Economy, Trade, and Rural Affairs Committee

Symudwn ni ymlaen felly i eitem 3 ar ein hagenda, a dyma’r sesiwn dystiolaeth gyntaf ar gyfer ein hymchwiliad i’r economi sylfaenol. A gaf i felly groesawu'r tystion i’r sesiwn yma? Cyn ein bod ni’n symud yn syth i gwestiynau, a gaf i ofyn iddyn nhw i gyflwyno’u hunain i’r record? Ac efallai y gallaf i ddechrau gyda’r Athro Anne Green.

Yes, good morning. I'm Anne Green. I'm a professor of regional economic development, and I'm at City-REDI, the City-Region Economic Development Institute at the University of Birmingham. I have worked in Wales in the past, and I've also done some projects on Wales relating to alternative approaches to economic development and the foundational economy, so it's good to join you today. Thank you.

Thank you very much. Harry Thompson.

Hi, I'm Harry Thompson, head of fair economy at Cynnal Cymru.

Karel Williams, emeritus professor, University of Manchester, director of Foundational Economy Research, and we've done reports for Welsh Government on town centres, food processing, and a variety of other things, including NHS Wales; and executive chair of Foundational Alliance Wales, which is a membership organisation that tries to progress foundational economy thinking in Wales.

Thank you for those introductions and perhaps I can kick-off this session with a few questions. How well understood would you say the concept of the foundational economy is across public services in Wales? And what level of capability is there to deliver such an agenda, and how do you think this could be improved? Who'd like to start on those questions? Professor Williams.

Well, I think, in one sentence, the foundational economy is very Welsh, because it is about the conditions of well-being, which are household income after paying for essentials, services like healthcare and education, and social infrastructure like youth clubs, all within climate limits. I think if you actually asked people in public services in Wales to define the foundational economy, I'd be surprised if one in 50 could actually give that one sentence definition, and it has been confused by a much narrower definition, which is that it's about procurement. The question of capability is a much larger one, and maybe you should ask other people about the confusions to begin with.

Okay. Harry Thompson.

Yes, yes, I concur with that. Our engagement with key stakeholders shows that the FE concept and awareness of it is pretty patchy. There are some elements of good practice, particularly pockets in the NHS. You've got things like an all-Wales foundational economy steering group, you've got some dedicated staff members there, but in other sectors, we find that awareness of the foundational economy isn't widespread. I would really agree with what Karel said there about just a lack of awareness across public services. I think there's a bit of confusion around the definition of the foundational economy sometimes. You'll see in Karel's written evidence, which he's put in, about a narrow, descriptive definition and then a broader, more analytical definition. I think that's a really good way of framing it. Particularly within that narrow one, I think the focus tends to be on procurement. I do think that's something you see a lot. You see that sort of, 'Keeping the Welsh pound in Wales', which I think is helpful and valid, but it does too unduly narrow it, because you have to look at things like workforce. So, for example, if your only priority is keeping the Welsh pound in Wales, you might not look at the business practices of those businesses, even if they're based in Wales. So, I think it has to be broader than that.

Professor Green.

We've done some work looking across Cardiff, Glasgow, Birmingham and Sheffield, looking at what the foundational economy means and how well it is understood. It's better understood, I think, in Cardiff perhaps than in England, but what we've got is a number of alternative approaches to economic development, community wealth building, inclusive growth, and sometimes the foundational economy is used as a label, interchangeably, with some of those other concepts. So, I think there are variations in understanding of what the foundational economy is. Some people might think it's just about procurement, others will have had a broader definition, as colleagues have just outlined. There is that issue that understanding of the concept is variable.

In terms of capability, I think there is an issue about the fact that there is a need to look at the core business of public sector organisations and everything more creatively. So, that, in some ways, is quite helpful because of the spending crisis, et cetera. But I think there is varying capability for understanding what it is, and to some extent there's a fair amount of confusion as to what people are talking about and whether people are talking about it at cross-purposes. So, I think there is a general understanding of the importance of all of the issues that colleagues have pointed out, but the label itself may hinder as well as help.

Do you think that developing a foundational economy academy, as recommended by Dr Gary Walpole and colleagues, would be a good way of supporting public sector organisations to develop foundational economy understanding and capability? Professor Williams.

Can I come back on this question of capability? I think Welsh Government policy has consistently underestimated the inertia and resistance to change within the Welsh Government machine. It also has basically command, but not control, over health, education and care. The question of capability then relates to the whole question of organisations where chief executive officers and chief financial officers are firefighting, and there are a multiplicity of internal silos and agendas. 'Capability' is the wrong word for thinking about how we actually get change in this system.

If you think about the academy, pulling people out of an organisation like Betsi Cadwaladr, and explaining to them what the foundational economy is, resolves the confusions, but it doesn't actually point Betsi Cadwaladr to some specific set of tasks and activities that give strategic leverage. The problem with the academy is it is essentially exec ed. In 25 years at Manchester business school, I did lots of exec ed, and the metric for exec ed isn't outcomes and change inside the company, but it's numbers trained and fees for the business school. It's an irrelevance to this central problem of how, in machines where we have resistance and where Welsh Government does not have command and control, we could actually find the point where we put the wedge into the log and get some strategic change.

Anyone else on establishing an academy?

I don't think we have a definite opinion on whether an academy is the best way of doing things. I would go back to what the issue is and what you're trying to solve, which is that—. I think when this agenda was adopted in 2016, you had a lot of noise about it, a lot of excitement about it, this fresh new idea. It was very much communicated in that narrow way of, 'This is about certain sectors, describing the sectors, keeping money in those sectors, doing the same things in them, so, for example, increasing productivity in them or helping businesses in those sectors to grow.' The situation as I see it—and we've done some research interviews on this as well—is that the concept has evolved from academics and other practitioners into a broader, more analytical side of things. You've seen some kind of take-up of that in NHS Wales, where they've got what they call a 'people, purchasing, place' approach. So, people: you're looking at the workforce; place: you're looking at how your decisions around—. You know, if you're an NHS health board and you're an anchor institution, you're choosing where to put local services and you might want to consider 'place' in that and whether you put them on the local high street, because my understanding is that they've got evidence that when you put, for example, a health service on the high street, people tend to stay and they buy a coffee and it helps the local economy. So, you've got to take that broader approach.

When it comes to education, I think there's a dissonance at the heart of this that causes a lot of confusion, because that concept was originally picked up in that narrow way around procurement, and there's this other definition that's floating around now. When we've spoken to people, even high-information stakeholders became aware of it around 2016, when this agenda was created, and they get a bit confused by the different definitions that are floating around: is it about procurement? Is it about other things? And I think there's a real task, because, actually—we're going to talk about delivery by Welsh Government today, I assume—lots of this delivery isn't going to be done by Welsh Government. We know that, in the round, the Welsh Government isn't hugely a delivery body; it tends to get passed off to NHS services or local authorities or corporate joint committees. So, it's those organisations that are going to be doing the delivery, and from what we've seen, those organisations, lots of them, are quite confused about what the foundational economy concept is and they probably need some specific tasks and actions to implement that.

Okay. Before I bring in Anne Green, I know Mick Antoniw would just like to come in on this particular issue. Mick.

Yes. Can I just ask—? I'm quite new to this, but one of the points that comes out of nearly all the papers and evidence that we've seen is, firstly, a total lack of clarity, et cetera. There's an attempt to then sort of fit into a one-size-fits-all, as though, somehow, the foundational economy becomes some sort of silver bullet. And it seems to me that there's a complete lack of understanding of the need to actually develop a specific approach to different circumstances. You know, the foundational economy sounds to me a little bit like the way we used to talk about sustainability and community, until you try and define it. Do you have any concerns about the fact that it is being used as though, somehow, it is a silver bullet, but with a complete lack of understanding as to what, strategically, it means in terms of what needs to happen and what needs to be done? To anyone.

Anne Green, would you like to come in on that?

I think there is a danger that it's seen as a silver bullet. I think there's a lot of good work going on, and the fact that there is confusion about what it is means that it can be used sort of performatively; you can tick a box and say, 'Well, I've done something on the foundational economy. I've done something on procurement. I've done something on community wealth building.' And in terms of—. So, I think there's a lot of good work going on and I don't think we should forget that.

And in terms of the academy question, I think there is an appetite for networking. I think we've seen that, and you can see that going on in Wales anyway. There is formal and informal information sharing. I think having some kind of central repository of content that people can add to is helpful. Some online material is helpful. Action learning sets and visits are helpful. But it's not a silver bullet, and I think there is a range of approaches that are going to be necessary for different people, because different people have different understandings, different demands on their time, et cetera. So, I think that’s what I would say in response to those questions.

Professor Williams.

It’s not a silver bullet, but I think it is a crisis. If you look at liveability, residual income has been squeezed by rising utility and food prices, health and care services are effectively being rationed at present, and local authorities have retreated from social infrastructure provision. That’s why your electorate is so pissed off with you and why Reform is in No. 2 position in 13 Welsh parliamentary constituencies. So, it’s not a silver bullet, but it is a crisis that requires your immediate attention. The question then is how are you going to attend to it, and that’s in the written submission that we’ve made and in the responses to some supplementary questions from you that we’ve done. I think our argument is that it needs a quite different kind of approach than the strategising and policy-centric approach that Welsh Government has adopted, and that it requires attention to alliances of the willing and this whole business of skunkworks projects, things on the edge that actually bring together people who want change, rather than create strategies and regulations that assume everybody is going to do change.

