Climate Change, Environment, and Infrastructure Committee

We'll move on, therefore, to the next item on today's agenda, because, as we remember, on 10 December last year, the Welsh Government laid its draft budget for 2025-26, and this morning we are having an opportunity to scrutinise and to hear evidence from two Cabinet Secretaries related to the budget as it pertains to their portfolios. The first to join us this morning is the Deputy First Minister and Cabinet Secretary for Climate Change and Rural Affairs, Huw Irranca Davies. A very welcome to you this morning, Cabinet Secretary. Joining him are Claire Bennett, who is the director of climate change and environmental sustainability with the Welsh Government, and Jamie Powell, deputy director of finance at the Welsh Government. A warm welcome to the three of you.

We'll go straight to questions. We have a whole host of questions that we would like to cover in the next hour and a half. We'll do our best to cover them all. I'll start, perhaps, just taking a step back, because your paper—and thank you for the paper—states clearly that tackling the climate emergency is a priority across the Government, and across the Cabinet, not just from the perspective of your portfolio. Can you talk a little bit about how you've worked across Government to ensure that this is prioritised and reflected in every role and portfolio?

Thank you, Chair, and happy new year to you all.

Happy new year.

We've always made very clear in Government that we see both the climate emergency and also the nature crisis as being embedded right across Government. Every portfolio Minister, every directorate, every team of officials needs to integrate it, including within the budget process as well. Now, part of the way that we do this in terms of climate change is through the director-level climate change portfolio board. So, within my area, Tracey Burke is the chair of that board. It meets every two months, it strategically looks at, right across the piste, how we're taking forward that climate commitment embedded within every area. It brings forward recommendations as well. It's also the driver behind that cross-portfolio—it's stimulating the work across, the collaboration across portfolios, working towards that cost-effective, net-zero transition. I should say as well—it's important to say repeatedly with this that we have a just transition, that we do this with people.

We're all working, of course, not only on working towards completing the carbon budget 2, so outwith the financial budget situation, there's the delivery of carbon budget 2, but also now, working towards the actions required for carbon budget 3 as well, and again, delivering those, which will be—as I've said to the committee before—a higher level of ambition in a way that is also fair and delivers a just transition.

For myself, I speak regularly with Cabinet colleagues on this; it's discussed within Cabinet, but also in bilaterals and trilaterals as well. Within my portfolio areas, you'll see that we've allocated, in 2025-26, £22 million of capital for Welsh Government to invest in the public sector decarbonisation within the estates, within the fleets of vehicles it has. But I can give you some examples of how this works across other budgets. So, for example, the Cabinet Secretary for Housing and Local Government has allocated £30 million funding to local authorities for low-carbon heating within their estates. The same Cabinet Secretary is also supporting the adoption of green features, such as renewable energy, with the £57 million Help to Buy—Wales scheme and the optimised retrofit programme again, so it's really deeply embedded. My colleague the Cabinet Secretary for Economy, Energy and Planning has committed £4.5 million to the green business loan, so that's supporting small and medium-sized businesses for energy efficiency investments, enhancements and decarbonisation projects. So, it's right across portfolios. It's not just me; this is right across Government and in all their budget decisions.

Okay. Diolch yn fawr iawn. Right. I said we had a lot of areas to cover, so I think we'll—I was going to say 'go straight into them', but—

The Cabinet Secretary didn’t include the nature crisis there, so how is that incorporated in education, in highways, in remediation, et cetera, to make sure that people connect with nature through education as a child, and then highways, when we're doing redevelopment, they're making sure that they're having due regard to biodiversity and nature?

Yes, yes. Well, the same approach applies to addressing the nature crisis as it does to the climate emergency as well; it needs to be embedded in every portfolio. And you're right in what you're saying: that is in education. And we should be proud of the investment that we do, still, within eco-schools—within 90 per cent of schools within Wales, we have the eco councils—plus the forestry school initiative, there's a link with that as well, the nature understanding and so on. But you're right in saying it's every portfolio. So, within transport, for example, with my colleague Ken Skates, they're providing funding now for schemes to increase biodiversity alongside transport routes, to develop things such as wildflower planting, to have a better approach that is more wildlife friendly and biodiversity friendly in terms of the regimes around mowing practices, and so on. So, it does mean that we look at every single area. It's very much reflective of that approach that we take with the climate emergency. So, we will keep on with this. It's also, by the way, what we do with things such as the Habitat Wales scheme, what we do with Natural Resources Wales and local authorities, and the work that they're doing as well. So, it has to be right across the public realm.

Okay, thank you.

And we'll be coming to some of those particularly, as we proceed. Joyce, you wanted to come in and then we'll go on to the other areas of questioning that you have.

We will be covering some of those in more detail, but I'm interested in how you're using your influence with the planning departments, so when we're building, and linking to flooding. So, I'm talking about surface water alleviation and prevention, so that when you're building, for example, new estates, you have permeable surfaces in place. The need couldn't be greater than now.

Indeed. You're absolutely right and it was pleasing for me to come back to Wales, having set in place—when, with another colleague here, we were in Westminster—the sustainable urban drainage programme, the SuDs programme, to see that Wales was ahead of the game here in investing in that, from a policy level as well as a budget level. And this is real partnership with local authorities. I spoke about three months ago at an event here, in a building only about 100 yards from where we're now sitting, where there was a UK-wide conference of planners, developers, project managers and constructors, who were being shown some of the work within Cardiff and within Wales that is leading the way on sustainable urban drainage on a grand scale, but also what we can do at individual property level as well. Much more to do on that, but I think that is a reflection of the way you need to embed both policy, but also budgetary decisions to drive it.

Okay. And I’m going to ask you about climate change action, and whether climate adaptation is a priority for the Welsh Government and how it’s being reflected in the draft budget.

It’s integral to the budget that we've brought forward. We published, as you know, back in October, our 'Climate Adaptation Strategy for Wales'. It shows how we’re doing this again, this approach, right across Government, not just within my portfolio, but right across Government. So, it is to do with investment in flood defences, protecting homes, of course it is, but it’s also to do with things like the investment in Public Health Wales. So, Public Health Wales have a role, for example, in helping us to analyse and understand the risks to human health, both with things like the increased traumatic weather instances with flood and so on that we have, but also with increasing incidents of drought and hot weather and so on, and what that means then in terms of feeding into planning and the design of homes and so on. So, within my own area, we're maintaining the investment.

The way we understand this better and then implement budget decisions and policy decisions is through our engagement with external bodies, like the Climate Change Committee as well, on adaptation. They provide feedback on our adaptation strategy. It was very valuable, actually. As we were developing our strategy, we were able to engage with them and take feedback in the course of it. Now, we haven't had a formal view yet from them on the extent to which they think the new strategy has responded to all the recommendations, so we’re looking forward to receiving that. But I think the strategy we announced in October has moved us forward considerably, but we’re always going to need to do more.

So, I take it, when you’re talking about the Climate Change Committee, you’re talking about the UK Climate Change Committee.

Yes, indeed. Yes.

So, do you think that it’s the case that the Welsh Government’s ambition for the public sector to achieve net zero by 2030 is achievable?

For the public sector, I think, we’ve got to be frank, this is really challenging and there’s great diversity within the public sector. So, from our NHS partners to local authorities, they’re all doing great work. There are really good examples of good practice. It is a collective ambition. It’s good to see, and I have to give my thanks to local authority colleagues individually, but also the Welsh Local Government Association as well and NHS Wales, for the way that they are leading on this work. But there will be some that will struggle a bit more in some areas than others. But this is a high ambition. We do expect every public sector organisation to strive to achieve it. It can only be achieved by all of them working together and by sharing best practice as well. There are some really good examples out there, so things such as local energy planning, decarbonisation of public service fleets, real practical progress on the ground. So, yes, it’s a stretching ambition for the public sector, but we expect it to be achieved.

How will the draft budget allocations for the Welsh Government energy service specifically support that public sector decarbonisation?

Well, there's a number of ways. I mean, within the energy service itself, which sits within my area, very much focusing on public sector decarbonisation, the energy service provides advice, technical guidance, support for the public sector, in developing some of these solutions for decarbonisation. These are very practical approaches, so it's things like how do they bring forward low-carbon heating solutions rather than relying on fossil fuels, the development of LED lighting, electric vehicle charging infrastructure, insulation upgrades, wind turbines, solar—the whole array of things. They provide the support and it's invaluable—that’s what I’m told by public sector organisations—to have this font of advice that can say, ‘Here is what you need to do to get to the next level.’

What additional financial support, other than that provided through the energy service, is available to the public sector in their aim to decarbonise?

There are other sources available as well. So, beyond the advice and guidance and support through the energy service, there are examples. Some of those are at a very much local level, and, again, credit to local government themselves, because they have their own local carbon heat programme that they work on, so there’s real commitment here. But, in addition to this, we have things such as the Digarbon programme. That provides £10 million loan finance to the higher education and further education sectors for the next financial year. You’ll probably have seen in your own constituencies as well some initiatives with this, with the FE and HE sector really driving forward and wanting to be right at the forefront of this change towards decarbonisation.

We also have the Wales funding programme, it’s a separate programme, and that has over £11 million of new capital every single year for loans, and it’s quite an interesting approach. It’s basically loans to support decarbonisation, but it’s predicated on the idea that, by investing in decarbonisation, you save money. So, they’re loans, the money then is repaid back—it’s a classic recycling of the money, which is quite good in this context—and that money then is reinvested in others who want to do it. It’s working very well and, as I say, it’s in excess of £11 million a year, and it’s a rolling programme as well. So, there is additional support out there to help the public around decarbonisation, and it’s vital they do, because this is really about leadership and showing everybody else.

So, can you confirm whether you have responsibility for the energy service, given that all the other aspects of the energy portfolio sit with the Cabinet Secretary for Economy, Energy and Planning?

Yes. This sits within my portfolio because it’s focused on that public sector decarbonisation piece, which I co-ordinate right across Cabinet. But, just to be absolutely crystal clear, other Ministers and other Cabinet Secretaries have a role to play within this, so local government and housing, education, they also have a role to play. But the energy service piece sits with me because that’s part of my role across Cabinet.

One final question. We all know money’s necessary to move things forward. You talked about the recycling of grants, and that’s obviously a good thing. Would you reassess those if you found the need for more finance, if you found that things were moving quicker than you’d anticipated and there was a willingness to access those grants to do even more?

