Economy, Trade, and Rural Affairs Committee

We'll move on, therefore, to item 3 on our agenda. This is the third evidence session for our inquiry into the foundational economy, and, in this session, we will be focusing on the food sector. Can I therefore welcome the witnesses to this meeting? Before we move to questions, can I ask them to introduce themselves for the record, please? If I could please start with Robbie Davison.

Morning. I'm Robbie Davison. I am the director of Well-Fed, which is a social business up in Shotton, established about five years ago, with 25 employees. It concerns itself with making sure everybody's got access to good food.

Thank you very much. Edward Morgan.

Good morning. I'm Ed Morgan from Castell Howell foods. Thank you.

Thank you. Kevin Morgan.

Kevin Morgan, from Cardiff University.

And Katie Palmer.

Hi.

Would you like to—?

I'm Katie. Sorry, I was looking to unmute myself, but somebody's done it for me. I'm Katie. I head up a small charity that's hosted within Cardiff & Vale Health Charity, called Food Sense Wales, and we're aiming to influence how food is produced and consumed in Wales.

There we are. Well, thank you very much indeed for those introductions. Perhaps I can just kick off this session with a few questions. Can you briefly outline the role you and your organisation actually play in the foundational economy, and comment on the relationship you have with the Welsh Government and other public bodies in this? Who'd like to go first on this? Edward Morgan.

Go on, then, I'll start. I'll revert to English. In Castell Howell, we're intermediaries in the food supply chain; we're wholesalers, and we're also manufacturers. And we supply pretty much exclusively food service and hospitality, so we don't really deal with any major retailers at all. We've been established since 1988—a depot down in Cross Hands, with other sub-depots across Wales, and one in Bristol. So, we supply—. The public sector is worth about 25 per cent of our total business, so it's quite a significant customer of ours. So, we're pretty much aligned with the foundational economy and the economic contract, and so on and so forth. I guess, in this context, we supply the ingredients—not all the ingredients—for around 700,000 school meals a week, so we're in quite a position, I'd suggest, of responsibility, whereby we look upstream towards our suppliers, and then downstream towards our customers. And I suppose not only are we moving boxes of food around the country, but we'd like to think we can add a little bit more value when it comes to social value, and also transfer of information up and down that supply chain. So, I guess the foundational economy, the food element, is central to our business.

Okay.

That's a bit of an overview there for you.

Yes, thank you very much. Robbie Davison, you wanted to come in as well. Thanks.

Yes. We cater with—. Let me just strip it out into a number of strands. We cater with ultra-processed-free food. So, we're the only caterer in Europe that's actually creating in that space. We point towards the public sector with catering contracts, and we also point towards the social sector to prevent hunger. We use our net profit to make sure that anybody who is hungry can afford to eat well. So, here we're using the ability to be commercial, and over here we're using our net profit to make sure that everybody can eat well, regardless of their income levels.

Okay. Kevin Morgan.

I've been a member of Foundational Alliance Wales since the inception, and you'll remember, Chair, that we've already submitted written evidence to you; my colleague Karel Williams did that. So, I won't go over that, unless you want to dig deeper into something. In terms of my own personal involvement, I suppose I've been involved in this for a very long time, in terms of wearing a research hat, looking at public procurement of food as my little niche, if you will—public food systems. More recently I was commissioned by Welsh Government to do a report on where we are in Wales with respect to public food procurement, and that was called ‘Values for Money’. That report is available, so I won't go into that. Yes, I've been looking at these issues for a rather long time.

Okay, thank you. Katie Palmer.

Thank you. So, we're working with a number of stakeholders in the food system to advocate for a more joined-up approach to the food system in Wales, but explicitly we're working, I guess, in two areas that really reflect on what we're talking about today. One is building the foundations for transitioning to more resilient and local food systems through working with a network of food partnerships that we've been developing over the last 10 years, I suppose, with Food Cardiff being one of the first places. And that network has expanded to 10 places, which are part of the nationally recognised sustainable food places network, and we're working with Welsh Government to expand that across all 22 local authorities in Wales. And we're also working with the foundational economy team, specifically around the Welsh Veg in Schools pilot, where we're looking at getting more organically grown Welsh veg into schools. But we work with a number of departments within Welsh Government in relation to food through education, the foundational economy team, the health team, food division, and tackling poverty.

And how well understood is the concept of the foundational economy across the Welsh public sector and its key stakeholders, do you think? And what impact does this have on the ability to deliver on this agenda? And how could this understanding be improved, in your view?

I think—

If I'm really honest, I'm not sure that that's the—. I wonder if that's the right question when speaking about food. And I would ask a slightly different question, which would be: how does the concept of the foundational economy fit with wider Welsh Government food policy aims? We haven't got a national vision for what we want our food system to be doing for us in Wales at the moment, and that's become very evident with the work that the well-being of future generations office has been doing, looking at well-being plans from public bodies, public services boards. It has also been recognised that there isn't any indicator that really represents food in the Well-being of Future Generations (Wales) Act 2015. And I would suggest in many cases that the foundational economy remit can be at odds, or at least not particularly integrated, with wider policies on the food system in Wales. But maybe that brings us on to the next question.

Okay. Kevin Morgan.

I was answering your question about the extent to which it's understood across Welsh Government, the foundational economy concept, rather than food. I would say it's poor, it's patchy, and, as a result of that, there's no cross-Government or whole-of-Government strategy, either for foundational economy or indeed for a food strategy. And that's part of the problem, and I think Katie was alluding to that. And that's one of the key needs that we need in Wales, is a clearer direction of travel from Welsh Government along the lines, by the way, I think, of the Scottish Government's Good Food Nation (Scotland) Act 2022.

Obviously, Peter Fox wanted to introduce a food Bill, and the Government, obviously, at that time said that they would actually try to improve working across the Government. Do you think that has improved since, obviously, the Bill fell?

I'm one of those people who think that was a mistaken move on the part of Welsh Government, that we missed an open goal at that point. When you think how that has galvanised the food movement in Scotland—it addressed some of the points that Katie was making in terms of setting a clear direction of travel, clear independent scrutiny, a clear set of metrics for achieving inputs and outputs, as it were. How do we measure value added and progress? We missed an opportunity, in my view, to do all those things when Welsh Government decided not to go ahead with the Peter Fox Bill.

Okay, thanks. Edward Morgan.

Yes, we see a change in public procurement and the processes. There are a couple of examples I can give. It's been controlled by Caerphilly council—the food framework for procurement into some 16 local authorities from Powys down. The tender documents have shifted in the last 10 years from possibly a 30 per cent quality envelope on your ability to deliver and other benefits, 70 per cent price. It's reversed to 70 per cent quality and 30 per cent price. Some contracts are 60:40 and some are 50:50, but there's a general shift towards a focus on what social value the contract can bring. 33

With procurement teams, who are professionals—they deal with this—it's evolving on various spreadsheets and we need to demonstrate evidence of compliance with what we've submitted in the contracts. I'm certainly seeing it on a procurement team basis, and I guess that influences the rest of our business as well, because the 25 per cent can sometimes drive the 75 per cent. Whether it's widespread in catering teams across local authorities and whether it's NHS trusts and care homes, I don't think so—it hasn't filtered down yet. We're definitely seeing changes on that level, but the evidence coming down isn't that significant.

Okay, thanks. And Robbie Davison.

I think it's really patchy. If I call the foundational economy the social economy for a minute, I think anybody involved in the social/foundational economy is aware of it, and more readily is aware of it because of particular funding streams that have come out of the Welsh Government that they may be able to bid into. So, there's a promotion of it from a money point of view. Slightly different from Ed, really, I'm not seeing that, from a commissioning point of view, the message is getting through—definitely not in the region where we work. I could give examples from just last year where some of the procurement was 90:10 in favour of cost. Only 12 months ago, 90:10 in favour of cost is a quite shocking place to be, given the leads we've got with what's going on in communities.

Thanks. I'll now bring in Jenny Rathbone.

Thank you. I just want to have a look at the effectiveness of the Welsh Government's overall approach to the foundational economy, because we've been talking about this for nearly 10 years or maybe longer. Professor Karel Williams was quite critical of the Welsh Government's underestimation of the inertia and resistance to change within the Welsh Government machine, and also talked about the fact that the Welsh Government has command but not control over health, education and care. So, Professor Morgan, if I could just start with you because you've been working quite closely with the Welsh Government, what could be done to address this if we want to advance the foundational economy and its social objectives?

As I said earlier and as we've said at great length in our written evidence, the foundational economy is very patchy across the Welsh Government. It's basically been siloed in the foundational economy unit, who—don't get me wrong—have performed minor miracles. They've done a lot with a little, but they are both, as we said in our evidence, intellectually and politically marginalised within the Welsh Government, because it's business as usual for large swathes of the Welsh Government. The foundational economy needs more of what the Organisation for Economic Co-operation and Development calls a cross-Government approach.

Specifically with respect to food, because food is probably a unique sector because it's so multifunctional, I can't think—. And I remember saying this, by the way, many years ago to Jane Hutt and Jane Davidson when they asked, 'Where should food go, where should it be located, who should be responsible for it in the Welsh Government?' What the food movement around the world says is that food should go where the greatest commitment is, but every portfolio has a contribution to make to food—every single Cabinet Secretary has something to contribute. So, I would say, in terms of the foundational economy, it needs to break out of that little silo that it's in and it needs to have more buy-in across Government. And with respect of food, I can't think of a better example of where every department could be contributing to food if the Welsh Government had a food strategy.

Katie, you wanted to come in. We heard in our earlier evidence that we should be moving towards the Welsh Government having a facilitating role rather than an interventionist one through the grants that we've just heard about. What's your comment on that?

I can speak quite a lot to this. For me, first of all, we've got to be really clear about what the foundational economy is trying to achieve in this space. We've got 27 per cent of respondents to the latest Food Standards Agency 'Food and you' survey saying that they're food insecure. We're not treating food as an essential item in that respect. We've got diet-related disease of an epic scale now happening. We've got our food system associated with climate and nature loss. And we're very dependent on a very centralised food system. What the foundational economy, for me, should be doing is ensuring that everybody has access to healthy and affordable food that isn't going to damage the environment, and that we're properly prepared for any shocks that we may have in the future; we've already experienced COVID, we're experiencing climate change.

What Government needs to demonstrate is leadership in this space, in terms of exactly what Kevin's just said—what's the vision, what's the strategy, what should we be doing about the food system. The foundational economy is not sitting hand in glove with what the food division are doing, for example, in terms of the food and drink strategy. How do those two things fit together? How are we linking up education and the skills pipeline that we need coming in to the food sector and educating our children to be great food citizens, for example? How is that bit linking in? And, of course, you've got the whole prevention agenda to think about from the health perspective as well.