Yes, and, following on from that, you and colleagues in the Foundational Alliance Wales network say the Welsh Government uses a descriptive sector-based definition of the foundational economy, while practitioners focus on how a foundational economy approach impacts on liveability. So, can you explain why the Welsh Government should actually focus more on liveability and how should they go about doing that?

I think, with liveability, I’ve made the point, which is that we have a crisis of liveability. This should be central to the Senedd before 2026, when you face the judgment of your electorate and of the alternate vote system. People are tired of high food prices, high utility bills, they’re tired of waiting for hospitals, and if you go and do community-based work they’re really alienated by the fact that there isn’t a youth social worker and things have closed. Now, in that context, the question is what do you do, and I think the Foundational Alliance Wales approach is twofold.

Firstly, we concentrate on strategic areas in activities where we can pull levers to get results. The two ones that we’ve identified are domiciliary care reform for the elderly, and grow your own workforce instead of importing ready-made nurses and doctors. Both of those build on things that are being done by minorities and we could put together alliances of the willing to do them. I could discuss that in terms of health boards or local authority dom care reform. That’s one activity. Find strategic activities and areas where we could pull levers.

The other thing is we need place-based reform, and the answer is not to focus on particular places but places where we could put together an alliance of the willing. For example, if you take a place like Port Talbot after the steel closures, does it have in the local authority a progressive chief executive? What are the housing associations doing? You need to think about who’s up for change and where you can get people together for change and then do the fairly straightforward things that we have seen have worked previously. I’ve mentioned Keith Edwards, i2i, Steve Cranston, Delivering Net Zero, what Amanda Davies is doing in the health service. Somebody who’s an enabler, facilitator, brings together the people who are willing to change. This is the model, and we have a crisis that requires immediate attention.

So, it’s about bringing people together in the main, then.

It’s about bringing people together and recognising that not everybody will want to change and not everybody will prioritise change. That’s been one of the central weaknesses of the whole thing, and resolving the confusion is only half the battle. You’ve got to decide where you put the wedge into the log to get the results. We need to be results orientated.

Okay. I'll now bring in Luke Fletcher. Luke.

Diolch, Cadeirydd. I think we've covered a lot of the meat of what I wanted to ask here, and I think that, actually, the challenge you put, Professor Williams, is a really fair challenge. Listening to the evidence so far though, I think you'd be forgiven for thinking that perhaps the Welsh Government is not doing anything good within the foundational economy. So, what I would like to try and tease out here is, okay, we know what needs to be improved, we know what's not being done right, well, what are the positives here? What are Welsh Government actually doing right and should perhaps carry on doing?

Well, I think the key word I would use is 'accidental success'. There are things that have been done that are really good, Luke, but that have not been part of a pattern, not been part of a deliberate thinking through of—. One of the things we're trying to push is: what are the conditions of success? If you take the foundational economy challenge fund, for example, that was really good for several organisations, like Woodknowledge Wales, Cwmni Bro Ffestiniog in Blaenau—you're going to be talking with them later today—et cetera, et cetera. But that was supporting organisations who were already on a journey and knew what they wanted to do. If you simply spray the money around and offer short-term responsive funding, that doesn't work. So, that was accidental success.

We've got accidental success actually a bit with procurement as well at present, which is—. You know, we need to get beyond this business of simply giving money to Welsh firms, because high-cost client firms are not doing them or us any kind of good. To do that, we need, basically, to understand who's in the supply chain and how we target firms. Welsh Government has supported SimplyDo and Lee Sharma in their work on identifying firms who could supply, and that's halfway there, because the next thing we need to do—and the knowledge framework does exist—is profile these firms, understand their size, whether they're investing, what their retained earnings are, and then target firms and get them on a journey with public contracts. So, halfway there. I'm not despairing, but what I think is the problem fundamentally is that Welsh Government, and all the Welsh political parties, have been into this model of change that, actually, simply, as we see after 20 years, doesn't produce results, and we're now in a crisis of liveability.

If I could come to Professor Green, because I think there's a lot of common ground between the paper that you submitted to the committee around—. I would argue that Welsh Government has embedded foundational economy policy in quite an uneven way across different sectors. I suppose the question for me is: well, how can you provide a path that allows Welsh Government to embed that policy in a far more even way? I think what Professor Williams has been highlighting here provides some of the solution. Would you agree with that?

Yes, I don't disagree with that. I think that some of the sectors we're talking about are very different. In the social care sector, in the health sector, there are more levers that are available. If you're looking at aspects of some parts of the retail and banking sectors, for example, there are fewer levers there for the Welsh Government to act upon, I suppose. And therefore that perhaps suggests that, although all these sectors come together in place, there are perhaps different sector-specific approaches that are needed in different sectors. So, I think that's what I would say. And I think there has been more activity in the health sector more generally in Wales and in England more broadly across the UK. That is a huge sector, and what can be done there in terms of procurement, in terms of recruitment activity and those sorts of issues about how recruitment can be made, how more local people can access those jobs, get more spending in the local economy. I think those issues can work, but, probably, in terms of the unevenness, I think it probably does require a bit of a sector-based approach that takes account of the different challenges and opportunities and policy levers that are there in different sectors.

Because therein lies the challenge, doesn’t it? There are so many different sectors within this catch-all term of ‘foundational economy’. We've got care, health, education—food and drink can come into it as well. These are all very different sectors, so how do we essentially mainstream within Government policy this thinking around the foundational economy? Coming back to Professor Williams—I'm conscious I haven't given Harry a chance yet—you, of course, highlighted that the establishment of a foundational economy unit within Welsh Government doesn't seem to have had much of an effect in mainstreaming the foundational economy in Government policy. So, where do we go here, then, not to enforce, but to mainstream foundational economics within Welsh Government policies, is the question.

I think co-ordination is a completely hopeless challenge. If you said the foundational economy unit should persuade food and agriculture to change its policies, which haven't increased the number of SMEs in Wales over the last 10 years, ‘Good luck with that one’ is what I would say. You know, you have to recognise the real limits.

And another—. It's a very policy-centric kind of discourse you've stumbled into. The innovation is going to come from the activities. The innovation is going to come from actually releasing people who are on the front line, not from Cardiff Bay directives, and I think this is really quite fundamental. In north Wales, for example, the foundational alliance is working on community benefit in tourism. What we've honed in on there is the slate valleys, because you've got three social enterprises that are highly superactive and can act as leads in bringing together a whole series of organisations. If we actually tried to say, ‘Welsh Government has decided we need community benefit in tourism’, or, in fact, 'Cyngor Gwynedd has a sustainable visitor economy framework’, it doesn't know how the hell to actually get to all the desirable things in the sustainable visitor economy framework. And if we actually start by saying we're going to get together the national park and Zip World and everybody in north Wales, people will come for the afternoon and then go back to their corridors. You really do need to start thinking about alliances of the willing, led within activities by people who see where you can put the wedge into the log.

Harry, can I come to you? Are there any additional things that you want to—?

Yes. From my perspective, we're working with external organisations to help them to look at their understanding of the foundational economy and what they're being asked to do. I think there's a danger that we go too far down a road where we can't ask them anything specific. I think when we're talking to—. We've done interviews with organisations like local authorities and corporate joint committees and think tanks, and even people in senior roles there aren't necessarily clear what they're being asked to do outside of procurement. So, I think there's a definite place for innovation and taking it outside, but I think if the Welsh Government is going to say, 'We're adopting this agenda, we're adopting this foundational economy agenda', you have to look at the specifics of what you're asking people to do. So, I think there's a need for a more settled definition of this, a need for more specific actions of what you're asking these deliverers to do. What are you asking health boards to do? What are you asking local authorities to do? What are you asking educational institutions to do?

And there are models for this. If you look at the fair work agenda, that's another really similar agenda that's a kind of a cross-government one. And what they've done is they've got a guide to fair work—‘Here are the specific things we're asking you to do as an organisation, and we can measure whether or not you've done them’—so, real living wage accreditation, trade union recognition. And I think that the fair work agenda needs to be folded into the FE agenda. I don't think you should do foundational economy without having that fair work piece to it. But I think there are learnings there from the fact that, sometimes, this foundational economy concept can be too nebulous for actors who aren’t theorists and things like that. You need to get to a place where people who are outside of this world feel that they can operationalise it and what you're asking them to do. So, that would be my piece on that issue.

So, essentially, what's the mission and how do we enable people to get there.

What are you trying to do, what are you asking people to do—yes.

Great. Really helpful. Thank you. Diolch, Gadeirydd.