We always keep every aspect of our budget under review. And it’s worth saying, this year, I’m coming into this committee with a little bit less anxiety perhaps than previous incumbents in this seat have had, but we’re still making up for a significant hit to our budget in the last few years. We’ve taken a lot out of the budget in this portfolio area, but this is a better year. But we will keep these under review in a range of areas. If we were to have additional funding coming forward, there would be a number of demands on it, from climate change to biodiversity, to flood, to a range of things, to coal tip remediation, et cetera, et cetera—all of those. But we will keep it under review. At this moment, by and large, we’ve managed to bring forward a budget where we can see that investment going forward in decarbonisation and responding to the biodiversity crisis, and our core features as well. If more came forward, we’d have a good conversation about how we’d prioritise it. There are going to be lots of demands on this budget, I’m sure.

There are indeed, yes.

Thank you.

Okay, diolch, Joyce. Thank you. Right, we'll move on to Janet.

Thank you, Chair. Your paper says that local authority bids to the various local transport grants will be submitted—

That's for another Minister, transport, isn't it? Transport isn't part of the portfolio of the Cabinet Secretary.

Well, where am—? Sorry.

We were going to move on to coal tip safety.

What page number? Oh, yes, sorry.

I'll do my best on transport. [Laughter.]

I'll catch you later, don't worry. Can you clarify how much funding the UK Government allocated for coal tip safety in its autumn budget? Was it £25 million or £36 million, as both figures are referenced in your paper?

Yes. It's £25 million from the UK Government. It's what we asked for and what we got for this year ahead. The £36 million is made up from our investment.

Thank you. And can you explain the breakdown of the £102 million the Welsh Government says it has allocated to coal tip safety in this Senedd term?

Yes. So, £65 million of that £102 million represents the amount awarded to local authorities, to NRW, and the nine remediation authorities since 2021, and the remaining amount is the 2025-26 budget allocation for coal tip safety work, so that includes the £25 million received from the UK Government.

Okay, thanks. The published BEL tables show revenue funding for coal tip safety at £4.24 million, but page 3 of your paper states it is £5.84 million. Could you confirm which is the correct amount?

Yes. I've got to own up, it's an error, which we will correct when the published BEL tables are brought forward in the final budget. So, the correct amount—I've got to get this right, now, for the record—the correct amount is the £5.84 million, and that's £3.8 million of baseline funding from Welsh Government, and £2 million of revenue funding from the UK Government. I think I'm right—

Yes.

Okay, good. But we'll correct it finally when the final BEL is brought forward in the budget.

Great. And have applications to the coal tip safety grant scheme outstripped the amount of funding the Welsh Government has allocated? And, if so, how is coal tip safety being ensured in the absence of funding being available through the scheme?

No, it hasn't outstripped the demand there, because there's a real practical reality here of being able to deliver, with the capacity out there to deliver projects on the ground. So, we allocated £18.4 million to authorities and NRW in 2024-25. It is correct that the initial applications received totalled in excess of £29 million. However, the practical reality is that many of those applications would be unlikely to have been delivered before the end of the 2024-25 financial year. But what we will do is that those will be taken into account now in the investment programme going forward into the next financial year. So, those proposals that were not deliverable within the timeline of that grant year will be considered for funding now in the future grant scheme.

Just to say as well that we're very confident in this approach, which I keep saying on the floor of the Senedd as well, that we need the quantum of funding there that will deliver practically those projects each year as this rolls forward. This is a long-term project there. If we had manna from heaven, and we suddenly had dumped on us 10 times the quantity, we wouldn't be able to deliver it this year ahead.

Thank you.

So, those applications that were made for the grant scheme in this current financial year will just roll over to be considered as part of the wider scheme—

Absolutely. They'll be considered for funding now in the future grant schemes.

Okay. Thank you. There we are. Okay. Diolch yn fawr iawn. Julie, we'll move on to you.

Bore da. I'm going to ask you some questions about National Resources Wales funding. The £19 million increase in the resource allocation for National Resources Wales, does that represent the £19 million loan to address the unpaid tax liabilities?

No. To be absolutely clear, it's nothing to do with that whatsoever. It's not related to the tax liability. It's specifically to do with things such as internal budget accounting adjustments and corrections, additional funding for NRW's pay awards and pension contributions, and also NRW's planning and infrastructure work as well. So, it's not related to the tax liability.

Right. So, that includes the additional £5 million to enhance capacity to progress infrastructure consents?

Yes. So, within that—

That's in the £19 million.

Exactly. And that's a very important piece of work, and that's included within the £19 million.

Right. Thank you. And then, the capital allocation, does the £2.7 million increase in the capital allocation represent the £3 million uplift for water quality improvement that is identified in your paper?

No. I'm pleased to clarify this as well, Julie. So, the increase in the capital allocation for 2025-26 is very specifically to support NRW's service transformation programme. That £2.7 million capital funding is going to be used to pioneer NRW's marine licensing work, as part of the initial part—the building blocks, if you like—of a customer platform that, in due course, will cover NRW's regulatory functions, external interactions with stakeholders and so on. What this will allow is NRW to provide a much better service to its permitting and licensing customers, improve its organisational capacity, and deliver more staff capacity to deliver more for the environment as well.

So, the capital allocation—NRW's capital allocation—of £27.81 million, what is that being spent on?

If it's helpful, I can give you a bit of a breakdown in some ways.

Yes, I think that would be helpful, yes.

Okay. So, in terms of the capital allocation for 2025-26, the total of that capital allocation is £27.8 million, and this is going to be spent in these following areas: NRW's core GIA, grant in aid, £3.1 million; the flood GIA, £22 million—so it shows the level of investment that we're maintaining in this area—the service transformation programme I just referred to, £2.7 million. And just to say the grant-in-aid capital allocation for core and flood is comparable to what we allocated last year, which was £25.6 million, so we're maintaining a significant quantum of funding in there. And then there is other capital funding, by the way, Julie, that's provided via specific grants, but they're within other BELs: so, for example, water quality capital investment, the NaCE programmes, which I literally have to remind myself every time are the natural capital ecosystem resilience programmes, and also the Wales coastal path as well. Now, those sorts of additional funding will amount to over £26 million as well.

I think Carolyn wants to come in, Julie.

I want to ask: is it invest to costs or invest to grow, basically? This money—. I know that they're having a change programme at the moment, having to make some redundancies. So, is that revenue something that's being used towards that? Also, the closure of the visitor centres as part of their change programme, we're concerned that, if they do close, organisations won't be able to take them over because of the withdrawal of staff. And we're also concerned that there's a proposal to bring in an outside car parking operator to put charges on the car parking, which will then be used, possibly, towards NRW's budget. But if any organisations are to take over they need that money themselves, ring-fenced, to be able to maintain these visitor centres. I wanted to raise that here, if that's okay. And we'd like that detail of what's going to happen there, if that's possible, because it's all part of the budget, especially if they're getting a bit more funding.

Yes. To be very clear, the budget allocations we've got here do not refer to the case for change programme whatsoever. They're not to do with backfilling that or anything. This is separate from that. They've been through that process. But I know that NRW will want to keep engaging—I would encourage them to keep engaging—with Senedd Members and the wider stakeholders on what now flows from the case for change. And I recognise the concerns that you've raised there. They're very alive to them as well. It's something I raise in my discussions with the chair as well when we meet. But, no, it's not part of—. These allocations are not designed to backfill or make up for something that's gone through the case for change. That piece of work has been carried through by NRW. These are now to do with investment going forward.

Okay, thank you.

Okay, thank you. Julie, did you want to come back on anything?

No, I think that's all right. So, I'll just go on to the last question. It's about the flood funding. That's been moved into the same BEL as its wider grant-in-aid funding. So, how are you monitoring NRW spend on flood and coastal erosion risk management?

Yes, even though it's in a different BEL, Julie, we can keep on the very close monitoring of it because the capital funding requirements are still agreed and monitored specifically. So, NRW will bring forward their proposals for capital funding each financial year, so the proposals for the year ahead, for 2025-26, were received back in the autumn—sorry, I say ‘autumn’; in December. They'll be presented very specifically to the flood and coastal risk management board, the programme board, for agreement in February. My officials are in regular dialogue with NRW throughout the year to monitor this spend and the investment, the flood investment, reflects our Welsh Government strategic priorities and our commitments as well. So, even though it's in a different BEL, we are very accurately monitoring whether it fits within our strategic objectives.

Thank you.

Diolch yn fawr. Thank you. Joyce.

That leads us nicely on to the flood risk management questions. Are you content, Cabinet Secretary, that the allocations for flood and coastal erosion risk management are sufficient, given the rising sea levels and increased risks of flooding all around us and being caused by climate change?

Yes, but we're always going to have to do more is the very honest answer. Everything that we know, everything that we see, all the forecasts, suggest this is not a one-year budget issue. We're going to have to maintain significant levels of funding, which we have been doing. So, the year ahead in this budget sees the significant investment that we've done in the last few years being maintained, going forward. We're also investing in our very successful, I have to say, and in some ways groundbreaking, natural flood management pilots with ongoing funding as well. So, it's not all to do with hard defences, although those will be sometimes be needed; it's those wider uses of natural processes as well.

Now, the full details of our programme will be agreed by the flood programme board that I mentioned are meeting shortly, in February, but we do expect to see as a result of our investment significant schemes again being brought forward right across Wales, including, just as a preview there, there should be some notable projects we expect to see in this round coming forward in places like Neath Port Talbot and in places like the Vale of Glamorgan and so on. We've seen in the last year significant projects in north Wales, in west Wales and so on. We need to keep this going.

So, how have NRW's report, 'Long-term Investment Requirements for Flood Defences in Wales' and the National Infrastructure Commission for Wales's report, 'Building resilience to flooding in Wales 2050', been taken into account in that preparation? And have there been any changes made as a result of those two reports?

Yes, they have, and certainly the—. I'll deal with the two of them separately. They both influence. The one that's had greatest immediate impact and impact over the last few years is NRW's report on the long-term investment required for flood defences, because that's changed our approach to the scale and the type of capital investment and flood investment that we're doing. It made very, very clear how much funding would be required not just for, as I was saying, one, two, five, 10 years, but over the next 100 years, recognising what's happening with the sea level and traumatic weather incidents that lead to coastal inundation as well.

So, that report made the case very clearly and we heard it, and we're delivering on it for continued investment over that 100-year period. So, the projects within NRW's annual capital programme are therefore ones that are reflective of their challenge that they've put to us, but also ones that are economically viable over the short and long term. So, this doesn't mean we just keep on building our way out of this. We have to think of other ways as well of countering this. So, we're maintaining the record levels of capital within the flood and coastal erosion risk management programme.

The National Infrastructure Commission for Wales's report is equally a very valuable contribution to the evidence base that we have. It's got an interesting, slightly different nuanced challenge here because it doesn't call for quantum of investment; it calls for a more integrated, more coherent approach to water management, including on a catchment basis. Now, that's quite interesting and I know, when they've appeared in front of you, they've talked about this different approach, thinking differently about it.