I think Government can enable by demonstrating leadership, but we've got to be thinking about social capital—things like developing networks of food partnerships. We've got to be thinking about the human capital, the training, the skills that are needed to develop these resilient local supply chains. And we do need the finance—we need the financial assets. We need infrastructure. I'm working with Ed at the moment on Welsh Veg in Schools, and the sorts of activities that we're having to undertake to enable a supply chain to go into the school is crazy, because there just isn't the infrastructure in place for horticulture, never mind the actual levels of horticulture that we're producing at the moment in Wales being so low. So, I agree that we do need Government to help, support and enable. We need a vision and leadership from Government, but we also need resources for infrastructure.

Edward Morgan, you talked about how procurement has changed, yet we still have absolutely no movement on the amount of horticulture we need to feed our children in our schools fresh food. It's all coming from somewhere else in the main. I understand that you're working with Food Sense Wales to make a contribution towards changing that, but it's a drop in the ocean compared with looking at the overall picture, isn't it?

I'll just put it in some kind of context. As a company, we import some 4,000 tonnes of frozen veg from the Netherlands every year. And we're not exclusive; we're quite big in Wales, but quite small in a UK context. So, if you extrapolate that to other players, it's a lot of produce coming from the Netherlands. I suppose supply chains have evolved to where we are, so we need to try and reverse that. But as Katie referred to, in the last 30 years, we've lost that infrastructure, and, if we're not careful, we're going to lose a lot of knowledge as well, as the older generation move on. So, I think that, when it comes to policy and the food Act, or whatever it might be, we're on an operational level, so our foundation of our company is dependent on a supply coming in. Because for school meals, for example, there is no option to short-deliver—there's a limited menu, we've got to have produce from somewhere to feed the children, and likewise the NHS and care homes as well. We've got to have something to get into the kitchens.

I suggest the best project I've been involved in—and I've been in the food industry all my life—is this Welsh Veg in Schools project, because it's taken us in so many different directions. And you're right, it's a titchy, tiny amount, it's really small, but by starting, and putting a little bit of stress onto that supply chain, through availability and trying to forecast and work with the school caterers, it's highlighting where we really need to invest. It's schools taking a whole-school approach to food, for example; children need to be aware of what they're eating. For example, this year in the project, we've had yellow carrots, we've had tomatoes that are purple in colour. We're great in Wales at growing chard and kale and products that are high fibre, high iron, yet the demand isn't there. The supply could be there.

Again, as part of the project, we're growing an acre of carrots in Ceredigion, and all of these are organically grown. The yield from that is going to be 10 tonnes, which is really small in the grand scheme of things, but it's only from 1 acre, so you think 10 acres would then, by necessity, be 100 tonnes. But on that acre, it's quite a manual job now in washing, preparing the carrots, they need to be graded, schools and other customers want things to be uniform, so they fit in machines. So I guess we've sleep-walked into a position where the norm now doesn't fit with what we can do in Wales at the moment. And again, the scary thing for us as a company is if there's any shock in that supply chain—. And we're relying on the imports—I mentioned 4,000 tonnes, give or take, from the Netherlands, but they come to the Netherlands via northern Italy, Spain, carrots are even going into the Netherlands from China, because there have been some problems there. We're quite fortunate, because, on a daily basis, we're living this; it's not a report. We're living it on a daily basis, and it's quite a scary place to be.

BLFF?

The Backing Local Firms fund.

That's come from the foundational economy team. It's not massive, but it's a statement of intent as well. Without that grant, would we be where we are? I don't know; we might be. But certainly, that grant has given it a little bit of momentum and a little bit of—. Yes, it's a bit of a statement to say somebody in Welsh Government is behind this.

I'll go back to the original question: should the Welsh Government be a facilitator or an interventionist? They still haven't got round to changing the healthy eating guidelines, which are completely out of date and inappropriate for understanding what children actually eat.

I think we've probably demonstrated, by virtue of this project, that a little bit of funding can make a significant difference. I think it's working hand in hand with the private sector. From the school gate backwards, it's all private sector driven: the growers, ourselves, the washers et cetera. So what I'd suggest is that directing the funding into the right places can have a really significant effect. Because, essentially, in some cases now, we're pushing veg into the schools who've agreed to be a part, and that push creates challenges in the kitchen and, probably, questions the catering staff on—. The frozen is easy, but if you want to use the Welsh veg, then we need to change things. So, there's a bit of pull and there's a bit of push going on as well.

Okay. Robbie Davison, should the Government be facilitator or interventionist?

Both. Both. So, facilitate through investment. We definitely need stronger policy. We definitely need, within the economy, better guidelines. The nutritional standards need to be rewritten and moved aside. I wouldn't mind, because we're talking a fair bit about supply chains—. There needs to be a thought and a redesign around who's actually eating the food, and I'm not saying anybody else is not referring to that, but if you design a food system predicated on the health of the eater, you get to a much different place to the one that is predicated on the supply chain itself. From my experience, from our experience, a lot of what we see is predicated on the flow of the supply chain, making sure the food arrives, as Ed has just referred to. But, interestingly, a lot of the food that is put on the public plate is quite damaging to the eater, and we need to be aware, if any redesign is going to go on, first and foremost, that you've got to keep the idea of and the health of eater first in any redesign. It's a really important way to think about how to get to the right place, particularly when we're talking about feeding children in schools.

Thanks.

Okay, thank you, Jenny. I'll now bring in Luke Fletcher. Luke.

Diolch, Cadeirydd. Just thinking about some of the levers the Welsh Government have, what exactly are they? We know that funding is one of them. But what are the other levers at the Welsh Government's disposal?

This is a great question. The usual answer, the knee-jerk answer is 'public procurement', and what I think our work over the years has shown is that public procurement in Wales is being set up to fail, unless it's integrated with other policies, and I think Ed gave really good empirical examples of this. If public procurement isn't integrated with policies to support the supply side, whether it's horticulture or whatever, and if it isn't also integrated with the policy areas that Katie talks about, about sustainable diets and consumption, then we're setting it up to fail. Because if we tried to procure a lot more fresh veg and pushed it into schools and the kids recoiled from that, then you are inadvertently creating waste, and there's evidence of this going on. So, that's just a simple example of saying, 'Yes, public procurement is a potentially powerful lever if it's integrated with other policies.'

But even then, we've got to realise, let's be realistic about the potential of public procurement. In our report for Welsh Government on supporting Welsh firms in the food processing sector, we showed that the total amount of money spent in the public sector on food and drink—the total amount spent every year, Chair—is equal to one Tesco supermarket turnover. We just say that just to get some sense of priorities. And then when you break down the food categories—meat is highest, and moving down the hierarchy—you can see what modest sums are available. You can't transform a food economy on the basis of those very modest sums.

And, therefore, the point I'm making is not that public procurement is unimportant—it is important, not least because it supports people who are the most highly vulnerable in society, whether they're children, whether they're elderly people, infirm, or prisoners, the common denominator is these are all highly vulnerable people in need of a nutritious diet—the point is, public procurement is a lever that needs to be integrated with other levers.

Sorry, Luke, I think Katie Palmer would like to come in on this as well. Katie.

Yes, I just wanted to come in on Kevin's point because I think there are two main things about public procurement. One is the value, which we’ve just talked about, but the other is the principle of the public sector leading in this space, and the importance that, actually, if you’re doing it for the public sector, you’re driving change for other markets as well. So, if you’re happy to put the infrastructure in place, for example, to process carrots, then that infrastructure is in place for local community food initiatives, it’s there for alternative retail. It takes us away from all this dependency on supermarkets.

So, that aspect is incredibly important as well, and I just wanted to make sure that that was captured, because it’s something that we’re seeing in our project, that through doing something like developing local food partnership—. A great example is in Bremenda in Carmarthenshire: they’ve taken over a county farm, and that county farm, now, is producing food, is producing all sorts of horticultural products. That is going into Welsh Veg in Schools, it’s going into community projects, it’s going into box schemes, it’s going into care homes. And we’re talking about relatively small volumes, but moving from zero to a point at which you’re working with all of those markets, just by taking over a county farm, is huge. And if we can replicate that across Wales, then we really start to shift the dial on things.

So, while I agree with Kevin in terms of monetary value, we’ve also really got to think about the messages it sends through public procurement, looking at all of these different aspects of social, environmental and economic benefits, and the infrastructure that it helps set up for other markets.

Thank you for that. You’re both tempting me quite a bit to go deeper into procurement, but I know one of my colleagues has a number of questions there, so I know they won’t forgive me if I start stealing their questions as well.

But, just in terms of the levers that are available, generally how effective is Welsh Government at actually using them? On procurement, we know that there’s room for improvement, so let’s think about some of the funding then. So, I’m thinking of the foundational economy challenge fund, the backing local firms fund as well, which is linked with the Welsh Government’s work on the foundational economy. Are they leveraging those particular funds in an effective way, or is it the same case with the foundational economy as the procurement side, that there’s room for improvement? I’m not sure—. Robbie, yes.

I think it’s in the descriptor: it’s an economy we’re trying to create. It’s not a sector, interestingly, it’s an economy. And this might sound like a weird example, but I don’t think it is. Our neighbour in Shotton is Airbus. Now, if you look—because I do—at Airbus’s books, and where the investment has come from, Welsh Government have been a really major, major investor into Airbus. Now, because they’re in an economy, and because they’re saying that they will, and do, create jobs—. Interestingly, if you just refer to the foundational economy as the third sector, the third sector in Wales employs about 10 times more than Airbus. But we—and I say 'we'—are treated as project money in, project money out. And, so, as a Government, what you actually do is you kind of spread bet on good ideas.

Now, interestingly, what I would say is—and this is worth looking at—if we’re going to talk about an economy, we need to talk about it in business sense. Is there a market? Where’s the investment going to come from? And how can that investment be leveraged to make sure that the impact is reached in the way that we’re describing it, as a whole load of businesses who are trying really hard—really, really hard—to create the economy that Welsh Government says it wants?

So, to be clear then, to be as clear as possible, what you’re suggesting is that the Welsh Government is seeing the foundational economy more as a project—

Yes.

—rather than a driver, whether that’s for economic prosperity, job creation.

Yes. I think when you set up a funding regime that is quite competitive, and give small amounts of money—and we all try hard to make those amounts of money work—you get back project outputs. You do not get back an economy that is in any way strong, or in any way has the capacity to move forward.

