Economy, Trade, and Rural Affairs Committee

We'll move on therefore to item 3 on the agenda. This session is on cost-of-living pressures and the young person's guarantee. This does follow evidence that we heard on 24 November last year. I'd like to welcome the witnesses to the session. Before we move to questions, could I ask them to introduce themselves for the record? Maybe we'll start with Mandy Ifans.

Good morning. Thank you very much for the invitation.

My name's Mandy Ifans and I'm head of employment advice at Careers Wales, looking after our Working Wales project.

Nikki Lawrence.

Diolch yn fawr. I'm Nikki Lawrence and I'm chief executive at Careers Wales.

And Nerys Bourne.

Good morning. Nerys Bourne, director of customer strategy at Careers Wales. Thank you for the invitation to be here today.

Well, thank you very much indeed for those introductions. Perhaps I can just kick off this session by asking you: is the rising cost of living impacting young people's choices when they leave school, and if yes, in what ways? Who would like to start on that? Nikki.

I'll take that one, I think, to start. Thank you. So, we have been looking at evidence around this; if you look at applications for higher education courses in Wales, for example, or the UCAS information, and alongside the number of apprenticeships that are still increasing and have increased by 16 per cent since 2017, also we've been looking at our own destination data, and it has showed a degree of stability, although I must say that in 2022, so last year, it was showing a 0.03 per cent increase. But of course, those are retrospective. When we've been speaking to our colleagues, our careers advisers within Careers Wales, over the last six months in particular, they are saying that the cost of living is having an impact on young people's decisions post school.

I thought perhaps it would be helpful to give you some illustrations of that. So, for example, a pupil in year 11 was speaking to our careers adviser. He had wanted to go on an apprenticeship. However, he felt, on reflection, when he came back to see the careers adviser, that he was no longer going to be able to do that, and he would instead be going to college. He cited that the reasons for that were around that his mum and dad were struggling to find work, and they were worried that it would have an impact on their benefits. And we're hearing other young people saying things like that they'd have to go to a college nearer to where they live. So, hopefully you can see from those examples, and I do have many more if you wanted me to go through those. But they give you a bit of an insight into how the cost of living is impacting.

Yes. Anyone else on this?

I suppose the only other bit of evidence is that we've had headteachers, one specific headteacher in north Wales, saying that they're already finding that more and more year 13 pupils are actually looking now for work and looking for degree apprenticeships, which are not that numerous in terms of availability in north Wales, and a lot of them are looking for higher education closer to home. So, it's affecting young people in different ways.

Luke Fletcher, you'd like to come in on this. Luke.

Yes. Just to build on something that Mandy said, actually. In terms of the data that you have around the decisions young people are taking, do you have any data around young people who are in education but are looking, actually, to drop out altogether? So, for example, I've heard through my office of a number of students in my region who are in college and midway through the year who are looking to drop out, simply because they can't afford to keep going to college. So, I'm just wondering if you have data that reflects that as well.

Not necessarily the data around that. The examples we shared with you this morning are anecdotal. They're things that our careers advisers are discussing with young people, and lots of advisers are saying it's a regular occurrence now. Whereas in the past it would have been a few, a handful of young people, more and more young people are struggling with maintaining their places in college, on apprenticeships, and in other provision as well, due to the cost of living. And it's not just young people who are in receipt of education maintenance allowance; it's young people who don't meet that threshold as well. It's far wider reaching.

So, is it a case that that data has just not been collected, then, and that being why there's no specific data set?

We do get data from colleges around people who have left early, so when they have left, and we do some work as well in terms of—. We identify young people who probably are going to struggle in college, and we work in partnership with colleges so that we can offer them careers advice before they drop out. So, there's that partnership element to it as well.

The youth engagement and progression framework's five-tier model of engagement helps in that respect, because with young people in school or in college or on work-based learning programmes, the providers will identify if they're wobblers, and we can tag those as being tier 4 people in danger of dropping out. And once they're 16 to 17, that information is there. It's not there in as much abundance for anybody over the age of 18. So, there's a bit of a gap there between 18 and 24.

To be fair, I do think further education colleges do a lot of good work in terms of that contact with students to try and keep them. I can attest to that through the campaign work that I've been doing on increasing education maintenance allowance and increasing the thresholds. I'll hand back to you, Chair, but it would be very useful if you could potentially share with us some of that data the colleges are giving you about those students who are dropping out early.

We're doing some work on the college leaver information now, so we'll have that.

Great. Diolch.

Okay. Diolch, Luke. I'll now bring in Buffy Williams.

Thank you, Chair, and thank you for joining us this morning. Are there any particular groups of young people you see being affected more than others by the cost-of-living pressures, and is this affecting their ability to access the skills and employability programmes on offer in Wales?

There is a growing body of evidence, obviously—you've probably heard it in this committee many times before—indicating that certain groups of young people and adults are disproportionately affected. Lower income households are more disproportionately affected because they've got less wriggle room in terms of budgeting. Rural households, single parent households, disabled people, all of those—we're seeing all of that.

I suppose the thing we're seeing most at the minute, and the stuff that keeps coming back to us, is about rurality and transport. That's a recurring theme for us. People living in rural Wales suffer disproportionately from public transport issues, digital connectivity, access to public services, all of that, and it all becomes a big problem. We've got lots of examples of young people, in places like Powys, for example—. We had an issue in Powys recently, over the summer, with access to the Jobs Growth Wales+ programme. The programme's there, but there's only one provider in the area and they were oversubscribed in the summer, which meant that young people coming out of schools were waiting. And we know that that waiting period is a risk for young people making the transition between school and the next provision. So, we've got that.

The other issue I suppose we've got is transport to and from things like apprenticeships. We've got an example—we spoke to a parent recently whose 17-year-old had started on an NHS nursing apprenticeship and is wholly dependent on the parent taking them to and from work. Now, that's fine—that particular parent was working and the employer was able to offer a flexible programme. Not everybody's that lucky. And it's issues like that that will prove to be a barrier and maybe stop people from engaging.

We've had other examples of young people who live with extended family during the week, because there's no other way of getting to and from their place of work or their place of training, and young people who have to get a lift in because the nearest bus stop is four miles away. So, all of that. If you are a young person with one of those issues, that's enough of a barrier, but lots of them have got multiples of those issues as well. It builds up into a perfect storm, it causes high drop-out rates—I know we're talking about apprenticeships and things later on—and it makes engagement much more difficult.

I don't think I've got anything—

I'd just like to add to that young people with additional learning needs. They face barriers in terms of travel as well. Very often, they have anxiety around travel and don't find travelling independently easy. Whilst they were in school, they might have had taxis or people escorting them to provision. Post-16, that doesn't always carry on, and there are differences in approaches by local authorities and social services in providing that ongoing support in post-16. So, I think that group of young people are facing barriers as well.

One of our advisers working in this region gave an example of the Gypsy and Traveller community as well and the cost of travelling to a provision in the city centre in Cardiff. That was a major barrier for those groups of young people, so they're deciding not to then take advantage of post-16 education.

Thank you. Your written paper says that young people may also face particular obstacles such as transportation and limited access to technology, as well as personal obstacles such as a lack of confidence or limited awareness of available opportunities. I know we just touched on transport there. What more do you think the Welsh Government can do to support the young people you work with to deal with the cost-of-living pressures?

Thank you. Indeed, transport, as we've already spoken quite a bit about already, is one of those areas that we need to maintain or look to do more on. Another aspect is around the ReAct+ programme. We're finding, from speaking to the young people, that it's upfront costs, especially in this cost-of-living crisis, that are causing a problem. So, if perhaps the Welsh Government could look at something around that, that would go a long way to help, I think. And in terms of what's happening at the minute with budgets, et cetera, I think it's around maintaining some of the services that we have—so, maintaining what's under the young person’s guarantee, with, obviously, Careers Wales and Job Growth Wales+, ReAct+. So, that's another aspect that we would say if we could just maintain, never mind looking to increase, really.

Anyone else on this? No. Luke, you'd just like to come in very quickly on this.

Very quickly. I'd be interested if we can build on that point you've just made around ReAct+ and upfront costs. I'd be really keen to get a better understanding of that.

Can I jump in there? We've been running a version of ReAct for many, many years and the availability of support to get to and from training and with personal development has always been there. What we're finding, over the last year especially, is that a lot of that payment needs to be made upfront by the young person or the adult. That's never been an issue before, but it is becoming an issue now. So, they will claim travel, for example, retrospectively. Now, what we're finding is—. We have a small fund for customer support, and we're using more and more of that fund. We've increased it this year by £1,000 because there are more and more people asking for that support. So, we're using it for things like, for example, helping people to get Construction Skills Certification Scheme cards upfront, or some of them need identification, and it costs to get ID, and they don't have that upfront money. So, it's that that's the problem. It's trying to make sure—. They haven't got that disposable income, they haven't got that flexibility with money. So, upfront payments can, sometimes, be a disincentive. It's a complicated issue, though. There are complications in terms of upfront payments.

Great.

Thank you, Chair. Thank you.

Thank you, Buffy. I'll now bring in Vikki Howells.

Thank you, Chair, and good morning to our panel. I’ve got a series of questions around apprenticeships, and I'll start with the completion rate. Now, obviously, apprenticeships are a key plank of the Welsh Government's programme for government and are desperately needed for us to fill the skills gap in Wales, but the completion rate of apprenticeships has fallen from 81 per cent in 2018-19 to just 66 per cent in 2021-22. So, I'd like to ask to what extent is the rising cost of living impacting on those completion rates and if there are any other factors affecting completion rates that we should be aware of, and how that can be overcome.

I'll start off. I suppose we should preface this answer by saying that, whilst we're very active in referring young people and adults to apprenticeships and raising awareness about apprenticeships in schools and with parents in particular, once they've started on that apprenticeship programme, we do tend to lose contact with them then, until something goes wrong. So, I preface it by saying that.

Having said that, obviously, it's hugely disappointing that the success rate is falling, because this is a key plank for getting young people engaged and upskilling the whole nation. So, that's disappointing. Having said that, what we're hearing from our staff, and they talk to providers of apprenticeships as well as young people who are dropping out, is that again it's a lot of the things we've already talked about. It's a lot of the young people giving up apprenticeships to take paid employment. Young people will look to take short-term action, perhaps, without understanding the impact that has on them in the longer term, and you've probably heard this in committee before.

We've had lots of examples of people giving up apprenticeships because they can get a job paying twice the apprenticeship. A year 1 apprentice gets, what, £5.28; they can earn double that. And we've even had examples of people giving up apprenticeships for seasonal jobs. So, it's a hard sell to keep people engaged in that. So, it's about that. The salary rate is sometimes a disincentive. We had an EPC from west Wales telling us that they struggle to sell apprenticeships to young people, because of the salary rate, and they can earn more in part-time jobs.

I suppose, as well, that that reduction in completion rates may be also including people whose employers have stopped offering apprenticeships or who are no longer able to keep those apprenticeships going. Some of the employers have been telling us that when times are hard, making sure that you've got the right supervision for apprenticeships and some reduced productivity on that part is sometimes hard to sustain in times of hardship. So, there's that. And then, again, there's all the transport issues that we've rehearsed and all of those barriers will contribute to that.

One chink of light, perhaps, is the work that the Universities and Colleges Admissions Service are doing with apprenticeships. It may not help especially in terms of retention, but certainly in terms of raising awareness of apprenticeships, they're doing a lot of work with apprentices there. They hit 2.2 million searches on their website for apprenticeships in 2022. And what's heartening is that a lot of the searches from apprenticeships that UCAS are reporting are from the most disadvantaged areas in Wales. So, maybe, looking forward, that could be something that will help. I'm not sure it'll help retention, but it will certainly make sure that apprenticeships are up there. Sorry, Vikki, I don't know if that answers your question.

Before Vikki asks the next question, I know Hefin would like to come in on this specific point.

Yes. I wonder if you could answer the question about the range of apprenticeships that are on offer and the connectivity between levels 4, 5, 6 and 7. It doesn't seem to be very well connected, and degree apprenticeships are thin on the ground, although the rail engineering degree apprenticeship was launched for January on Tuesday this week, which is a really good step forward. Do you think the fact that apprenticeships seem to exist below level 6 causes an issue, because then it's difficult to see a full educational career pathway?

We do a lot of work in schools to make sure that apprenticeships are seen as an equal and similar pathway for young people. I think the biggest issue we have is selling that to parents. We still struggle with parents who are quite single-tracked in terms of thinking that if you want to get on, you do A-levels and then you do a degree. So, I think that's where the biggest issue is. It's not always with the young people; they see that difference. And a lot of young people are actively looking at apprenticeships. But I think we do need to do more, as it said in your paper, Hefin, about making that pathway clearer and connecting the progression between one programme and another. Because some people can go all the way through with an apprenticeship, starting from level 2, all the way through. It's possible; it happens. And when it happens, you have really rounded, well-educated, well-skilled young people and adults. So, it's an area I think we have to work on.

Back to you, Vikki.

Thank you. Going back to the completion rates of apprenticeships, I wanted to ask specifically about apprenticeships in the care sector, because they came in at one of the lowest completion rates—50-something per cent, I believe—and that is a real concern when you look at the number of extra staff that we need in the care sector. Is there any light that you can shed on that particular issue there?

There has been discussion around the care sector and the requirements within that qualification, and it was around the essential skills. That was something that was suspended following COVID, because the feedback from the candidates was that they were struggling with the level of the qualification. Some amendments were made, and I think that did help with some of the completion rates. But I think—going back to what Mandy was saying as well—some of the challenge is around the apprenticeship salary, it's around transport, it's around the other things as well, and other occupations, other areas, being better paid. I think that has also contributed. But within the care sector, we were aware that the essential skills was one of the issues in terms of enabling people to complete the qualification.