Now, I've met the commission to discuss the report and recommendations. I'm really grateful for the time that they've spent following up, actually, with my officials as well. I'll be responding formally to the report in the first part of this year. It contains a lot that we'll want to progress but we're going through the detail of it at the moment. But, again, I think it's got challenge but it's also the right challenge of the way of thinking about the way we respond to flood and coastal sea rise and so on, as opposed to simply saying, 'Here's a quantum of investment that you need to spend your way out of this.'

If I can, if there's one area where the public will be very switched on to inter-governmental working, it's flooding, because it's visible and it affects people. And across all of the departments, Deputy First Minister, you will see that quite clearly. So, I think there are things that perhaps need to be done more quickly than they currently are, particularly in the planning. If we're going to build more homes, particularly more homes, we need to go beyond sustainable drainage systems. We need to look at the surface water—you won't be surprised I'm talking about surface water—and permeable surfaces, and also ensuring that you don't get the urban creep that happens once people move into their homes, and do an awful lot of education on why we're doing these things. So, I have no doubt, with your history in this area, that you've considered those things, but who's pulling them together?

I think that is very much a cross-Government piece of work, with my Cabinet colleague for housing and local Government, and it is something we're very seized by, because part of the challenge from the infrastructure commission, but a part we're already very aware of, is that it's not only to do with grand schemes and it's not only to do with catchment management approaches, it's street-level design. So, it's working with colleagues in planning, not just to develop SuDS, but the design of new communities, but also how you can retrospectively improve existing communities. When you have incidents where you have not just flooding in the river valleys at the bottom of the valleys themselves, which is traumatic, but you also have it on the tops of the hills because of the increasing propensity over the last few decades of hard surfaces, hard front gardens, et cetera, that is causing problems. So, we need to plan our way and design our way out of this, not just with new housing but also our existing communities as well—communities that 20 or 30 years ago would not have been flooded at all, but now there's that cumulative effect of the weather and poor surface water design at a street level. Claire, I don't know if you want to talk at all any more about the engagement with officials in other portfolios, particularly housing and local government, on this.

We do have quite regular engagement with colleagues in planning, and that planning piece is really key. But the Deputy First Minister is right: the existing infrastructure is a different challenge. You'll be familiar with some of the projects that Dŵr Cymru has delivered, in Cardiff and elsewhere, which are about surface water management. And I think, as we move through this investment period for water company investment, with that set of nature-based solutions and how you keep surface water out of combined sewerage systems, there's a range of benefits. So, it's not just about the flood risk, there's a water quality component, and that's why the integrated catchment approaches are really significant. Picking locations and opportunities where there's other investment going in, and this can form part of then what's delivered, I think will be a real key opportunity—so, continuing to talk to colleagues in housing and regeneration, and elsewhere, about where this can be built in. And it's also got a biodiversity component as well. I think the opportunity is those multiple benefits that can be delivered.

Thank you. Thank you, Chair.

Thank you. Speaking of biodiversity, Carolyn, are you going to take us into that area?

I just have one little thing. Local authorities are the lead flood authority, and they've got enforcement powers. When we had the recent flooding, they should be able to enforce NRW to maintain their culverts and ditches, which they haven't been doing. So, I'm just wondering if there's funding in this budget here to ensure that NRW do that, and they also have regard to the slopes and the way that they do clear tree felling, which doesn't help with flooding. They should be doing continuous cover forestry rather than clear tree felling. So, I just want to raise that at this point, if that's okay.

Consider it raised.

Thank you. Moving on to biodiversity, for me, connecting people with nature is really important, so that they understand the value of nature. Without biodiversity, we have no economy, so I think it's really important. Can you outline the budget improvement advisory and impact group sub-group's work to develop a preventative approach to budget setting through the lens of biodiversity? Is that the sub-group you mentioned earlier?

No, this is a different sub-group. This is a sub-group of the BIAIG, the budget improvement advisory impact group. They're in the early stages of their work, but their work is focused on a slightly different but very, I think, productive area, which is embedding prevention. It's very much avoiding those harmful unintended impacts in budget setting. So, they're using biodiversity, actually, as an area to test out pilot ideas, such as development of a toolkit, providing advice to policy makers and, indeed, to the Welsh Treasury. They're relying, in that, on some of the work that came out of the Dasgupta review, and we're expecting them to report on some progress on this. Even though it's early work, it's very interesting, and I think it's going to be very productive. We're expecting a report on progress in 2025, so in the year ahead. Subject to that, what comes forward from it, and if it is useful, what we would like to do is to explore a whole budget approach to preventative activity—not the responsive, but the preventative. If we can do that, then that'll support the ambition we have to mainstream delivery for biodiversity and also ecosystem resilience across all partners.

The other thing to touch on is that we've got officials from the Treasury, biodiversity and decarbonisation involved in the Next Generation Budgets project. That is a project that's running for over 21 months. It'll be ending in February next year, and it's run by a group called the Climate Group. The Climate Group trains and supports devolved Governments in design of next generation budgets. We're really keen on this space. This is a project that's trying to align public budgeting with climate neutrality, and also then unlocking financing, building on technical training, looking at international best practice. So, I think there's a range of ways in which we're trying to really take forward this changed approach to budget setting that really reflects biodiversity, climate and so on.

Do you take into consideration the Well-being of Future Generations (Wales) Act 2015 as part of that exercise?

Yes, entirely, including the ways of working as well. The great thing about the well-being of future generations Act is it allows us to go through this transformational but constant change, so we have a system-wide shift. Certainly biodiversity was considered as part of the analysis of impacts on the environment within the draft budget, reflecting those domains of sustainable development within the well-being of future generations Act. In going ahead for 2025-26 and developing our spending plans there, we've been guided by the five ways of working as well, which is based on that idea of prevention and mitigating the impacts as far as possible. So, it's deeply embedded now.

How do you respond to calls from environmental groups for the Nature Networks fund to be enhanced with longer term funding? It's really tricky, isn't it, if you've got one-year funding, because schemes take a while and, like I said earlier, it takes a while to have that change with nature and to get volunteers involved et cetera. The RSPB have called for the launch of the next NNF to be in the spring, so approval of projects by the autumn, to enable delivery in line with the seasons. Is that something that can be achieved?

It's not impossible, but there's a fair bit of work to be put into this. In respect of RSPB's call, we can definitely work with the National Lottery Heritage Fund to explore that option of having an early window for some applications for the next round, so it can work with that seasonal approach. But it will need to work with the National Lottery Heritage Fund timetable and also allow enough time for stakeholders to put forward good applications as well.

On the wider point—you talked about the Nature Networks—I think one of the big challenges—and I've said it in front of this committee before—is we can sustain a quantum of funding from Government, and it's important that we do, because it's a vitally important area, this particular area, but we also share the ambition to have longer term funding in place. It isn't possible right at this moment to increase the quantum in the way that some people would like within this current budget. I mentioned earlier, Chair, that we're still dealing with the legacy of a couple of years of some really difficult decisions within our budget areas, but now we seem like we're on the front foot a little bit.

I'm keen to work towards additional funding, and part of this could well be unlocking private finance with real integrity, real ethical investment that is complementary and additional and allows us to go at a greater scale and pace. I know that many of the ENGOs out there are also keen on this area, because they've been pioneering it. But meanwhile, we will continue investing in Nature Networks and the national peatland action programme. A role within this as well is the SFS preparatory scheme. What we've already done with some of the initiatives that we're piloting this year is showing a direction of travel, so we'll keep that going.

Are you making representations to the UK Government to reinstate a UK nature restoration fund to replace the EU LIFE fund, which is sorely missed?

Yes, we will keep on having that dialogue. We made representations to the previous UK Government, and we had no response, but we'll keep on making those representations about replacement funding. But I think it's important to say that, whilst we would welcome, if you like, replacement—and this is part of a wider discussion, actually, of all of the funding that we lost at that time when we left the EU—meanwhile, we get on, because there are so many programmes that we are doing within Wales that we're using the funding available to get on with it. So, we will continue to make those representations, but I think it's vital that we just get on with using the money that we have available as well.

We heard evidence from the WLGA on the importance of the Local Places for Nature funding. Local authorities have been cash-strapped, they prioritise housing, social services, these front-line services. So, on biodiversity, ecology, without this funding, they might not have the officers there to be able to deliver the biodiversity targets. I know one authority previously had one interim, and now they've got four because they're using this budget. So, it's growing green skills as well, it's working with communities, they're working with communities and volunteers, and the Local Places for Nature programme has developed thousands of schemes within communities, bringing in volunteer time as well, allotments, orchards, changing green spaces for wildflowers, lots of things happening. I know you value it, but there's a reduced budget, so what impact do you think that reduced budget will have? Will it mean cuts to officers, do you think? I'm really concerned about that impact.

We hope that partners can work with us on this to minimise any impact. It's important to say there is still significant investment going into Local Places for Nature, and you're right, we all really value this because it does so many things. It's not just the transformation of spaces in local communities; it's the engagement exercise with local communities that brings people with us and it excites them about the potential of transforming nature and doing good things for nature. But there's still £12.6 million capital, over £2.7 million revenue funding.

In what is still a stretched budget, we have made the decision to prioritise other areas, which I know the committee will also think are very important. So, we have put additional funding into things such as water quality. We've had to put some more funding into things such as reservoir safety, which is often raised on the floor of the Senedd with me as well. But we've not cut the legs from under this—far from it—there is massive investment going in.

What we'd like to do is to make sure that we can work with partners out there so that there's a minimal impact here. And bear in mind, the way the budget is structured is that, if in a subsequent spending round we find that additional money becomes available, that in the spring the UK Government does something else or whatever, or we find it ourselves, then we can ramp this up. So, we were very much focused on, 'How do we maintain the investment in it?', whilst recognising we also had some real pressing priorities in other areas. Water quality is something that this committee and other Senedd Members have been asking me to do more on. We've said, 'Okay, we will', but we've had to give a little bit in other areas.

I'm pleased to hear that—that if there was extra funding, you'd put some money back into it.

The overall budget narrative identifies four priorities for the budget, including jobs and green skills, which is what we've just heard about. How is the need to invest in green jobs and skills to enhance nature reflected in this budget, and will you commit to investing long term in the nature service for Wales?

The nature service for Wales is really interesting, because it's an interesting initiative, it's developing—it's still in early stages, but it's developing. We're very interested in it. But it is a good example of an approach being taken that doesn't rely on going to Government and saying, 'Can you fund us, please?', because what they're looking to do is draw in funding from external partners. We think that is creditable, not simply from a selfish basis of me being the budget holder, but because, if we can do this alongside taxpayer funding, then we increase that quantum of funding coming into the area. So, we really applaud them and we're keen to engage, we're watching them very closely. I think it's got real potential. And I recognise, we're watching it evolve as well, what it wants to do in that skills and training and workforce development and volunteer development as well, to see where it gets to. It's still early days. But it's got a role to play, without a doubt.