Just sticking with you for a moment, then, Robbie, in the paper that you submitted to the committee, you called for longer term funding from Welsh Government. Is that something that you’re in conversation with Welsh Government about?

Yes, I'm trying to. I'm trying to, and I'll say it openly: we would favour working with Welsh Government as a partner, but as an investment partner, as a matched investment partner. So, we're not asking Welsh Government to fund everything. What we're actually saying is, 'We'll meet you halfway, 50/50.' But we have the market to go into. We're in the economy. We're saying, 'We know where the market is, we know it's big, but come and join us as a partner, and if you join us as a partner and it's not project funds, we have a great chance of being a big part of the Welsh economy.'

That's really interesting. Does anyone want to add anything at all?

Yes, I think I will, if I understood the question correctly. I think the new curriculum in schools has an opportunity to make food front and centre of the activities in schools. The well-being of future generations Act and the seven pillars, each one of those can be cross-referenced with food. I mentioned this to the future generations commissioner as well, to Derek, when I first met him. I said, 'Derek, I think you should make food your main priority.'

Agricultural policy: back in, I'm going to say February or March, when the consultation document came out on the sustainable farming scheme, we raised our concerns to the Minister then, Lesley Griffiths, that we're in the business of adding value to food, as is Robbie as well. We buy, we put a margin on. Robbie buys, and he puts a margin on. But we can't put a margin on—. If the food doesn't exist in Wales, we haven't got anything to put a margin on. So, we're a little bit concerned with the declining production here in Wales. Lamb numbers are down. Calf registrations are down. And the truth is—I referred to it earlier—our aim is to give 100 per cent availability 100 per cent of the time, because with schools and certain customers there is no option. If you go to a restaurant and if scampi isn't available, you can have gammon or something instead. So, it's critical for us to have a supply base, so we can supply people like Robbie and the schools, but if that supply base here in Wales is diminished, and I get some of the arguments behind some of the reasons, but yet we can't create an economy if we've got nothing in that foundation. So, literally, the foundation is beef, sheep, dairy production. That's mainly what we're pretty good at in Wales, and we need to be pragmatic with the Welsh projects as well. We're not going to move that £4 million back to Wales. We're not great at growing certain types of veg, especially in the weather we've had, but we still need to grow more in Wales, and that can be part of some kind of different integrated farming system.

The project we're involved in now—you'll have to forgive me for referring back to it—does align nicely with your climate change ambitions. We did a project on broccoli. One of the local authorities—Bridgend—are substituting frozen broccoli with fresh broccoli grown in Llechryd, so again in Ceredigion. And a bit of a light-touch audit, because they are quite expensive to do a full life-cycle analysis on the broccoli, conducted by Swansea University, concluded that the broccoli grown in Llechryd would have a carbon footprint approximately between 40 and 60 per cent less than the broccoli we're buying in from the Netherlands. So, if you start putting that into it, we're not going to compete on price, because we haven't got the economies of scale in Wales yet, but what we can offer through looking at our own agricultural system is the reduced carbon impact, the environmental benefits, biodiversity, especially in the scheme we're working on now, and the heritage and the culture, and of course, if that can be aligned with the curriculum, and many farmers invite pupils and schoolchildren and headteachers and all those involved, children like food and they get it. They can make that link between—. I've seen it so many times in schools who've got the children involved in a cafe, for example. They're working out margins, they're working out recipes, and that's maths coming to life.

Thank you. Great. I'm conscious of the time. That was a really interesting discussion. Diolch yn fawr.

Diolch.

Yes, thank you, Luke. I'm also conscious of time, so if I can just ask you to be as succinct as possible, we've still got a few topics we'd like to get through. I'll now bring in Samuel Kurtz. Sam.

Diolch, Cadeirydd. Good morning, panel. I'm looking, and we've talked about it this morning and touched around it, at what has worked well and what hasn't worked as well. So, based on your personal experiences in developing and supporting the foundational economy, I'd be interested to hear examples of, 'This is really good, this hasn't worked well', and whether there's good knowledge sharing within the industry and within the foundational economy. I'm happy to start with you, Robbie.

Knowledge sharing—I'll go there first. Kevin alluded to, before, the foundational economy team, and I think they've done a great job, to be fair, Karen Coombs and her colleagues. And they've done their best to bring organisations together on a regular basis in order to share some of the experiences we've all had. What I would say, though, is that we are in an environment where, because it's project funds, everybody gets quite protective of their own and gets quite defensive sometimes. And I think there's a place, within the foundational economy, where we could all work together in order to find some of the marketplaces that we've got, because we do bring different skills, we do bring different abilities. But I've not found that it's a place where we are sharing some of the expertise, sharing some of the responsibilities, although we have got good talking shops.

Okay. Helpful. Edward.

Yes, I think collaboration, through the backing local firms bid—I think there are eight partners there, and we meet regularly and share knowledge. We agreed to that beforehand. And I agree with Robbie, the foundational economy team have been great, led by Karen and others in the team there. They are receptive, and I think they get that we need to be doing. And a problem—well, I wouldn't say a problem—I've had is that there are numerous reports, but you can only learn by actually doing it. You can't learn by reading—sometimes you can, but it's the actual doing part of it. And I think that's critical: having a go. And then the learning takes you off in different directions, as we've found. Yes, so no complaints at all against the foundational economy team, they've been great.

Fab. Kevin.

It's a great question and, instead of answering in terms of detail on this or that project, I think the bigger picture that the committee would want to address is that the big problem over 20 years has been that good practice has been a bad traveller. And that is a key challenge for all of us in whatever part of the food system or the foundational economy that we exist in. And the question is: why is that? Why doesn't good practice from one local project disseminate elsewhere? Why isn't it spread and scaled? Welsh Government has a role in that, the Welsh Local Government Association has a role in that in terms of promoting peer-to-peer learning. That's the fundamental way that organisations learn: peer-to-peer learning. And, therefore, that's what I would like to see more of: where Welsh Government empowers and enables others to learn for themselves. And that's how Welsh Government will become more consequential, in my view, and have more impact: working hand in glove with partners, but enabling others to learn from each other and spreading good practice. I can talk about local projects, but it goes back to Robbie’s point that local projects tend to end when funding ends, and that means they're not viable longer term unless they can be embedded, find markets, and find revenue streams that are sustainable. We've got to get over 'project-itus' as we call it.

Thank you. Katie, I can see you were patiently waiting with your hand up.

Thank you. Yes. I agree with Kevin to an extent, but I'd just like to hark back again to talking about food partnerships being a key way of sharing learning. We have 22 evolving across Wales; we have a community of practice, we're sharing that learning. And I think that a key example is Food Cardiff's leadership in the development of the Food and Fun pilot, which is now a Welsh Government programme for government commitment, funded by and co-ordinated by the Welsh Local Government Association. And in a similar way, we're working with the WLGA and Welsh Government on the development of food partnerships.

I think the foundational economy team has done a fantastic job with limited resource. I would question how the foundational economy team and the food division work properly—marry together strategically. I think there's an issue there, and whether the balance of resource is in the right place for that.

I have a slightly different reflection from Robbie in terms of how the projects have collaborated. Certainly, the Welsh Veg in Schools programme, which we're heading up, has benefited from our working hand in glove with at least three of the other community-of-practice projects that are in the backing local firms fund, and we've also drawn in resource from, and been match funded by, a UK partner in Bridging the Gap, where we're also learning from projects within that Bridging the Gap family of projects, which is all about how to make nature and planet-friendly food available to all. So, we're learning from UK examples for a whole community of practice that sits behind that. But we're also then bringing that into the Welsh Government community of practice. So, I think there is a lot of learning.

And, sorry, the final point that I would like to make is the importance of communications and comms. We've put a lot of effort and resource into sharing what we're doing through different media platforms. And today, Welsh Government are doing a piece on food partnership with Bwyd Sir Gâr Food; we've got an item on Country Focus, talking about Welsh Veg in Schools very candidly, about the challenges in the supply chain. And we've got some more coverage coming out on the BBC this week. So, I think the communication, and investing in comms, are really important as well, and I think that's something we haven't talked about today.

Okay, thank you, Katie. I'll hand back to you, Chair. I'm conscious of time.

Yes, thank you, Sam. I'll just very briefly bring back Jenny Rathbone. Jenny.

The top question for me is: Chris van Tulleken says that the main driver of our very sick population and the obesity epidemic is ultra-processed food. So, why haven't we banned ultra-processed content from food in our schools, prisons, hospitals and care homes?

Well, for 20 years, governments have recoiled from regulating the food sector almost across the board. If you think of the last Government in the UK, they recoiled from their own obesity programme. One waits to see what this UK Government will do about it.

In Wales, we've got very few levers to do something. We've got an enormous opportunity with universal free school meals for primaries. I don't think, Chair, that we sufficiently appreciate how distinctive this is: we are the only nation in the UK to have universal free school meals for primary schools—the only nation. It's a major feather in our cap. Having said that, we must not think about scaling up the status quo, as other colleagues have said. We've got to use it as an opportunity for changing food culture, and for using that procurement power where it's integrated with supply and new, sustainable diets, so that we're integrating food policy to promote sustainable diets and remove ultra-processed foods from the menu.

Because at the moment, the people who are responsible for putting the food on the table are having to deal with a menu that's not relevant to the seasons that are changing, what's fresh and available, and they're having to deal with, 'Oh, there's not enough magnesium in the way you've adapted your menu.' It seems to me that it's still highly controlled from the centre without any possibility, or very little possibility, for innovation. Now, obviously, Edward has given us some really good examples of innovation, but it doesn't, somehow—. We're yet to see the way in which the procurements—. There seems to be a difference of opinion about how well the procurement levers are working to, if you like, be more aligned with the new curriculum.

But to be fair to catering teams, the lack of directionality—. You yourself mentioned earlier on the healthy food regulations: where are we with that?

Talking about it.

Where are we with sustainable diet directionality? Procurement regulations need to be clarified. So, I'm speaking in defence of catering, what we used to call 'dinner ladies', as it were.

Yes.

The catering teams on the front line, they themselves are facing an enormous array of challenges and they need more help to help themselves.

Okay. So, that's why Government has to lead.

Yes.

Okay. Is there anything you want to add to that, given that we are—?

If I can perhaps speak as probably a parent and somebody in the food sector, I think if there is that kind of guillotine coming down to ban what would be deemed as ultra-processed foods, I think there might be an increase in children bringing their own school meals—which is, I believe, sandwiches, which I believe is unregulated. So, it needs to be done kind of carefully and pragmatically, and I think school meals are potentially, for those who take them, 36 per cent of meals taken by children, on average, I think. So, the other 64 can be from wherever they like, really.