Thank you. And then, looking at the latest data, which shows that learners living in the most deprived areas are less likely to be successful in their apprenticeships than those from the least deprived areas, and we can see that this gap has widened over the last three years as well, what can you tell us about why you think that gap has widened, and any specific actions that you think can be taken, and by whom, to address this gap?

I think in terms of 'why', we have covered this a lot, so sorry to repeat. But it is still around that cost of transport, lack of good transport networks, the digital poverty, connectivity, that availability, as I think Mandy was just saying earlier, around higher paid employment, and pressures on the young people to contribute to family income. So, I think those are the areas of why it continues to be widened. But in terms of the—. Sorry, what was the second part of your question, Vikki?

What kinds of actions, any specific actions, that you think can be taken to address that, and by whom?

I suppose any action that would tackle any of those things will contribute and help, because they are disproportionately more of a problem in deprived areas. I don't think there's an easy answer to that, though—I don't think there's a simple or a single solution, Vikki, I'm sorry. So, not a direct answer to you.

No, that's fine. Could I ask a specific question on the cost of transport, then? So, obviously, the Welsh Government has got the MyTravelPass scheme for bus travel, and a similar scheme for rail as well, both of which give a third off travel for young people. To what extent do you think there is adequate awareness of those schemes, and do you think that they are enough to address the cost of transport?

Two things there. I think the first thing is that that presupposes that they can access that transport. That's the first thing. So, they might have a discounted service, but getting to the service in the first place is an issue. There's no easy answer to that, either. But, secondly, I think it's about—. I'm sorry, I've forgotten what the question was again, Vikki. Do you mind repeating it?

No, that's fine. So, I was just referencing the fact that we've got the MyTravelPass scheme for bus travel, and then a similar scheme for rail, and they both give a third off for—

Yes, that's right. And you asked whether there was awareness. I think that's the second part—we do tell young people about it, and there isn't always the awareness there. Schools are telling young people, colleges are telling young people, everybody. But I think people need to be told twice, three times, four times, reminded of this as well. But I would think the biggest issue is actually getting to where that transport is in the first place, to start with—that's more of an issue than actually the transport.

Thank you, Chair.

Thank you, Vikki. Just to build, really, on what Vikki was asking you there, you mentioned Jobs Growth Wales+, and you've talked about some of the barriers, obviously, facing young people, like limited transport. Can you tell us, in your view, what are the barriers faced by programmes like Jobs Growth Wales+ to actually reach young people who are obviously hardest to reach?

We work very closely with the Jobs Growth Wales+ providers, and with Welsh Government leaders in the programme. There are four or five, I suppose, key things that the providers are struggling with. One is access to young people outside of schools and college. Now, most of the providers have really good links with colleges—some of them are colleges themselves—and really good links with schools, so they're getting in there. But it's access to people outside of that that sometimes is difficult. When they are accessing young people in schools, absenteeism can be a problem, because some of the people more likely to be absent are exactly the sort of people that they need to be targeting for Jobs Growth Wales, and who would benefit massively from the Jobs Growth Wales+ programme. So, there's that.

On access to young people who are educated other than at school, or elective home educated, it's patchy in terms of how much data and information can be shared or is shared across local authorities there. Again, those are, sometimes, the people that would benefit the most. We know that there are lower referral numbers going into Jobs Growth Wales+ than the providers expected. Now, this summer, all of the providers were either at or above their projected numbers, but that's the peak time, isn't it—April to the summer. There are leaner months ahead, so we know that those numbers will drop, going forward. So, it's getting those numbers right and finding those people.

And I suppose the other big, big challenge for them is making sure that there is equality of access for young people, even in areas that are more sparsely populated. Powys comes to mind, simply because Powys, south Gwynedd, those places were problems when we had the traineeship programmes, and they're still problems now because the numbers are lower and young people sometimes don't want to take the extra transport to go to where the training is provided.

And I think the last thing I would say on that is that there are still some young people whose challenges are beyond the scope of the Jobs Growth Wales+ programme. We've had young people whose behaviour, for example, is so challenging that risk assessments have been done because you have to look after the safety of some of the other pupils as well. So, added to that, a lot of the people they're getting have severe to moderate anxiety problems, low self-esteem, mental health issues, low confidence, low social skills. I was talking to some youth workers in the Cardiff office yesterday, working in Ely and St Mellons, and they have young people who haven't left the house and don't leave the house. There's no short-term solution for that.

Having said all of that, Jobs Growth Wales+ was devised to tackle these sorts of people, and there is a lot of flexibility and agility within that programme to allow them to accommodate them. For example, they can vary their attendance time. So, if you've got young people like the ones that the youth workers were working with, they don't have to attend five days a week—they can attend two mornings a week and grow their attendance up. They vary start times all the time—they can start when the buses get there. They've got the ability to bring in niche provision—so, if they need debt help, they'll bring those in. The providers can recruit their own so that they don't need to come through us anymore—young people can be recruited directly. Most of the providers have really good marketing budgets, and some of them have got engagement teams that they've brought in. They work in places like the boxing club in Cardiff and they get lots of referrals that way. But I think what that has all done is it's widened the participation way beyond what was on the previous traineeships programme—way beyond that. So, what they're getting now are the hardest to help.

And what are your views on the latest Jobs Growth Wales+ data from April to June 2023, which actually shows that 41 per cent of young people were still seeking work or unemployed after leaving their programme? Is it therefore realistic to say the programme is able to actually achieve its aim of reducing the number of 16 to 18-year-olds who are not in education, employment or training, in your view?

I think that's still doable because, with the sorts of young people that we've just described, and going back 30 years' worth of experience with working with these sorts of young people, one chance won't do it. They have to come back. One bite of the cherry is not going to be enough. They need to come back and then be allowed to take some time out and come back again. So, I'm assuming that a lot of those in the 41 per cent there who are still unemployed afterwards, there are people who are going to re-engage. They will come back. And sometimes, it's on that third or the fourth opportunity that something in their lives is slightly different and they're able to take advantage. So, I think it's a long game. There are no easy fixes with this. You've got to be prepared for those people dropping out and coming back. And they do notify us of any leavers, so nobody's left hanging, if you like. We get notifications every month of leavers, which we then follow up and try and bring them back, so do the youth service. There is good partnership working in Wales, which we're lucky to have, which isn't the same everywhere. The youth engagement progression framework has set out all of us as partners to support young people.

Okay. Thank you. I'll now bring in Hefin David. Hefin.

Diolch, Cadeirydd. The Welsh Government’s 'Young Person’s Guarantee national conversation report: phase 1’ found there was a general acknowledgement that schools had failed to prepare young people for what lay ahead, and that careers advice was sporadic and was directed at those who were more academic. Do you recognise that picture, and how can we change that?

Diolch. Thank you, Hefin. The feedback from the national conversation is a really interesting piece of work, and there's lots in there for us to unpick. In Careers Wales, we regularly receive feedback from our customers, and it's something that we value, because it will help us develop our services, identify good practice and areas that we need to develop. To take the first part of your question, in terms of are schools preparing young people for the future, this obviously links in with the careers and work-related experiences. This element is a cross-cutting theme within the Curriculum for Wales, and this is a big opportunity to improve that element of the work. Previously, this was delivered as the careers and world of work framework. There have been Estyn reports on this element of work over the years, and it has identified that significant improvement is required. So, we welcome that CWRE is going to be introduced as a cross-cutting theme across all the curriculum, and that it starts from the age of three with young children as well. We're aware that children start to form their career ideas at the age of seven, so it's really key that we work with children in primary school to support that development and make sure that they have information about the world of work and about options as well. And Careers Wales do work in primary schools and we have developed some resources to support primary teachers. We’ve also got the careers award as part of the development of CWRE, and that could be a framework that could be used to support schools to inform young people about their futures.

In terms of your second point, Hefin, asking around whether careers advice is sporadic, and is it aimed at more academic people, I was quite surprised to see that in the feedback in one sense. It doesn’t reflect our delivery model in schools. We’ve got a targeted and bespoke approach to the way we work with young people in schools, and we offer more intense support for young people with certain characteristics, for those young people that may not fare as well as their peers—so, if they’re in receipt of free school meals, if they’re young carers, if they’ve been in care, if English is a second language. They will be provided with more intense support from their careers adviser. But everyone will be offered careers information, advice and guidance.

In the past, it’s interesting, we’ve been known as a service that targeted NEET young people and that that’s all we did, whereas now it is a much broader model. There was some really positive feedback in that national conversation as well. I was pleased to read things like, 'The careers adviser would regularly talk to me about my options', and, 'The careers adviser was the most helpful advice'. Mandy mentioned earlier absenteeism from school, and some young people miss out because they’re not in schools. There are different levels of access to pupils in schools as well, depending on that school. But the thing for me, from reading this, is that what’s really important is that young people need to hear these messages more than once. If they miss a careers talk in assembly, or a workshop, that’s not enough. They need to hear the messages, they need time to unpick it, to understand, to self-reflect. So, it’s a collective approach that’s required.

Yes, you've put a very good defence of some of those issues that I put and were very stark. You've put up a very robust defence. One of the issues that I found—. And I want to say 'thank you' to Careers Wales for participating honestly in the 24 hours of interviews I did for the 'Transitions to Employment' report, and you gave me some very useful direction, which I was able to cross-check against the sector. But what I found was that there's a disconnect, and where there are pockets of good practice, there's very much a disconnect between further education, who provide the bulk of apprenticeship qualifications, and schools. And there's a barrier there, and that doesn't give students an honest picture of the landscape that is available to them. Do you feel that Careers Wales have a role here in breaking those barriers down and bringing that parity of esteem up?

We certainly have a role to play, and I think we do play a proactive role now. We do build relationships between employers and schools, and make the links between FE and schools, but that's not something we can direct—

No, you can't direct it, and I think the commission for tertiary education and research will have a role in the direction of it, but can you give me some examples of that, then?

We've got a pilot now in—. We're running a pilot in Ynys Môn, where we are working with the five secondary schools there, the FE colleges and the local authority to make sure that every pupil has access to information, and one part of that pilot is to invite the FE colleges into year 9 parent evenings to make sure that they have access to all of the options. And that impartial careers advice is a critical part of that as well. So, there's an example, and I'm sure there are other examples that you found when you—

Yes.

—were doing your consultation. It is an issue in some areas, and I hope with, you know, the establishment of the commission that some of this will be resolved.

Well, I found—. I think we've got to be careful about putting too much expectation on the commission as well. But I did find that there were very good pockets of good practice. For example, NPTC Group of Colleges and Llanidloes High School, for example, gave me some really good evidence, and Llanidloes High has a sixth form, but they were working well with NPTC. I just wonder, how do we scale that up? And one of the things that I found, also, is that those—. Colleges have an access to an employer database that schools can only dream of. So, colleges have people employed to seek out employers who would then liaise with the apprenticeship programmes. Schools don't have that. What they tend to rely on is informal networks of parents who may be employers, or who may have links with employers. I think there's a quid pro quo there between schools and colleges. If schools offer access to the pupils aged 11 to 16, for example, then the colleges could offer schools access to those employers, and therefore you start to get a mutual benefit. Do you think Careers Wales could facilitate that?

I do think Careers Wales can facilitate that. We've got an education business exchange that, again, is a database of 10,000 employers and that could be something that we could develop into a work experience database. So, there's potential there, and I think, as the national careers service for Wales, we're well placed to make those connections and to make those links.

What I would particularly like to see is FE and schools working together. I wonder if Careers Wales might be the facilitator, might be the conductor of the orchestra, rather than actually play the instruments. So, you've got FE and schools liaising, with you doing the honest brokery, perhaps. Is that realistic to think you could do that?

I think we could do it. There needs to be some directive, though, from Welsh Government. Currently—

So, that could be a remit letter of some kind?

Yes, because currently, you know, there is an element of competition for young people.

And I feel strongly, to break down those barriers, you've got have that co-operative working, but you've got to have someone offering something someone else wants, and a mutual exchange. And I think Careers Wales, with your capacity, is limited, so rather than put more work on you, use that existing landscape and facilitate that. I think that might be—. So, if we looked at that as a committee, you wouldn't be averse to us doing that, to put it that way.

No, certainly. I think that we would welcome that approach.

Okay. And just one more, Chair, if you'd permit me?

Yes, sure.

Recommendation 10 of the report—I mentioned young people not in education, employment or training. I also mentioned those learners with additional learning needs. There's a fantastic project that has just run its course in Cardiff University called Engage to Change. Have you had any involvement with Engage to Change, which finds employment for—job coaches; I should have said it more clearly—young people with additional learning needs. I've seen that happen. Unfortunately, it's not happening on a big enough scale. Have you had any engagement with that, and if so, what engagement, and what is your opinion on scaling that up in some way?

Yes, we have worked with Engage to Change. We've got a team of specialist additional learning needs advisers who work closely with the team, so with ELITE and Agoriad, and I was glad to see that as one of the recommendations in your report. I think having a strategic approach to that kind of work would support young people with that transition from specialist schools, or mainstream schools, into work. So, yes, I would welcome that. And I think, again, there's a role for Careers Wales to play there in terms of that referral and working with those job coaches to make sure that young people are getting that impartial—. And, as you said, on this brokerage as well—I think that's key.

I think there's a concern about sustainability now, because Engage to Change has come to the end, and they are looking at legacy programmes to try and embed this, and they're still looking for somebody to do that. Are you optimistic that this could be expanded, or do you think that without Engage to Change, the whole issue of addressing programmes is a too difficult one to address?

