but less than one in five had needed to change contractors, as they too have been content to pay the foundation living wage. Cabinet Secretary, given that local authorities are, in many areas of Wales, amongst the largest employers, will you join me in encouraging all councils in Wales to provide a lead within their local communities by not just paying the foundation living wage to directly employed staff, but to go the additional step and look to meet the accreditation standards by ensuring that their contractors pay it also?

Mark Drakeford

Well, Llywydd, I thought that Dawn Bowden made a very important point at the start of that supplementary question, when she pointed out that for many organisations it makes good business sense to pay wages of this sort, which result in them being able to recruit and retain staff. At the Finance Committee this morning, we talked briefly about social care as an example of exactly that phenomenon. The turnover of staff in social care can be up to 30 per cent on an annual basis, and yet we know that where there are local authorities and care companies who pay their staff and organise them on terms and conditions that make it attractive for people to take up those jobs, to stay in those jobs, to benefit from the training that is then available, that is a more successful business model for those companies and for those authorities than trying to pay at the bottom of the pay scale, and then having to cope with all the other costs of recruitment, retraining and having to employ temporary staff to cover where gaps in workforce have emerged. So, I think she made the case for the payment of the foundation living wage in terms that local authorities and employers can understand, and I’m very keen, myself, to make that case with them whenever I have that opportunity.

David Melding

Cabinet Secretary, can I add my support to this growing trend as well? I understand there are over 80 companies and organisations now throughout Wales who are paying the foundation living wage, including, Presiding Officer, the National Assembly and Cardiff council. I think the point you make there is exactly the right one. We do have a productivity crisis in this country, and a lot of it is caused by wages being simply too low. That part of the economy does need to innovate, and also, obviously, provide those employed in it with decent standards of living. So, I think the productivity and efficiency argument is very, very important, and we’ll see more and more practice of this from the 80 companies and those that will join them in the years ahead, I’m sure.

Mark Drakeford

Well, I agree entirely with David Melding that low pay is the enemy of productivity, and we’ve seen that in the UK economy over the last seven years. When wages are held down, it becomes a perverse incentive for employers to keep people on where they could have taken other actions that would have led to greater productivity and, as a result, better wages for those people employed in them. I’m pleased to say, Llywydd, that as well as the National Assembly and Cardiff council, as the Member said, the Welsh Government is also accredited as a living wage employer with the Living Wage Foundation, and not only do we ensure that all directly employed staff, including apprentices, are paid the living wage, our agreement as a Government goes further than directly employed staff. In new Welsh Government contracts, we expect all contracted-out service providers to pay their on-site staff with the living wage, as well.

Jeremy Miles

6. What steps are being taken by the Welsh Government to assess the future resilience of devolved public services in light of the UK Government’s continuing policy of austerity? OAQ(5)0151(FLG)

Mark Drakeford

Llywydd, we work with our public service partners and the Welsh inspection, audit, and regulatory bodies to assist in mitigating the flawed and failed policy of austerity.

Jeremy Miles

I thank him for that answer. At the heart of the question of resilience, as we’ve just been discussing, is the question of well-being and productivity of the workforce, the ability to recruit and retain talent, and, at the heart of that, is the question of pay. So, does he join me in deploring the suppression of public sector pay by the UK Government and the impact that has on the Welsh Government’s capacity to finance in other parts of the public services in Wales the sorts of pay settlements we would want and need? Does he agree with me that the UK Government needs to move beyond choreographed briefings by Cabinet Ministers about this issue to genuinely relenting on the question of public sector pay austerity? And does he join me in hoping that the talents, energy, and passion of Plaid Cymru can be directed to supporting the Welsh Government’s pressure on the UK Government, rather than setting up the kind of dividing lines we saw in the Chamber yesterday?