So, I suppose there is that education piece. And I suppose I've seen it first-hand: if you try and introduce something slightly different to the school menu—. Children, they haven't got much time during the dinner hour—they go in, they eat, they want to go out, they want to play, or do something else—so it is that piece, not in necessarily the canteen, so they know what they're going to eat before they go in there. So, they've already made that decision, and peer pressure can be quite significant. But I would say, if there was a way of children taking a bit more ownership of the school meals, then it is a way to somehow change the culture. But I guess that's going to be done in the classroom, and not necessarily in that split-second decision. If they come into the kitchen and the canteen and they see, I don't know, kale, or chard, which for us would look beautiful and inviting and colourful, children are going to say, 'Oh, crumbs, no, not for me.' And then there's the challenge of children not having any food at all.

And the school caterers I know, when we go into the kitchens, they've got so much empathy for the children. They know the children, and they kind of feel for the children as well. So, we can't take the feelings of the catering staff out of it, and their passion for their job and wanting to give the children something to fill them.

Well, we know we're up against big food, who spend billions telling you to go to some place with a yellow sign.

Sorry, Jenny. Katie Palmer would like to come in on this as well.

Oh, okay. Katie.

No, I was just going to say: one of the things that I don't think we've mentioned in this space is risk, and I think one of the places that ultra-processed foods have come in, or processed foods have come into the schools, is because of risk. You've got the food safety risk—or de-risking, I should say—food safety, the number of different allergens that schools have got to take into consideration, and therefore the number of different menus that they have to develop to account for all of those different allergens, but I can't help thinking that if we're eating a far less processed food to start with, so one that's made from Welsh fruit and veg, meat, dairy, and who knows, in the future, maybe pulses from Wales, then we would have fewer issues with some of those things around allergens. But I certainly think risk is definitely one of the barriers that we have in terms of how we look at dealing with school food.

Okay. So, Robbie Davison, how do we manage risk, then?

Manage risk? I'm going to be quite flippant: make great food. We're ultra-processed free, and we made a conscious decision, because—I'll go back to an earlier answer I gave—it's got to be about the eater first. There isn't a school meal—there isn't a school meal—that we cannot produce ultra-processed free. So, on the menu—. Forget desserts—forget desserts—but, actually, the meal itself, there is not a school meal that we cannot produce ultra-processed free. Now, we've managed to change all of our production around—food safe, great-tasting food—but what's interesting is we've managed to do it at no additional cost to us. Now, if we can do it, every single food producer can do it, but it does require the Government to legislate.

Okay. Thank you, Jenny. I'll now bring in Hannah Blythyn. Hannah.

Diolch, Cadeirydd. I'm conscious of time, so I will try and condense a couple of questions on fair work and the food sector into one, so bear with me. The first is, really, to ask colleagues for any examples of fair work initiatives that are currently perhaps being undertaken in the food sector and how can Welsh Government and other public bodies best support these. And then, secondly, do you have a view on what additional fair work measures the Welsh Government could take? We've touched on procurement in relation to the food sector itself. Are there opportunities there in terms of the leverage we do have in Wales for fair work and the food sector, because, obviously, both are central to the foundational economy in Wales? Diolch.

Who wants to go first on those questions? Robbie.

Just to quickly jump in, we work with a housing association called ClwydAlyn, and Clare Budden, the chief executive officer there, has been incredibly progressive about wanting to tackle poverty. Now, interestingly, we're about to tender for a piece of work with ClwydAlyn, and right at the top of the list is making sure that it's a real living wage, but right at the top of the list, interestingly, they've gone directly—and they have about eight care homes—that the menu has to be ultra-processed free. So, that kind of fair work and then fair impact that comes from that is a really important step, and this is the CEO of a big housing association saying, 'This is how far we need to go to make sure that we're part of a fair work economy.'

Okay. Edward.

If I can illustrate with an example, there, we have a supplier process, the forms they need to complete, one of which is the modern slavery declaration. So, we buy beef direct from Pembrokeshire, so they're in our supply chain, and the veg that we mentioned earlier. The milk comes through an intermediary, still in Pembrokeshire. When we ask them to fill the modern slavery form, the answers can be quite interesting, to say, 'Well, I'm paid'—the farmer themselves—'I pay myself less than the living wage, so you're asking me to put a declaration down, to tick a box, to say all my staff are paid the living wage, let alone the real living wage', and they say, 'Well, I'm not on that myself.' So, what do we do? We pay them more, or—. So, there's a problem there, right at the heart of our farming communities, that the people who produce the food, the farmers and the growers in this instance, by and large, are being paid less themselves as the owners than the staff are paid. They are being paid less, and that doesn't seem right.

So, you know, we've signed up to the Welsh Government code of ethical—oh, golly—procurement in supply chains—I think I've got that a little bit wrong—but we're looking at our farmers and growers here in Wales, and they can't adhere to it. It's not that they don't want to, but they can't. There's a glaring gap there, so that comes down to farm-gate prices and the sustainable farming scheme and so on and so forth. By and large, if they're opting to come and work for us for £13, £13.50 an hour, which quite a few have, 9 a.m. to 5 p.m., or working nights, then we're losing that foundation of our supply chain, irrespective of foundational economy work, and that's critical. Without them, we're nothing, and we'll never achieve our objectives if farmers themselves, those at the base of the pyramid, aren't having a fair deal.

Kevin Morgan.

Fair work is absolutely essential to everything we're talking about here, but if it's seen as just another policy goal, treated as a silo, hanging on to a procurement clause, it'll be more difficult to deliver. If we can integrate fair work in our narratives for sustainable food systems, then I think it's much more compelling as an offer, and there are greater incentives for employers to address it. Because we tend to think of fair work, understandably so, purely in equity terms, being fair to our workforce, but it also has an enormously important impact on efficiency. The best systems we've seen in Europe—. The city of Malmö, for example, integrates fair work to create an efficient catering workforce, which is empowered and enabled to design and deliver sustainable diets. They don't isolate fair work, but they integrate it in terms of their narrative, in terms of their terms and conditions, Chair.

Okay. Thank you. And finally, Katie Palmer.

I guess, just to highlight again, on food insecurity, that people who are working within our food system are more likely to be food insecure than the general population, which I think is an important point. We also know that, if we're looking at the retail sector, the value in the food chain does not sit with those producers early on in the food system; the value sits in the retail end.

A couple of good examples: Cardiff Council is a living wage city, so, obviously, the catering teams within the schools, for example, will be paid the Wales living wage; also work that Size of Wales has been doing with Caerphilly County Borough Council, looking at menu frameworks in terms of integrating global responsibility and deforestation. So, that's thinking about fair work for the supply chain, for those people that are providing food for us from abroad, as well as at home.

Okay. Just very, very briefly, then—I'm afraid time has beaten us—Edward Morgan.

Very briefly, the work done in Caerphilly and Monmouthshire on deforestation-free food, and what's embedded in our food—that extends all the way back to the Brazilian rainforest. So, if we're not producing here in Wales, we're offshoring our—. The theme of the question was fair wage. We don't know what's happening in Brazil, Vietnam and far-flung places, so that's another reason why it's important to really focus on our food production here in Wales. At least it's on our doorstep and we can, hopefully, do something about it. So, a great point there, Katie, yes.

Okay. Thank you very much indeed. I'm afraid time has beaten us, so our session has come to an end. But thank you for being with us this morning. Your evidence 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 thank you for being with us today.

Cheers.

Diolch yn fawr.

We will now a short break to prepare for the next session.

Welcome back to this meeting of the Economy, Trade and Rural Affairs Committee. We will move on now to item 4 on our agenda. This is the fourth evidence session in our inquiry into the foundational economy, and in this session we'll be focusing on housing and decarbonisation. Before I welcome the witnesses, can I please extend a welcome to Lee Waters, who's here as a substitute for Hannah Blythyn? Welcome, Lee. I'm pleased to see you here this morning. Can I also, therefore, welcome the witnesses to this session? Before we move to questions, can I ask them, please, to introduce themselves for the record? Can I start with Anthony Rees?

I'm Anthony Rees, from Cyfle Building Skills, a company from south-west Wales.

Joanne Patterson.

I'm Jo Patterson from the Welsh school of architecture at Cardiff University.

Iwan Trefor Jones.

Yes, I'm Iwan Trefor Jones and I'm chief executive of Adra, which is a housing association in north Wales.

And Gary Newman.

Good morning, I'm Gary Newman, I'm chief exec of Woodknowledge Wales, which is a charitable community benefit to society.

Thank you very much indeed for those introductions. Perhaps I can just kick off this session with a few questions. Can you briefly outline the role you and your organisation actually play in the foundational economy, and perhaps comment on the relationship you have with the Welsh Government in actually delivering this? Iwan Trefor Jones.

Is it okay if I speak in Welsh?

Yes, of course.

In terms of our role within the foundational economy, I would break it down into three parts. First of all, from our tenants' point of view, the foundational economy is vitally important and very relevant to them. I saw a figure the other day saying that, on a national level, 60 per cent of people in Wales work in the foundational economy. But, amongst our tenants, the percentage is far, far higher. So, anything that impacts the foundational economy impacts the well-being and welfare of our tenants. We are responsible for the welfare of approximately 20,000 tenants. So, the evolution of the foundational economy sector is very relevant to the well-being and welfare of our tenants. That's one aspect. The second is, as an employer in the housing sector, we employ many in the construction sector and the care sector. So, as an employer, we are involved in this sector, the foundational economy.

Thirdly, I would say that we have a vital role to play in the supply chains with regard to the work that we commission. We upgrade homes. We ensure that homes are maintained in the right way. We construct new homes. So, we are involved in the development of the supply chains to support the construction sector, and we try to keep those benefits local. So, as a housing association, we are deeply involved in the foundational economy.

With regard to our relationship with the Welsh Government, that relationship is clearly vitally important. It isn’t just the housing department that we are involved with, because this issue, the foundational economy, cuts across several services and departments within the Welsh Government. So, it is important that we have an overview of that and that we have that link with the different departments involved in the foundational economy, including the economy department, the department for tackling poverty, and of course the housing department itself. So, that’s a very strong relationship that we have, and there are also many grants provided in this area. So, it's important that that relationship is a very robust one with the Welsh Government.

Diolch yn fawr. Joanne Patterson.