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

Diolch, Gadeirydd. Something that you mentioned earlier, Professor Williams, really resonated with me—we need to be more results orientated. One of the criticisms levied towards the Welsh Government is that they're a Government of announcements rather than actual delivery of projects. I can see you nodding along to that. So, in answering Luke's questions, you mentioned some of the accidental successes we've had. Are there examples of foundational economic policy initiatives that have really failed in Wales, and things that are potentially continuing that could be stopped tomorrow and repurposed, or resources redirected to deliver better outcomes?

I think the short answer to that is 'no', because there's very little in the foundational economy at present, other than a trickle of small contracts from the foundational economy unit. And beyond that, in a sense, everybody else is doing foundational—in health, education and care—on this confused basis. I think I'd like to come back to this point about what is the role of Welsh Government, and policy and direction. I think it is to support people to do strategic things, because I don't think Welsh Government knows what, at an operating level, you should actually be doing about community-benefiting tourism in north Wales.

So, you would say, then, less interventionist and more of a facilitating role—moving out of the way of those who actually know what's going on, and know what they're seeing on the ground, rather than being a direct interventionist Government involved in those.

Absolutely—promoting and supporting in strategic areas, for example in elderly care, domiciliary care, because you can change that with contracts, whereas residential requires capital et cetera. Grow your own workforce development in the NHS, because there's very little purchasing you can control in the NHS, but it's the leading sector of our economy, and nearly two thirds of the spend is on salaries. This is absolutely critical. Last year, for example, probably half of the new nurses coming into Wales were actually overseas qualified. That is disgraceful, and Welsh Government should be saying that. But what you then do about it, when it's only three of your health boards who are actively engaged in this, is really up to someone like Amanda Davies doing the shoe-leather job of trying to get people together who are willing to change. There will be lots of people who are not willing to change.

That's interesting. Thank you. Harry, any thoughts on what Professor Williams has said there so far?

Yes. I think there's space for both. I think there's space for that social innovation and spreading good practice. You've got these grow-your-own initiatives that were alluded to there and which are really impressive. You've got this scenario where we are locking people out of NHS jobs. So, if you look at some rural health boards, you'll all know they're really struggling with recruitment issues. What certain health boards have done—and, to be a nurse, you need to have a certain amount of GCSEs—is respond to that by basically making apprenticeship academies, and saying, 'You can do a seven-year apprenticeship to become a registered nurse.' And it's just a win, win, win across the board, because you're addressing NHS staff shortages in rural areas, you are giving predominantly women who maybe didn't get their GCSEs when they were 16 years old, and are now 35, who are rooted in the communities and probably stuck in low-paid and unfair work, a pathway to better jobs while you're doing something socially useful. So, there are examples of innovation like that that haven't come directly from the Welsh Government.

But I think there is a role for Welsh Government in encouraging that to be spread out—if you're doing something good and you're seeing something good, why not encourage that to be further pushed outwards? I do think still that—. I keep coming back to this point, but there is this need to spell out to people what you're asking them to do. So, I think there's a role for both—there's a role in terms of enabling that social innovation and being okay with letting go, and saying, 'Okay, we're not going to dictate; please innovate', and that's how we've got good things like grow your own. But I do think there's a role for Welsh Government in saying, 'Okay, this is good, this has worked, we're going to ask other actors to do it.' There's got to be a balance, I think.

Okay. That's helpful analysis. Thank you. Anne, any thoughts on this?

Yes. I think in terms of health and social care, I think there is quite a lot that can be learned from what is going on already. I'm going to use an English example of what's going on in Birmingham, and that resonates with some parts of Wales, but not, perhaps, for rural Wales, where there's been a whole chain—. There's been a Birmingham anchor network bringing together some big organisations in Birmingham, including the NHS trust, and they've changed the way that they recruit, not to doctors and nurses so much, but to all of those other roles, like in facilities, in admin in the health sector, and made it much easier for people in deprived neighbourhoods to access those jobs. It's not all the bureaucracy that used to be there, and it's called 'I Can'. There's a lot of things that you can do, and that's sort of changed some of the recruitment profile for some of those jobs. That doesn't necessarily tackle some of the issues about nurses and where they're recruited from, but it does make jobs that are available more accessible to local people, therefore there's perhaps a bit more spending in the local economy. So, I think there are things that can be done in terms of recruitment and making it easier for entry-level jobs, and the support that can be put in place to help people get there. And I think one of the things about the health and social care sector is that that is a sector where there is a pathway to progression. You are in a big organisation there. Thank you.

Thank you. Could I just ask, then, in this 'I Can', what is it that they've changed to enable those from the neighbourhoods that you mention, and to increase their accessibility to these jobs within the NHS trust in Birmingham? What's changed directly? Is there a more proactive approach in going into those neighbourhoods physically to say, 'Look, these jobs are available', or is it a change to the criteria on the job description? What is it physically that's changed to enable this?

It's changed—. I mean, if you think of the NHS, there can be a common form, whether you're going in to be a catering assistant or something that demands more formal qualifications. So, they've absolutely simplified the application form, you go in for a chat, if you've got the right values and attitudes, then there may be working with the voluntary sector and third sector organisations to help people get a bit more skills, if required, and then—[Inaudible.]—access into those roles. And it has changed some of the recruitment patterns of that. So, it's simplifying, it's partnership working, and it shows what can be done.

Okay, that's really interesting. And you mention that it might not be replicable in some of the rural health boards in Wales, but I would argue it could, because there are areas of deprivation within all parts of Wales, regardless of city or urban or rural divides, so that's an interesting point.

Before you go on, I think Professor Williams would just like to come in on this.

Could I add that the 'I Can' thing is being done in Aneurin Bevan University Health Board? Simplification of the form, screening of applicants, trying to find out what their values are and whether they'd be good health support workers.

There's a lot of things going on under the radar in Wales. There is a small group of people in Aneurin Bevan who are doing wonderful things, which they reported on in the Foundational Alliance conference last week. They only need support. Of course there's a role for strategic direction at the centre, but in the end, it's Sarah Simmonds, the human resources director at ABUHB, and Dr Paul Edwards who are going to do the hard lifting on this job. They're the people who are going to sort out the form, they're the people who are going to sort out the local further education college, and that's the work that needs to be done. This is not so much policy but social innovation, which is central, I think, to the misunderstandings around the foundational economy. It does require supportive policy, but it's basically about social innovation by people on the front line.

Okay, thank you. I'm conscious of time, so I've got a question specifically for Harry here in terms of the Cynnal Cymru-developed community of practice in 2020, as part of Welsh Government's foundational economy challenge fund. I was just wondering what are the key learnings from this and how effective has this approach been in encouraging innovation and good practice spread?

A really interesting question. It was before my time. We got a final report, which I can share with you as well as part of the evidence. One of the key learnings from that final report was that there was a real need for bridging the gap with the public sector. It really found that lots of foundational economy suppliers were disconnected from public bodies, that could and should be anchor institutions. And on the other side of that same coin, public bodies didn't know how to find local foundational economy businesses, and they didn't know how to build local relationships. So, the challenge fund did do quite a lot in terms of pointing the way forward in that. It found that outreach and engagement in person was a lot better, and there are a couple of examples of this, actually, which goes to Karel's point about some really good stuff happening under the bonnet. So, the Vale of Glamorgan local authority took a proactive conversational approach towards linking up public bodies and local suppliers and, actually, that year they got the funding, they got more than 100 businesses to register with Sell2Wales, which is an 89 per cent increase on the year before. So, where there was a disconnect, this foundational-economy approach has identified that problem and started to identify solutions. You had Swansea local authority who did a very similar thing and got lots of unknown suppliers to come in. And Karel alluded to actually the work that SimplyDo are doing. So, the lessons from that are still being used. I think what they essentially did was used artificial intelligence with four social housing providers to help them find local suppliers for a range of tasks, and that was from retrofitting their social housing stock to invoicing systems, and it created a long list of local suppliers, which they then went through and graded, and actually they got local suppliers to bid in.

So, I think it was interesting, reading the report for this committee, because, actually, you're talking, in 2020/21, they're saying there's a real disconnect between these public bodies and local suppliers, and actually they're not getting into this at all. And the current evidence we have is that, actually, things are a lot better in Wales in that sense. There's more of a sense in public bodies that they should be reaching these local suppliers. I don't know how you quantify that. I don't know how it's being measured, but there do seem to be consistent examples where these public bodies are reaching FE suppliers in a way they weren't before.

Just on the community of practice as well, I think the community of practice was really well rated. Lots of projects observed they actually found the community of practice more powerful than the funding because, if you're all going through this process together, why wouldn't you communicate and collaborate and look at the issues you're all facing and the solutions you're using. So, it makes a lot of sense.

Thank you, Harry.

Okay, thanks, Sam. I'll now bring in Mick Antoniw. Mick.

Thank you. Listen, two short questions. There were a number of things I wanted to ask you that I think you've already covered. This one first of all: we have two pieces of legislation that have been passed—one is the Well-being of Future Generations (Wales) Act 2015, and, more recently, we've had the Social Partnership and Public Procurement (Wales) Act 2023 that has been passed—have you given any thought in terms of what role that legislation, in terms of providing a framework for some of the suggestions you've been making about how Welsh Government should be supporting some of the directions and innovations with regard to the foundational economy, might operate? It may be early days, it may be unfair, and if there isn't a simple answer, then please just say so and then I'll move on to the other question I've got.