Mark Drakeford

Well, Llywydd, I certainly agree that the Chancellor of the Exchequer should listen to his Cabinet colleagues and end the damaging public sector pay cap. You heard the First Minister make exactly these points yesterday. We know that public sector workers, since 2010, have seen average pay fall by 4.5 per cent in real terms, and that is damaging both to them and to their families, but also to the communities in which they live, because it suppresses effective demand in the economy, and why I said, in my first answer to Jeremy Miles, that the policy of austerity is an inherently flawed policy. You cannot cut your way out of a depression, and that’s what this Government attempted to do, and, in doing so, it simply added to the problem, rather than trying to solve it. An end to the public sector pay cap would be a very valuable way of stimulating the economy as a whole.

Andrew R.T. Davies

Well, you can look at austerity in two ways: you can look at it in the way that you look at it, as a failed policy, finance Secretary, or you can look at it—[Interruption.] Or you can look at it as living within your means. We all know what happens when the Labour Party get their hands on the finances. It just spirals out of control, and it’s the next generation that has to pick up the debt. [Interruption.] I appreciate that the parties on the left just want to spend other people’s money, they do, but going back to the question—[Interruption.]

Andrew R.T. Davies

But, going back to the question, the question refers to the resilience of public services in Wales. I was just wondering: has the finance Secretary had a chance to have a detailed conversation around the Cabinet table of how the Cabinet will make use of the additional capital expenditure that’s available via the comprehensive spending review? I believe in the region of £400 million has been made available for capital expenditure that will enhance the durability and resilience of public services in Wales, and will he make a statement as to how he is allocating these additional moneys over the lifespan of the comprehensive spending review?

Mark Drakeford

Llywydd, well I notice that, when it was their own jobs at stake, the Conservative politicians were able to find plenty of money to pass to the Democratic Unionist Party in order to make sure that they stayed in work. There was no problem with austerity then. We have an end to austerity in one part of the United Kingdom, paid for by people in the rest of the United Kingdom. I think we can see just how far an adherence to austerity went when it was the Conservative party politicians’ own jobs on the line. The Member’s serious question was the one that he ended with, and that’s to do with the capital budget. He will be aware that I was able to lay a four-year capital budget in front of the Assembly as part of last year’s budget-making round, and I know that that was widely welcomed, both by our partners and by private businesses, because the need to plan public expenditure over that longer run is inevitably important to them. I am engaged, as I said earlier, in a series of budget meetings with Cabinet colleagues as we move into the next budget round. I am discussing with every one of them how we may be able to deploy the very modest additional capital allocations available to us over the next four years. I will look to make the very maximum use of the public capital available to this Government for a series of important public purposes, prioritising those investments that release revenue, so that we are able to cope with the ongoing cuts to our ability to sustain public services over the next three years.

Simon Thomas

As the Cabinet Secretary just said, austerity doesn’t seem to like getting its feet wet and doesn’t cross the Irish sea, but the resilience of public services in Wales does depend on the robustness of the Barnett formula. The fact that the Barnett formula has been adjusted but has not been reformed on the basis of needs is an ongoing problem for public services in Wales. So, what assessment has he made, building on some of his earlier points, of the implications for the Barnett formula of the agreement with the DUP and the long-term sustainability of public services in Wales?

Mark Drakeford

Well, Llywydd, my objection to the deal with the DUP is not that the DUP won a series of investments for the people of Northern Ireland; I’m sure those investments will be very welcome. My objection to it was the way that it has run roughshod over the arrangements for funding public services across the United Kingdom. Now, where there were investments in Northern Ireland that were solely for Northern Irish purposes and were not responsibilities of this Assembly or the Parliament in Scotland or, indeed, of English Ministers discharging responsibilities for English services, that I entirely understand. But where you have a deal that puts money into mainstream public services, into education, into health, into infrastructure, there’s no ambiguity at all, and UK Ministers can try as much as they like to hide behind some small print in the way that things are managed—there’s no ambiguity at all that the principle is that, if you invest in those mainstream services in one part of the United Kingdom, you provide all parts of the United Kingdom with a commensurate investment. Because patients in Wales and children in Wales deserve the same investment in their future as people in Northern Ireland deserve the investment that they will now be getting.