I think the key thing that you said there, Hefin, is funding—we're all aware of the funding and the challenges ahead for us—but that is definitely a blueprint that's been trialled successfully. So, whether there's funding to expand that, that's a question for Welsh Government, I guess.

Okay. And finally—last question, Chair, if that's okay?

Yes.

Just very quickly, what other things are you doing for young people transitioning with additional learning needs?

Well, currently—. I mentioned the team of specialist advisers we have. You're probably aware that, with the onset of the Additional Learning Needs and Education Tribunal (Wales) Act 2018, our role is going to change slightly, but we are still currently providing learning and skills plans for young people in years 13 and 14. But our advice is, build up a relationship with these young people and their families—because the families are crucial in supporting that transition as well. We have a designated section on our website called 'My Future', which provides information for young people and their families on the transition, but also on other areas of support that there is for these young people. I don't know if you want to talk a bit about what's available in terms of post-16 support?

We have careers advisers who will specialise and work with people with disabilities out in the labour market as well. We also work with other partners who support them. So, Jobs Growth Wales+—there are a lot of people on the Jobs Growth Wales+ programmes who have disabilities, and they are well supported within the programmes; Communities for Work+ programmes—I think about 24 per cent of their customers have disabilities; and the further education sector has a long history of supporting people with disabilities. So, in terms of referring people onwards, then, that is what we would be looking to do—to refer them to these provisions that will be able to support them. But also we work very closely with the Welsh Government's disability employment champions, and we are working with them to identify opportunities to embed, perhaps, a better progression framework for young people.

Diolch, Hefin. I'll now bring in Sam Kurtz. Sam.

Diolch yn fawr, Cadeirydd. Good morning, panel. Thank you for your evidence so far. I'm looking to particularly ask some questions around regional differences when it comes to the young person's guarantee and career choices. How does the young person's guarantee cater for regional differences and how might it be improved? Because I know in your written evidence you've spoken about the challenges around specifically rural communities. I'm not sure who wants to go first.

I'll start. Yes, we've highlighted these issues, I suppose, already during this committee—transport is a key one, and we've given some examples of how a young person has had to go to live with another family member in order to attend, and also someone walking four miles to get a bus. So, rurality really is still an issue. Obviously, the doubling of the training allowance, the meal allowance and reclaiming travelling costs is helping towards this. And I suppose, going back to something I said earlier, it's about, in some ways—because we know we're in difficult times now—maintaining these services, really, adding where we can. But it is around that and maintenance as well, and looking at improving transport links, connectivity. All difficult answers, I know, and have been rehearsed, really, earlier today, and have been discussed in previous committees, I'm sure.

I think one of the issues we have here is that the young person's guarantee is an ambitious programme, but it's also a long-term programme. And we're at the start of that journey effectively, and, for me, the reason it's hard to answer that question is that we don't have the full picture for the young person's guarantee yet. The whole point of the guarantee is that it's a partnership, isn't it? It's a collective effort between Welsh Government, FE colleges, Working Wales, Careers Wales, Communities for Work+. All of these partners contribute and each of these partners has a bit of the picture. What we don't have at the minute is a data set that pulls all of that information together—some sort of data intelligence hub, where that information can come together. And once that happens, and I know that Welsh Government are looking at this—once that does happen, we've then got the data to answer that question. Where are the gaps? What is the difference between this region and that region? What works and what doesn't? Then you can plan and actually pinpoint the way that you plan additional provision later on. So, part of the problem is that we've all got a little bit of that picture. We provide monthly reports to Welsh Government on the young people that we've supported within the 16-24, and I'm sure all the other partners do the same. And we have started talking to Welsh Government about potentially having some of that data come in to our management information database, so that we are looking at and pulling stuff together. We're at the start of that journey, I think, but that's why it's difficult to answer those questions. I don't think the data set is there yet.

Okay. That's really helpful, because the focus has been around the regional differences, but are there any other differences that you're seeing across Wales, in terms of provision or access, when it comes to things like the Welsh language, or is it that it is predominantly a rural versus urban divide? Or are there parts of, say, north Pembrokeshire and south Pembrokeshire, both quite rural—north Pembrokeshire predominantly more Welsh, south Pembrokeshire predominantly more English—is there a divide within regions, or is it predominantly just urban versus rural?

Our experience has been that it is the urban versus rural. However, we've got careers advisers in schools and colleges, as well as working with people that have left education, and if you want to continue your learning through the medium of Welsh, all of those factors that we've discussed come into play, because you may have to travel a little bit further, you may have restricted choice in the options that you have. So, all of that comes into play then as well. But, no, our experience has largely been that that's been the issue.

The issue—. So, Welsh language doesn't come into it as an access issue at all for any parts of Wales?

Not from a Working Wales perspective with people outside of education. Nerys, I don't know within—

I think we're all familiar with the engagement in bilingual courses or Welsh language courses post 16. It does reduce. The expectations, sometimes, of young people when they leave school is that their post-16 education won't be through the medium of Welsh. So, there is work to be done there in terms of making sure that young people are aware that they can continue to study through the medium of Welsh when they leave compulsory education. There are lots of good work that Coleg Cymraeg Cenedlaethol do in promoting Welsh language courses. They produce resources, there are bursaries for young people. It's making sure that they are aware of that and that young people are aware of the demands that there are for bilingual people in the workforce. So, that's something that our careers advisers would do as part of the guidance process. All public bodies are struggling to recruit bilingual employees, and education is facing a similar challenge. We welcome the fact that there are free courses to upskill the workforce, the education workforce, but there's much more that needs to be done on that agenda. I think there is a shortage in general of Welsh language provision, not just in rural areas, but across Wales, I would say.

The reason I ask on Welsh language specifically is that it's becoming a bit of a key ask for some employers and I think that's a really important thing. If we're to reach our million Welsh speakers by 2050, I think that's important. But you're saying there aren't any discrepancies just difficulties, potentially, in recruiting in the sectors. What we've seen from the census data is that there's been a change in the shift of how the Welsh language is mapped across Wales, and that's not being reflected necessarily, you're saying, in the young people's guarantee and courses, et cetera.

Not that we've seen yet.

No. Okay. That's helpful, thank you. Diolch, Cadeirydd.

Thanks, Sam. I'm very conscious that we are a few minutes over time, so I'll just bring in Luke very, very quickly, just to ask very brief questions. Luke.

Diolch, Cadeirydd. I suppose this is building a bit on some of the stuff that Sam was just talking about. I'm interested in just looking at how effective the young person's guarantee has been in addressing some of those workforce demands in regions across Wales, for example, filling some of those gaps in sectors where there are job shortages, or filling some of those skills gaps. Is there room for improvement?

I think my answer is going to be similar to my last answer, I'm sorry. It's about getting that data set.

Yes. So, data is a real problem, then.

I think data would make everything easier; it would be easier to measure the success of the young person's guarantee, it would give you ideas about where to look, where the problems are. At the minute, we don't have that data in one place. I'm sure that everybody has got a bit of that picture, but pulling it all together, I think, would make it easier to answer that question.

We have been doing a data intelligence feasibility study with Welsh Government, so it does show that it is possible, it's just taking the next steps, really.

So, I suppose, then, if I were to ask you, 'What are the priorities that we need to address to make sure that the young person's guarantee is delivered fully?', data would be one of those things—improved data.

Yes. Data would. Continued collaboration with all the key players is another key element to making sure that it's successful, yes.

If there was only one thing that we could do, that would be what I would suggest that we would need. And we have spoken to Welsh Government and people running the young person's guarantee and they know it, they understand that and we're looking at it.

Great. Diolch.

Diolch, Luke. I'm afraid time has beaten us, so thank you very much indeed for being with us this morning. Your evidence has been very useful to us as a committee and, obviously, us scrutinising Welsh Government policies in this area as well. So, thank you very much indeed for being with us. A copy of today's transcript will be sent to you in due course, so if there are any issues with that, then please let us know, but thank you.

Lovely. Thank you very much. Diolch.

We'll now take a short break to prepare for the next session.

Welcome back to the Economy, Trade, and Rural Affairs Committee at the Senedd. We'll move on now to item 4 on the agenda, the second of today's sessions on cost -of-living pressures and the young person's guarantee, which follow up the evidence taken on 24 November last year. Could I welcome the witnesses to this session? Before we move to questions, could I ask the witnesses to introduce themselves for the record? Maybe we'll start with Lisa.

Hi, apologies, I didn't realise I had my translation set there. I don't speak Welsh, so—. Lisa Mytton, strategic director for National Training Federation Wales. Good morning. Bore da.

And Barry Walters.

Bore da. Barry Walters, principal of Pembrokeshire College.

And Jason McLellan.

Jason McLellan, leader of Denbighshire County Council.

Thank you very much indeed for those introductions, and perhaps I can just kick off this session by asking a question. From the perspective of your organisations, is there evidence that the rising cost of living is impacting young people's choices when they leave school, and if yes, in what ways, in your views? Who'd like to start on that? Barry.

I think, since I was here last in November last year, there have been some changes, haven't there, certainly in terms of funding support for learners accessing Jobs Growth Wales and the increase in EMA payments in terms of full-time learners whose family household incomes meet the threshold. So, I think the situation this year probably isn't quite the same as it was last year. Having said that, though, I do believe that there are still young people suffering financial hardship. I do believe that some people are taking advantage of well-paid, low-skilled work with no long-term future to support the household income, rather than coming either to college or following an employment programme or apprenticeship scheme for the short-term reasons.

And you say that it's different to last year; are you saying therefore that it's improved since last year?

Well, purely on a numbers' basis, yes, I would say things have improved. Our full-time FE enrolment has increased; our Jobs Growth Wales numbers have increased significantly, and our apprenticeships were over our profile, so there is some positive news there, but perhaps those mask some of the underlying issues.

Lisa.

Shall I answer that? Yes. Thank you. I think Barry has outlined it quite rightly. I think the biggest issue that we have is whilst numbers have increased, it is that parental influence that we are still seeing as far as concerns around parental benefits and the impact that they have as far as their own household income is concerned, and then influencing the young person to go to the low-skilled high-paid job, rather than staying on, say a Jobs Growth Wales+ scheme, et cetera. So, we're still seeing that when we're talking to our young people and doing our learner surveys, that's some of the feedback that we're still getting at the moment.

However, just to reiterate and echo the point that Barry made, seeing the difference this year in the lunch allowance, the clothing allowance, and the increase, really, up to £60 as well has undoubtedly helped and has increased our numbers. So, there are some positives out there, but we still have that sort of parental factor that's influencing some of the young people in their choices.

Before I bring Jason in, if he's got something to add, I think, Luke, you just wanted to ask a specific question on this issue.

Yes, just more of a point for clarity, maybe. Maybe a bit of a silly question on my part, but you mentioned the increasing number of full-time students and Jobs Growth Wales students; those figures wouldn't reflect attendance, though, would they? That would be a separate figure, attendance.

No, these are students who have enrolled and attend college, or if they're on apprenticeship schemes, they're in one day a week, possibly. It's not an attendance-related matter. Attendance we monitor and track, but it's a completely different process.

Okay. Thanks, Luke. Jason, would you like to add something to that?

Yes. I can really only echo what the previous speakers have said. So, our employability service in Denbighshire is Working Denbighshire, who engage with young people across the employment journey, and as has been said already, there's more than anecdotal evidence to show that parents are concerned. But it's a sort of double-edged sword; they're concerned about losing—as the last speaker said—losing benefits when the children leave education. And conversely, they're concerned about going into long-term education, and not working and bringing money into the household income. So, we've seen—. There is a lot of seasonal work here as well in Denbighshire, particularly. Working Denbighshire's based in Rhyl, which has some of the most deprived wards in Wales, and we've seen people drifting into short-term seasonal employment rather than getting back into education or training. So, the patterns that the last speakers spoke about are very much familiar to us in Denbighshire.

Okay, thanks for that. I'll now bring in Buffy Williams. Buffy.

Thank you, Chair, and thanks for joining us this morning. I'll follow up on from the Chair's question around the cost-of-living pressures. The rising cost of living is having an impact on young people aged between 16 and 24, particularly those eligible for the young person's guarantee, and is this affecting their ability to access the skills and employability programmes on offer in Wales?

Barry.

Yes, sure. Perhaps if I can start off by giving you an example of an apprentice learner with us in Pembrokeshire. The apprentice lives in Llangwm, he gets a return ticket on the bus to Haverfordwest and then he buys a return ticket from Haverfordwest to Milford, where his apprenticeship scheme runs. So, the Llangwm to Haverfordwest cost of the bus, return, is £4. The Haverfordwest to Milford is £5. So, that's £9. We then put a meal deal in there for another £4, so that's £13. On £5.28 an hour, the young man has to work for two and half hours before he has any money to take home with him. So, there are cost pressures and what we did with this young man is—. I think I mentioned last year that our consortium, which is made up of four colleges across the south of Wales, plus a number of independent training providers, we have a deprivation fund, which we use. It replicates, basically, the financial contingency fund that we have in further education. So, those people experiencing hardship can apply for the fund. And the way we put that fund in place is that we take a percentage cut of every consortium member’s allocation and we put it in that deprivation pot. And then we prioritise the access to that pot for people who have been in care or are on low income, have income support, or had income support, or are in general financial difficulties.

Anyone else on this? Lisa.

Yes, just to quickly add, I think, again reiterating the points, we find that a lot of our young people are now living independently because of cost pressures within the household. So, they're leaving the household and sofa surfing in some respects. But, on the other hand, we do have, again, some parents taking a percentage of their allowance to try and support the household income and that is obviously giving them less disposable income.