On the wider piece and what we can do directly, you'll know we published the 'Net Zero Skills Action Plan' back in February 2023, and we had a summary of responses to it on road maps in June 2024. We're looking to do skills development in a number of areas. One of them, by the way, related to this portfolio area, but also to biodiversity and climate response as well, is on coal-tip safety. The establishment, if we take the Bill through to an Act, with the will of the Senedd—in establishing that supervisory board, part of that is developing that skills piece, and there is massive potential within there, not just for the remediation aspect, but for the biodiversity aspect, the climate adaptation and resilience piece as well there. The continued significant investment, just leading on from the last question there, in the Local Places for Nature programme, is a major part of it as well, because that upskilling of people locally in local authorities, but also in local communities, will develop that highly skilled network of people who have enthusiasm and capacity and professional qualifications for nature recovery. And we have extended that programme now, by the way, just to say, until October 2027, yes. So, that creates real stability.

Which programme?

The extension of the Local Places for Nature programme.

Extended to 2027?

Yes, indeed.

Oh, that's good, because I know some were concerned. They thought they might face redundancies in March this year, so that's really good. There should be some core funding going through.

Very much. So, even though there's a slight reduction in the overall budget there, it's giving that certainty that we're committed to this, as long as we can within the budget setting of this Senedd term there, which takes us up to October 2027 there. But we're also doing investment in the—. So, that, by the way, is around 150 plus public sector, environmental non-governmental organisation green jobs, plus volunteers, plus the people they contract to. So, that's horticulturalists, arboriculturists, nursery and ground staff, landscaping contractors.

The other thing to be aware of for this committee, which I know you've pressed me on, is we're also shortly to be bringing forward the consultation on the first ever timber industrial strategy. And let me just be clear on that as well—what we're talking about there is, yes, all the forestry skills and the woodland creation skills, but it's also the embedded carbon aspect of that in wood being used in homes as well. So, when we considered this at Cabinet when we returned from the recess, the skills opportunity within that was a very key focus as well.

And the other aspect, of course, is what we're doing in the move to a circular economy with skills, with the massive opportunities we have there in the reuse of the materials that are currently in circulation, and then turning those into jobs and skills as well, which all impacts on not-extractive industries. So, doing less of that and more capturing of what's currently out there. So, there's an immense amount that we can do.

Okay, thank you.

There we are, excellent. Diolch yn fawr iawn. Can I move on to waste, then? Because I just wanted to ask what assessment you've made of the resources needed to develop a Wales-only deposit-return scheme, and how is the budget providing for that?

So, we have resource internally to actually take that forward. We've been planning for this for a long time.

Indeed, but, obviously, being a Wales-only scheme, then, that will bring with it, I presume, an element of increased cost.

It will, it will. And we recognise that and we've planned for that. So, we'll continue to use the existing Welsh Government resources now from within the circular economy and resource efficiency budget to bring forward our proposals. We'll consult on those proposals, Chair, during 2025-26. It's important that we do, because we need to work with all stakeholders, large and small, and diverse, some of whom have concerns about the approach, but we're confident, by the way, that we can assuage those concerns, and we can work with them and design a scheme based on best international practice of the 53 plus countries that this is already in, and develop a scheme that will work really well, and take us, not just on the recycling journey that we’ve been on—we are, I don't tire of saying it, the second best in the world—but will take us to reuse. Reuse—now that’s the big prize for us on decarbonisation and use of those materials that are currently in circulation. So, we’ll consult on the proposals in 2025-26. Any additional resources needed to implement a unique scheme, a bespoke scheme, for Wales, which delivers in that context of Wales, which is very different from the rest of the United Kingdom, will be considered, then, in the budget rounds for the future years. But we are anticipating it. We know there’ll be a draw on resources. But, you know, it’s the right thing to do, Chair, because if we have to commit some resource to doing this, and doing it properly, and becoming not just the best in recycling, but the best in reuse, and developing those job opportunities that come from it, well, that’s an investment that’s worth doing.

Julie.

So, do you think this could be brought in before the next Senedd election?

We are working through the timescale of this. We’ve said, Julie, that one of the welcome things in saying that, now that we recognise there is going to be a different approach in Wales on DRS with reuse, is that it gives us the time to engage with stakeholders. And there are some concerns out there, so we don’t want to rush this. We anticipate that the original timescale, if there was a four-nations approach on this, which, originally, by the way, just to remind you, was in the original consultation about three years ago, that there was a four-nations approach on it, so we’re not departing from this, others have departed from it—. Originally, the timescale would have seen a full reuse scheme in place in 2027. That’s still in our minds, but, realistically, with engagement with stakeholders, we can put everything in place for the full roll-out in Wales not far off that timescale. I haven’t got a specific date yet, but we’re not starting from scratch with this. We have our plans worked out. But I’ll come back to you with a firmer timescale once we’ve—

So, it's likely to be in the next Senedd term.

As early as possible in the next Senedd term.

Okay. Diolch yn fawr.

But all the proposals in place to make it happen we're working through now.

Okay. Diolch yn fawr. So, do you see any conflict between what you describe as ‘reduced demand’ for capital funding on waste projects, and achieving the 70 per cent statutory recycling target for 2025, because we only have four local authorities currently meeting that target?

Right. No, because we do have local authorities that are at different levels, and we continue to work with those local authorities in order to drive their recycling upwards. And we continue to invest in local authorities where we can see they’ve put a very good business case forward to enable them to achieve it. So, we’ve put money behind that. The interesting aspect going forward now is we do have to pick up those local authorities who have not hit the targets and work with them in order to encourage and work with them to develop their plans to hit the target. But we can actually, potentially, go further, because one of the things that’s on the agenda that goes beyond this budget entirely is, of course, the EPR proposals as well—the extended producer responsibility proposals—because those proposals will release additional funding back directly into local authorities to enable them to go even further on recycling. So, it will not—. And it will be additional to what we can do with Welsh Government funding. We’re not going to walk away from this, by the way. We’ve got targets to hit and to work with local authority colleagues to do, and we’ll keep our commitment going, and the investment in order to do it. But it is interesting that the EPR might release—will release—additional funding. The total funding, as of April this year, by the way, which will see the first year of payments coming forward under EPR—this has been developed on a four-nations basis—will be additional to the funding that local authorities have received previously.

Okay. Diolch yn fawr. Joyce.

I’m going to talk marine, which needs some attention, in my opinion, more than it’s getting. So, do you have a timescale for when an updated marine protected area network management framework and associated action plan will be published, particularly since they are out of date?

Yes, Joyce, we're getting on with it. We're doing it. So, we've announced already a new call-for-actions window in—. We announced back in March last year a new call for actions for the 2024 MPA management action plan. Hopefully we'll get lots of responses for a range of management measures, including things such as bait collection, marine litter, the Welsh acoustic marine mammal survey and so on. We have responded to some of these already, including, for example, surveillance work on Grassholm island for the survey work on the highly pathogenic avian influenza. The projects are progressing well, so we're actually getting on with the actions already. Rather than relying on revising a framework, or whatever, we're driving ahead on it. The MPA network management grant scheme that I mentioned there is in place and driving forward the actions.

Okay. It is pretty critical, isn't it, because we talked yesterday enthusiastically—and I have no problem with that—about offshore wind, and at the same time we need to secure the future of the activity that takes part in the sea by those that live in the sea. So, just like we would look at the whole-scale impact of hard structures on land, we should be doing exactly the same in the sea. Just because we can't see it doesn't mean it's not there. So, I remain concerned about our commitment. I want you to tell me that I don't need to be.

Listen, I think you should always be concerned, both terrestrially and particularly in the marine environment, because I think the marine environment is one that we've come to, in more recent decades, to try and get an understanding of what the state of the current marine environment is and what it will take, in terms of a range of things—actions on the ground that I just described, partly through our grant funding, but also through the designation process with MPAs, and also the active management of them. Now, what we're going to have to do, and this is relevant to the budget-setting process as well, is continue the investment and also the partnership working there in the marine environment, to keep on developing our understanding of the way we balance the various demands on our marine environment, and some of those will be renewable. Some of those will be laying cables. There will be a myriad of things. But the overlap between the MPA system, the designation system, the active management, the incentivising through grants, which we've got within the budget, of initiatives to improve the marine environment—all of those are vitally important. But you are right. I wouldn't say to you, 'Don't be concerned.' I'd say keep that concern going, because this is a learning process.

And one of those concerns, of course, has come from one of your partners, and that's the seagrass restoration projects that have pioneered the way we think about the sea bed and the critical role that seagrass plays. So, how do you respond to the fact that they are saying that the Welsh Government's current approach to funding isn't sufficient to secure the long-term need for that restoration? And are you considering changing that approach since they have made their views clear?

So, we've worked very closely with the seagrass network. I visited them myself and have spoken with the members. They're doing incredible work and there is incredible potential within seagrass in terms of marine biodiversity restoration and a range of nature and ecosystem aspects. Just to say, we have awarded something like—. It's in excess of £1 million of funding already since 2021 to seagrass and saltmarsh restoration in Wales. It's not like we're not doing anything within this space. We've done that through the Nature Networks programme and also the coastal capacity building scheme. We are committed—absolutely committed—to seagrass and saltmarsh habitat restoration in Wales. They're really critical elements with immense potential, including for carbon sequestration and storage as well as biodiversity. So, my officials are fully engaged with the seagrass network.

We do intend, Joyce and Chair, to bring forward a written statement this week, indeed, on seagrass restoration, which will describe the next stage of our engagement, our partnership. I think this is one of these areas where the partnership with Government is really important. I'm also very interested in the wider partnership, because seagrass excites people. Saltmarsh doesn't so much. I was brought up on the northern banks of the Gower estuary—not the bright sandy beaches; I love the mud and the tidal estuary and environment. I'm also excited, I have to say, by saltmarsh, very much as well. But seagrass really excites people, and I think that there is the potential there to draw in other partners, but Welsh Government has a role within it. So, I've got a statement coming forward later this week, which might expand a little bit.

We look forward to seeing that. Janet, you wanted to come in on this.

Yes, just on that. It's a pity the statement couldn't have been this afternoon.

I know.

If only for the fact that we really need to highlight just how valuable saltmarshes and seagrass are to the ambitions that we're all trying to achieve here. And I know when I've spoken to universities and professors who've been working on this, and when you talk about partnerships between, say, them and the Welsh Government, I'm a great believer in partnerships between the local community and, you know—.

Yes.