Hi. So, my name’s Jo Patterson, I’m a professor at the Welsh school of architecture, and for the last 15 years I’ve been leading researchers who’ve been carrying out research on housing stock to integrate low carbon technologies into buildings, particularly focusing on housing. We’ve been working with a number of social housing companies, particularly across south Wales, and local authorities, to deliver these projects in practice—so, working on people’s real homes to really demonstrate and work with the social housing companies and local authorities, to really help them to develop their skills and knowledge to work right through the whole delivery process. So, it’s not only about the installation, but working to plan and design and then procure and install and then maintain and operate those technologies so that they work as effectively and to the highest quality that they possibly can.

One of the things is we’ve been able to provide evidence, because we model and monitor those buildings before and after any work’s been carried out, so we’ve been able to provide real evidence not only around carbon emissions but also around the improvements to the built environment, reductions in mould growth, damp, improvements in heating comfort and internal conditions, but also around the reduction of bills and impacts on fuel poverty—so, really strong evidence on individual homes, and engaging with residents as well.

Okay, thank you. Anthony Rees.

Good morning, Anthony Rees, Cyfle. 'Cyfle' is the Welsh word for 'opportunity'. It was set up 13 years ago as a regional scheme, really, to develop young people for the built environment. I would normally say ‘construction’, but it’s definitely changing to the ‘built environment’ because of the new changes to low carbon and whatever, so I’m bringing the mechanical and electrical, the electrical and plumbing, into the built environment, because that has normally been separate.

The main theme for us is how do we develop young people for our communities in our communities. The foundational economy is important so that, alongside working in partnership with clients, our housing associations and local authorities, we can get best value, really, for developing that young person on an apprenticeship or a shared apprenticeship scheme that we’ve developed. So, youngsters can learn and earn and, hopefully, earn a good wage as they develop, and they stay within the community and work in local projects. So, that's why I see it as more of a people legacy, really, but the building is important and that's why I think the foundational economy, in partnership with Welsh Government, is so important, that we get the best value and the best outputs for our community, especially for young people. Obviously, if we can develop young people that go to local providers, they work for a local contractor, and there's a chance then of upskilling, obviously, the small and medium-sized enterprise sector to develop and to deliver, really, for the region.

We've done a bit of work with Lee over the years, Lee, when we came asking you for a bit of foundational economy money for a work experience programme. So, we've got two key schemes, really, linked with Welsh Government and the foundational economy. We've got a sizable work experience programme where we help youngsters get into the world of work for the first time, working with the education sector and the industry and clients, and, obviously, we've got a shared apprenticeship scheme. There are 12 shared apprenticeship schemes in construction in the UK. We've got the largest in south-west Wales, and this year we'll have taken 60 new apprentices, so we're up to 970 and next year we'll be the first scheme in the UK to have 1,000.

So, I would say we've got a lot of good practice in Wales, especially south-west Wales. We're an exemplar for collaborating and working with the public sector and others, so I think it's, for me, that we need to continue the good work and how do we get the best, really, out of the foundational economy.

Okay, thanks. Gary Newman.

So, Woodknowledge Wales is about decarbonising the natural environment with trees and the built environment through the greater use of timber. We want to do that in a way that is socially beneficial and delivers greater resilience and economic benefits to communities, particularly rural communities. So, we do interact with Welsh Government through housing to try to support the building of better, higher performance, lower-carbon homes, also forestry through attempts for afforestation but also to improve the value that we get from the timber that we grow to start to target higher-value markets, and then through Welsh Government's work in terms of decarbonisation, because growing trees and building with timber are both technically ready, quite straightforward greenhouse gas removal mechanisms, and alternatives like direct air capture get billions invested in them and they don't work at the moment. So, that's where we come from.

Okay. And if I can ask all of you: how well understood do you think is the concept of the foundational economy across the Welsh public sector and its key stakeholders, and what impact do you think this has on the ability to deliver on this agenda, and how could that understanding be improved, in your view? Iwan.

Personally, I don't think there is that awareness. I've been involved in north-west Wales and, to some extent, the economy is the foundational economy, where there's a high percentage of people working in the construction, tourism, care, health and social economy sectors. So, the economy is the foundational economy, and sometimes I feel that this term can be dangerous. At the end of the day, what we're trying to do is make a difference to people's lives and ensure that they get to achieve their potential and that everybody gets equality and an opportunity. It's important that we all work together and that we play to our strengths in order to ensure that this kind of employment is tailored to the needs of businesses or the person themselves.

So, I feel that perhaps we're tricked by terms sometimes, and that we should just focus on ensuring we have the right action plans in order to respond to local need, and support local, indigenous businesses to grow and to develop, and so that the support for those businesses is co-ordinated effectively.

Okay. Diolch yn fawr. Joanne Patterson.

So, I've been working with a range of people within local authorities and the social housing sector, mainly people who are on the ground working, and I don't think I've ever heard them mention the words 'foundational economy'. However, I think it's probably more a recognised term for people who are in the decision-making roles within these organisations. 'Future generations', on the other hand, is obviously a much more well-recognised and received term and concept, and I think maybe embedding the foundational economy into the future generations Act more would probably be able to bring that terminology and the concept behind it. Because I think the concept is absolutely sound, but it just needs to be understood by a broader range of people, because we need all of these people to come with us, not just the decision makers—it needs to be understood by the majority.

Anthony Rees.

I would say, as an industry rep, mainly representing the SME sector, really, and apprenticeship programmes, I think it's more of a term used in public sector tables. I think if you asked a contractor for the foundational economy, the circular economy, the contractor wants a fair price to build a house, and they can make a profit. And that shouldn't be a dirty word, either—what's wrong with profitability? And they put that money back in the community. I think that's a sound foundational economy model, if everybody could be fair and work towards that. Things are tight out there, in the SME sector, we've got a dwindling workforce, so we all need to get together within our communities. And I agree with Iwan, I think it needs to be more on a local basis, what works there, because, in Wales, we are a bit different in each region—what's fit for purpose for the region, really, to boost the foundational economy.

Okay. Thanks. Gary Newman.

I have to declare an interest, because I became one of the founding directors of the Foundational Economy Alliance Wales. So, I'm a big fan of it, and I would obviously support the submission that came in from the Foundational Alliance Wales. I was drawn to the concept because it makes sense; it's a useful economic framing, for me. It makes sense in terms of focusing on things that can make people's lives better, and it makes sense in terms of framing how you would localise or can localise supply chains, and the benefit of doing that, and a little bit more sophisticated than maybe putting a red dragon on a piece of packaging. So, I'm a big, big, big fan.

In terms of how well it's understood, I don't think it really matters, for me. It's about what happens on the ground, as I think Iwan was saying. It's about the practical implications. And I think these things, like the well-being of future generations Act, or the foundational economy, are useful framings, but, actually, that has to be interpreted into the doing on the ground, and what that means. And that is very sector specific. So, we need to operate at those sorts of practical levels. And I'm also very much a fan of enabling organisations and best practice to do it from the bottom up, rather than from top down.

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

Diolch, Gadeirydd. Moving on then from the foundational economy, and whether the term is accepted or not, or whether it's relevant to where it is, so just imagining that it is accepted and it is understood, the effectiveness of the Welsh Government's approach to supporting it—Anthony, what would be your assessment? Is Welsh Government doing enough, are there some gaps?

We came about three or four years ago for a chatter, myself, met Lee, and we had a bit of money from the foundational economy pot for piloting a mechanical and electrical work experience programme. It wasn't big money, it was about £80,000, but it created employment, it created opportunities. So, without that pump-prime, we wouldn't have piloted something. So, don't be afraid of trying things, sometimes. And that created 50 per cent employment—100 people had work experience, with 50 jobs. So, I think we need to look at what works for the region. It's worked for us. We've got a good network too of contractor engagement, but things don't happen overnight. And it's working with the right partners, too, not anybody who comes in and they've got a great idea. I think you need a platform that works within your sector; I think it is sector specific. In the things that we've built over many years, the contractors do work well together. They share, although they're competitive when it comes to tendering, and I think we've got a good model.

We've paid £22 million in wages since the inception of the shared apprenticeship scheme. That's one hell of a foundational, circular economy scheme, but it's always under threat, because of funding, and funding is only over one or two years. We need a longer plan sometimes. I think we need to work with the Welsh Government on things that do work, and if it works for the region, why can't others do it? We can share that knowledge. I think there's a great opportunity, moving forward, but I think we've got to look at not just short term, but what works more in the mid and long term.

I'm going to come back to that long-term, short-term point, but, Joanne, your thoughts on effectiveness.

I completely agree with Anthony. I think small pots of money can make a big difference, if they're spent in the right way. I think consistency is really important with spending, so people can really plan for delivering projects well, whatever they are regarding the foundational economy. We also really need to learn the lessons that people are experiencing and bringing out from this expenditure. Because even if they haven't delivered as well as we would have hoped, there's still an awful lot to be learnt from those experiences, and I think we shouldn't be afraid, as a nation, to learn from those. Because more often than not, we are quite forward thinking, and risks are there and mistakes will be made, but let's learn from those.

Yn sicr, mae yna bethau positif iawn. Mae 'Prosperity for All', strategaeth economaidd y Llywodraeth, yn bositif o ran yr economi sylfaenol. Mae'n symud i ffwrdd o'r sector-based approach i edrych yn ehangach ar gyfleon o fewn yr economi. Dwi'n meddwl y risg sydd wedi bod yn y gorffennol ydy bod yna ormod o ffocws ar beth buaswn i'n galw yn high-value economic sectors, er enghraifft y growth deals—a dwi mor euog â neb, gan y bues i'n gweithio ar sefydlu'r growth deal yng ngogledd Cymru. Roeddech chi'n cael eich gyrru i lawr y llwybr o ran yr economi gwerth uchel a datblygu'r GVA a'r GDP fel mesuryddion, ac, i ryw raddau, roedd yr economi sylfaenol yn cael ei chadw ar ei hôl. Ond dwi yn gweld, rŵan, yn nogfen strategol y Llywodraeth, o ran 'Prosperity for All', fod yna fwy o bwyslais yn cael ei roi ar yr economi sylfaenol. Yr unig siom, efallai, ydy nad yw'r sector adeiladwaith ddim yn cael y tegwch o fewn y cynllun yna.