But just very quickly, touching on the concern that we had around parents thinking it's going to impact their benefits et cetera, I think there could be an opportunity for Welsh Government and the Department for Work and Pensions to just put some positive communication out there, really, about universal credit and Jobs Growth Wales and the increased allowance doesn't actually impact. So, we need to turn it around. So, there's an opportunity to actually do some positive communication there, because I think Welsh Government have done some really positive marketing this year, and I think that could just be an add-on to that positive marketing and recruitment marketing as well to get people to come onto the programmes.

And, Jason, anything to add to what you've heard?

Yes, and what was just mentioned is exactly what we're doing with work in Denbighshire. They're very good at engaging and we are engaging with parents and having those conversations as well and, once we overcome that and we have people on the programme, success rates are good. But what the stats are telling us is that take-up should be higher, really. So, there is definitely some work to be done on engagement there. Yes.

Okay.

Thank you. Are there any particular groups of young people aged between 16 and 24 you see being affected more than others by the cost-of-living pressures?

Barry.

Well, again, it'll be those young people who come from lower socioeconomic groups, the pockets of deprivation that exist, certainly in our location. And it comes back to that point about the household income and what's the greater need, and sometimes foregoing the opportunity for education or a skills programme focused on getting people into employment. And then I think the other things you need to add to that are transport and the price of food. And transport is different in different areas. In some places, there isn't a transport infrastructure. There are many stories of students being reliant on parents and the goodwill of parents to take them to and from part-time work and things of that nature. So, there are a whole host of issues I think that need to be taken into consideration.

I would just simply echo that, Chair. I think there isn't a specific group as such. I think it is those ones from the more deprived areas, certain rural issues with regards to transport. We're also finding that in more urban areas as well now, but certainly it's affecting a lot of our learners who are in mid and west Wales. Transport access is a major issue for them.

Jason.

Yes, I'll echo what's been said by previous speakers there. One of the groups that we're finding it difficult to deal with, and it's been mentioned before, is those living independently—young people, who, for whatever reason, have left the family home. They may be semi-transient; I think the phrase 'sofa surfing' was used earlier. We're finding that engaging with that group is difficult. And, again, we've talked about parental influence, and where it's not there it seems to add to the problems.

Okay.

Thank you, Chair.

Thank you, Buffy. I'll now bring in Luke Fletcher. Luke.

Diolch, Cadeirydd. I'd like to understand where you think young people are with the young person's guarantee.

[Inaudible.] It's up to you. I'm happy to come in next.

Maybe a lack of what a young person's guarantee badge is, but I think the provision and the individual programmes that contribute to that, by and large, young people can be made aware of it. But I think it does come back to something that came out in Hefin David's report and Sharron Lusher's recent qualifications review report. It's about the availability of impartial advice and guidance at the age of 14 to 16 to make young people aware of all the options and all the routes that are out there and available to them. That's really all we've got to crack to ensure that young people are well informed and can make decisions based on knowledge.

Yes, just to add to that, I think, again, if we talk about some positives, the Summer Sorted programme Welsh Government did in the summer certainly had an impact on getting those more disadvantaged learners onto a programme and also, as I said, an active marketing campaign. From a provider's perspective—so I'm talking about colleges and training providers—we both collectively do a lot to recruit young people ourselves, and I think perhaps that partnership that we used to have with Careers Wales et cetera, that needs to be re-strengthened, if you like, from what we had a few years ago.

And, inevitably, there's the support that's needed for educators in school as well, and career choice. More often than not, you'll find that young people are navigated, shall I say, onto a particular course—vocational learning, Jobs Growth Wales et cetera—because they don't think that they'll achieve, perhaps, on a more academic course, whereas actually those opportunities are there for everybody who may be disengaged, for whatever reason, and I think it's broadening that understanding with our teachers and school advisers in schools, to make sure that they have the same consistent message and know what's available for these young people as they transition out of school as well.

So, to pick up on that, then, in terms of—. I take the point as well, I think it's more about the programmes under that umbrella of the young person's guarantee, but, thinking about those students that are harder to reach, those from low-income backgrounds, for example, do you think that the programmes themselves are well-enough equipped to be able to reach those students, to be able to engage with those students and, ultimately, to get them on those programmes?

Yes. I would say 'yes', especially the Jobs Growth Wales+ programme, which is the only programme we actually have data for. We were listening to our colleagues previously, and I think there is an issue around data, so we won't labour that point, but I think there is an issue around data so that you can actually measure that impact then, Luke. But, as I said, the Jobs Growth Wales programme, it does. We've seen a massive increase. It's going to impact budgets because it's been so successful, the recruitment campaign, at getting people on board, so that's another discussion that I think we need to have. But I think there is still a lack of understanding about the young person's guarantee per se out there and how that can support our most disadvantaged and harder to reach.

Okay. Did Jason want to come in at all?

Yes. I would say the same, that there is not a great awareness of the young person's guarantee, but what I would also echo is that the promotion of that within Denbighshire is very much delivered by key partnership working. So, Working Denbighshire will engage with Careers Wales, the DWP and other skills providers, youth services. We go into schools early in the academic year of year 11—I'm old school; fifth year, as it was in my day—and Working Denbighshire have a presence in the schools on GCSE and A-level results day. So, the key to overcoming the lack of awareness is that joint working.

I agree on the data point as well. I think that's vital to get right. So, I think, based on some of the stuff that has been said there around the programmes being well equipped to reach some of those harder-to-reach students, that you would say, by and large, the programmes are meeting their objectives. Would you say there's room for improvement, potentially?

There's always room for improvement, isn't there? But I do think that the Jobs Growth Wales+ programme has proven to be a success in this particular area, especially as we can now seek out and engage individuals directly ourselves. And we also work very closely with the youth service, as Jason was commenting, in north Wales, and that is working really well to access those hard-to-reach young people.

I would simply agree. I have to say, as I've said, we've got the data on Jobs Growth Wales+ and we've seen it's risen 57 per cent already in the last cohort. So, something is working, definitely.

Okay, great. Diolch.

Thank you, Luke. I'll now bring in Vikki Howells. Vikki.

Thank you, Chair, and good morning to our panel. I've got a series of questions for you on apprenticeships. Firstly, I'd like to ask whether you think that the Welsh Government is going to meet its target of 125,000 apprenticeship starts this Senedd term, given the pressures on apprenticeships and also on apprenticeship providers.

Lisa.

We're doing a double act. Apologies—we're just checking and just bouncing off each other as well. Thanks, Vikki. I think, inevitably from my perspective with the training providers in Wales, then, just meeting the Minister for Economy last week, we are still totally behind that and pushing that forward. There are a couple of challenges, barriers, for want of a better word, to the development of new apprenticeships. So, for instance, Welsh Government, as you know, can now approve frameworks, apprenticeships, but the process is slow and we just feel it could be a little bit quicker, if I'm honest. It's not responsive enough to employer needs, and I think it needs a focused, employer-led team, if I'm honest with you, with a timetable for review and process. That lends itself to frameworks that are also continuously extended as well, so it hinders progression. Where we're liaising with employers and they are telling us what they want, so we are looking at these new apprenticeship frameworks and putting them in, we just find there's a delay in getting those apprenticeship frameworks approved. And also, some frameworks, for instance business administration—it's been extended twice. Whereas we feel that it doesn't need an extension. It needs to listen to what the employers want, what the providers and colleges are saying the learners need, and then publish a new framework for that. We have fed that back to Qualifications Wales, and I think we need to follow up on those discussions. So, that for me is a really important point regarding apprenticeships.

And then before I hand over to my other colleagues, just very quickly, I think that we need to be able to promote and provide access to a lot of the initiatives that are available, especially with what we call uplifts in geographical areas. So, there are demographic uplifts regarding the Welsh language et cetera. We used to be able to do it, and I think that we need to perhaps be able to access those uplifts again, because it will certainly bring everybody together in a partnership relationship to promote and give learners the support that they need. Thank you.

Barry.

I won't repeat anything Lisa said. All I'll say is that obviously there's already recognition that the target of 125,000 apprentices is this Senedd term plus one year. The other point is that there's been an increase in framework funding, and that's been well received, because it does help us to maintain a professional workforce. We don't lose staff, we don't have that churn and turnover, which enables us to maintain continuity. But that does mean, obviously, you deliver less from your contracts. So, that will sort of impinge on your total numbers, if I can put it like that.

Jason.

It's difficult to answer the question as to whether the target will be reached. I'll say what we're doing in Denbighshire and in the north to promote apprenticeships. We're working, again, collaboratively, with the regional skills partnership. They're promoting the take-up of apprenticeships and we're working with that. We've found that they tend to be promoting the higher-end, degree level, and that's not for everyone. So, at the moment, we're in discussions over how we can promote other apprenticeships. We've got employment co-ordinators working with local colleges on that as well. So, that's what Working Denbighshire is doing to make sure that we can reach that target.

Thank you. My follow-up question is on the completion rate of apprenticeships. I know the panel have made comments about completion rates in other courses. So, just to clarify with regard to apprenticeships, of the learners who didn't complete their apprenticeship in 2021-22, around 16 per cent said that it was because they'd left to go into other employment. So, could the panel just clarify whether the reasons that they've given in general on this point would be the same for apprenticeships, or if there's anything else that we should be aware of there?

Yes, Vikki, inevitably, it is for similar reasons. Again, it's because of the salary/wages available for some of these low-skilled jobs, and this is what we're endeavouring to share with parents, and with young people, and all-aged apprenticeships, really—that you're going to get a fantastic qualification, with all the skills that you need, so stick with it. But, of course, we are liaising with employers as well, to make sure that they understand that that's how we need to retain apprenticeships onto programme as well. But that's what we're finding, really—that when we're doing leaver questionnaires, they are leaving for some of these lower-skilled but higher-paid jobs.

Our completion rates for 2021-22 were, comparatively, very, very good. We had fewer apprentices not completing their apprenticeship frameworks, but of those who didn't complete, 25 per cent of those leavers moved into other forms of employment. They were largely from the health and social sector, and hospitality and catering—large numbers leaving those particular professions, due to increased pressures brought on, really, by the pandemic, in the main, but other job insecurity issues. I think the other thing to bear in mind is the construction framework, which is now three to four years, and some learners are seeing that as too long to be following an apprenticeship framework, and, therefore, leaving the apprenticeship because they're doing labouring jobs and earning more.

Jason.

Yes, similar. It's the lure of higher wages. We've also, with some of the learners, seen that the education element is such that—. You know, they're just anxious to join the world of work. That's another reason that they may drop out—they've had a taste of working life, and they just want to join the adult world of work. That's something we've noticed. We're trying to have in-work mentors as well; they go in occasionally and just talk through the benefits of staying on the apprenticeship and the long-term benefit. So, we are trying to address that.

Thank you. And the final question from me, then, is about what we can do to better support young people to complete their apprenticeships, to turn this around. What practical actions could and should be taken?

With the support of our Welsh Government colleagues, we've had a number of discussions recently with Qualifications Wales, et cetera, and awarding organisations, that go back to the point that Barry made regarding certain barriers with certain qualifications. The biggest one in the last 12 months has been the health and social care levels 2 and 3, and we're now engaging on levels 4 and 5. And barriers to achievement because of the expectation within the apprenticeship not being what the employer actually wanted. I have to say they've been very constructive conversations. We have now extended the length of stay, as we commonly call it, to be able to allow learners to achieve within an appropriate time. And, again, going back to the construction qualification, those discussions are ongoing, because, with regard to that one, it's just too long. So, there needs to be some element, with that financial penalty to providers, that we can discuss the length of stay—some a little bit quicker; some need to be extended and a little bit longer. That way, we can ensure that we retain and achieve, then, apprenticeships that we have already on programme.

Just to support that, we do have ongoing discussions with Quals Wales—they regularly attend the work-based learning strategic group that all the FE colleges attend—but also group discussions and ongoing discussions with Welsh Government officials in relation to frameworks.

And Jason.

Yes, similarly, we're engaging with the colleges and, as I said in my last answer as well, we do have mentors who are working directly with the young adults on the apprenticeships.

Thank you very much, Chair.

Thank you, Vikki. I'll now bring in Hefin David.

Diolch, Cadeirydd. I'd just like to follow up on apprenticeships as well. We've talked about making them quicker and getting people into work fast. One of the other issues is that, if you do A-levels, there's a clear pathway into university and to a degree and a Master's degree and so on, and perhaps professional membership. Apprenticeships also offer that route, but what they don't do is give you a route into degree apprenticeships. So, could I just ask for the panel's views on degree apprenticeships? I attended the launch of the rail degree apprenticeship on Tuesday, which clearly shows there is a desire for these kinds of things. It is excellent, but there aren't enough of them, and there isn't that vertical connectivity. So, I'm just wondering what the panel's views on that were.

We're very supportive of degree apprenticeship routes. I think it's a great way for people who have gone through vocational routes to work their way to higher level qualifications. Let's be honest, university routes aren't for everybody. So, it as an alternative. It does provide choice and it does enable people to earn as they learn and, at the same time, progress their careers. So, I'm very supportive of them, and would like to see more routes, obviously, become available.

But there's a funding issue there, isn't there, Dr Walters?

Clearly.

The funding issue is the fact that if you want them expanded, somebody's got to pay for them, and the Welsh Government aren't going to rapidly expand degree apprenticeships because the money's not there to do it.

I accept that, and I also think there's a lack of parity then between how university degrees are funded and how vocational degree routes through degree apprenticeships are funded. So, there is a serious imbalance there, which, again, needs to be looked at.

Okay. I'm looking for short answers now, if anybody else wants to speak, so I can move onto careers advice. Is everybody done, Chair?