We've got an oyster project going on in Conwy, and I have to tell you that it's amazing what they've done, in terms of getting engagement with youngsters from schools, other people who are interested in these oyster projects and things. And it's an untapped resource, Minister. So, I'm eagerly awaiting—. I thought I'd mention it, but you mentioned saltmarshes. I was going to come in to say, 'Don't forget saltmarshes.' I think I'd be told off by the professor. But, honestly, I think it's something that we can all—. If there's a project going on somewhere, I want to go along and help, because there's a lot that we can do.

The incredible thing about the seagrass network—and I'm also going to keep on saying, 'and saltmarshes'—

Yes, do.

—is not only the potential it has for those biodiversity sequestration gains and so on, but what really strikes me is the multiplier of volunteer time, of people who are really committed—really committed. I haven't seen anything like it since I've been involved in things. Peat gets it, in a way. But, in another life, when we took forward the Canal and River Trust model, it was based on the idea that we had this expectation that there was an army of tens of thousands of people out there who wanted to be part of the future of canals and rivers. We were right. They really wanted to get involved and are passionate about it. It's the same with seagrass. When we speak with the seagrass network and go to see their on-the-ground stuff, they are genuinely delivering multiples by the hundreds of volunteers, which has an economic value in terms of literally planting seagrass meadows or maintaining the boat that they've got in Bridgend—

It's good for the health and well-being of the people doing it as well.

—or other aspects. Yes, sorry.

No, no, we're all very—. I've been harvesting seagrass seeds as well. The frustration is, of course, that much of it is subject to a bidding process for grants, meaning that there's no certainty as such, is there, despite our passions. Sometimes it wins, sometimes it loses. We've raised this with you before. But we look forward to seeing the written statement at least, and then we'll go from there I suppose. Diolch yn fawr. Delyth.

Diolch, Cadeirydd. Bore da. Forgive me that I was a little late. It's lovely to see you. I wanted to ask you about environmental governance, which is so important because so much of what we have been discussing already, so much could stem from that when it's done properly and robustly, and engagement with the public and public awareness is so important in that as well. In terms of the extra resource that's been allocated to the interim assessor, do you feel sure that that will result in better governance?

Yes, but—. Sorry. It will definitely result, we are confident, in bringing more outputs from the current model with the interim assessor that we have, which is not the fully fledged beast that we are going to transition to. But one of the things that this committee has been very focused on, I know, is the outputs, the reports that came out of it, and the assessments that flow from that. We're confident that the investment that we've got within this budget will enable those to be delivered this year, so we will see those outputs coming forward. What this doesn’t take account of is that longer piece of transitioning to that full environmental governance body. That will come forward in future budget rounds. But we’re cognisant of the fact that we’re going to have to adequately resource and fund that.

Okay, thank you. On that, is it the plan, please, to establish a shadow body whilst the transition to the statutory body is going ahead?

We're still considering that. I know it's something the committee have raised before. We're alive to that as one of the options that could do that transition from these interim measures to a more permanent governance body. We're working through that. It's one of the options we're looking at, but there are other ways of doing it. So, we'd be very happy to bring forward, Delyth, more information on that in due course.

Thank you, that's really useful. So, that won't be reflected in the current budget.

That's not reflected in this budget.

Okay, thank you. That's really useful. And just finally from me on this, in terms of extra resources being put in to the interim role, do you feel that that will in any way improve public awareness of the assessor's work, or in terms of ensuring that people know that the resource is there and are encouraged to use it, do you think that that will come about as a result of what's happening in this budget?

Yes, I think it will and I think part of that will be if they, as we're confident they will, bring forward some of those outputs of the work that they've been doing this year, so that there's more public visibility on that. So, that's an area, that area and that area, they've focused on, they've produced work on.

I think the fact that we've put in not just the continuing funding, but the additional quantum of funding for the second deputy interim assessor as well, will assist in terms of wider engagement and capacity within it. But we do also have to be realistic that this still isn’t the fully fledged governance body. So, I wouldn’t want to be unrealistic in saying to people, 'Charge at this', in the way that you would do the fully fledged body, to bring issues, to say to them, 'Focus on this area or that area.' That capacity isn't there at this moment; that's what we're working towards.

Okay, thank you.

Yes, obviously we had the initial assessor, then two deputies were added. I see from your paper that a third deputy—. It feels a bit like the Allbright bitter advert, where they were building an extension on the extension. [Laughter.] No, but it's all got a very ad hoc feeling to it, and obviously there's no clear plan in your mind about a shadow body as yet. It just feels a little bit as if it's drifting.

So, just to be crystal clear: we're actually working through the options on what the transition will be, whether that's a shadow body or some other—. And we can bring that forward in due course.

In terms of the additional capacity we built in, that's been very much reflective of the body, as it's currently saying to us, the interim assessor is saying, 'I could do with more capacity in order to bring forward outputs that people will actually see'; reports that will actually say, 'Here's where we need challenge, improvement, et cetera.' So, it's far from drifting; it's actually very focused, but also very realistic on what it currently is and the resource it has. I don't know if you want to add, Claire.

I just wanted to clarify one point, so, it isn't the third deputy, it's the—. When we appointed two deputies last year, there wasn't sufficient budget, so we've now made provision to actually—as in, if they'd been in post for the whole year. So, we've now made the provision to make sure the budget can continue to fund the number of deputies that we've got—

So, proportionately, it's the same resource—

Yes, it's not another extra one.

—albeit for 12 months as opposed to part of the year last year. That's an important point.

Yes, we're not adding to it. It's not quite the Allbright advert.

No, no. Okay, diolch yn fawr. Thank you.

Although, you and I are showing our—

Yes, we are showing our age in referencing that. [Interruption.] No, I'll tell you later on. [Laughter.] Okay. I'll tell you over a pint of Allbright. Carolyn.

My question is on countryside access. We've received a letter from the Ramblers, who are concerned that funding hasn't increased over the last three years for capital projects, and the New Economics Foundation found that while the public have legal rights to access the countryside, the infrastructure enabling the exercise of these rights has been neglected. We talk about how important exercise in accessing the countryside is for public health and well-being, and the impact it then has on social healthcare budgets as well, and that again, linking to the environment and to nature as part of that education process. So, how is your need to improve access infrastructure reflected in the budget, and can you tell us a little bit about that, please?

Yes, indeed. It is, Carolyn, within this budget. I would say, by the way—oh, gosh. I'm no longer, but as a former vice president of Ramblers Cymru, I've a lot of empathy with this, because the more that we can invest in the existing rights of way network, then the better we can improve access for all, for everybody, in the wide diversity of people as well. It is worth saying that, even in stretched times, we have been doing that investment in recent years, and that has funded near enough 500 projects across Wales and 125 km of public right of way improvements just in the last two years alone, and those projects have been physical improvements, improvements focused on people with disabilities, so access, removing physical barriers, et cetera. But we've got additional improvements under way from this year's budget that will be enabled.

So, what we're doing within this budget is we're continuing to fund the access improvement grant. That has received just short of £6 million of funding during the last three years. That continues within this budget. It's very popular with local authorities and others, I have to say, concerned with access, so we're looking to continue the grant in this budget round with £2 million for 2025-26, but there are other aspects as well.

I'm always very focused on the local rights of way network. It's the stuff that people walk out of their doors. But, look, we're also very keen on saying to people, 'We want access for all in the wider path and trail network', so we'll continue to fund the Wales coastal path for its maintenance, for further development, for promotion, and to take forward some of the recommendations in the 2022 Wales coast path review. I can't remember who chaired that; I think it was the pain that's sitting here now, but my thanks to all the partners in that. There were a range of recommendations, primarily related to the Wales coastal path, but also the wider trail network as well. So, some of the funding within this will allow that to be taken forward, and the focus of that was very much on not just the hard infrastructure of paths, but the social health, the well-being, the education, the economic impacts of the trail networks as well within local communities, not just Wales as an entity, and the wider environmental benefits, so we've put £1.675 million for these purposes as well.

But I do take the Ramblers' point, and they're a cracking organisation. I'm no longer directly involved with them, but in their championing of access they will always rightly say we can do more, and I agree with them, it's just that we have to square-off the budget as it currently stands.

Their Paths to Wellbeing project was really good.

Yes, yes.

Enhancing trails, and very much valued. Local authorities have to deliver their rights of way, and again, they're cash strapped as well, so maybe not a high priority, which is a concern for me. Do they still have to deliver a rights of way improvement plan every so often, to show what they're doing to improve their rights of way?

[Inaudible.]

We'll have to check and come back.

Maybe you could drop us a note on that.

Because that will keep the pressure on then. If they don't, it will be right at the bottom of the agenda. And the Ramblers asked also regarding active travel routes. The standard is that they tarmac paths, and sometimes they go over grass verges, which annoys me as well, and they don't lead to anywhere. But in some instances, the Ramblers have asked if they could be limestone gravel instead, more natural. It would help with drainage as well, and so it's something I'd like to raise with—because that falls under the Cabinet Secretary, doesn't it, actually, for highways? But is it something that, perhaps, you could pick up with him as well, going forward?

Well, yes. Without betraying any secrets, the Cabinet Secretary for Transport and North Wales and I have had a discussion. I went out recently for a ramble with the Ramblers, and they were very seized with the opportunity to help Welsh Government, both in terms of materials and structures for removing barriers and increasing access, but also on joining up with the local rights-of-way network, with small areas with minimal investment that would improve the ability of communities to be connected for active travel purposes. Quite interesting—

Yes, for walking and cycling.

So, not mega sums of money, but relatively minor improvements.

Well, we can pursue this in our next session with the relevant Cabinet Secretary. Julie, did you want to come in on this?

I just want to say I really strongly—. I think this is an absolutely crucial area of our work. Certainly around this area, a lot of wooden stiles have been replaced now by gates that open, which clang, which isn't very pleasant, and don't look so nice, but they absolutely are opening up some paths to people, because I've noticed the different nature of people who are actually using them now. So, these grants, presumably, are used for that by the local authorities in some cases, or—?

That's correct. So, we've currently got—. Under the current round of funding, we've got just short of 90 projects specifically on that, on removing the physical barriers and putting more accessible routes in. Out of those over 450 projects over the last couple of years, there are currently just short of 90 specifically of that being done.

Yes. I think it's having an impact.

In the current round. So, what we are enabling with this funding is for those projects that are being brought forward now for the year ahead as well.

There we are. We'll keep our powder dry on that, and we'll try again later on. [Laughter.] Okay, diolch yn fawr iawn. Can I thank you, Cabinet Secretary, for your attendance and that of your officials this morning? I think we've covered the bases that we wanted to cover.

Thank you very much for your attendance. You will receive a copy of the transcript to check for accuracy, but, with that, thank you very much, and we look forward to welcoming you back for the general scrutiny in the next few months. Thank you very much. The committee will now break for a quarter of an hour and we'll meet back at around 10:35. Thank you very much.