Harry.

I don't really know the detail around the procurement side of the social partnership Act yet. I think it's mainly the social partnership that's being implemented, isn't it? We did, in one of the foundational economy capabilities networks, have a presentation from someone who was developing the procurement side of things. But I think it's too early to know how that's going to come out in the round and impact things in the foundational economy.

Professor Williams.

I think the foundational economy, in the broad sense, is a focused way of thinking about the conditions of well-being that are relevant to households now—the income that's being squeezed, the services that are being rationed, the social infrastructure that's decaying. It points at what you should prioritise economically, socially and politically. But, equally, I think the whole problem with social partnership and the well-being of future generations Act is the world-class objectives—wonderful, we've put the United Nations’s sustainable development goals into legislation, and everybody has to attend to it. But if we say, 'What are the outcomes we can identify?', there's clearly a large gap, as there has been for many Welsh Government policies, between the well-meaning large objectives and the modest outcomes. And what we’re trying to do is to say, ‘Focus on these areas, and when you focus, think beyond the kind of polycentric way, and think how the centre can support social innovation by the people like Sarah Simmonds and Paul Edwards in Aneurin Bevan University Health Board’, who need to be networked with everybody else, of course, in NHS Wales, in similar roles.

Professor Green, do you have anything to add?

Just to say on the well-being of future generations, I think that is useful, in terms of the agenda there, to think about well-being in the long term. I don’t really have anything to add about the Social Partnership and Public Procurement (Wales) Act 2024. As I think has been said, it’s the newness of that. So, I don’t have anything to add on that.

Thank you for that. I’ll just move on to the second point I wanted to ask, and it’s an area I’m again not clear about myself. This is really directed towards Professor Williams. You called for the Welsh Government to fund autonomous skunkworks projects that tackle difficult problems in flexible and innovative ways. I’m just wondering if perhaps you could explain how you think these should operate and how they would differ from the approach that was taken through the foundational economy challenge fund. And I have to say I’m still confused about the understanding of the issue of autonomous skunkworks projects as well, so perhaps you could just clarify that a bit.

In Foundational Economy Research Ltd, we wrote reports on town centres and on food processing, and on NHS Wales. In some of these areas, like town centres, we were actually involved in attempts to implement progressive recommendations. And it was really like wading through treacle. The central recommendation of the town centres thing was that the town centre is not resolvable unless you do something about edge-of-town developments, which is not $64,000 kind of insight. We then went through endless things where people raised, ‘Could you put parking fees on edge-of-town developments?’ et cetera, and after, I think, 18 meetings, we brought forth a mouse. I think this happens very often in the Welsh Government. So, I think it’s the settled view, both of the foundational economy research professors, and of key figures in Wales like Professor Kevin Morgan, who’s well known to this committee, and well respected, that we need a skunkworks approach.

This involves three or four different things. First, it needs to be on the edges, but not of the organisation and within its processes—that’s absolutely critical. It shouldn’t be part of the standard committee system. Secondly, I think it needs to have an enabler, a facilitator, who does the shoe-leather work of identifying the people who are willing to change, and actually brings them together in a room. This is the role that Keith Edwards played in housing in i2i, this is the role Steve Cranston is now doing in Delivering Net Zero, it’s what the wonderful Amanda Davies is doing in NHS Wales. You bring together the people in the room, and they have a very broad task—like the broad task would be, ‘Grow your own workforce development’—but they have substantial autonomy then about how they flex the objective and which levers they pull, so that they’re on the edge of the machine and improvising. They need the support of senior management within their organisations, and they need the strategic support of the Welsh Government, but they don’t need control by senior management or by the Welsh Government.

I’ve tried to be as clear as I can. It’s a very clear model. It has been applied in Wales. We need much more of it. I can’t guarantee it’s any kind of silver bullet, but it’s a damn sight better than sitting in 18 meetings on what we’re going to do on town planning and getting fuck all out of it.

Okay. Thank you, Mick. If I can now bring in Jenny Rathbone.

Thank you very much, and thank you very much for your stimulating papers. It's unusual for us to get something that really hits back on what we're doing, so it's very welcome.

I want to look at procurement and the foundational economy, and I have a particular interest in how we transform the content of school food, given the huge amount of money we're investing in it. Professor Green, you talk about the possible values of the social partnership and procurement Act, but in my scrutiny of this legislation on another committee, I didn't get a sense that the civil servants in Government had really thought about this at all. They seemed to be focusing on the construction industry, which the Welsh Government is never going to be in charge of, or not in the foreseeable future anyway. How could we use this Act to really try and drive some skunkworks on this important subject?

I'm not an expert on school food. I think that Professor Williams may have an example of where this has been done. I think in terms of procurement, thinking about small businesses, thinking locally, can help in that respect, but I don't have a specific example in relation to school food, I'm afraid, and I just wondered whether any of the other people had an example—

Don't worry. I threw it in because—. But is there anything else you want to say before I come to Professor Williams in the first instance, on how we really drive the innovation, if you like, from the grass roots? How do we encourage people to think about how to deliver things differently than what we're doing at the moment?

I think a lot of it is about, in organisations themselves, thinking about all the frameworks that are there for procurement, and how different and smaller and more local actors can get on those frameworks, and how we can perhaps, across different organisations, do procurement perhaps together and differently. Because I think perhaps joining up across organisations is helpful in that regard, if people are a bit scared of, 'What if I do procurement a bit wrong?' I think that is probably what I would say there.

Professor Williams, Caerphilly never stops mentioning Woosnam's farm as a way in which they helped a small business become a supplier, but the procurement process is so complicated, how would any small local organisation ever break their way into it, given that they're never going to be able to do this for a whole local authority?

Food is a classic example where we need to be strategic but we also need to recognise the importance of social innovation. If you look at food, for example, before the current school meals, when we reported on SMEs and food processing in Wales for the Welsh Government, we found that the total Welsh public spend on food and catering was roughly equal to the turnover of one Tesco superstore on the edge of Cardiff—i.e. the volume leverage wasn't there. That needs to be the starting point in food policy, that you don't have volume leverage. But you do have cultural leverage, and there, of course, what you really need is Professor Kevin Morgan, whose book on school, hospital and prison food we're going to be publishing in January, and I hope you all come along to the launch event.

I'm going to be there too.

What Kevin has been banging on about for years is that it's not food because we don't have the volume, but the food we serve in our schools, prisons and hospitals is a test of our civilisation and a way in which we can change diet. This is very interesting, because of course it does require Government to actually institute a regime of free school meals. It does require someone to sort out the kitchens. And then, when I was talking to Castell Howell a month ago, there's the problem of the 70 per cent limit on uptake, because although you, Jenny, might actually like healthy food, lots of kids in Welsh schools are accustomed to a very different diet and don’t want to eat their greens. And what someone like Castell Howell is doing is that they’re playing with schools in the Gower on diet, on menus, on preparation, to try to get beyond that 70 per cent ceiling. So yes, of course, be strategic, see that we don’t have volume leverage but we do have cultural leverage, and then see that, once you’ve created the framework, you need social innovation within that framework.

If we’re talking about values, we’re up against the multinational companies who want to continue to sell us ultra-processed food that’s sending us all to an early death. So, how are we going to overcome that, given that they spend billions on telling you to go and eat something that’s not good for you?

Wales has a considerable advantage here in that we have two regionally based food service distributors, and Castell Howell is an absolute shining light in terms of social innovation. Of course it responds to demand, but it wants to do differently. When we reported on food processing and SMEs, one of the things that we suggested was that Castell Howell should be incentivised to do more with public contracts.

Thank you. That’s really useful. You talk about smarter procurement, rather than postcode localisation. Could you just explain a little bit more? How do we do smarter procurement? Because we have a system in place at the moment and breaking into that seems really difficult.

We’ve already got to the point where, in the case of a few housing associations, people are using SimplyDo, artificial intelligence, data-scraping techniques to identify the supply base of potential suppliers. The second step is to actually screen those suppliers. There’s a very interesting exercise currently going on between Cartrefi Conwy and ClwydAlyn housing associations, who are trying to move into retrofit, et cetera. And what they’re doing is that they have identified the supply base and they’re now trying to screen the suppliers to choose substantial firms who have records of expansion, who have retained earnings in the firm so they’re stable, that they actually are investing, that they have reasonable wages, et cetera, working it out from standard accounting information. We can screen firms. And it’s very interesting, because when you look at the question of who could do heat pumps for ClwydAlyn and Cartrefi Conwy, when they screened the firms, the substantial ones are the guys who are plumbers or electricians who are running eight or 10 vans, not the people who are offering from nowhere to come and do heat pump installation. And I think that’s very interesting as a way of thinking about how we incubate more capable firms.

But how do we do that without coming across the rules? I know we’re no longer in the EU, but nevertheless there are procurement rules that don’t allow you to say, ‘You’ve got to be local.’