Yes, everyone's done, I think.

Okay, great. I'd like to go on to the links between employers and educators, and the fact that, in our evidence from Careers Wales and some of the evidence I gathered—I've spoken the national training federation, I've spoken to ColegauCymru—what's clear is there's difficulty in FE getting access to students aged 11 to 16, and that makes it much more difficult for students to see that progression pathway, and think about how their education links with their career. Can I start with ColegauCymru? I think that's Dr Walters, isn't it? How can that barrier be broken down? Do you feel that there are opportunities for colleges to offer schools something and the schools to offer colleges something that would give better choice to students aged 11 to 16, for example?

I suppose, speaking frankly, I think what you're dealing with is an education infrastructure that has, traditionally, supported competition, and if you're going to have that, then there are going to be obstacles, aren't there, around sharing and working in partnership. But we come at it, in Pembrokeshire, from the view of trying to do the best possible thing for Pembrokeshire learners. So, we do work with the schools, we do have 14-to-16 programmes. I'd like to see more, but, ultimately—you mentioned funding previously—there's always a cost to these things.

In terms of links with employers, yes we've got extensive—. We've got 5,000 apprentices on the consortium's books, as it were. We work with 3,500 employers across the whole of south Wales. So, it is significant. We've also got our own employment bureau—

I'll come to employment bureaus in a second. Can I just ask you that question? You have got access to a whole range of employers, schools haven't. We've found that NPTC Group of Colleges are working really well with Llanidloes High School in producing a partnership whereby there was access to the FE databases given to schools. I think that could be a really good thing that could be rolled out more widely. You have got people working hard, through colleges, to build an employer database. Schools haven't got access to that information. Could there be a kind of quid pro quo, where, in return for providing that information to colleges and access to employers to schools, you provide that information to schools, and in return, schools then say to you, 'Well, you've got unlimited access to our 11 to 16-year-olds'? Is it realistic to think that that is something that could happen? I've seen it happen in pockets. Do you think it's something that could realistically happen across Wales?

That is a tough question. I'd be happy to work towards it. But, as I said, you've got an infrastructure that has been embedded in terms of a competitive basis. We need to move away from it, if we're genuinely talking about the best interests of the learners. Could it be achieved? Yes, I'm sure. If people are willing, then it can be achieved.

Well, it's certainly happening. It's certainly happening in pockets, but it's not happening—

In pockets, yes. Sorry. But is that in areas where you have tertiary, for example?

Yes, it is, but it's also in places where there isn't tertiary. NPTC is the example in my report I've prepared for the Government. There's an example of a school that has a sixth form that is working with colleges. So, it can happen, and I think the value would be, if schools see that you are offering something that they can't afford to buy, for nothing, and in return, you get access to the students, surely there is a mutual benefit there. Perhaps it could even be formalised in some kind of service level agreement. I would really like ColegauCymru to look at that.

Certainly. I'm happy to take that back and discuss with colleagues.

Has anyone else got a view on that?

Yes. Thank you, Hefin. You and I have had this discussion and touched upon tertiary models, haven't we? Inevitably, we have seen a more positive impact where that access is more available and there's a strategic across-the-board learning strategy, if you like, from those schools, through to the FE college that's within that local authority. But you're quite right—and I think it goes back to something that we answered earlier—it's about those school advisers. Like with the sixth form that you mentioned there with NPTC, if you've got an effective school adviser or a teacher who's really engaged, then you'll see that absolutely come through.

I think what may help—and I hope that it'll help—is the new Curriculum for Wales, with the areas of learning, and, obviously, the community-focused pilots that are happening in a lot of local authorities at the moment as well. So, hopefully, they will engage with those employers. But I think for us as training providers as well, it goes across the board. We mentioned parity of esteem, and that has to be there. So, I think the point you make about SLAs is an important one, and that is certainly something that we can work with, along with our partners in CollegesWales as well.

So, neither of you would object if we put SLAs, for example, as a recommendation to Government, as a committee. Okay—

Sorry, Hefin. I think Barry just wanted to come back on that point.

There are examples of this going on, though. For example, yesterday I was in a meeting with some of the companies that are seeking to invest in floating offshore wind. We had Blue Gem Wind, RWE Renewables, we had the port authority in, for a meeting, because what we want to do is work with the schools to engage under-represented groups, so that these companies can access school pupils, raise awareness of future opportunities. We've also met with the local secondary heads, and they are very keen to get involved. So, there are things that are happening that certainly tie in with what you're promoting there.

I wonder if the Commission for Tertiary Education and Research could offer an opinion on that as well, but, obviously, they're not responsible for schools. But I think we need to discuss this as committee and see if we can make some recommendations in that regard.

Just finally on employment and education bureaus, through the course of producing the report that I was working on for a good year, Jeremy Miles said, 'Look, we are doing something in this space with these education and employment bureaus', and Vaughan Gething announced it, but it does seem to be very focused on college, and I don't see how schools can have access to these. So, it doesn't solve that 11-to-16 problem, does it?

From a training provider perspective, I would agree with you—from that and schools. There's no published data, but when we did engage with young people, there was a lack of awareness about the bureaux. So, I think something needs to be done there, as perhaps something to look forward to in the future, and something to think about, Hefin.

There is a pretty good website linked on Business Wales, but obviously it's not necessarily user-friendly for front-end users, for those who would be interested in using them. Did Dr Walters want to come in with anything there?

No, I think you're right. The employment bureaux that have been implemented, certainly in the FE sector, have been very successful. I've got some data here: last year, we got 490 FE students into work placements; we got 50 into apprenticeships; and they supported a further 380 with things like curriculum vitae writing and prepping for interviews, and things of that nature. So, it is adding value. But again, I get the point; it's in the FE sector, and can it be expanded to other sectors?

Diolch, Cadeirydd.

Diolch, Hefin. I'll now bring in Sam Kurtz. Sam.

Diolch, Cadeirydd. Good morning, panel—physically and online as well. In terms of your work in delivering the young person's guarantee, we've touched on some of the challenges pupils may face, but, in delivering it, what challenges are being seen in Wales at the moment? Are they regional challenges, Welsh language challenges? What are you seeing on the ground challenge-wise, if any? Not sure who wants to kick off.

I'm happy to. I think it's something that we've already talked about, really. It goes back to challenges for rural areas, without, again, reiterating the point, but around transportation links and cost. I think Barry mentioned cost earlier, and gave an example of one young apprenticeship, which literally wipes out three hours of their working day, financially. So, I think there's that issue. And obviously as well, funding needing to be aligned—that is a challenge. The Jobs Growth Wales programme is the only post-16 funding that didn't get the 5 per cent cost-of-living increase this year. And I think, whereas, from an apprenticeship point of view, we did—I have to say, really grateful for that, and it really has helped; it's been so positive, it's really given everybody a bit of a boost—but Jobs Growth Wales hasn't seen that. We welcomed all the support regarding the increase in allowance and clothing, et cetera, but, as far as parity is concerned, they didn't get that. Yet, the programme is out there to help reach our hardest-to-reach young people. So, I think that really is a point for discussion, Sam, if I'm honest.

Okay. And, Barry, anything to add?

Not a lot more to add to that. Transport is obviously a big issue with us. And even within regions, you've got different infrastructures; for somebody in Swansea, transport isn't the same issue as it is in rural west Wales.

Okay. Jason.

Yes, likewise, Denbighshire's a rural county, and we do see that poor transport links are a real problem.

Fab. Thank you. Because the crux of my questioning is to see if there are any other discrepancies or differences other than just the rural-urban divide, and seeing if there are—. The example I used in the previous panel is around the Welsh language, and I think, in delivering on 'Cymraeg 2050' targets, then education and apprenticeships and everything play a part in delivering that. So, is the Welsh language being seen, in terms of from a recruitment side, from the professional side, or from the apprentice/student side, are there concerns around the Welsh language, or where would you say we are in terms of that access? Barry.

Well, as was mentioned in the previous panel, recruiting, first of all, staff who are Welsh speaking, first language and prepared to teach; we have Welsh-speaking, first-language staff who prefer not to teach through the medium of Welsh. It is a challenge for everybody, but we're hugely well supported by Coleg Cymraeg Cenedlaethol. We've got a number of projects on the go with them, which are helping to drive up the use of Welsh, both with full-time FE students, but also with apprenticeships, and that is working really well, and that is helping to drive up the usage of Welsh, certainly in our apprenticeship scheme and within our college.

Fab. Lisa, anything to add?

Again, a very similar picture, I have to say. Coleg Cymraeg Cenedlaethol are also helping me with my incidental Welsh, so I am improving. But they are. As far as supporting our workforce, then that is helping, and that is giving them then the encouragement to actually share that and recruit learners within the Welsh language and within those areas where the Welsh language is much more preferred, if you like, rather than the English language because it's their first language of choice, and that's what we need to do. There's still a lot of work to do. I know we've had these discussions over the years, but I think it is still progressing and ever-evolving as well, you know, to engage.

Okay, helpful. Jason.

Yes, not much more to add, to be honest. We are struggling to recruit to Welsh language posts, yes.

Okay. Thank you. And in terms then of Welsh Government's approach, how much does that cater to variances, local or regional, in delivering the young person's guarantee? Is Welsh Government flexible enough in supporting the delivery of the young person's guarantee, or where could improvements be made? I'm not sure. Jason, I'll start with you.

I suppose funding is the main issue, isn't it? Our service Working Denbighshire is funded separately by European money, and it's now gone to some levelling-up shared prosperity funding, so it's the old bugbear of funding, I think.

Okay, helpful. Barry.

I think I'd agree. The one-size-fits-all approach doesn't necessarily work when you're looking at urban versus rural areas, the lack of sparsity funding. It comes back to what Jason said, really. And I think it is something that Estyn discussed with us on their recent thematic review visit. So, yes.

So, would you say at the moment that the Welsh Government's approach is a bit more one-size-fits-all than it should be, or is there minimal flexibility at the moment and that flexibility could just be increased to be a bit more favourable?

For the rural versus urban agenda, yes, I think so. I think it needs to be explored further, yes.

Thank you. Lisa.

Yes, just on that point, I think it's a big job, but there could be an opportunity to look at a cost plus delivery model, if you like, for those rural areas, working with consortia, working with a number of different partners, just looking at how the differences are for those and perhaps how budget, funding, et cetera, could be different for them. I think I mentioned it earlier, but something that could change is something that we used to have, namely those uplifts for those demographic areas, especially with demographics of Welsh language and the geographic areas as well, and also to support those with self-declared disabilities. So, inevitably, what happens is that they need to be automated. It's a complex application and then it deters people from actually getting people onto programmes. So, I think that's something that perhaps needs to be looked at as well.

Okay, helpful. Thank you. Diolch, Cadeirydd.

Diolch, Sam. I'll now bring back in Luke Fletcher. Luke.

Diolch, Cadeirydd. So, in terms of the schemes under that umbrella of the young person's guarantee, how effective would you say they are at meeting some of those workforce demands? So, filling some of those gaps in certain sectors or addressing some of the skills gaps that we have in our economy.

I think workforce demands have to drive the young person's guarantee, personally. It is about raising awareness and raising young people's aspirations. The renewable floating offshore wind example that I just quoted, the way that they want to target young people to raise awareness of the fact that there will be jobs emerging down the line, where they can stay and live in west Wales, and yet access well-paid careers. So, I think there has to be an element of workforce demand driving the nature of the guarantee.

Do you think that the schemes are effectively doing that at the moment?

Yes, I think they are tailored towards industry need. I think they very much do serve that purpose.

Yes, I would agree. I think the schemes that are available at the moment certainly help with that. As I said, we know we have seen an increase in recruitment as well. So, I think it's perhaps those other issues where we talked about those cost-of-living pressures, rather than the actual programme itself. So, I think, at the moment, don't change it if it's not broken. I think it's working. There's always room for improvement, as we said earlier, but it is helping us to engage with the employers, the workforce and the skills needs, if you like, but it's just some of those other challenges that we're facing, actually getting that young person on board, rather than the programme itself.

So, if we want to fully deliver the young person's guarantee, we're going to have to address some of those challenges, aren't we? So, if I was to turn around to you now and say, 'Here's a blank cheque', what's the priority challenge that you'd want addressed?

I'll try and quickly think of a couple off my head.

We had data in the last one—

I think data is so important, isn't it? Because then you're able to, as I said, measure impact. You can clearly see then where more additional support is needed, perhaps where the funding is needed. I just mentioned about the budgetary pressures, because this recruitment has been so successful in the summer, that is going to impact us, so how do we fare from October through to April? So, I think we need to—. It’s the successes that may actually hinder the providers.

But I think, going back to if there was a wish list, if you want to call it that, for want of a better term, it is to get those communications right as well with regards to those benefits, so that the parents, who have a big influence on young people, have a better understanding that going onto a Jobs Growth Wales programme is not going to impact their universal credit. But what we find is that parents then will allow them to go on to a Jobs Growth Wales programme, maybe, but not let them go into employment then, because that will impact on their benefits. So, there’s a massive discussion there, and that’s a bigger one, I think, for us and this committee, but certainly one for you to take forward.

Barry.

I won't repeat what Lisa's just said, but I do think that the upturn in enrolments and take-up on the Jobs Growth Wales+ programme this year is a reflection of additional funding being directed towards those programmes, and that cost-of-living support, if you like, has enabled them to thrive this year compared to last year. I also think, personally, again the apprenticeship programme is critical, really, for our economy, for regenerating those parts of the economy that have suffered. It’s really, really important, and further promotion of apprenticeship schemes and opportunities, I think, is vital.

Great. Jason, final word.