Welcome back to this meeting of the Climate Change, Environment and Infrastructure Committee here at the Senedd. We will be moving to the third item, which is a continuation of our scrutiny of the Welsh Government's draft budget for 2025-26, and to look specifically at that element of the budget that's relevant to our committee in the context of the portfolio of the Cabinet Secretary for Transport and North Wales. And I welcome Ken Skates warmly to the meeting—welcome to the meeting, Cabinet Secretary. And joining him are his officials: Peter McDonald, director of economic infrastructure; Christopher Warner, deputy director of transport strategy and policy; Andy Falleyn, deputy director of infrastructure delivery; and Steve Vincent, who is deputy director of economy, energy and transport for the Welsh Government. Welcome to you all. We have got about an hour and a half to go through some questions, and I know there are a lot of aspects of the budget that we're keen to pursue, so we'll start straight away, if we could, and I'll invite Janet Finch-Saunders to start with the first question. Thank you.

Good morning. Bore da. Can you provide an overview of the changes in the structure and budget lines in the draft transport budget for 2025-26 compared to 2024-25, including the rationale and how it aligns with the First Minister's priorities?

Bore da. Diolch yn fawr iawn. Thanks so much for that question. Of course, this is the first time that we've been able to present a main expenditure group specifically for transport; it's the first time that this has happened, so, hopefully, we've been able to bring a greater degree of clarity to the funding streams within the portfolio.

In terms of how it aligns with the First Minister's priorities, well, in regard to my responsibilities, that covers connecting communities. So, within connecting communities, there are four principal areas of concern. One is with rail, completing the core Valley lines, the south-east Wales metro and maintaining rail services as well. The second priority concerns roads, fixing roads, and so you'll see that there is specific reference to improving the condition of the strategic road network and also offering local authorities the ability to fix their roads, plus there's the emphasis on major asset renewal. The third priority concerns buses, as we move towards franchising, including developing bus services, protecting bus services and enhancing the fleet. And then, finally, there's the whole regional agenda around regional transport plans, including local authority grants. So, we've tried, as best as possible, to align the budget lines with the Cabinet's priorities in regard to connecting communities.

Thank you. I notice active travel wasn't mentioned there, but I wouldn't mind pressing you more on that. And when I say 'active travel', there's too much emphasis, if you don’t mind me saying—. 'Active travel', people imagine cycle paths and cycling; I'm talking about children walking to school, and, generally, more people walking as part of your agenda. Are you fully signed up to that?

Absolutely, Janet. I've twice met with the access and inclusion panel at Transport for Wales, and, as a result of my discussions with the panel, I'm utterly convinced that if streets are safe for the most vulnerable people in society, for blind people, partially sighted, hard of hearing or deaf, people who face disabling challenges day in, day out, frail people, then streets are going to be safe for us all. So, you'll see from the way that we're going to be funding active travel that there is a sharper focus on enhancing streets for all. And, in terms of active travel, the active travel funding for 2025-26 has been maintained within the budget. It moves to regional budgets for the following financial year. But we are placing an emphasis in 2025-26 on fixing streets, improving pavements, a focus on walking to and from school, making sure that streets are safe for all. That includes, also, actually, not just the streets, but some of the furniture there, so tactile paving, which has been raised by a lot of Members, needs to be improved—we’re going to focus on that—seating as well. Bus stops need to be safer and more convenient for people to use. So, there is a much stronger focus moving forward on walking and wheeling—and by 'wheeling' I mean pushing a pram; I mean being in a wheelchair—because this is about inclusive movement, it’s about inclusive travel, and that’s what we’re going to be focusing on.

Fantastic. Do you know, I have to say, Minister, that’s very heartening to hear. Could you include, as part of that agenda, pavement parking issues? And I’ll leave it at that.

We’re going to go deeper into active travel later on, if you’d allow us to maybe pause. I can see Peter’s put his hand up and, Peter, if it’s appropriate, maybe we can come back to this in a moment, unless it’s something specific.

That’s absolutely fine, Chair. I’m happy to add a bit more detail on the structure of the MEG, if that would be useful, or we can move on.

We’ll come back to it, particularly related to active travel, later on, but was there a point more generally about the MEG that you wanted to make?

I was just going to say that, in general, this is more evolution, rather than revolution, in terms of the changes that you see in the BEL structures. It does reflect that we are a transport MEG for the first time, so that has allowed us to do a bit of rationalisation. For example, the expenditure on the strategic roads network has now been split out between contractual payments and maintenance, which should make for a more transparent budget picture. We can talk about that later, if that would be useful. And we’ve also taken some steps towards regional devolution of grants in how we’re describing some of the BELs. And also we’re trying to take some of the measures that apply to all modes of transport and take them out of the TfW Rail BEL and put them in more general BELs just to reflect that they support multiple modes. So, there’s a few things happening, but they’re much more in the evolution, rather than the revolution, space.

Yes. Okay. That’s useful. Thank you for that. And just whilst we’re on the structural nature of questions around the budget, could you provide us more detail, Cabinet Secretary, of what will be funded through the national policy developments and projects revenue and capital BELs, please?

Sure, absolutely. It’s pretty straight forward on the capital side: there are two projects. One is the national travel survey, which will provide us with, for the first time, really comprehensive data on travel. This is particularly important when planning new routes and also when trying to assess value for money as well in terms of investment. That’s especially relevant to active travel, I think.

The second capital project relates to a programme that TfW are leading on. It’s a digital customer experience. What we want to be able to deliver in the future with one network, one timetable, one ticket, is, if you like, a single point of truth—one place that people will be able to go to for timetables, for ticketing information, to buy tickets. So, they’re working on that particular programme at the moment. On the revenue side, things have changed since the budget for 2024-25 was established. Again, we’re trying to be clearer and more transparent with the revenue side of things. I think Peter’s probably best to explain the detail on this, if I may bring Peter in.

Indeed. Peter.

And if I may, I’ll pass on to Chris Warner, who leads on this area, because, essentially, what we are doing is putting together some road safety and active travel revenue measures that, once you go in aggregate, the level of expenditure is broadly the same, but I’ll bring in Chris.

Please, yes. Chris.

Bore da. Thanks, Chair, and thanks, Peter and Cabinet Secretary. So, I’ll just give you some examples of what’s in the national policy and development revenue spend. There’s funding for our delivery partners on road safety and active travel. So, that’s where grants to some of our partners come from. There’s some funding that we use to gather evidence and do evaluation as well, and, at the moment, subject to further internal discussions, we’ve earmarked funding to pursue two of our really important cross-cutting themes, which are equality and decarbonisation.

Okay, thank you. Yes, very briefly—okay, very briefly, because I've got something else I want to ask about that particular line.

Okay. I just want to ask, will these be ring-fenced as they go to local authorities, or whatever, for highway grant spending or for these projects? Will they be ring-fenced, not just going to the whole pot?

Sorry, I think we may be conflating some of the capital projects for road maintenance and active travel with this particular area. Sorry—

Okay.

We will be coming back more specifically to these. Just to pursue this national policy developments and projects revenue BEL line, can you clarify the comment in your paper? You say that you’re increasing the transport strategy related revenue budget allocation from £6.9 million to £7.2 million. Now, Senedd research has been unable to recreate those figures, because the BEL tables that were published with the draft budget for that particular BEL shows it increasing from £1.87 million to £7.2 million, but the draft budget narrative says that there’s a revenue increase from £6.9 million to £9 million. It’s just confused us a little bit, so hopefully you can shed some light for us.

Yes, absolutely. Chris, can you highlight this, please?

Yes, of course. Sorry we didn’t make this clearer in the evidence paper, but if you look at the published BEL tables, you’ve got national policy development and projects at £1.865 million, and then immediately beneath that you’ve got the road safety BEL at £5 million, and that makes up the £6.9 million that was the baseline figure. Then, as you can see on the right-hand side of the BEL tables, that’s increasing to £7.2 million. So, this is the result of restructuring the BEL tables. Hopefully, it’ll be a bit more clear for future years. Apologies for the confusion on that.

There we are. Okay, thank you for that explanation. Janet, over to you.

Thank you. Maritime ports and Cardiff Airport are the responsibility of the Cabinet Secretary for Economy, Energy and Planning. Why does your paper suggest your national and international connectivity revenue BEL will fund work on marine and ongoing work on the future of Cardiff Airport?

Apologies if it’s not clear, but essentially I’ve retained responsibility for aviation policy and maritime policy in Wales, but responsibility for the airport, as you rightly point out, is with the Cabinet Secretary for economy. The reason that the policy has stayed with me is to make sure that there are synergies across all transport modes. So, it’s just down to the policy remaining with me, it’s not specific to Cardiff Airport.

Okay, thank you.

And what about the ports, sorry? Because obviously you gave us a statement yesterday on Holyhead as well.

Yes, again, it’s ports policy, rather than ports infrastructure. It’s basically making sure that, again, we’ve got integration and alignment across all transport modes.

Okay, because that isn’t specifically itemised in the list of responsibilities of Ministers on the Government’s issued list. Maybe that could be refined a little bit to be clear. That’s just something to take away.

That needs to be clarified, then. Yes, absolutely.

Okay, thank you for that. So, just moving on, then, to local and regional transport policy, given that regional transport plans are due to be finalised in the next financial year, how is the budget going to support a move from local to regional transport planning and delivery?

Yes, you’re absolutely right, we are moving in that direction for full devolution to take place from 2026-27. In 2025-26, the budget includes funding for corporate joint committees to complete their work on the regional transport plans, and indeed for Transport for Wales to support councils in doing this. Also, what we’re looking for in 2025-26 is for corporate joint committees to comment on local authority applications for funding, so that we can assess the fit of applications in 2025-26 with the regional priorities before we start to award grants. So, it's a phased approach through to the devolution of local transport grants.

Okay, thank you. Janet.

Your paper says that local authority bids to the various local transport grants will be submitted to the Welsh Government for approval this month. How does this align with your intention, outlined during transport scrutiny last November, to devolve transport budgets regionally?

Again, we're going to be making sure that, from the 2026-27 financial year, budgets are allocated regionally, but, as the paper sets out, for the financial year 2025-26, local authorities were asked to submit applications for funding by, I think, 20 December. Those applications are being assessed, but what we're asking the corporate joint committees to do is to comment on those applications, to make sure that there is recognition that they fit with the regional transport plans, which are being finalised this summer.

Right, okay. I get what you're telling me, but if they're going to be finalised by the summer, what weight will the CJCs have on the input of those plans?

Well, the CJCs are responsible for those plans, and so all local authorities within each of the respective corporate joint committees will be contributing to those plans. And as a result of that, the corporate joint committees will be able to, I think with an immense degree of intelligence, comment on the applications that we received for the financial year 2025-26. And I think it actually steps nicely for devolution in 2026-27. Obviously, it will be difficult to devolve without those regional transport funds being finalised and agreed, so what we're doing is just phasing the approach to make sure that applications are aligned with regional priorities, but that, at the same time, we're able to phase the process in a safe way that guarantees value for money.