That goes back to Keith Edwards and i2i. You essentially behave as a capitalist business does. You decide what you want to do and then you take legal advice on how you can do it within the framework of the law. It needs somebody to write specimen contracts, which others use.

Can I ask one final question? I think, just to wrap it up, for all of you, how do we use the levers of Government—so things like the real living wage, the shorter working week, the emphasis on good jobs in the foundational economy that you’ve all talked about previously? How do we actually get Government focusing on this, as opposed to some of the other things that they’re being asked to do?

We’ve got a particular interest in this because we’re the living wage accreditation body for Wales. I think it’s really interesting. I’ve mentioned before that fair work needs to be completely wrapped into this foundational economy agenda. We have a specific list of asks when it comes to fair work that are really, really clear in terms of trade union recognition, trade union access as a minimum, real living wage accreditation, and they're still not being done. So, I think, partially, there's an element of that Government needs to move from suggesting to telling, because at the moment, we've got guidance that says, 'You can do this if you want.'

The First Minister at the time, Mark Drakeford, wrote to all public bodies in Wales, telling them to become, or asking them to become, real living wage accredited a couple of years ago. At the moment, even on this—a really clear specific ask—. I count about 60 public bodies of different kinds. So, you’re thinking local authorities, national bodies, local health boards, corporate joint committees, fire and rescue, police forces and national parks authorities. We still only have 16 of 60 that are real living wage accredited. I think there’s got to be consistent scrutiny on this. I don’t think this is because public bodies, for example, hate the real living wage agenda or don’t want to do it. I think it’s because, to get this done, you need to have senior-level buy-in from someone who is a CEO or a director of a public body who says, ‘This is going to be part of our work plan; this is who’s leading on it, this is the deadline for getting it done.’ When they’ve got so many other things on their plate, it just doesn’t get done, even when the First Minister sends a letter. So, something this committee might want to consider is asking people, when they come to these committees, if they’ve accredited as real living wage, if they recognise trade unions.

But you've got to improve your productivity in order to do it, because there is only so much money in the pot in any organisation.

Potentially. Lots of them are paying the real living wage to lots of their staff. I don't necessarily think you do have to increase productivity. Sometimes it's there and there's a handful of staff that aren't being paid the real living wage, for example, third-party contractors. So, we require, as part of our accreditations, third-party contractors who are working for the organisation to be paid the real living wage, because, otherwise, you could just get around it by outsourcing cleaners and things like that. We're not too far away, but there still hasn't been that big uptake. It's something that Welsh Government explicitly asked public bodies to do, and it still hasn't been picked up. So, the new Social Partnership and Public Procurement (Wales) Act 2023 could be used to do that, but also politicians could hold this to account.

Okay, fine. So, the real living wage is something easy to measure. What about all the other things that you, Professor Williams, say are so important around liveability?

Yes, well, I mean, firstly, of course, we should encourage the real living wage, but Wales is basically a low-wage economy—is and will be a low-wage economy. The key thing about people on low wages is that they’re time-poor in a way that people like me aren’t. I can afford two cars; I can afford to outsource domestic tasks. People at the bottom—. We did work in Newcastle upon Tyne, it was very interesting, and it focused on the classic Geordie or Welsh household, which is dual earner, one car, the man takes the car to go to the full-time job, the woman is trapped in the local, part-time labour market. And somebody said to me, ‘You can always recruit school dinner ladies in Newcastle upon Tyne.' And in this kind of world, flexible shorter hours would be exceedingly desirable, but this is very clear. You cannot legislate for flexible shorter hours, because, if you tried to do it in most local authorities, you’d immediately end up with people saying, ‘We need 15 per cent more workforce to do it.’ If you have a high-trust, problem-solving organisation, like Merthyr Valleys Homes, they have done flexible, shorter hours without more workers and struggling to deliver the same quality of service. But they will solve their problems. I would, on flexible shorter hours, therefore, recommend, again, skunkworks, alliances of the willing, to get together four or five progressive housing associations like Coastal, like BronAfon, put them together with Merthyr Valleys Homes, and say, ‘Lads, flexible shorter hours make sense. We can bring along some guys like Professor Williams to explain why. Now, get on with it.’

Okay. I'm conscious that, Anne, you've been obviously, slightly, because you're not in the room—. Is there anything, any last comments, you want to make on what's the top priority for what we need to get, what we need to change?

I absolutely agree with what Harry has said about tying the fair work agenda into the foundational economy agenda. And then, also, I think there's something about—. One of the themes that's come out of the evidence today is about the coalitions of the willing and I think, therefore, you can begin to work on good work charters et cetera that look at some of these other dimensions you've talked about. Then we're at least on a journey, even if we're not arriving at the destination.

Thank you very much.

Thank you, Jenny. And I'm afraid that time has beaten us. It's been a very interesting session. Thank you very much for giving up your time this morning. Your evidence, obviously, will be very important to us for our inquiry. 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 for your time this morning. We'll now take a short break to prepare for the next session.

May I welcome you back to this meeting of the Economy, Trade and Rural Affairs Committee? We'll move on now to item 4 on our agenda. This is the second evidence session for our inquiry into the foundational economy. May I welcome the witnesses to this evidence session? Before we move to Members' questions, may I ask the witnesses to introduce themselves for the record? And perhaps I can start with Ceri Cunnington.

Bore da. Ydych chi'n fy nghlywed i?

Yes, I can hear you clearly.

Good morning from sunny Blaenau Ffestiniog. I'm Ceri Cunnington from Cwmni Bro Ffestiniog.

Thank you very much. Matthew Brown.

Morning, all. I'm councillor Matthew Brown. I'm leader of Preston City Council. I'm also a senior fellow of the Democracy Collaborative.

Thank you for those introductions, and perhaps I can just kick off the session with a few questions. First of all, can you outline the approach to economic and community development taken in your area over recent years, and how did you develop this approach?

Perhaps I can start with Ceri Cunnington.

Yes.

For some reason I'm going to—

I'm going to do this in English, for some reason, but very quickly.

I think we've moved away in our area from strategising and directing to enabling and empowering. It may be something Welsh Government should be looking at. I'll just give you an example of the work we've been doing over the last—maybe it's a decade now. So, Antur Stiniog, one of our social enterprises in the area, received £1.2 million of European regional development fund and Welsh Government funding in 2012 to develop a sustainable tourism stream, because we saw tourism as a massive economic driver in the area. But tourism was happening around us, and income from tourism was being extracted from the area. Anyway, by 2025, we are now part of a community network of social enterprises and businesses. We employ over 100 full-time jobs, 70 part-time jobs, 180 volunteers. It has a turnover of £4 million and £6 million-worth of community assets. So, it's community-led economic and social development hand in hand. Two hotels, a bunkhouse, a pub, community cinema, youth centres, food and fuel poverty projects, a hardware store, business and retail units—we rent properties to three families locally above the business units—social and care work.

So, you compare this £1.2 million of investment in sustainable tourism over a decade ago with the £7 million invested in Surf Snowdonia maybe 2 miles down the road, and in one surfing lagoon that doesn't make any economic or environmental sense, but was a quick win as regards jobs, jobs, jobs, shiny and seemed risk free. So, I'd say that private capital and expensive long-term vision investment in community and foundational economy, small and medium-sized enterprises—we need to look at that model and be more brave.

So, to go back to the strategising, we have all the worthwhile, commendable strategies in Wales—probably the best strategies in the world—but we need to open the door, be brave. Give us the tools as communities, and we will implement these strategies. We've proven we can implement these strategies. So, we've been working for the future of our generations and communities before the Act was even put to paper. We have examples throughout Wales of economic and community development. I think Welsh Government needs to open the door and be a bit more brave when implementing economic strategies. So, that's my rant. Diolch yn fawr iawn.

Thank you, Ceri. Diolch. Matthew Brown.

Hello, good morning. I'm finally on camera now. We've adopted a quite alternative approach, really, in Preston, just due to the failure of previous conventional economic development approaches. So, obviously, as an authority, we do welcome and want to attract inward investment, but having an economic policy that is predicated solely or primarily on that hasn't really worked for us.

What we've done as part of our community wealth-building strategy is a number of things. Firstly, we really encourage real living wage accreditation with our public sector institutions, which has been very successful so far. We've worked with our public sector institutions to procure a lot more goods and services directly from the Preston and wider regional economy. So, in terms of things like construction, very positive—tens of millions, if not hundreds of millions with locally based construction companies, rather than, say, corporations. We work with our public pension fund to encourage that to invest directly in the county and in Preston itself, and we've had some success with that.

And then we're also looking at the ownership of the economy, because, obviously, we're quite a diverse working-class community in Preston, so the inequalities from the current economic model have really not been supporting those communities and just the wider community in Preston. So, for example, the city centre now is being regenerated, primarily in local public ownership, so that's things like providing land for youth zones, building cinemas, building small business hubs, upgrading museums. But we're very keen on what could be described as more democratic economic models. So, we've established around eight new worker-owned businesses. We encourage transitions to employee ownership. We're working to establish a regional co-operative bank. The council itself will be providing broadband for residents, free broadband, in certain areas, and through Preston digital co-operative we support community land trusts where we support co-operative housing. The council itself will be providing council houses for the first time in quite a number of decades in the next few years.