Yes, locally what we've done is we've established an employer engagement programme facilitating partnerships between schools and employers, and very much looking at employers’ needs, marrying the expectations of young people going in to work and employers’ needs, and again, there's work in Denbighshire going into schools to discuss that. So, there have been some positive outcomes from that.

Diolch, Luke. Our session has therefore come to an end. Thank you very much indeed for being with us this morning. A copy of today's transcript will be sent to you in due course, so if there are any issues with that, then please let us know. But thank you very much indeed for being with us today.

Thank you so much.

We'll now take a short break to prepare for the next session.

Welcome back to this meeting of the Economy, Trade and Rural Affairs Committee. We'll move on now to item 5 on the agenda. And I'd like to welcome Huw Irranca-Davies from the Climate Change, Environment and Infrastructure Committee, who has joined us for this item. This session, with the Secretary of State for Wales, follows the announcement by the UK Government of a proposed joint investment package with Tata Steel. Could I thank the Secretary of State for attending today's meeting at short notice following the announcement of the deal with Tata Steel? And could I ask him formally to introduce himself for the record, and then we'll move straight on to questions? Secretary of State.

I'm David Davies, the Secretary of State for Wales, and I'm very happy to be here and to answer your questions.

Thank you very much indeed for that introduction, and perhaps I can just kick off this session with a question. Perhaps you can explain why, in the UK Government's view, the deal agreed with Tata to move to electric arc steel making at Port Talbot is the only option that can work at the scale required and within the time frames available.

Well, I don't know what other options there would be. Clearly, the plant was losing over £1 million a day and Tata were planning to pull out. Blast furnace technology can be used to make virgin steel, but, frankly, that particular plant was going to close if the UK Government hadn't come to some sort of an alternative arrangement. So, the only thing, really, on the table was an electric arc furnace. There will no doubt be questions about hydrogen in a moment, and I'm happy to answer them, but that is not commercially viable at the moment.

Luke, I think you wanted to come in on this very point.

Yes. You've already predicted some of my questions there. I'm particularly keen to understand what considerations were given to alternative technologies. Electric arc furnaces, we've heard time and time again now, don't produce the greatest steel that we need. There's hydrogen and reduced iron, so I'm just really interested—. I know you've mentioned there that hydrogen isn't commercially viable at the moment, but, of course, investment in it can make it commercially viable, and there is a role for the state in a strategic resource, isn't there?

Right. Mr Fletcher, let me take those two questions in turn. On the issue of the grades that can be made by electric arc furnace, I've delved into this quite a bit myself. The technology has moved on quite a lot since electric arc furnaces were first developed. If you look at electric arc furnaces that are in use within the UK at the moment, Sheffield Forgemasters use electric arc furnace to make steel for the defence sector and LIBERTY Steel at Stocksbridge use an electric arc furnace to make steel for the aerospace sector. Gareth Stace I spoke to yesterday about this and put this very question to him, and he said that it is simply not the case; that the steel that can be made by an electric arc furnace is now of a very high grade indeed. There may be some grades that you can't make from it, but there are plenty of markets out there for electric arc furnace produced steel, and there's a lot of research and development going on to make sure that the grades can be met. There may be an issue around beverages at the moment, but some of that is down to making sure that the regulators are happy with what's being made. So, the general view is that, actually, you can make most grades from it and that what can't be done at the moment will be done shortly. So, that was the first thing.

The second part of your question was to what extent hydrogen was looked at. There is one plant at the moment—you've probably seen all of this—the SSAB one at Luleå in Sweden. What they're doing is very interesting, but it's not commercially viable at the moment. I don't want to spend—. I appreciate that you'd like quick-fire responses—I've done your job, Mr Chairman—but there is a very good podcast with Lord Browne interviewing Henrik Henriksson, who is in charge of that plant, and he himself says that that steel is going to be 25 per cent more expensive. He actually also says that one of the ways in which they'll manage to keep the costs down is because there have been no steel mills built since the 1970s and the new ones are going to be very highly automated, meaning fewer people employed. So, if the suggestion is that by using hydrogen technology we could have soaked up 3,000 jobs that doesn't fly either. The steel, in the words of the people actually in charge of that one plant, is 25 per cent more expensive. The European Union have published a document looking at this and they say it'll be a third more—so, 33 per cent more expensive. Everyone agrees that, at the moment, that steel is more expensive and the answer to the problem of a plant that's losing £1 million a day is not to create steel that's more expensive than the market price for steel.

Well, there's no doubt, obviously, that hydrogen steel would be more expensive at the moment, but investment in it can make it cheaper. We've seen KfW, the German development bank, they invested heavily in hydrogen I think it might have been about 12 years ago—you know, these investments have to come to make that form of production cheaper, and, if we're talking about the long-term future, then, surely hydrogen's the way forward.

Well, if we're talking back at that plant, this is the only plant that I'm aware of that makes steel from hydrogen and I don't think they're going to have it ready until 2026. So, it's not commercially viable at the moment, and, insofar as it's going to be commercially viable, Sweden have obviously got large amounts of iron ore there, to hand, in Sweden and also access to electricity through, I think, hydro. So, they've got a lot of the things that they need to make that commercially viable, but it's still not commercially viable and it's still going to be 25 per cent more expensive at the moment. Now, maybe at some point in the future, this will become the new technology, but Tata don't think so at the moment and they, after all, are the ones who are going to be putting in most of the investment here. So, we would all like it to be the case, and, obviously, with an electric arc furnace there, it might be, at some point in the future, when that becomes commercially viable, that that could be added, but that has to be a decision that Tata have to lead on. They're the experts, not us, on this.

But then, at some point in the future, we'd have already missed the boat then, wouldn't we?

Well, not necessarily, because I think you need an electric arc furnace anyway if you're going to make steel from hydrogen. So, we'd already have some of what we need there. But what we have right now in an electric arc furnace is tried-and-tested technology that could save 5,000 jobs plus a supply chain. It would be crazy not to go with a technology that is there and available right now.

Before you go on, Luke, I think Huw just wanted to come in on this very, very specific point, very, very briefly.

Yes, indeed. I don't want to belabour the points that are being made very eloquently and the fact that other Governments are stepping in and investing in other technologies, but you mentioned there specifically that this will protect some of the jobs and also the supply chain. So, this technology will guarantee all the jobs in the Welsh supply chain that are currently supported by the type of steel making we do in Tata.

I can't give that commitment, but what I can say is that Tata have said that none of their sites in the UK will now close, as opposed to pulling out from all of them.

But you said the supply chain. The supply chain is also an important point.

The figures that we've looked at suggest that 12,500 jobs in the wider supply chain would be protected.

Luke.

The Secretary of State for Business and Trade's official told the Business and Trade Committee that the UK Government

'were trying to do the smallest number that they'—

being Tata—

'would accept but would also mean that the business would be sustainable into the longer term.'

Do you think that was the right approach? Are you confident that was the right approach?

Definitely. Look, I'm not going to go into everything that took place in those negotiations, which I wasn't directly a part of, but there have been various leaks in the papers suggesting that, originally, Tata were asking for a lot more money than £500 million. The argument went on, as negotiations do, with the Government offering a much lower figure, and then they eventually came to an agreement.

Now, with all due respect, Mr Fletcher, on the one hand I've got people saying that the Government offered too much money, and you seem to be implying in that question the Government aren't offering enough money. The Government went at this with a view that we do not want Tata to pull out of the UK. We want steel to continue being made here. We want to save as many jobs as we possibly can. So, we are willing, as a UK Government, to invest a lot of money into the steel industry to make sure that jobs are saved in Port Talbot and across the rest of Wales and the UK. But, obviously, we have to deliver value for money for the taxpayer. That's why the negotiations took a long time, and we arrived at a figure that wasn't quite as much as what Tata wanted originally, and was probably more than the Government offered in the first place.

But wouldn't you say that that statement speaks to a potential lack of ambition for green steel more generally, if it's looking to offer the lowest amount possible?

Well, no, sir, I think that's normal business practice, isn't it? We obviously—

But we know, of course, getting to net zero is going to be a substantial task and require a lot of investment.

With respect, Mr Fletcher, I think your question is suggesting that there was some other negotiation that could have taken place over hydrogen. That never happened.

I don't think I've suggested that.

Right, okay. So, what you're saying is that the Government should have offered more than £500 million, even though we now know that Tata were happy to take £500 million and put £750 million in themselves.

What I'm saying is that statement, I think, speaks to a lack of ambition. We talk about, again, words like 'not commercially viable' when we talk about hydrogen. We all know that, in the early stages of technology, none of it is commercially viable, but the state's role over the years has been to invest in that technology to make it commercially viable.

So, I think there are two points here, if I may say. First of all, the Secretary of State for business and technology is absolutely right to have gone into a negotiation wanting to offer the smallest amount of taxpayers' money that would get the result that we all wanted. She got the result that we wanted. Why would she have gone in there agreeing to a much higher figure when we have now resolved the issue for £500 million? At no point was there a discussion around hydrogen. Tata were threatening to pull out of the UK, which would have cost 8,000 jobs and many thousands more in the supply chain. We wanted to keep them here. The technology that they agreed would be the right technology for that site would be an electric arc furnace, and we managed to strike a deal for less money than they originally asked for. That's good business, right.

As far as hydrogen is concerned, there's no commercially available hydrogen at the moment. We know that. We know that, at the moment, it's far more expensive. Tata never suggested hydrogen, so we can't enter into negotiations—. We're not about to start paying people to try and do something that hasn't yet been done. At the end of the day, we've got 9 million tonnes of scrap steel in this country. A lot of it's being exported. Why would we not take advantage of that raw material that's here and available now, and use the technology that's available to save as many of those jobs as possible?

I don't disagree on that point at all, in terms of using scrap steel more efficiently in the country. But again—I won't labour the point, Chair; I am conscious there are other questions—I think this whole argument around not being commercially viable is just a bit of a red herring, because ultimately, if you look at technologies throughout the years—. I mean, the iPhone, the technologies that went into that were largely state funded but weren't commercially viable to begin with. It's the role of the state to invest in those technologies in order then to see that investment pay out further down the line, surely?

Well, with a suitable investment partner, but Tata weren't talking about this, so our job was to get Tata to stay and save as many jobs as we can. We needed those jobs here and now. And as I say, anyway, if you listen to what—as I'm sure you do, sir—people like Henrik Henriksson are saying, it wouldn't have saved that many jobs, because the hydrogen plant that is being built in Luleå is very highly automated, and this technology is not going to save the thousands of jobs that were traditionally needed in a traditional blast furnace.

Before I bring in Huw Irranca-Davies, I know Hefin David would like to come in on this very point.

Yes, just on the mention by David Davies of the scrap steel argument. This will inevitably push up demand for scrap steel. First of all, how confident are you that there is enough scrap steel to achieve these objectives, and will it not have a knock-on effect for other users of scrap steel? Could the ultimate consequence be that scrap steel ends up being sourced from abroad?

Well, first of all, we are exporting around 8 million to 9 million tonnes of scrap steel. I’ve got the figure here somewhere. Let me say 8 million tonnes, but it might be more than that, unless somebody wants to send me a figure. It's 8.7 million tonnes; not far out. The electric arc furnace, as I understand it, will be looking to process 3.5 million tonnes. So, there’s plenty of scrap steel within the UK to fill that demand. Obviously, a lot of that gets exported at the moment, and you’re quite right, sir, that is a question I actually ask myself: to what extent will consumers in places like Turkey, who are currently buying that scrap steel, want to be offering more? I mean, obviously, the basic economic rules of supply and demand and free markets—which I’m sure we all subscribe to—would suggest that that could have an impact on price. But that’s all been gone into by the officials. I've checked that, and they are quite confident—as are Tata, by the way—that the steel will be there. And after all, Tata are investing significantly more than us, around £750 million, into all of this, so they’re obviously very confident as well.

Huw.

Thank you, Chair. Secretary for State, it's really good to have you with us today. It’s slightly odd, the line of questioning question I’m going to go at, because as you say, you weren’t in the negotiations—there was another one of your Cabinet colleagues in the negotiations—and neither was the Welsh Government involved in those at all. But can I just throw back to you, before I ask for your comments on that, why the Welsh Government, which has so significantly been engaged in not only Tata Steel but steel production throughout Wales for the last two decades, was not party to these discussions whatsoever, and neither were you?

But before I do that, in your response to Luke Fletcher a moment ago, you made really clear that it is not the role of the UK Government to be proactively investing in emerging technologies in primary steel making. You’re leaving it to other countries to do that. That shocks me a little bit; I genuinely say that. You, like me, are a resident Welshman; we know not just the history of this, but the future of this, if we can decarbonise, but you’ve said basically what Tata have put on the table is what the UK Government was willing to engage with—your Cabinet colleague. Why?

Let me take the Welsh Government question first of all; that’s easy. The Welsh Government said that they weren’t willing to enter into any discussion that involved closure of the plant or the blast furnace. So, they kind of ruled themselves out. Secondly—

Were those the terms? Was it closure?

Well, as far as I’m concerned, they’d written saying they didn’t want to have that kind of discussion, but of course, they were free to do so if they wanted to—

But they were free to engage in things to keep it open, which is what you were engaged with.

They always have been. They have a responsibility for economic development, as do the UK Government. So, if they wanted to go along to Tata and negotiate something, that was up to them. They didn't have to wait—

So, they were debarred on the basis—

They weren't debarred by us. They weren't debarred by the UK Government. They were welcome at any time to have a conversation with Tata—nothing to stop them. If they've got £500 million on the table that they could offer, then they perhaps should have said something.

So, they were not included in this because closure was on the table. Is that what you're saying?