Thank you.

If it helps, Chair, I can provide a greater briefing on where we are with the regional transport plans and devolution of transport funding.

Yes, that would be useful, certainly, although we still have a few more questions on this particularly. Joyce.

Good morning, Cabinet Secretary. Your paper includes two similar tables setting out allocations to local capital grants over a number of years, for example one on pages 13 and 14, and then another one on page 15. Can you clarify the purpose of these, given they appear to include different figures for the same grants?

Yes, apologies, the table on page 15 was included in error, and the correct figures are indeed in the table that appears on page 13.

Okay. That's helpful. Thank you.

Thank you. Back to you, Janet.

Thank you. Can you outline the sources of funding that will support delivery of regional transport delivery plans in future? For example, will these include local authority and private sector funding alongside Welsh Government funding?

This is a really interesting question. It is our ambition that corporate joint committees will be able to lever in funding from the private sector to complement the funding that they themselves allocate to projects, as well as the funding that we allocate, and, indeed, potentially that UK Government allocate as well. So, the success will actually be determined by how much they're able to lever in from the private sector. If they can lever in more, then, in all likelihood, they're going to be able to deliver on their transport plans at a greater pace.

Thank you.

I'm pursuing a little bit further the devolution piece, which, in principle, is, of course, welcome. But with that shift happening, how will you be ensuring, for example, that the funding that you provide is spent in a way that aligns with the Wales transport strategy and wider national policy?

Well, again, this is a really important question, Chair. I know that there are some people who have been rather concerned about the move to devolve transport funding, but I can assure Members that, with the devolution of funding to corporate joint committees happening from 2026-27, that funding will be subject to delivering the regional transport plans, and those regional transport plans being agreed with Government, and, indeed, there's a statutory requirement that regional transport plans align with the Wales transport strategy. So, it will, I can guarantee, all be aligned with the strategy.

Okay, and conversely, then, how are you going to make sure that devolved regional spending is actually accountable to those local authority voters who are most being impacted? Because there was, of course, concern with the whole corporate joint committees shift that decisions are moving further away from those communities?

Yes, another very well-made point, and a point that's been raised by a number of people who share your concerns. Now, the regional transport plans have been subject to local consultations. Local authorities will still be responsible for delivery of the projects within the regional transport plans, and so there will still be that local accountability, there will still be that local participation by citizens, who can comment on the regional transport plans, who can make submissions about them. But I do think it's essential that we devolve to the most appropriate level, and local authorities, to their credit, have stepped up to regional working, and in my view it's therefore absolutely right that the Welsh Government step down and enable and empower local authorities at the most appropriate level to deliver on the transport plans. But as I say, those projects within the plans will still be in the hands of local authorities themselves for delivery.

Okay, thank you. And finally on this, then, in the past we've had transport Ministers tell us that it's impossible to measure the impact of some of the funding that the Welsh Government is providing for this kind of activity, because it's mixed in with other sources of funding, local funding et cetera. How are you therefore going to demonstrate the impact and the value for money from Welsh Government spending if, again, these budgets are mixed with other funding sources?

Yes, you've highlighted a very real challenge, but as part of the project to devolve funding we're also developing a plan for monitoring and evaluating the Welsh Government funding, and that's being supported at the moment by Transport for Wales. Now, as soon as the plan for monitoring and evaluation is completed I will absolutely share it with committee members, if that's something that you would be interested in receiving.

We would, because I think for a Minister to say that they can't prove any value for money, and maybe I'm unfair in paraphrasing it that way, but certainly as a committee responsible for scrutiny, that raises a few flags in our minds.

If I may say, it's not an unusual approach to have Welsh Government funding, if you like, mixed in with funding from other sources via local authorities. The key for us is in making sure, moving forward with the devolution process, that we put in place a plan, a robust plan, for evaluation and monitoring. That's what I'm very, very keen to do, so I will absolutely share that plan with Members as soon as it's finalised.

And can we be confident that that will be in place for the start of the next financial year, for example?

Well, we're devolving fully from 2026-27, so the plan is in development at the moment, but I'll defer to Peter, who may be able to say when we're going to be completing the plan, if that's okay.

Thank you.

Thank you very much, Cabinet Secretary. We will be putting TfW analytical support in from day one, so if we can find the right way of working with CJCs, there's no reason why this can't begin in the next financial year. This is in general a very big question and issue, and any reflections from the committee over the next few months would be helpful in feeding into our preparations for this. I think it's also worth distinguishing between the monitoring and evaluation of a capital project, which is a lot easier to do, even if the funding has come from multiple places, because you know what you've got as a result. It is less difficult than, let's say, monitoring impacts on supporting bus routes, because at the moment we have a privatised bus sector, and a lot of the money ultimately goes into private hands and goes into that general business model. So, things are harder on the revenue side, on the operations side, in some parts of the transport network, albeit the bus question will be easier to deal with in a franchising world.

Okay, that's really useful. Thank you so much for that. Right, we'll move on, then, and Julie, please.

Thank you. We want to go back now to active travel. I know we started to discuss it with Janet's questions, but if we could get a bit more detail, please. Your paper says that funding for active travel is to be confirmed, so could you provide details on how the active travel funding may be changing for 2025-26? I think you did say in response to Janet that the amount would be maintained. When will you be able to confirm how much of the new regional transport and active travel BEL allocations are for active travel? I'll start off with that.

Thanks very much, Julie. I may bring Chris in in a moment, actually, but just to say that the active travel fund still exists. I'm intending to confirm grant awards before the start of 2025-26. The funding will not be ring-fenced, though, for active travel. So, the amounts that will be allocated will depend—I think rightly so—on the assessment of local authority applications. And as I've already outlined, corporate joint committees are going to be able to provide feedback and comment on the applications so that they do align fully with the emerging regional transport plans. Now, the funding is going to be allocated on the same principles as in previous years. We invited one application per local authority under the competitive funding element of the fund, and we've also provided an indicative allocation of the core funding to each local authority.

Now, the reason that we invited one application per local authority was twofold. One, when we did this—. We like to be able to guarantee funding as early as we can and avoid unnecessary paperwork. So, when we were setting out what the likely budget would be, we were looking at pretty tough financial circumstances, and, of course, the draft budget is better than we were planning for. But the second point to the application process is that, in this current financial year, we've only fully funded 19 projects across the 22 local authorities, and yet local authorities have been spending quite considerable amounts of time and energy, expertise and money building up bids that actually then come to nothing. So, what I would like to do is offer greater certainty of funding and cut out the unnecessary spending of time and money and energy on applications. Chris can correct me if I'm wrong on this, but I think some local authorities were spending between 80 per cent and 90 per cent on consultancy fees when it came to the applications that were being put together, rather than actually on delivery, and I'd rather see money going into delivery on the ground rather than into paperwork.

So, can I be—?

Chris. Sorry.

Can I just clarify, then? You're asking each local authority to put forward one proposal in the active travel field, and that will not be competitive. You would be able to fund each of those bids for all the local authorities.

So, it is under the competitive funding element of the fund, and we've also provided an indicative allocation of core funding as well to each local authority.

Okay. Did Chris want to come in, just to confirm the consultancy issue?

I don't have the numbers in front of me, but it's certainly the case that we're encouraging local authorities to maximise the amount that they're investing on the ground. Delivery on the active travel fund—. I think just to add to the previous point, the active travel fund is always oversubscribed. I think it will be in this case this year, but it certainly was last year. So, that competitive element will still remain for local authorities, but we have issued indicative allocations for the core funding that they can expect to receive so that they can forward plan to some extent.

I think in previous years we have issued indicative allocations for our grant schemes like the active travel fund, to enable local authorities to plan. But, because there was some uncertainty this year over the level of local authority funding, we felt that, rather than lead local authorities to be pigeonholed into the particular silos, if you like, of our individual grant schemes, we would instead not give them indicative allocations for things like the active travel fund, but try and make sure that we only invited the right level of applications, that wouldn't waste their time developing proposals that were unlikely to get funded but, nevertheless, would give us a reasonable pipeline to assess, and they could prioritise between the different grant schemes themselves.

So, we will then assess the individual grant scheme applications and then look at them on a regional basis before we then put some advice to the Cabinet Secretary about the allocations to the active travel fund and the other funds, taking all that into account.

Okay. Thank you for that clarity. Thank you. Carolyn, you wanted to come in?

Yes. Local authority officers told me that applications were onerous, 20 pages long, and they didn't have the technical expertise to apply for the grant. So, to actually have the funding and to be able to actually deliver it with those officers would be better spent resources. Could I ask you: how do you respond to the suggestion made by Living Streets to the Public Accounts and Public Administration Committee that there's a risk of active travel getting lost in the move to a regional approach?

I appreciate that there are concerns about this, but, again, I can offer some assurance today, I think. The Active Travel (Wales) Act 2013 requires corporate joint committees to have regard to the integrated network maps for active travel when formulating their regional transport plans. Our guidance for corporate joint committees for developing those plans reinforces this—it signposts to our active travel Act guidance. And, also, active travel plays, I think, a huge role in the emerging regional transport plans.

Can I just come in and say—? The Act hasn't achieved the results that we were expecting. Do you think that, sometimes, the standard was too strict? So, Ramblers—I mentioned this earlier—have suggested that, if we didn't have a tarmac surface, if it was just limestone gravel, if it could be linking up to places for social cycling and exercise, walking, connectivity, rather than places of purpose—you know, more flexibility—it would help walkers, cyclists and improve cycling for leisure as well as access to work and shopping et cetera, or whatever the intention was supposed to be in the first place.

Absolutely. Your views are echoed by many people, Carolyn, and I'm very sympathetic to those views. Just to say that the Act itself is being reviewed, and so we will be looking at any shortcomings, any failures, with the Act, and we'll be seeking to address them. The figures are difficult to read, to be honest, because we don't have comprehensive data for Wales. That's why we've established the national travel survey, which will provide us with that comprehensive data to be able to assess the degree of success or failure of the Act. But I do take on board the points that you and many others have made in regards to the strict criteria for funding the routes.

Very briefly from Chris, then, if you may, and then we'll come back to Julie.

Thank you, Chair. Just two very brief points on that. The regional transport plans will be going out for consultation within the next couple of months. So, that will give stakeholders and the wider public the opportunity to look at the emphasis given to active travel and to other things that they're concerned about within that, so there can be some proper public dialogue about the role of active travel in the RTPs. But we are seeing it coming through prominently in the drafts that we're looking at at the moment. And I think the other advantage of the regional transport plans in terms of active travel is that it will be clearer, on a regional basis, how active travel fits with the other modes; rather than dealing with it in an isolated approach through the active travel fund, you'll be able to see that wider picture, which is really important from our point of view.