It's also trying to get some cultural shift in how our institutions and businesses work and think. So, for example, our NHS has been a brilliant anchor partner. During the pandemic, they bought masks from a Preston-based company, which created 90 jobs. They've used former land to allow new affordable housing with housing associations, they've acquired a private care home and put it into public ownership. And they're doing lots of this, really, especially trying to recruit people in the most deprived communities and getting them into NHS jobs, rather than casual gig economy jobs.

So, the Preston model, obviously, we've been at this for 10 years—it does take time to implement it and to actually bring it to scale; this is not quick work. But, crucially, the community wealth-building movement, which the foundational economy is very similar to, is actually an international movement now, so it's really exciting. We're seeing American cities in Pennsylvania and in Chicago talking about community wealth building in Europe, and all the rest of it, really. So, I think that was quite a long explanation. Thank you.

And you just mentioned other examples around the world—did you take, obviously, what you saw internationally, then, and try to replicate that in your own area? Did you learn any other useful approaches from other examples around the world?

We did. The inspiration was the Evergreen Cooperatives in Cleveland, Ohio, so the American rust belt. What happened there, it started about 20 years ago, is that the not-for-profit hospitals and universities chose to buy goods and services, mainly environmental goods, from new worker-owned businesses that were actually incubated in the most deprived communities. And it was pretty heartbreaking hearing the situation of poverty, especially amongst the African-American communities there, whose average life expectancy was 64, whereas in the more wealthy areas, you had people who were very wealthy, a few miles down the road in Cleveland, Ohio, that could expect to get to 88. So, there was like a 24-year gap in that community, just because of the economic inequality. So, that inspired us. But, obviously, the legislative and philanthropic support in this country is very different to America, so we had to do it very differently in Preston and beyond Preston. So, that's what really inspired us.

But there are other examples, such as the work in Manchester with public procurement and the Centre for Local Economic Strategies, where they, I think, increased spend over a number of years from the city council, which is quite a large authority, from about 51 per cent to about 74 per cent, and that, I think, created 5,000 jobs just by rippling that into local supply chains. Because if we support small businesses, self-employed businesses, co-operatives, there are actually more jobs because of the ripple effect and the multiplier effect, and there's less wealth extraction. So, you actually get more jobs in communities, rather than fewer.

And, Ceri, from your perspective, did you take any inspiration from examples either in this country or, indeed, abroad?

Yes, we learnt from community in Wales, I think—we're a community of communities. So, yes, we learnt from partners in Partneriaeth Ogwen in Bethesda, people who worked down in the Rhondda, in post-industrial towns, so, you know, we've realised that the old economic models have failed us, so we have to do stuff for ourselves. So, we've looked at the challenges, but more the opportunities that we have in the area, tourism being a perfect example, and using that money, then, created by tourism to reinvest back in the community. So, at the moment, we're looking at the high street, the high street of Blaenau Ffestiniog, which was built during the slate rush. It's a long high street, but, you know, we're never going to have those kinds of businesses across the high street now. So, we're going to redefine the high street and have a mixture of services, places where people can congregate and cultural places, but also accommodation above business units that we've purchased on the high street with tourism money. So, yes, it's about circulating the money, similar to—. It's different to Preston, we're a small town of 5,000 people. But, yes, it's a mixture of working across—not scaling up, necessarily, but working across the community. So, yes, we do learn from community to community, but there aren't—. Obviously, the Basque Country, Mondragon—you know, the social enterprise sector there is massive. So, yes.

Before I bring Luke Fletcher in, Mick Antoniw would like to come in. Mick.

Just a very simple question. It seems to me that what's been said is that local government and community local government are almost the most appropriate frameworks within which some of these developments can take place. Is that right? Is that your experience?

Matthew, you're looking—[Inaudible.]

Yes, I think community wealth building is generally anchored in place, so it often begins within communities, but it could be done on a national level, with a national government promoting community wealth building, or it could even be done at devolved assembly level like this, really. It could even be done from the community, or in the charitable sector or trade unions or small businesses. I think that it's really helpful having a political leader, locally or regionally, that's supporting this, but community wealth building can come from anywhere. But I think you need to have people who are very determined and who actually believe in it, because I think the challenge that we face, and have faced always, both in politics and in local government and beyond, is just a resistance to new ideas. I think that holds people back. People just do not like new ideas. If you say to people who've been doing it a certain way for decades, you might have resistance to get to it. It's kind of a bit scary, really. But the reason why we are doing it this way is just to really try to tackle those inequalities and create something new and different where our communities can benefit.

Ceri.

I just agree 100 per cent, I think. Local government and Welsh Government need to be brave. There are models out there that work, and if you do compare bang for buck, we've seen it locally here how much public investment has gone into certain projects, compared to what we've received. And if you did measure the wealth—community wealth or economic benefits—that circulates locally, it's a no-brainer, to be completely honest with you. Just, someone needs to take that kind of—it's not even a risk.

Okay, thanks. I'll now bring in Luke Fletcher. Luke.

Diolch, Gadeirydd. We've heard about some of the stuff that has worked really well in Preston. So, if I could come to Councillor Brown first. I've looked at Preston over the years and some of the policies that have been going on there. It's been quite impressive. I would be really interested, actually—. We know what the positives are. Well, are there any initiatives that you might have implemented that might not have worked as you might have wanted them to? And, if there were, what were the reasons for that? It would be really interesting to know what worked, of course, but also what didn't work as well.

Yes, there are some things that we have done that haven't landed as well as we would like—for example, work to establish a regional co-operative bank. This is taking a lot longer than we thought it would do, just in terms of encouraging partners to prioritise.

In terms of things like co-operative development, that is beginning now, actually, to get to scale, but it took years to convince people that a co-operative option was something that could be looked at. This is what I believe in, personally and politically, because there are tonnes of evidence from European cities in, say, Spain and Italy, where they do have a more dense, co-operative economy, how it is really good for the community and residents more generally. So, that is really tricky.

Then, there's procurement as well. There's some stuff that you just can't buy locally or regionally, even. You've got to be realistic about it and use influenceable spend but also make sure that you get value for money and all the rest of it. You can actually find a way of doing this in a way that's positive.

What we wanted to do originally was to get our big anchor institutions to do what they did in Cleveland, Ohio, so encourage them to incubate new co-operative businesses and place them in the most deprived communities, and then get the hospital, the university, the council and the rest of it to actually purchase goods and services from them. It is very different in the UK because the procurement regulations are more strict to do that. Additionally, there's not the same philanthropic money as well, you see.

What we're finding in Preston now is there is a cultural shift across the institutions, local businesses, the council itself, doing this, but also, very excitingly, a lot of the community getting really excited about it. So, our faith community, for example. Christians—the church within my ward is establishing a community land trust. We've had people in the south Asian community who've established worker co-op businesses as well. The NHS, obviously, is changing the way it behaves to support community wealth building.

So, we're actually reaching a bit of a tipping point where this is really beginning to deepen. I think that, also, for change to happen in a positive way, it can't just be top-down. It can't be even a relatively small council leader like me setting the agenda, which I do. You've really got to get into those communities and actually explain about community wealth building and how it's actually good for those communities, and bring them with you.

We were supposed to have a delegation from Middleton here yesterday—Middleton Co-operating. So, we're working closely with them, and we've touched base with them. But, yes, it's exactly that. I've seen so many consultations on what can be achieved at community level in delivering the Government's priorities, but surely it should be what can be achieved at Government level in delivering the community's priorities. So, it should be turned on its head, or, even if we worked closer together, open that door. There seems to be a resistance sometimes at a swyddog, at an officer level—we see resistance to change. Yes, anyway.

I suppose, with resistance to change, a large element of focusing in on what Preston has done and on the co-operative sector is actually measuring economic success in a completely different way, isn't it? Is it fair to say that that’s where much of the resistance comes from for that change, then, because you’re not doing the sort of traditional things that people have been conditioned to think are the right way forward, and that actually you’re trying to rail against that, you know?

I think that third sector, community sector thing is a bit of a misnomer. We’re quite a big economic driver in our town. Like I say, we’re employing about 100 people. All of them live within the postcode; it’s fully internal there with social enterprises in a town of 5,000 people. So, it’s not small change. That is on top of the social stuff we provide. I don't think it's—. It’s not that complicated. It’s quite simple, really, but it’s not traditional, I suppose. And we work closely with the small SMEs in the town as well. They act as social businesses. They employ locally, they raise families locally, they invest locally. So, yes, something needs to change.

Did you want to come in on that at all, Matthew?

In terms of resistance, was it, you were saying, in terms of—

Yes, the resistance and the need to measure economic success in a completely different way.

No, I agree. I think culturally the kind of economics we’ve had for many a decade is just so engrained everywhere. You could argue it’s been engrained in politics, it’s been engrained within economic development, and trying to say, ‘Well, we can do things differently here’, is difficult for some people because they've worked that way for so long. But also communities—. I mean, the actual levels of inequality in this country—. Compared to the former European Union, we are the most unequal. Back in the 1970s, we were probably the most equal, and now we’re one of the most unequal. So, people are just used to being disempowered and having very little agency in the workplace and beyond. So, trying to say to people, ‘Well, you can be empowered, you can take ownership of your economic lives’, is something they’re not used to hearing.