Yes, that's my understanding. Closure was on the table. Tata were threatening to pull out completely—

So, on that basis, the Welsh Government was told by who that—

No. The Welsh Government had written, either to Tata or to the UK Government, and said that they weren't willing to get into any kind of discussion on anything that might have involved the closure of Tata.

But you weren't discussing the closure; you were discussing how to save jobs.

Well, actually, Tata were discussing the fact that if they weren't able to come up with a plan, they would have pulled out of the UK.

Okay. In hindsight, would it have been better to involve the Welsh Government within this? Because not only have they had that long history of productive and constructive involvement with Tata Steel and other steel operators throughout Wales, but also, they could have added something to this as well—and they could have. They couldn't have added the sums that the UK Government could have, and we would argue could still, but—

I think the problem here, bluntly, is that the sums of money here are so large that the Welsh Government weren't in a position to offer that. What would they have been offering?

So, the Welsh Government's role would have been insignificant, so, as such, they're not included.

At the end of the day, there are two parties to this. There is one party that says, 'We're intending to pull out of the United Kingdom and it's going to mean 8,000 job losses and supply chain job losses of 12,500, but if we can come to an arrangement over an alternative technology, which we think should be an electric arc furnace, we'll stay. How much can you offer us?' That's what it came down to. They didn't want anyone else involved, and there are a lot of market sensitivities around this negotiation, which is why the leaks that took place were unfortunate. It was time for the end of the Indian stock market, nobody wanted a situation where people might have benefited from advance knowledge, so the discussions were kept very, very confidential.

I fully understand that, but your suggestion, your implication, is that the Welsh Government could not be trusted not to leak.

No, I'm not suggesting that. I'm suggesting that Tata wanted to keep those discussions between themselves and the party who were offering money to stay here.

So, whose decision was it not to include the Welsh Government?

I'm not aware that it was the UK Government's. I can't answer that entirely, but I don't think that anyone at any time said, 'We're not going to have this person or that person in the room'. But what realistically could the Welsh Government have added? Because we're talking about large sums of money here. What were they offering?

I would simply say that in every case where we have saved jobs in Wales—. Some we've lost, but in every case where we've saved jobs in Wales, the Secretary of State and the Welsh Government have been at that table and have contributed in whatever way. And it could be through retooling, retraining, it could be smaller sums of money, but it could be actually arguing for an advanced industrial strategy and persuading the business Secretary.

Mr Davies, there is going to be money for retooling and retraining and possibly for infrastructure as well, because on top of the £0.5 billion from the UK Government, the UK Government are also offering £100 million for a transition board, and I very much hope that the Welsh Government will want to be involved in that, possibly even to co-chair it and perhaps even to add some money themselves to it. So, there is a role for the Welsh Government—of course there is. They have the levers that they can pull in devolved areas, such as around planning—all right, that's for the local authorities, but ultimately responsibility rests with the Senedd—education and so on and so forth. So there's a huge amount that they can now offer. They weren't really in a position, let's be honest, to offer hundreds of millions of pounds towards an electric arc furnace, but they are in a position to help with all of the things you've just said. And I hope they'll come to the table. I haven't heard from them yet, but I really want to work with Vaughan Gething or anyone else in the Welsh Government who wants to support Port Talbot through this difficult period of time.

I think you had a second question.

It was the key thing of this proactive industrial approach from the UK Government, which you pretty much ruled out in your earlier answers.

I don't accept that. To be honest with you, a UK Government that's offering £500 million for an electric arc furnace on one site—. This is probably one of the largest, if not the largest, amounts of UK Government taxpayers' money that's ever been offered to a company in order to save jobs somewhere. That is being very proactive indeed. Obviously, we weren't going to just roll over and accept the first figure that was asked for. That's why the negotiations took some time. We had to deliver value for money to the taxpayer, but we've shown a huge amount of proactivity. So, there we are.

Thank you.

Thank you, Huw. I'll now bring in Vikki Howells.

Thank you, Chair, and good afternoon, Secretary of State. Turning to the impact of the deal on the workforce, I know that you have said that the anticipated 3,000 job losses at Port Talbot are terribly sad news, and I'm sure we'd all echo your sentiment there. Can you tell us about the approach that the UK Government took in order to try to save as many jobs as possible?

In terms of saving as many jobs as possible, obviously the situation that confronted us was that Tata was looking to pull out, 8,000 jobs would have gone across the UK and 12,500 in the supply chain. So, our approach was to get very proactively involved and negotiate a way to keep Tata in the UK and to keep steel being made in Port Talbot. Obviously, the electric arc furnace would mean there would be fewer jobs than there are at the moment. I can't actually say how many jobs are affected, because Tata legally have to go through a process with the unions and a consultation, but the figure has been quoted of 3,000 and I'm not shying away from that. But I don't have an exact figure.

So, the hope is that some of those will be through voluntary redundancy, but I have to be realistic—I think we all do—that this is potentially a very, very worrying time for people who work in Tata at Port Talbot, and therefore the Government have come up with this £100 million transition scheme, on top of the money for Tata, and that's going to be used to help the people and the community of Port Talbot through this very difficult time. So, we don't shy away from it at all. I've said, and I'll say it again, it is very sad news for people and it's a very worrying time. That's why I'm very pleased that we've saved steel there, but I'd be cautious about sounding a celebratory note, because nobody wants to see up to 3,000 jobs potentially lost.

Thank you. We know that the Secretary of State for Business and Trade's official told the Business and Trade Committee that a number of the job losses would be filled by workers retiring by the time they would have lost their jobs. Are you able to give us any more information about roughly how many workers the UK Government expects to leave through retirement versus redundancies?

No, I don't know, and I don't think anyone can be sure of those figures at the moment. Obviously, some people will retire, some people will take voluntary redundancy, which I hope is done on generous terms to recognise the huge contribution those people have made, but not all of them. So, I don't know the figures, and legally I can't really even talk about job losses, because legally, obviously, Tata have to consult with their workers and talk to the unions. But be in no doubt about it, there will be job losses, and we were concerned to make sure that it wasn't catastrophic and that we didn't see 5,000 or 8,000 jobs being lost and a supply chain. We've managed to save most of those jobs and most of that supply chain.

As Tata now are moving on to consult with the unions, we know that concerns have been expressed by the trade unions and the Welsh Government on the impact of the deal on the workforce. What flexibility do you see there being for changes to be made to the agreement between Tata and the UK Government as a result of the consultation with the unions?

To be direct with you, I don't see any changes, any flexibility at all. [Correction: 'it is unlikely there will be any flexibility.'] We've come to an agreement, which is that Tata will build an electric arc furnace and the UK Government will contribute £500 million towards it. An electric arc furnace is going to need fewer workers than the blast furnace. I don't know where we can go from there. I'm really sorry about that, but that is the direct answer to your question.

I just want to return to one thing and make it very clear: at no point were Tata talking to the UK Government about building a hydrogen plant. That was not a discussion. So, that wasn't something that we could have contributed to. There seems to be an impression being given that, if the UK Government had offered more money, we could have saved more jobs. We could not have done that. That wasn't an option for us. We have saved as many jobs as we can, and the negotiations took some time because we, obviously, didn't want to pay any more money towards Tata's electric arc furnace than we had to in order to save those jobs. But that was what the negotiation was all about.

Thank you. And just one final question, looking at the steel-making sector in general across Wales. The Community trade union has said that Tata's site at Trostre is likely to close as a result of the decision to move to electric arc steel making, and that it also may impact on jobs at Llanwern as well. Do you consider those scenarios to be likely and what consideration did you give to protecting jobs at downstream sites when drawing up the agreement?

A lot of consideration was given to that, and Tata have said that they don't expect any of those sites to close. Where the steel grades aren't available for the processing in those sites, they've been importing it, but they're looking very much now to make sure that the steel produced by the electric arc furnace will be available for as much of that processing as possible. So, a lot of thought was given to it, and the expectation that has been given to us is that those plants will not be affected or at least will not have to close.

Diolch. Thank you, Chair.

Diolch yn fawr.

Thank you, Vikki. I'll now bring in Hefin David. Hefin.

Diolch, Cadeirydd. The climate change committee heard from the unions, and their view is that there were other options available based on electric arc steel making, supplemented with production using direct reduced iron. Can you help us understand whether that was put forward during the negotiations, whether there was a serious discussion about that, and whether that union voice was heard? Obviously, the outcome was not what they wanted, but was that heard during the negotiation process?

No. I've looked into this, and as far as I can establish, Tata did not discuss using DRI, but would that be DRI produced with hydrogen or in some other way?

'Direct reduced iron' is what the trade unions said to the climate change committee.

I'm going to be meeting with the trade unions anyway, but, I mean, my understanding is—. I'm not—. I did work for British Steel, actually, but as a filing clerk many years ago, so I'm not going to claim any expertise here. In order to create steel, you have to directly reduce iron ore, and at the moment you can do that through mixing it with coke in a blast furnace and creating 2 tonnes of carbon dioxide for every tonne produced of steel, which is something the climate change committee will be well aware of. Or you can do it with hydrogen in this new way, which isn't, at the moment, commercially available. I'm not aware of another way of doing it, but I'm happy to be educated and I'll be very pleased to talk to the unions about that. But anyway, it doesn't really change the answer, because obviously that wasn't something that was discussed. The discussion was all around an electric arc furnace.

Yes. I'm just trying to understand the process rather than trying to change anything. Obviously, I totally take your point on that.

Obviously, I've got no insight into how Government Ministers in the UK Government interact with each other, but we know the Minister of State at the Department for Business and Trade, Nusrat Ghani MP, said that the importance of UK retaining virgin steel-making capacity was very important. Have you had discussions with Nusrat Ghani about the impact of this on that objective?

Well, look, I have spoken to her recently about this, but the thing is, we still have one blast furnace left, but to some extent, some of this argument about virgin steel is based on a sort of security of supply argument. We obviously would have to import the iron ore that we use, and actually the coke as well, if we were going to carry on using blast furnace. So, the real issue here is: how do we maintain security of supply, if that's what your question is getting at? The answer to that is that we have got 9 million tonnes of scrap steel in the UK at the moment, much of which is being exported, so we've already got the raw materials to make our own steel here, and to do it, by the way, with fewer carbon emissions.

As far as the grade of steel goes, I'm sure you'll probably want to hear from Gareth Stace at Make UK yourself, who knows far more about this than I do, but the fact of the matter is that there is a sort of view out there that you can't get the grades from recycled steel that you can get from blast furnace steel and that it's just not as good, and I'm told that that simply isn't the case. Sheffield Forgemasters and LIBERTY at Stockbridge are testament to that, because of the specialist grades that they're producing for the defence and aerospace industry.

Nusrat Ghani's argument was about the consequences of importing, whereas what I understood it to be was that introducing the electric arc furnace means that making particular steel products would not be possible, so you'd end up importing—

You might end up importing a few of the products that you can't make at the moment, but you might end up exporting other products that you're making in more quantity than you are at the moment. Which particular areas are we talking about? The grades that people worry about are, sort of, automotive, aerospace, defence. We are already producing defence and aviation grade steel from electric arc furnaces in the United Kingdom. I think there's more of a problem, actually, over cans for beverages, and this is where you get into arguments about drawing and so on, and so forth. This gets a bit technical for me, but I understand that there is research and development going on to try and make sure that you can produce good-quality steel from electric arc furnace by slightly changing the designs and things. But I agree that there are some grades that it's challenging to produce at the moment through electric arc furnace, but also there's a lot of work going on to resolve that.

And to go back to Mr Fletcher's point, we have to look slightly to the future sometimes and look at the way that technology is moving on. And technology is moving, definitely, in terms of electric arc furnace. It is also about a circular economy. It produces far less carbon. We're not saying that was the main reason for this, but that is something that surely all of us would be supportive of. And we've got that raw material sitting here in this country at the moment—why not make use of it?

Okay. I guess, just to finish, Cadeirydd, I think all I'm really looking for is the same questions I asked Welsh Government: to what extent is the strategy being co-ordinated across Government departments, with one Minister saying that the UK retaining virgin steel-making capabilities is vitally important, whereas this agreement does something different? I fully appreciate the bind that you would be in, in that you're dealing with a private company—totally understand that—but I just wonder about the way this conversation is being had across Government.

The sort of suggestion from your question, with all due respect, is that, rather than allow Tata to close the blast furnace, if you believed it was really very important indeed that we maintained the blast furnace at Port Talbot, then we would have had to discuss with Tata how we fund this. You're losing £1 million a day. Do we seriously, as a UK Government, or a Welsh Government, start handing over £1 million a day so that you can keep that open?

Well, alternatively, you go back to the Minister of State at the Department for Business and Trade and tell them that their view is unrealistic, given the practical position you're finding yourself in. I'm really trying to help you here. [Laughter.]

Well, I'm not going to go back to fellow Ministers and tell them their views are unrealistic. I'm sure it would be great—

[Inaudible.]—do that. [Laughter.]

It would be great to have a profitable blast furnace in the United Kingdom, and if members of this committee are saying it would be great to have profitable blast furnaces, despite the 2 tonnes of carbon per tonne produced, well, I'm very interested. I'm all ears, actually.

Absolutely, but you must have cross-Government dialogue—

We do.

And what happens in private conversations, before you have collective responsibility publicly, is those conversations must happen, and I wonder how helpful it is to have those two different messages out there.