Buaswn i hefyd yn licio gweld mwy o sylw'n cael ei roi i brentisiaethau, fel sydd wedi cael ei ddweud. Mae'r ffordd mae'r personal learning credits yn cael eu hariannu tipyn bach yn anghyson ar draws Cymru. Buaswn i'n licio gweld Business Wales yn fwy rhagweithiol o ran cefnogi sectorau fel y sector adeiladwaith, y sector gofal a'r sector twristiaeth yn enwedig, oherwydd dyna ydy asgwrn cefn ein cymunedau ni. Ac yn drydydd, dwi'n meddwl buaswn i hefyd yn licio gweld bod yna fwy o gefnogaeth i'r sector SME i dyfu. Mae yna lot yn y sector SME yn statig iawn; dydyn nhw ddim yn tyfu, dydyn nhw ddim yn datblygu. Petai yna fwy o gefnogaeth ar gael, a bod y gefnogaeth yna yn fwy cydlynus, yn cefnogi'r sector SME i dyfu a datblygu ac ehangu eu marchnadoedd a dod yn rhan yn fwy o supply chains, dwi'n meddwl y buasai hwnna yn rhywbeth fuasai'n gallu cael ei gynnig o gyfeiriad y Llywodraeth.

Before we go on to Gary, I think Lee would like to come in on this very point.

I just want to develop Iwan's point about the high-growth sectors and the fixation on that. It strikes me that part of the problem the foundational economy has—and whether you use the term is irrelevant, I agree—is it's not seen as sexy; it's seen as low productivity, low wage and not something the Government should be focusing on, almost like an admission of defeat, and that really hasn't shifted. I just want your reflections on that and how you think it might be shifted.

I totally agree. Again, from personal experience more than anything else, when we were negotiating the growth deal for north Wales, we were told to focus specifically on key sectors that would achieve that step change when it comes to GDP and gross value added, instead of well-being indicators. Some of the projects that were developed across the growth deals focus specifically on achieving high GDP and GVA, so it's coming back to those key sectors that form the backbone of our communities. I think 'Prosperity for All' is much more of a balanced approach now than there used to be. There needs to be more of a way to try and highlight the good practice, the impact, the outcomes of key economic sectors such as the foundation economy. We need to highlight the impact that we can have on those key sectors, such as construction, such as care, and show how they can become part of local supply chains.

I guess beauty is in the eye of the beholder, because I think the foundational economy is incredibly sexy, particularly when you throw in the need for decarbonisation. Because if you look at the foundational sectors, these are also the biggest emitting sectors, and therefore are the sectors that really need to radically change. In agriculture and construction, there's a huge opportunity to transform these sectors, and the foundational economy gives us a good framing to do just that. So, let's get on with it.

Coming back to you, Iwan, quickly, you've called on the Government to develop a long-term strategy for the foundational economy. I just wanted to ask you what that would look like in your eyes. What sectors would be included in that?

If I can adapt that sentence—I know it's our contribution. I think what we want is a long-term commitment to the foundational economy. I would also argue, perhaps, that it's not strategies that we need, but clear action plans with milestones, with clear key performance indicators, that reflect what we're trying to achieve. I think there is a danger that we have too many strategies, and what we need are clear action plans that are measurable and that lead to impact on the ground.

Diolch yn fawr. And then, more broadly, I wanted to come back to Anthony’s point, initially, and some of the evidence that we're taking at the moment on the Welsh Government's role in this, funding-wise. Is it an interventionist role, or is it a step back and sort of a skunkworks approach, which has been one term that's been used? Anthony, what are your views on the long-term/short-term funding model and the Welsh Government's involvement in funding? How would you envisage, going forward, the strengthening of the partnership and the Welsh Government's role in that?

I think the Welsh Government is key. As Gary said, let's get on with it. In terms of the built environment, it's busy, there's opportunity there, but the SME sector is shrinking, the workforce is shrinking. I agree with Gary that there's great opportunity, but who the hell is going to do the work? So, it's the chicken and egg, really. We've got to develop skills now. We're on about free ports and offshore from Neath down to the west coast, down to Pembrokeshire. There's a lot of educational money that goes into the system, but the outputs aren't good enough. There are not enough coming into apprenticeships in our colleges. There are 1,000 learners doing a built environment course full time, and 20 per cent of them come into the world of work, into apprenticeships in construction. So, I think the key here is what are we going to do with some of that funding. Is it better spent looking at more of a local approach? We've got the regional learning partnership boards, but it's very much educational led. It's the educational sector leading the industry sector, really, when it comes to skills. It needs to be more of a joined-up approach and a fair approach, because industry puts a lot of time into training young people, so it's how do we get the best value out of a longer training programme that meets the skills challenge.

I think whoever plays that interventionist role needs to be totally trusted, and I think it has to be the Welsh Government, because of that level of trust. But I do think it's almost a balance between an interventionist and facilitator role, because there needs to be the support there as well. None of us can deliver decarbonising of our housing stock on our own, because we do need to be looking across this chain of planning, design, procurement, installation and maintenance operation, which involves a massive amount of people, and the strength of the foundational economy behind that is incredible. But I really feel that it still needs to be led, and the Welsh Government have the opportunity to have that overarching view across that process to enable the connections, and in an inclusive way as well.

I completely agree with the potential role for Welsh Government. You referred to the financial side of things. From the housing side of things specifically, I was looking last night, and the social housing sector receives around £800 million of grants from the Welsh Government, and a lot of that comes through the social housing grant. But that’s short-term funding. There’s no long-term commitment to those grants. What we’re not seeing at the moment is a connection between that £800 million and the ambition of strengthening the foundational economy. What I’d like to see is more connection happening. That’s significant expenditure, and what we need to see is that money being used as a catalyst to strengthen the foundational economy in our areas—in construction, the care sector, for example, providing hope and employment for our tenants.

At the moment, we’re not seeing that connection between the Welsh Government level and the local level. I think there’s an opportunity there to use that expenditure to strengthen the foundational economy. That’s not even talking about the decarbonisation side of things. The Welsh Government has announced that the Welsh quality housing standards are to be met by 2033, but that’s asking for significant investment—millions and millions of pounds. You have close to a quarter of a million social housing properties in Wales, and each one will need significant investment to reach retrofit requirements and decarbonisation requirements. But who’s going to do that work on the houses? It comes back to the point around where are the contractors going to be, where are the workers going to be. We need to work together on a national level, and a regional level, and a local level, to prepare for that funding and to keep those benefits as local as we possibly can, because we need to make sure that young people have the opportunities, and the SME sector has a way of procuring the work, so that we have partners that can procure in the right way, in order to try and keep this money as local as we can.

So, there’s an opportunity there, isn’t there, to strengthen the foundational economy, but you need people to talk to each other, you need stronger relationships than we have at present, and, for me, you need a clear vision in order to bring that partnership work together and make it more robust than it is at the moment. But there is an opportunity there, and there is potential.

Diolch. Gary, your thoughts on the Welsh Government's role—interventionist or hands-off—and funding through that as well. Gary.

Sorry, did you ask me—?

Yes, sorry. Your thoughts on the Welsh Government's role, whether interventionist or stand-offish, and how funding would fit into that as well.

Apologies. Clearly, you need the high-level, long-term strategies. Whether it’s decarbonisation or housing quality, you need to get those into regulations now, so that people in industry can plan for the passive house buildings that we’re going to need to build in the future. So, Government clearly has a strong role there, but in terms of the doing—in terms of the real, bottom-up doing—then I think it needs to be much more hands off, skunkworks, supporting. We’ve benefited from a foundational economy grant—quite small—to help us develop communities of practice, so that we can bring people with a shared challenge together to find solutions. That actually sounds quite boring, but it’s quite cheap and it’s incredibly impactful. If you can inspire people to do things differently, and then help them and support them to implement that, then you can create fantastic, bottom-up change. And it works, as far as I’m concerned. So, a bit of top-down policy setting, and then a lot of bottom-up enabling.

Thank you. Diolch, Cadeirydd.

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

Diolch, Cadeirydd. We touched a lot on funding in the previous set of questions. I was going to ask around that, but I’m also conscious of time. So, if I can stick to one particular question here. In our previous session, we discussed it again, and touched on this: the long-term planning needs and the long-term funding needs when it comes to the foundational economy. In our previous session, one of the points that was raised by witnesses was that there's also a need for Welsh Government to change its attitude towards the foundational economy, in the sense that it should see itself as an investor in foundational economy businesses, rather than a project funder. I'd be interested to hear your thoughts on that particular point, and of course if there's anything additional you want to add on funding, please do.

I'll start with Iwan. I see that you agree with that.

That's the point I was trying to make previously, truth be told, in terms of, for example, the use of grants and the way that grant programmes are being used—the way that we procure and so on. The public sector is responsible for £6 billion per annum. Where does that funding go? How much work is done to analyse where the leakage is in terms of that funding? What opportunities are there with the £6 billion to support the foundational economy? So, there's an opportunity to move away from grants to be looking at investment more specifically. We do need grants for the pump-priming, I would argue, but it's not sustainable in the long term. Perhaps you'd want to look more carefully at what happens to the Welsh pound, where does the Welsh pound go and what opportunities are there to use the Welsh pound to strengthen these sectors that are so vitally important to the people who live in some of the most deprived communities in Wales. These sectors are so, so important to develop careers for young people, to get them out of poverty, and to get them into work in full-time posts and transform their lives. But I'd like to see more work being done on that £6 billion annually, and ensure that it is directed more towards the foundational economy.

So, it's a question of ensuring that it's sustainable over the long term.

Yes, exactly. Certainly.

Joanne, would you like to add anything?

Well, I think the examples—. For example, with the feed-in tariff in Germany and just seeing how that has been very consistent. It was launched in 2000 and only 6.2 per cent of renewable energy was from renewables. In the 14 years, that went up to 28 per cent. But the funding for that was consistently there. Welsh Government have funded a lot of really good programmes. We've had Arbed; we've had the innovative housing programme; the optimised retrofit programme. They were really innovative, world-leading initiatives, which are great, but they need to be consistent, because you see the SME supply chain develop around those programmes, and then as soon as the programme ends, they leave and they move to other countries or they change the way that they're working. They go from installing air-source heat pumps back to gas boilers, because why would they change what they're doing when it's much easier to have a consistent supply chain bringing in products?

So, I think there needs to be consistency in the funding programmes that are happening and longer lead-in times with funding as well, because again the delivery of these projects and the decarbonisation of the housing stock needs to be planned carefully and it needs to be designed carefully, and those are skill sets that are not necessarily—. They're collaborative. People don't necessarily have the collaborative skills to work with each other and share information, drawings or designs, so people need time to enable those works to happen to the high quality that they need to, otherwise the trust falls away. So, it's really important that there is time for people to plan and design what they're going to do, rather than being given money six months before it needs to be spent, and either things are done poorly, or they're done hastily, or they're not done at all, and I think we really need to change the way that we think projects like that are being funded.