This is why we’ve done things like established a co-operative education centre, that’s why we’ve got a co-operative development agency, and this is why we’re working across all communities, because where we’re rich in Preston and have been for some time is just in the amount of community faith, charitable organisations and people involved in things in those communities, and using that as a springboard to actually deepen community wealth building.

We’ve got a new worker co-operative that’s come from a community centre that is doing retrofit in one of our social housing estates, and it basically will get kids to rap and perform and all the rest of it and record things and paint, but they’re really behind the Preston model. They’ve actually established a retrofit co-operative called Brookfield Retrofit+, I think, and they’re going to employ people as a worker-owned business. Now, if we can get our housing associations and other parts of the public sector to purchase from that to do retrofit, the few people in it could potentially be dozens if not hundreds. That is where you get a new system locally that is pretty different to the one that we’ve had so far, but very mainstream in some of those European cities, whether it’s in Emilia-Romagna or the Basque Country in Spain. The way we do economics in this country, they think is very strange and abnormal. We think doing things that way is abnormal. But the way they do it—. The way we do it here they think’s abnormal. If you actually look at some of the public health outcomes from economies like that, they’re healthier, they’re happier, people have longer lives, and people share the wealth they produce a lot better. So, it can be done differently, but obviously it’s whether with new ideas, especially if they’re a little more transformative—. You’re always going to get naysayers, but obviously I’m in this for the long haul, I’m still here and I’m continuing doing it, really.

Thank you. I'm conscious of time, Chair. I did want to ask around how Welsh Government has been implementing foundational economics, but, due to time, I think if we write perhaps to the witnesses that would be the best way forward. Great, diolch yn fawr.

I'll now bring in Samuel Kurtz. Sam.

Diolch, Cadeirydd. Thank you both for joining us this morning as well. Matthew, if I could start with you, I just want to delve in to see if you could categorise the relationship between your organisation and the levels of government that you need to work with in delivering your aims. I'm just wondering how this relationship impacts on your ability to deliver, any lessons to learn. We heard about the skunkworks kind of thing in an earlier session with Professor Williams this morning. I'm just wondering if that is an example of what's being delivered within your organisation.

Of course. When we first started this, there was very little—. We're talking 2011 that we took charge of the authority. So, there were huge cuts on Preston City Council, quite a small council, but also a council that needed more money, just because of the challenges we faced. So, we basically used what we had already by looking at working with public sector partners around local procurement, creating jobs that way. However, in the last few years, we've been quite successful in attracting funding for things like towns funds and levelling up, and, when we've done that—it's mainly capital money—we've then used it to support community wealth building, i.e. to support some of our municipally owned projects, which will build that resilience for the city. Then we got shared prosperity funding as well, which has helped do things like expand the social economy and deliver skills training and support recruitment and support the establishment of the digital co-operative that we're going to do.

So, the relationship with Government is actually pretty good. Obviously, they're not—. The previous Government, they don't want to agree philosophically with what we're doing, but they can see we're actually delivering, and they can see the strategic importance of Preston, especially as the administrative headquarters of Lancashire up here in the north-west of England. So, it's been quite a sensible relationship we've had, but it's not really compromised the values that we've had. We've had to, obviously, work with the former Government, which, obviously, is not of our persuasion, but we did that as well as we could do, and, obviously, with a new Government, I think there's a lot more opportunities for community wealth building, with things like Great British Energy, doubling the size of the co-op economy and public ownership of buses and the rest of it. I think it's quite exciting, where we can take this, with the new Government.

Fab. Just a bit more of a topical issue, I think, around Preston. Obviously, you hosted Radio 2 in the Park, and I listened to lots of that, and that seemed a success. Is it because of the work that you were doing as a Preston council that you were able to attract an event, a live event, such as that, or did the live event, can that work as a catalyst in spearheading some of the changes?

It was amazing having the Manic Street Preachers at one of our parks. It was a bit surreal actually; you're walking your dog one weekend, and Sting's performing in the park the next weekend—that was amazing. [Laughter.] I think, more generally, just with the profile of Preston and what we're doing in terms of the ideas, which have actually put us on the map a lot, it makes it more easy to attract events like that. I'm not saying there's a strong direct relationship, but we've got some brilliant officers, and, obviously, arts and culture is a big part of what we're trying to do in terms of having a more creative local economy. Because the local economy, when I was a lad, say, in the 1970s and 1980s, was—. You know, you'd just go shopping—generally based around retail—with your mum. That's changed. It's a lot more online, it's a lot more about an experience. So, trying to attract events like that was a big thing. So, I think it's probably not directly related, but I think that putting Preston on the map with these ideas has really helped more generally.

But what we did do as part of Radio 2 in the Park was we did ensure that as many local companies and people could be involved in it as possible. We had Jo Whiley in The Ferret, which is a venue that's now in community ownership, which we supported as part of the Preston model. So, she was there. Jeremy Vine was in one of our pubs. And I think that just trying to create a message about what we're doing and we're trying to do and why we're trying to do it then has a positive effect in many other ways, really, including attracting events like that, really.

Okay. Thank you. That's a really helpful analysis on that. I appreciate that.

Coming to you, Ceri, just on that as well, Cwmni Bro Ffestiniog's relationship with Government. Obviously, Matthew, with Preston based in England, one tier of government there. But just your experience here in Wales.

Yes. More recently, also, we had levelling-up funding, and shared prosperity, to the tune of £1.2 million, I think, to buy some properties on the high street to redevelop them—so, it was taking the devil's money to do God's work. So, there's been a—. Yes, similar; maybe we don't agree with the ideology, but we have had shared prosperity funding. In the past, like I said, in 2012, we had European funding, £1.2 million, to build a mountain bike centre, which is a social enterprise, which has created enough revenue to develop projects now. So, yes, there's quite a good relationship with local authority and Government, but we tend to get away with lots of stuff. We don't actually say what we're actually doing. So, we write it up as something completely different. So, we're far enough away from Cardiff to get away with stuff, and I mean that in a good way—we're not stealing money or anything, but we are doing quite innovative stuff with the funding we're given.

So, that innovative stuff you're doing with the funding, is that what Professor Williams earlier would say—sort of the skunkworks model—is where, actually, it's too prescriptive when organisations like yours are looking for funding from Government, be that Welsh Government, UK Government, so actually you're—[Interruption.] Sorry, go ahead, Ceri.

No, no. Exactly. And targets, and, you know, three-year funding cycles, and then we're told then we can't have a second round of funding because it's not innovative enough, but it's actually working, and, like Matthew was saying, it will take a generation for this work to bear fruit. It won't happen in my lifetime. We're planting seeds, we're dad-wneud, we're unlocking—. You know, this has been generations. I was born and raised in this town, and even now young people are encouraged to leave here because it's deprived, because it's disadvantaged. We need to change that narrative, and, on a community level, I think we're doing that. We do have our music events. We've just bought an empty building to give to the youth of the area to develop themselves, because there's no space for them in this community anymore. They're bussed out daily to local tertiary colleges. Well, not local—an hour away to tertiary colleges. Anyway, I'm going off on a bit of a tangent, but, yes, I think our relationship has been quite good with Welsh Government and local authorities as regards funding, but we've had to be creative in the way we're saying we're delivering projects.

Okay, that's really helpful. And just then sticking with Cwmni Bro Ffestiniog—and you've mentioned this in a previous answer, how we need to flip the narrative around this, and you mentioned in your vision statement the bottom-up entrepreneurial approach and the top-down bureaucratic approach of public sector organisations—I'm just wondering what you think Government bodies need to modify their approach. Is that an individual mindset, or is that just the structures that those mindsets are working within?

I think there are amazing people within local authorities and Government, it's just the structures. They're outdated, I think. You know, communities are a mess. They work across all these sectors that are sort of siloed in Welsh Government, and I think there is a move to this—. It's like moving a big tanker, isn't it? The local authority here are starting to see the benefits of working closer with communities. I think that's because, since COVID—. I know everyone goes on about COVID, but communities were the best placed to support communities during COVID, and local authorities and Government facilitated this, and I thought there was change. I thought, actually, you know, Governments shouldn't be trying to rule—or they should be facilitators of communities taking ownership of their future, in a way. Yes, sorry. So, I don't know, to be honest. I think there is a change. I think things are moving in the right direction, but I do appreciate how difficult it is to—. Yes, these structures.

Okay, thank you. Thank you, Matthew. Diolch i ti, Ceri. Diolch, Gadeirydd.

Diolch, Sam. I'll now bring in Mick Antoniw. Mick.