I'm not sure it would be helpful for me to start telling other Ministers that they're wrong about this, and I'm not sure that I need to do that [Correction: 'and I don't believe they are']. Look, I'm here to basically say, 'We had a choice as a UK Government between Tata closing Port Talbot, or Tata remaining in Port Talbot, but with fewer jobs.' We took that latter option, because that was obviously a far better option, and we've put a lot of money into it, and I will defend that absolutely. And I will also say this: I totally understand the concerns people have about the loss of jobs. And I want to say this to you: I spent a lot of time in the area—genuinely—and I want to be able to hold my head up high. That £100 million I fought very hard for, and I'm very glad that we've got it, and we want to put it to good use. We want to support that community, and support people and retrain them, and I honestly say to you: I want to hold my head up high in there and make sure we help anyone who's affected in this way. And that's why I was so keen to say to the unions, 'My door is absolutely open to you', and I'm looking forward to meeting them on the sixteenth.

Well, I certainly wasn't questioning your motives in any way, just to be clear about that.

Okay. Thank you, Hefin. I'm very conscious of time, so if I can ask everybody to be as brief as they can. Luke.

Diolch, Cadeirydd. If I can just look at the energy side of stuff now, because, obviously, moving to green steel and decarbonisation methods tend to swallow a lot of electricity. With some of those low-carbon approaches now, like electric arc furnaces, are you confident that some of the policies around energy are the right policies to be able to ensure that steel produced here is competitive with other places? So, I'm thinking here of the UK steel report that said that in France they're producing steel at 30 per cent less than they are in the UK, and in Germany, 70 per cent less. Sorry, the other way around, actually. Sorry.

Okay. I'd be interested to know how they've done that. Obviously, France uses a lot of nuclear power, and they built those nuclear power stations some time ago. So, they've got access to good baseload at a predictable price. Germany, I think, are finding things a bit more challenging on that front and they've shut down their nuclear programme, and I think they're actually burning lignite to get electricity, which is very damaging for the environment, but we'll gloss over that for a minute. I think what you're really saying is that we will need a lot of electricity for this to work—

Yes, no doubt.

Yes, and you're right, of course, and there are conversations that have been had between Tata and National Grid to make sure that that is available.

And in terms of the national grid as well, good connections will be very important.

Sorry, the—?

The grid connections—

Yes, yes.

—going into Port Talbot. What sort of work and conversations are going on around improving those as well?

Well, I'm not party to the exact conversation, but I know that the point you make is a very fair one, and that conversation has been had and is being had at the moment between National Grid and Tata to make sure that's there. So, it's a very important issue that you're raising and people are aware of it.

So, just one more question, Chair, just to try and keep things as brief as possible. Does the UK Government, then, intend to publish in the long term a strategy for decarbonisation of iron and steel?

Yes, they do. And I think it's due very shortly. I'll write to the honourable gentleman on that one. But, yes, they are looking to publish a strategy and, yes, it's here somewhere.

If you'd be very kind to provide that information, that will be very useful to us as a committee.

Thank you.

And who knows, I may even get inspiration before the end of this session. [Laughter.]

Thanks, Luke. I'll now bring in Buffy Williams. Buffy.

Thank you, Chair. And thank you for joining us this afternoon. Can you explain how the transition board will operate and what involvement you expect the Welsh Government to have in it?

The terms of reference for the transition board have already been shared with Welsh Government officials. So, I presume they've been seen by Ministers. It will be chaired by a UK Government Minister, but there is a hope that perhaps Welsh Government will get on board with this and maybe even co-chair it. Obviously, I don't want to give away all the terms of reference while they're being agreed—and the fact that they're being shared with Welsh Government, I hope, gives you some reassurance here. But the hope is that Welsh Government/UK Government will be working with the local authority, with the unions—I hope they'll be playing a big part in this—and possibly some other people with the knowledge of the potential for business and education and training needs in the area.

Thank you. Can you explain what types of interventions you expect the £100 million transition fund to make? If there are significant job losses at Tata’s downstream sites in Wales, will these areas be able to receive support through the transition fund, as well as Port Talbot?

That is a good question. I think, at the moment, the concern is that most of the job losses, if there are job losses—well, there will be [Correction: 'there will likely be'] job losses—would fall in Port Talbot. So, I think the current thinking is that the transition fund would be there for Port Talbot. If, as a result, because it is a bit complicated—. It's not necessarily as straightforward as thinking that just because all the jobs on the blast furnace will go everything else will stay. I understand, from a conversation with Tata management, it may not work out quite like that. So, I think, if it transpired that there were significant job losses at one of the other sites, as a result of what's happened, then, although, at the moment, the transition fund is aimed at Port Talbot, I, as a member of that, would clearly want to take that on board. The fund is there because, if a large number of people lose jobs in one specific area, that community is going to need help and support. So, it would be slightly remiss of us if, as a result of the decision that's taken place, there turned out to be a large or significant number of jobs somewhere else where we just washed our hands of that. All I can say is that we don't want to wash our hands of it, but I think at the moment, that isn't the plan, but the hope is that there wouldn't be significant job losses anywhere else. In short, I think what I have to say is: the answer to your question at the moment is 'no', but we should be open-minded about changing the terms of reference if we had to.

Okay. Thank you. Thank you, Chair.

Thank you, Buffy. I'll now bring in Sam Kurtz.

Diolch, Cadeirydd. Good afternoon, Secretary of State. One headline, following the announcement was—and I use the word and term—'bittersweet'. Would you agree with that assessment?

Yes, I would. I may have even used the term myself. I was quoted out of context as saying, 'This is terrible news.' What I meant, of course, is it's terrible news for the potentially 3,000 people who lose their jobs, of course. So, yes.

Okay, thank you. Because that phrase was used quite often, 'bittersweet', and, as you've alluded to in answering questions previously, there are jobs lost but there are jobs saved and it's a balance to be struck.

But I want to probe a little bit further on the wider economy in Port Talbot and potential opportunities coming downstream from the likes of the Celtic free port, which I've been a proponent of here in Cardiff Bay. What discussions are to be had now, or have already been had, about the opportunity of utilising Tata in Celtic free port, floating offshore wind, new opportunities, building on, potentially, Luke's questions around electricity? And is there an opportunity for more of the steel to be used or constructed and made within Port Talbot for floating offshore wind in the Celtic sea?

In short, absolutely, yes. Now, one of the strange things, actually, was that—. We clearly hope that the Celtic free port is going to be used to construct, or put together, assemble, anyway, floating offshore wind structures. It was strange to me that the steel that was being produced by that blast furnace wouldn't have been suitable for the towers; it might have been good for some of the other components, but not for the towers themselves. The suggestion at the moment is that, as things stood, it wouldn't necessarily be the case that the steel coming out of an electric arc furnace would automatically be good for the towers either. However, it is clearly the case that if you have a brand-new steel manufacturing facility being built on a site that is also, hopefully, going to be used for constructing very large products that are made of steel, it would be crazy not to be having the conversation about how do we make sure that that steel is being used for these floating offshore wind turbines, particularly as, actually, we really need a UK-based supply chain anyway for this to work. That conversation is taking place. That conversation is going on between Tata and at least one of the companies that are involved, and I'm sure that we all wish them the very best of luck. There are people working hard now to figure out how this can be done, because it is in everyone's interest that it is done.

Okay. So, in terms of the transition board, are the Celtic free port, floating offshore wind, renewable opportunities and the wider Port Talbot economy part of that discussion around the transition board as to the future opportunities, given the sort of potential timescales as to where job losses occur and new opportunities come on line?

Well, the transition board terms of reference have been shared, but, effectively, as has been said, it's there to support people, individuals perhaps, through retraining opportunities. Clearly, there is a hope that thousands of jobs will be created as a result of the free port going ahead there. But I can't specifically say that there's a certain amount from the £100 million that's been earmarked for that purpose. I think it's a bit of an open book at the moment. The board needs to be formed, but, as I say, there are going to be people there from Welsh Government, trade unions, business and education. It seems that what you're suggesting sounds perfectly sensible to me. At the end of the day, the purpose of that fund is to smooth the transition back into other careers for people. So, it's a perfectly sensible idea. And as I say, the conversation is being held at the moment about how we can make sure that that steel can be used on site, as it were.

Okay. I've had a tour of the Associated British Ports site that neighbours the Tata Steel site and it's a vast area of land. I know that the Minister of State at the Department for Business and Trade has said that Tata will release land for redevelopment and new businesses. How much land are you expecting to be released by Tata, and is that being earmarked for specific projects, or is that just in its infancy at the moment?

All I know—. I think it's in its infancy, because I don't have a figure. I've asked that myself, 'How many acres?' I don't know. I don't think that's clear yet, nor exactly for what purpose. But that is the suggestion, that land be released. [Correction: 'But to confirm, land will be released'.]

Okay. And then just one final question from me in terms of the south Wales industrial cluster and the decarbonisation of that. This obviously plays into the wider role of what is looking to be achieved around the decarbonisation of the south Wales industrial cluster, from west Wales all the way across to Newport and east Wales.

Correct, yes, it does. Obviously—I said this earlier on—2 tonnes of carbon dioxide are produced for every tonne of steel that's produced in Tata. So, from the point of view of carbon emissions, this is a very good move indeed. There has to be longer term thought given as to how we remove more carbon dioxide from industries in south-east Wales, and I think the current thinking is that it will probably have to be done through shipping, in some way, and there are discussions going on there, and there's at least one major company that I know are interested in doing that. But I think it's a separate discussion, if I may say so, but an interesting one nonetheless.

Okay. Helpful. Thank you, Secretary of State.

Okay. Thanks, Sam. One final brief question from Huw. Huw.

Secretary of State, it's genuinely been illuminating having you in front of us today, and I really appreciate it, I really do. And I think all of us would agree that any job saved is better than having no jobs at all, any steel production is better than having no steel production. But I just want to come back to an earlier part of the discussion, because, from everything that you've said, and Hefin, my colleague, was much more circumspect and diplomatic—. But the future of primary blast furnace steel production within the UK under the current UK Government's thinking has no future, because you've outlined the climate change reasons, but you've also said there's no reason that the UK Government, when faced with decisions like this, would proactively argue the case either for carbon capture or future hydrogen technologies. And I don't want to go through what we've been through already, but you've made it pretty clear that primary blast furnace, even with new and emergent technologies, is not within the thinking of the UK Government. That, for me, sends a bit of a shiver, and I'm a climate change evangelist. But you're pinning everything on this one technology and saying UK Government is not interested in others unless Tata brings it to the table and says, 'We want to.'

No, I'm not saying that at all. As far as carbon capture is concerned, that's never been done with a blast furnace before—

Indeed. Somebody will have to do it.

I've got plenty of stuff on that, but, in short, what it says is that there are multiple sites emitting carbon within a blast furnace and that, even if we'd gone round and done something that nobody has ever done anywhere else before, the most you could cap is around 50 per cent of it, because of the number of different areas that are releasing carbon dioxide. You've been far more of an evangelist for reducing carbon dioxide than I have, Huw—

So, we'll discount that one.

I don't think anyone's called me an evangelist for this before.

You sounded on repeated occasions today, saying this is not the main reason, but this will help us decarbonise.

Yes, correct.

Right. So, that one's gone.

So, we dealt with carbon capture. So, we're back to hydrogen again. If Tata had said to us, 'Well, we think we could build a hydrogen plant here. Would you like to contribute to the capital costs?' I'm sure there would have been interest. That conversation wasn't had. But, ultimately, if you're looking at a plant that's losing £1 million a day, in what way would it make sense to build another plant that's going to make steel that's going to cost between 25 per cent and 33 per cent more than the steel that is losing you £1 million a day?

You and I are coming at this from different directions, because you're saying, 'If Tata had come to the table and had done this.' What I'm saying is: isn't it the role of UK Government to say, 'We can identify where there would be potentials, and we should be working with industry on how do we make this happen together'?

But we are not experts, right. If Tata don't feel that they can make—

You have a team of people behind you and you have many people to call on. You can look at global—

But Tata have to make money—. Tata, ultimately, does have to make a profit.

So, does it fundamentally come down to—

Somebody has to make a profit.

—what's the minimal offer to keep some jobs available without closing the plant? Is that what it finally comes down to?

I think I would prefer to say, 'What do we need to do to save the maximum number of jobs?' And we've done that. We could not have offered more money and saved more jobs. We could have offered more money and Tata would have taken it, but we could not have offered more money and saved more jobs. We've saved as many jobs as we possibly can at the level that is the best one that we could find for the UK—

Is primary blast furnace steel making dead within the UK?

Well, that's up to those people who—. That is up to anyone who is operating a blast furnace. There's only one left in the UK at the moment, and there'll be conversations being had, no doubt, about how we keep that there. But, if a blast furnace is going to lose £1 million a day, what company is actually going to keep a blast furnace?

Okay. I'm afraid time has beaten us, but thank you very much indeed for giving up your time this afternoon, Secretary of State, and for giving up your time at very short notice as well. A copy of today's transcript will be sent to you in due course, so, if there are any issues with that, then please let us know, but, once again, thank you very much indeed. It's been a very useful session.

Diolch yn fawr. I believe the—. If I may just clarify one thing.

Yes.

I'm told that we'll be publishing an industrial decarbonisation strategy to reach net zero by 2035, and I think that's coming out in March of next year. I'm not sure what I did just say, but I meant to say that Tata are the steel experts. Presumably, I said somebody else was, so, perhaps the record will acknowledge that.FootnoteLink

As I said, a copy of today's transcript will be sent to you in due course, anyway, so if there are any issues then please let us know. But, once again, thanks very much indeed.

Diolch yn fawr.

We'll move on to item 6 on our agenda. I propose under Standing Order 17.42 that the committee resolves to exclude the public from the remainder of the meeting and from the first item of our next meeting on 11 October. Are Members content with that? Yes, I see that they are. The motion is therefore agreed and we will move on to our private session.