From our funding experience, obviously it's people development—bringing young people into the world of work. There's quite a cost there. In our scheme this year, we've got 105 apprentices across the region in different disciplines in the built environment. The wage has gone up considerably over the last couple of years. Our scheme is £1.4 million. We get £100,000 from the Welsh Government; £900,000 the employer pays, so the employer has got the biggest bill, the biggest contribution, not just in monetary terms but obviously for mentoring and supporting young people. There's a hidden cost too, to a lot of schemes, which you don't see. So, for me, I think funding is not crucial in everything, but I think when it comes to people development and developing young people for the built environment, that bit of grant aid does support the overall, sometimes, output and delivery within those programme areas. So, I think the Welsh Government foundational economy is working in collaboration, really, with trusted partners, and I think that's the way forward. Don't chuck anything into something where somebody's got a great idea; we've got a pilot, but there's a lot of waste, sometimes. There's a lot of good practice in Wales, and there's a lot of good practice in our region—exemplar. Let's build on that.

Before we go on to Gary, I think Lee would like to come in on this.

Just to ask you on that, because much of the evidence is about additional grants, additional funding, how about making sure that, for the money we've already spent, these values are mainstreamed into that? So, take the social housing grant as an example. I think that is £300 million or £400 million a year. How do we make sure that the way that that is spent has these principles embedded, so that the value is fed into the local economy, rather than it leaking out, as you said?

There's nothing wrong in terms of trying to look at ways in which Business Wales and the economic development team at Welsh Government is supporting the housing division to ensure that the capacity is available at a local and regional level to try to minimise leakage from the £350 million coming from the social housing grant. From our own experience, we work closely with local contractors, with local SMEs, and we're trying to move away from the model where we import the contractors and use that £350 million, or part of that £350 million, to support the local SME sector to develop new homes and to refurbish existing properties. So, it's a question of commitment; it's a question of ensuring that the values are in place and that the partnership working is in place, especially between Welsh Government, the housing associations, local authorities and the SME sector.

We have a scheme that we developed—and I think we've submitted some evidence on it—the Tŷ Gwyrddfai project in Penygroes, which is the first decarbonisation hub of its kind in the UK. And it brings together all of the relevant partners—further education, higher education, the SME sector, large manufacturers—to ensure that we support and develop the capacity of the SME sector in the construction industry. It's about training, it's about strengthening their resilience, ensuring that they receive up-to-date business support, procurement advice. All of that is delivered under one roof in Penygroes, and it's a game-changer for us. It's something that we are trying to develop even further with the support of the Welsh Government. And, by the way, that project received funding from the circular economy fund and the shared prosperity fund as well.

But isn't that a good example of good practice emerging, but then how do we scale it and spread it?

That's something, coming back to your point, where it's about being transferable, transferring good practice to other regions, to other areas in Wales. I'm more than happy for other partners to be invited to Tŷ Gwyrddfai to see what's happening and to see the relationship that's evolved, especially between further education and higher education. Getting further education and higher education to work together on one project, as you can imagine, is massively beneficial, and not only in terms of the research and development to trial new products and new materials, but also in terms of providing vocational support, vocational training for young people and to retrain the existing workforce. It's a very significant project.

Diolch.

Gary Newman.

Yes, just to address that point directly, I think we've got some fantastic companies in Wales—house-building companies, timber frame manufacturers and contractors—that would stand the test against any company in the UK, and I don't think we celebrate that enough or recognise it enough. We often think, 'Oh, there must be something better if we look over the border', and absolutely there isn't. We're an independent organisation, so our membership includes the big contractors; it includes medium contractors; small contractors; 13 of the Welsh housing associations, including Iwan's, Adra—thank you very much; and all the timber framers; architects; forest owners; forest managers, including NRW. We're looking to create a coalition of the willing to change, and change is hard. There are systemic barriers to doing things differently, whether it's moving from, I don't know, energy performance certificate A to passive house, brick and block to timber, imported timber to homegrown timber, and we need these things to happen. There's a fantastic role for Government in not running the show, but in unblocking the blocks, be it insurance, be those regulatory policies that encourage tree growing and then discourage tree growing at the same time.

So, I think it's facilitating the people who are doing the doing: the people who are planting the trees, managing the woods or building the houses or running housing associations, and then helping them to move faster. Because over the next 30 years, as we all know, we're going to be moving into an incredible period of dramatic and unpredictable change—we're seeing it through the forest industries; we're seeing the climate now and the storms, and we're in the foothills of the chaos that's going to ensue. So, we need much greater resilience; we need to be much more fleet of foot, and we need to be more confident that we have what we need in Wales, we're just not necessarily deploying it as we could.

Okay, thank you. Diolch, Luke. I'll now bring back Lee Waters. Lee.

Thank you. I just want to develop the question of sharing and spreading good practice, really. What role do you think there should be for communities of practice? I'm aware that there is one that I'm told is fairly successful for the Welsh Government's decarbonisation programme. I'm particularly asking Joanne this on the work that she's been doing in the housing programme: is that the model that should be used in other areas, for example, the social housing grant, or do you have other ways that you can make sure that we can spread and scale the effective practice that is slowly emerging?

I think everything needs to be inclusive, and I think there's a danger that we're forcing things into silos, and if you start transferring knowledge of good practice through social housing grants, then you're only targeting a certain amount at certain people. And I think that good practice has to be shared across everyone, because like I said, it's planning, designing, it needs to be shared across the whole—. So, it's finding ways to engage with people, to listen to what people need to hear, but also to learn from the experiences that people are having on the ground. Quite often, these groups form, for whatever reason they form, but do they really, really include the right people that need to be in those groups, so that that learning and listening can happen from the people who really need to be part of that process? So, I think there needs to be a much more cross-delivery process and listening rather than in that siloed—.

Is there a model that you've come across that works better?

No. [Laughter.] I wish I could say there was. I think, it's a large group of people, and it's such a wide—. You probably would need 30 people of certain expertise involved in the process of the delivery of a project, one retrofit, let alone the whole process. And how you bring those people together quickly to work effectively at scale is very challenging. But I'm not aware of any models that we could lead on.

So, I think what we're searching for here are some recommendations on how we scale good practice.

Yes.

Do you have any suggestions?

Just one suggestion, and probably there are many more, but certainly I think there's an opportunity to do more at a more regional level, and developing and involving regional architecture in Wales. And there are bodies looking to work more regionally and more strategically. So, maybe there's an opportunity to look at ways in which good practice can be shared at a more regional level. But really, again, it shouldn't be instructed by Welsh Government; the regional partners should come together, in my view, to actually take that step, to trust each other, to share information, to listen to good practice, and just to take that approach, instead of just waiting for the instructions. So, maybe a more outward-looking approach from the organisations working at a more regional level and the willingness to share good practice, I think, is really important.

Yes.

And have the RLSPs got a role there? I would say, 'Yes.' It's the regional learning and skills partnerships, and I know that, down with us, they are setting up groups, really, for decarbonisation retrofit, so it's getting the right mindset and the right people to share, and to share concerns too.

Thinking of the projects you've all been involved in, have they been evaluated, has the learning from those been shared and spread?

We've tried. [Laughter.] And I think part of the thing is that the sharing needs to come from independent organisations, or it could be a university or somebody like Woodknowledge Wales or an organisation of independents, because as soon as large companies get involved, then they tend to want to sell their own products.

But isn't that what a community of practice can achieve?

From working independently?

Yes.

Yes, yes.

But I thought you were sceptical of them.

Well, it has to be inclusive, and I think that's the danger that, quite often, these groups are set up and they're not inclusive, and people want to—. They've got a voice, they want to share their voice, they want to share their expertise, but quite often, there's not a way to really be able to do that. So, it's widening the net to enable that wider voice to be really heard and listened to.

Do you know how we might do that?

Jenny, you'd like to come in on that.

Could I just come in? Because I think, in the previous session, we heard that sometimes, with these communities of practice, people are acutely aware that they may be competing against each other for future contracts, and obviously people are inclined to protect their future meal ticket. So, how will we get over that?

I think it's being able to monitor and provide data on how things are actually performing in practice, and if we can provide things like whether homes are less damp or they're less mouldy, or carbon emissions are reduced, or how well is the—. Real evidence, really, is to say, 'This is what we've done and this is how it's worked, and this is how much it's cost.' There's usually going to be a trade-off between cost and performance, but it's making sure that that evidence is real and genuine, rather than maybe not quite as evidenced as it needs to be.

Before we come on to Iwan, I think Gary would like to come in as well. Gary.

Yes, I mean, I'm a huge fan of the community of practice model. All our members are all really, really busy. They don't come to talking shops; they come to find ways of getting things done. And actually, it takes a bit of time to build trust and to really push things forward, and that's, I guess, why you need a bit of resource. But you also have to do 'doing', so these people that are involved in communities of practice have to see—you know, the business side of things has to see that things are moving in the right direction. What underpins that is trust, so they have to trust the people who are running the communities of practice, and the whole process, and I think if you get that right, then you can move mountains. There's a huge amount of good stuff coming out of certainly the communities of practice that we run, so as a model, I'm a fan, and it doesn't cost much; it really doesn't.

Iwan.

Yes, just very quickly—

Could I just ask you to add into your answer to elaborate on your point in your paper about the need for measurable indicators on the efficacy of a foundational economy, which shapes investment, and the overall idea of what they might look like?

Okay. Two parts, then, first of all in terms of this issue around good practice, and I mentioned the regional level, I'll just give you one example of that. There's a group that we've now established at a regional level, the all north Wales level, to support each other to work together towards the Welsh housing quality standard 2 by 2033, to look at supply chains, to look at products, materials and how we can share good practice, how we can share working practices, how we can share information. So, that's an example, hopefully, of ways in which we can collaborate, bringing together all the relevant organisations to ensure there is more of a co-ordinated approach, and everybody shares the same values in terms of trying to retain as much benefit within the regional economy, which will have a direct impact on our communities and on the foundational economy.

The second part in terms of indicators, very quickly on that: traditional economic indicators have been driven by growth. It’s all about growth, GVA, GDP, just coming back to my previous points, but very little on well-being, very little on literacy, very little on health. There’s an opportunity, I think, to re-examine that, to be clear what the indicators should be. It’s not all about growth, it’s about equality, it’s about being in an inclusive economy. So, there’s an opportunity, I think, to try and look at ways in which we can measure progress and measure impact in a different way.