Thank you. Just really a couple of questions. Matthew, it's very clear that the co-operative model is fundamentally important to the longer term development, and also the thing about empowerment. But I suppose my question really probably is more fairly directed towards the UK. But, within my own now, we have the co-operative centre, which is funded by Welsh Government, which has been doing an enormous amount of work. We have now the trade union learning fund, which Welsh Government funds. We have also the development now of the community bank, which is well under way. We also have bodies like the Coalfields Regeneration Trust, which is about—[Inaudible.] I suppose the question is: to what extent are those sufficiently joined up and sufficiently focused collectively, I suppose, in the development of the foundational economy? Because they all seem to be doing good things. But from your experience, Ceri—and sorry, Matthew, it's probably because it's a very Welsh-focused question, I think, but maybe arises from what you've been saying about co-operatives around this and so on, your experience in Preston—Ceri, what is your experience of those, in terms of all those things, which are good things, but to the extent to which they are sufficiently joined up to deliver and support and facilitate the sorts of projects you're talking about?

Yes, I think we've got a really good relationship with the Wales Co-operative Centre, now Cwmpas. I’ve worked with them over the years. I think, again, there has been recently—. They've been given funding to do stuff within communities that communities can do for themselves. So, there needs to be a really honest conversation about what Cwmpas are funded for. And I think it again comes back to this facilitation, of supporting with the legalities of establishing a social enterprise, for example—not coming in and saying, 'You need to establish a social enterprise'; communities can decide that for themselves. But on the joined-up stuff, from the work we've done here in Blaenau Ffestiniog, we've now done it on a county level. We've got 50 social enterprises now, networking across a county level. This is only a year old, and it's called Cymunedoli—it's the communitisation, for want of a better word, of assets.

I've found it difficult working with the Wales Co-operative Centre recently because they see us as a threat. Because we're supporting each other, we don't need so much support from them. There needs to be a conversation. So, I don't think there's much joined-up thinking going on, if I'm completely honest, but, individually, I've worked closely with them over the years, yes. But, again, the nature has changed. I think there's a story of relative success here now, and then Cwmpas maybe haven't changed the way they're working to reflect this success, in a way. They need to grow with us. Does that make sense? I think there's an old style of thinking still within the Wales Co-operative Centre. But they would probably debate that with me, and I'd like to have a conversation with them about the future role of Cwmpas in working with communities. Sorry, that was a bit of a ramble.

Thank you, Mick. I'll now bring in Jenny Rathbone.

Just picking up from what Ceri was saying, how much of your success is to do with your relative geographical isolation? I've visited you in the past, to look at the way the European funding was benefiting your community. But clearly, you're a community of 5,000 people, and other centres of population are some distance away—you can get to Betws-y-coed quite easily, but your geography is all about being in the middle of some mountains.

Which has kept us really safe, I think. There's a Welsh saying, 'breichled o dref ar asgwrn y graig'—a bracelet of a town surrounded by the mountains. Yes, we're isolated, but during the industrial revolution we roofed the world—our slates roofed the world, didn't they? Blaenau Ffestiniog was one of the heartlands for that. There's a nature of exctraction from the area, so we want to turn that on its head. We should be one of the wealthiest towns in all of Wales, if not Europe, because we were creating wealth. Now, we're creating wealth through tourism—a massive amount. We've got the zip lines around us. But where does that wealth actually go? Who's following the money? I don't know how that answers your question, Jenny. But we do network. We're not isolated, we're outward looking—we've always been an outward-looking town. It's act local, think global, in a way. So, I don't think of us as insular or isolated.

No, I wasn't suggesting that at all—absolutely not. I want to look at procurement, and we've not got very much time left. So, how do you procure public goods? How successful are you in procuring public goods locally—Matthew, perhaps I can come to you first—things like food, and, obviously, all the other things to do with the livability issues that Karel Williams was talking about?

I think a lot of it is trying to have a cultural shift, and I think a lot of it is collaboration. We've, for some years, had a procurement practitioners group that brings together not just the council, because we're not the largest anchor, but the hospital, university, colleges, housing associations, and the rest of it, and sharing best practice and looking at how we can increase spend to the local economy, and also get positive things like apprentices, trade union recognition, access, real living wage, and other very positive things. A lot of it is just, for example, if there are large contracts, can you break them down into small ones, because what we found is that local companies had the capacity to deliver those. It's having 'meet the buyer' days. Things like the documentation sometimes make it really difficult for smaller businesses to bid. We've been pretty successful in certain sectors. One example is that the police horses are now eating hay in a field that's adjacent to where they are—you know, little things like that.

But also, in terms of construction, what you see in Preston is we're using a not-for-profit developer, charitable developer, which is about two or three miles out, delivering most of our work that will be in public ownership, like the cinema, museum and the rest of it. It's family-based construction companies, one of which has become employee owned—one of the principal contractors for our museum. They tend to have a relationship with much smaller subcontractors through their supply chains. Just a £17 million upgrade of our museum has seen about 300 people have work. Some of it's part time and casual, yes, but there are 300 people on site, upgrading our Harris museum and art gallery. And we feel, because we are using smaller companies and employee-owned businesses and other more democratic forms of businesses, that that is creating more jobs, rather than, say, a large construction corporation, which often wants to bring its own vehicles in and often doesn't want to use local supply chains. So, doing it that way is very participatory and it's very supportive, but you need a cultural change. You've got to be quite forensic about where you're spending, why you're spending, and how you can actually get social and economic benefits as well as spending locally. And a lot of stuff cannot be bought locally—that's the reality, so you've got to be realistic about that.

You said that the procurement regulations are a lot stricter in this country than in Ohio. How do you ensure that local companies get a fair crack of the whip? We heard earlier that postcode localisation doesn't work. How much is it the values that's driving local people to think, 'I can do that and I'm going to bid for this'?

I think it's trying to work with small business groups and business groups generally, like the chamber of commerce, the Federation of Small Businesses. Obviously, we've got a co-operative network, we work with them as well, making them aware of opportunities. They're not as well established, but we do make them aware of them, so they can potentially bid for these opportunities. I think it's just creating a culture where we have conversations, we encourage them, we have conversations about how they might want to bid and what the process might be. But, obviously, when it comes to the bid, we've got to look at the rules, and they need to apply as much to the small businesses as the larger ones. But you can create a market just by doing a bit of hard work and actually engaging with the businesses and the anchor institutions, to make sure that you do increase that spend. We still have, as a council with our anchor partners, a desire to spend as much locally as we can, if it's going to be beneficial to our local economy.

Professor Williams has talked about encouraging the Welsh Government to focus on strategic sectors like, for example, domiciliary care and growing your own workforce. How much has that been a feature of the activity in both Preston and Blaenau Ffestiniog? Matthew, do you want to go first?

We're a district authority, so there are some things we control, other things we don't control, but obviously we work with our anchor partners to look across all sectors. What we have found is that certain sectors have been easier to do with this: so, construction I mentioned before, food, printing, legal services, architects, digital—that seems to be the sectors. In terms of things like social care, yes, we are working and looking at how we can look at co-operative models with the county council, and trying to get, with the unions' support, potentially co-operative models in the bidding process. There are also conversations around care and other services about whether they should be more directly provided by local government. For example, we do insource as well. We've got a new homeless facility, which the council is now providing. So, I think the sectors end up speaking for themselves, the ones that are going to be successful and the ones that are strategically important, like digital, just the longer you go at this, really.

Would you say that the other public bodies that you are working with have been successful in growing their own workforce locally rather than bringing them in from outside?

I would say 'yes', because I mentioned before, in the first question, about how we do encourage the anchor institutions to recruit people in especially the most deprived communities, and grow the workforce locally, but additionally, recruit people from minority backgrounds, disabled individuals. We've been trying to make sure we have a diverse workforce, but it's also progression. Part of that is looking at skills, so the council, through shared prosperity, are putting £1 million plus into skills so that we can actually upskill people to get them into jobs like that when the anchor institutions then try to target that recruitment in areas that need it. Because if we can get someone in an area that has a really high IMD—index of multiple deprivation—away from a gig economy job or an exploitative job, say, working as a care assistant in the NHS, they're just treated much better, especially in terms of their mental health, by being in a public sector organisation that does treat them well.

Thank you. And Ceri, lastly: locally, do the people who deliver your health and social care, on the whole, live locally?

Yes, they do. We don't pay probably the best wages, but I think the retention is quite high—well, very high—because they also live in and contribute to their community as well, they see more worth in the liveability stuff as well. For the future, we work closely with the secondary school here with the new curriculum to make young people aware of the opportunities within their communities. We try to facilitate, if young people have ideas about the future, that they don't have to go and work in Tesco or whatever, there are opportunities within this community. If they have ambition and great ideas, they can stay here and achieve as well, and contribute. So, yes, ours is a bit different, but it's all about that—that a job is more than a job, isn't it? It's a career, it's a future, and it's the whole liveability of living in an area and what you contribute to that area. So, we don't have concrete schemes or anything like that, we just go on community.

Thank you, Jenny. I'm afraid time has beaten us, so our session has come to an end. Thank you, both, for being with us this morning. Your evidence will be very important to us in our inquiry. 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 for being with us today.

We'll move on now to item 5, and I propose in accordance with Standing Order 17.42 that the committee resolves to exclude the public from the remainder of today's meeting. Are all Members content? I see that all Members are indeed content, so the motion is agreed, and we'll move into private session.