Just going back to the 'Prosperity for All' economic document that Welsh Government has, there are no indicators there. But, again, if you look at the regions and the growth deals, it’s all about GVA and GDP. Everything is driven by growth and not equality of opportunity. I think there’s an opportunity to ensure that we’ve got indicators in place that measure equality of opportunity, especially for our communities.

Great, diolch.

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

Thank you very much. I want to look at procurement and fair work, starting with the Social Partnership and Public Procurement (Wales) Act 2023 and our aspiration to drive social value and support the foundational economy. My sense is that there’s lots of fantastic work going on, which you’ve all spoken about, but simply the need outstrips the demand by a racing mile, both in terms of demand for housing that people don’t have, and also just the general decarbonisation agenda is just vast. So, how do you think this—? Is it a magic bullet, the social partnership and public procurement Act, or is it money? Who’d like to start? Does Iwan want to start?

Very quickly on that, as I mentioned, £6 billion is being spent by the public sector in Wales and we need to maximise the value of that within Wales, especially among the SME sector. There are a lot of different initiatives and, as you mentioned, a lot of good practice. Again, I mentioned in our paper the material framework that we have at an all north Wales level, but also Ffrâm24, which is a multi-supplier framework that has now taken the place of the National Procurement Service material framework from the Welsh Government. It’s being led by Adra, and there are a number of different categories, but the objective of Ffrâm24 is for public bodies to make use of that framework and that we support Wales-based companies to be on the supplier list, so that you retain as much benefit within Wales itself. So, that’s an innovative way of doing it, and the support and the commitment from a number of public agencies across Wales to Ffrâm24 has been really positive.

Okay, great example, but how much is it dependent on your geographical location in north-west Wales, as opposed to, say, south-east Wales, where we’ve got a construction industry that works across the border all the time?

Just in terms of clarity, Ffrâm24 is an all-Wales framework.

Oh, is it? I beg your pardon.

Welsh Government have invited Adra to lead on Ffrâm24, as I said, taking the place of the National Procurement Service that was led by Welsh Government. So, there’s an opportunity through Ffrâm24 to ensure there’s a greater connectivity, if you like, between public bodies and Wales-based companies, so that they’re on the right categories and that expenditure is retained within the framework. So, that’s a really positive step.

How realistic is that given that we're all reading about the financial and budgetary challenges that local authorities are facing? You mention in your paper about the cost-of-living crisis driving people away from best value in terms of local procurement and going for, 'How much is it going to cost us?'

There are a number of issues there. We have to demonstrate value all the time, but there's a social value to this as well, and how do you calculate social value, especially in terms of bringing people out of poverty, in terms of reducing dependency on benefits. It's quite a complicated approach, I accept, but I think there's an opportunity and potential to do things differently at an all-Wales level, and to try and retain as much economic benefit and social value within Wales itself, especially through the new procurement Act. I think that offers the right leverage, if you like, to make sure that we support local communities through our procurement practices, and Ffrâm24 is one example of that.

Okay. Well, that's positive, but, on the other hand, have you got any different perspective on it?

I think, from our experience of working very closely with SMEs on the ground, they struggle. They get to a certain size and they struggle, because they want to get bigger, they don't have the capacity to get bigger, because they can't spend all of the time on the paperwork and everything, and when they've got an option to carry on as they are, doing a very good job, but carry on as business as usual, or to step up, quite often they stay where they are and just work in a small locality, because it's just easier for them. So, I think there need to be opportunities—. The procurement Act, great. That's really good, because it will support them with digital facility, to help them to manage and take that extra step, but it's how do we hold their hands to get further ahead and really grow as businesses, to really support the scaling up that we really need going forward?

And how do we get local authorities to give people time to plan and collaborate, because, often, they're saying, 'We want you to start by the day after tomorrow'?

And I think that's partly down to the funding coming out earlier, so that the local authorities can work and engage with the people that they work with to deliver the projects more effectively in the longer term.

Presumably, they have pre-procurement discussions, don't they, saying, 'We are going to be letting this contract, and you may want to think about x'?

It's the large amount of people involved in a project, and if they don't know that it's coming for sure, or when it's coming, then it's very difficult to arrange all of those interactions before something may happen.

Jenny, Gary Newman would like to come in on this as well.

I saw Gary wanting to come in, and I wanted to talk to Gary anyway. In your paper, you talk about how public bodies apply the rules and being, for example, risk averse in their interpretation of regulations on tree planting, and a lack of overall strategy on land use. I just wondered if you could elaborate a little bit on both those points.

Well, just on the point on procurement, I'm no expert, but we produce some guidance to help procurers to think about procuring differently to procure low-carbon outcomes, but it's not really impacting. I think procurers like to procure in the way that they know, and it's incredibly risk averse. So, I think there's a piece of work somewhere for Welsh Government in terms of training or demanding more ambition from the procurers.

In terms of tree planting, it's not been—. There's a lot of ambition in Wales, which is great. It's not been well implemented in terms of a blanket 10 per cent tree cover on every farm. That might be convenient for policy terms, but trees and forestry work well when they're in blocks, not in little clumps on the corner of farms, not loved or cared about by the farmer, and, therefore, even if it was an accepted measure, it wouldn't, I don't think, deliver the ecosystem services and the economic benefits that it could. Then you also have the problem that, when people decide they are going to grow trees, and they apply for the licences and environmental permissions, which is not that dissimilar to trying to build a house, you find that there are all sorts of reasons why they can't plant the quantity that they want, or the area that they wanted, for all sorts of complicated, risk-averse reasons within the structures of Welsh Government and Natural Resources Wales. So, we need to be more purposeful in that kind of aspect, particularly in tree planting. And sorry, Jenny, there was a second part.

Surely only Welsh Government could come up with an overall land-use strategy taking climate change into account. There are numerous examples of why we need beavers in the uplands so that we don't have flooding in Bridgend, but if we don't have those strategies in place then it's very difficult for farmer X to be able to see where they fit into this.

So, that's the other aspect, yes. We don't have an overall land-use strategy, which is ridiculous when you think of the challenges that we're going to face going forward. So, where is it most appropriate and advantageous to plant trees? Where is it most appropriate to have amenity planting? Where is it most appropriate to have productive forest planting? So, I made that point, Jenny, in the paper—I'd forgotten that—that it is critical, and I think it's going on in England and Scotland, and I think we need something in Wales sharpish, particularly to take account of the fact that the climate is going to be changing very, very quickly, so what was appropriate at one time is not going to be appropriate at another.

So, given the restraints on time, I wondered if, in this final contribution from any of you, if you could give us some good examples of good practice in public sector procurement, and/or good examples of fair work initiatives that aren't in your papers, because obviously you've given us quite a lot of evidence there about Academi Adra, et cetera, in developing the skills of tenants.

I think, especially in the built environment in south-west Wales, we've got frameworks there, the south-west Wales framework. That's come up now for tender, it has been marked, that's £1 billion of work for the next four or five years. That'll be definitely SME driven, and to be fair, we have managed to get a good skills and training output out of those schemes, because it's SME driven. If you get a major tier 1 contractor in from over the bridge, they will not train as much locally. So, you need the tier 1 for certain schemes, because of the risk and the size of the scheme, but you've got to have a balancing act of—. With our schemes, we've had over 400 SME contractors buying into our programme. What a success that's been, and that should be applauded, really. We don't do enough of that. We don't—. As I said, we should be promoted as best practice; we're not very good at doing that in Wales, I don't think. I think we've got great success stories, we do deliver well in certain regions, but I think there's an opportunity there, really, that the SME has to—. The biggest threat to the SME, if you ask them, is the workforce, the skilled workforce. There's a diminishing workforce. There's a risk there when they take on bigger jobs, so how do we de-risk that, really, together, so we are prosperous, so we support the future generations Act, so we have healthy communities, and well-skilled and well-paid jobs for our young people that stay in the community. That's the challenge for me, and what we're all here for. We have got good practice, but the SME sector is troubled. It's a risk there, because they all say the workforce, there's a diminishing workforce; a lot of people have retired since COVID, and how do we plug the gap?

Okay. Earlier on, one of you—I can't remember who—said it's education that leads on the people that we're actually training up. Why is the industry so passive, and sort of saying, 'Oh, well, we'll take what you give us'? Why aren't we driving the education sector, to say, 'There are huge needs here. We need x number of these people'? Joanne.

I think the need to be really flexible—well, to keep moving. We can't stop. So it's about the trainers, and the trainers need to be really moving forward very, very quickly. That's quite difficult in the education sector because you've got approved courses to run, so there needs to be a way of making sure that courses can be adapted, and if we've got air-source heat pumps coming in, where are the skills, where are the trainers who are going to train people around the benefits of air-source heat pumps? But that's going to keep changing, so it's making sure that those trainers are always on top of the game and aware of things that are coming through, so that they're training people on the right things for the moment.

Iwan.

You mentioned good practice, and I've outlined many in the paper. I mentioned Tŷ Gwyrddfai, which is a decarbonisation hub to develop green construction skills, which is obviously a really important project bringing together all the relevant partners. Tendra is also mentioned in the paper. Tendra is a scheme that's been funded through the Arfor programme, and it brings together a lot of the small microbusinesses to enable them to have the support, the capacity, the skills to tender for work at a more local level, but very, very important in terms of designing local supply chains. I also mentioned Ffrâm24 as good practice, but also you mentioned Academi Adra, which is a really important project again. It's providing training with paid work placements, and it's targeting a lot of our tenants at entry level to make sure that they are equipped with the appropriate skills and the confidence to access opportunities in the labour market.

We've done a number of courses on construction, care, for example, and we've seen a lot of young people grow and build more confidence so that they can access opportunities in employment, but that's a really exciting scheme and something that we need to share widely.

And final comments to Gary Newman because we're way over time. Gary.

I just think it needs an honourable mention that the innovative housing programme had a profound effect on the sustainable construction supply chain. Okay, Welsh Government wasn't ready to radically change the regulations—I think they should—but they radically supported people doing things differently in social housing in terms of embodied carbon reduction, which is critical, and operational carbon reduction and the support for local companies. And that was layered on top of the existing regulatory frameworks. I think that is a fantastic example of how to do something really well without having to disrupt every other department in Welsh Government.

Thank you. Our session has therefore come to an end. Thank you for being with us this morning. Your evidence will be very important to us as a committee for our inquiry. A copy of today's transcript will be sent to you in due course. 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 therefore to item 5 on our agenda, and I propose in accordance with Standing Order 17.42 to resolve to exclude the public for the remainder of today's meeting. Are Members all content? Yes, I see that they are. So, the motion is agreed and we'll move to our private session.