Okay. Thank you very much. Julie.

I think you've covered some of this already, but Audit Wales raised a number of concerns about how active travel funding is monitored and evaluated. How will you address this, particularly when the funding is included within a wider regional allocation?

Thanks for that question. My officials have, indeed, responded to Audit Wales and their recommendations, and explained the concerns that need to be addressed, and they're going to be addressed as part of putting in place the new regional funding approach. So, that's going to include monitoring and evaluation of active travel investment alongside other projects and programmes in the regional transport delivery plans. I'm very, very conscious that we need to do this. So, it will be done as part of that work of putting in place the new regional funding approach.

And how will you ensure that the Welsh Government and local authorities meet their duties under the active travel Act and the reporting requirements in this new approach that you've got?

Absolutely. Well, obviously, I meet my own duties as a Welsh Minister, and, for local authorities, it'll be built into the development, monitoring, reporting and evaluation approach for each of the regions that will be funded.

Thank you. Can you provide further detail on the shift in priorities to focus on walking and wheeling? I think there was some discussion about this with Janet earlier on, but how is that reflected in the draft budget?

Okay. So, Janet raised, I think, a point earlier that is being debated and discussed quite widely, and, if I could just go to the core allocation in the active travel fund, that's an important mechanism to make sure that swift improvements for walking and wheeling can be felt across Wales. So, it's going to be through that core allocation first and foremost. We've shifted the emphasis towards directing more of the funding towards making minor improvements that can be implemented quickly and efficiently in regards to walking and wheeling—pavements et cetera—by mandating that a minimum of 60 per cent of the core allocation should be spent on making direct improvements on the ground, such as improving crossings, installing dropped kerbs where necessary, bringing in tactile paving, installing seating along routes, removing barriers, and generally making streets safer and more usable for all people. It's all about inclusive movement and inclusive transport. So, mandating that a minimum of 60 per cent is actually spent on the ground, because previously, as I said, some local authorities, not by their own fault—not by their own fault—were using a considerable proportion of core allocations for consultancy fees, feasibility studies, development work on a large number of schemes, some of which risked being out of date by the time the scheme was likely to attract funding. So, I think what we will see is a greater emphasis and focus on delivery for walking and wheeling—pushing prams, wheelchairs—and we will see a greater degree of work undertaken on the ground rather than invested in paperwork.

Yes, thank you very much for that response. I'm very supportive of making it all inclusive, and I'm looking forward to meeting you with the Guide Dogs for the Blind, actually, fairly soon. But, obviously, there has been progress made in increasing the amount of cycling, and there is concern from people in the cycling world that this may move backwards. So, I wondered if you could comment on that.

I think those concerns are unfounded, not least because we've recently implemented the biggest road safety initiative in 25 years with 20 mph, making roads safer, and that has made cycling safer, there's no doubt about it. And if you look at some of the data that organisations like Cycling UK have been able to publish, that shows that a huge proportion of people who would like to cycle would cycle if speed limits on urban routes were lower, and that's exactly what we've done. So, I think those concerns are unfounded. And I'm not going to apologise for prioritising inclusive travel. I'm not going to apologise for making sure that the most vulnerable and the frailest citizens in our society have safe streets to use, that pavements aren't crumbling, that there are dropped kerbs, that there are tactile pavements. Because, as I say, streets that are safe to use by our most vulnerable people are safe to use for everybody, and that is what I define as inclusive travel.

And what has been the response from stakeholders? Have you had much discussion with stakeholders about this?

Yes, I have—pretty extensive. As I said, I've met with the access and inclusion panel at TfW, which comprises some incredible individuals and organisations. I've met with the active travel board, I've met with local authorities, I've met with numerous Ministers, and this has been very much welcomed. Indeed, if you take Living Streets, for example, they very much welcome this emphasis—they were saying particularly the emphasis on walking to and from school—and they do magnificent work in this area. Other organisations likewise do—Sustrans, for example—and that emphasis on inclusive travel, I think, is something that everybody embraces. I'm going to be undertaking further training in the social model of disability, and I'm absolutely determined to make sure that inclusive access to public transport as well is at the heart of all public transport planning. I know that some people are concerned about the deprioritisation of cycling infrastructure, but again, I'd point to the very fact that we've implemented the biggest road safety measure in 25 years to benefit cycling safety, and I don't think that should be ignored by the cycling community. But, in terms of inclusive travel, I will not apologise for prioritising safer streets for all of our citizens.

Thank you. Okay.

Yes. Could I just say one thing?

Very, very briefly, then, because we need to make progress.

I've met a number of groups of varying disabilities to discuss this issue, and the point that they wanted to make, really, was that they are very supportive of active travel in all its forms, and obviously they're very pleased that there will be an emphasis on what their needs are, but they did want to make the point that they do support cycling and other forms of active travel.

Chair, if I may, could I offer an invitation to committee members to attend either the next or the subsequent meeting of the access and inclusion panel, so that they can hear first-hand the challenges—

Yes, that'd be great.

—and the barriers that they face? Is that okay?

Yes. There are a lot of nodding heads in the room, so I presume that's a 'yes'. Thank you for that.

Thank you.

I'm sure all those who can attend will do their utmost to do so. Thank you. That's a very kind offer.

I think I was the first Minister to attend that panel. It's an amazing panel, and I'm determined to have their work, their expertise, their lived experienced, incorporated more fully into the planning of not just active travel, but public transport as well.

Yes, indeed. Okay. Diolch yn fawr iawn for that, Cabinet Secretary. Right, we'll move on now then to highway maintenance. Carolyn, you're going to lead us on this.

So, cyclists and walkers also use pavements and roads, don't they, most of the time, rather than designated cycle routes? So, it's an important issue.

Your paper shows the revenue budget for the strategic road network—that's the Welsh Government maintained trunk roads, isn't it—excluding the new contractual payments BEL, has increased by £10.58 million, yet the draft budget narrative states that an additional £27 million revenue funding will be invested in maintenance and that a £25 million road improvement fund will be created. So, can you clarify these figures and outline how the road improvement fund is provided for within your budget?

Absolutely. This relates again to our determination to be more transparent and clear with how we present the budget. So, last year, contractual commitments were blended with operational maintenance budgets, but this year we're taking the opportunity to clarify the position, bringing together contractual commitments, like the A55 design build finance operate contract and the A465 mutual investment model, into a separate BEL.

I'm going to bring in Andy Falleyn, if I may, just to build on what I'm outlining, but I can assure you that the £25 million has been ring-fenced in a pothole prevention fund, and the net revenue increase is £27 million, and that will allow us to spend and retain more capital allocation, because capital allocation is often used alongside revenue; the two budgets work hand in hand. When there are revenue pressures, capital is used to support the day-to-day operation of the strategic road network. So, I'll bring in Andy, and if I may, Andy, could you just contribute to the other point that Carolyn made just a little earlier, about the use of active travel capital funding and how, perhaps, that can be utilised for the purposes that Carolyn has outlined?

Yes, certainly, Cabinet Secretary, and good morning, committee. Cabinet Secretary, you set out quite well the position. The budgets for the strategic road network, which is what we're talking about and the point you raised, Carolyn, it's that the interrelationship between revenue expenditure, or revenue budgets, and capital budgets is entirely interrelated, and I know, from your experience, you're probably very much aware of that.

In terms of the figures—and, again, Peter mentioned it right at the beginning of the session and the Cabinet Secretary reinforced it—what we attempt to do now that we are a transport stand-alone MEG is to make it as transparent as possible to understand where we spend the money. So, what we've done—. Last year, 2024-25, we had a total revenue budget of some £59 million. That was blended between our contractual commitments, which again, as Cabinet Secretary has pointed out, is the A55 DBFO service charge payments, a commitment to alleviate the tolls on the Cleddau bridge, and this year we have the A465 project coming on stream. So, we've separated those payments out, and the other BEL for revenue is the operational BEL, which, hopefully, will make it clearer to understand where we spend the money.

In total, we've gone from a revenue budget last year of £59 million to something in the order of £117 million. That is a £59 million increase. So, £32 million of that is as a result of the A465 MIM project becoming operational. So, that leaves an additional revenue uplift for 2025-26 of £27 million, which is where the £27 million has come from.

Right.

Of that, when we have revenue pressures, and we've had in the past, we have used some of the capital allocation to support day-to-day revenue activities. That is to ensure the safe operation of the network and to ensure that Welsh Ministers carry out their statutory duties. In reality, spending the capital money that way is not, perhaps, the most effective way of doing it, but this uplift in revenue now allows us to spend the capital moneys in a way that is more proactive rather than reactive, so we can carry out maintenance on the network to prevent, for example, potholes forming in the first place.

So, what we have done, and will do as a result of that, as the Cabinet Secretary has said, is to ring-fence £25 million, which we’ll be allocating to improve an additional 100 km of road going forward. Now, as part of that expenditure, what we will be doing is we'll be able to monitor that and demonstrate what we're doing, as far as that additional expenditure goes, in terms of road improvement. That will fix potholes, but also it will fix the condition of the carriageway so that potholes will be less likely to occur. Going forward, we'll have a better condition carriageway. That will also include the likes of bridge joints and so on and so forth, but we'll be able to monitor that and report on that.

On the other point the Cabinet Secretary raised, in terms of maintenance, this is where the flexibility around how you spend the money can be made at a local level, in terms of where that money is best spent and where that's best allocated. And as part of that process, we will be looking at the maintenance of not just road surfacing, but also adjacent pavements as well, to make connecting communities and communities as safe as they possibly can be.

Okay, thank you.

I agree with you—

We need to make progress now.

Local authorities agree that maintenance is better than pothole filling, and they've been struggling as well. So, what is your current estimate of the maintenance backlog on both the strategic road network and local authority roads?

Okay, so, on that point, we don't have the figures for local authorities. Obviously, that is their responsibility. In terms of the strategic road network, we don't concentrate or we don't focus on a specific figure for backlogs. What we have—. For example, the strategic road network asset is valued at something in the order of £20 billion. So, as you can imagine, as with any asset, there is always work that needs to be done on that, and there are challenges as far as that's concerned, but what we focus on is the condition of the asset base itself, rather than a backlog figure. So, what we monitor, for example, is roads in what we call 'poor condition', and that might mean a combination of, we need to improve the drainage along a route, we need to improve potholes along a route, or maybe bridge joints, and so on and so forth.

Andy, I'm just going to have to jump in, because the Chair's telling me I've got to hurry up. Is that okay?

Apologies.

Thank you. So, we have the local government borrowing initiative now, £60 million going forward, for maintenance of the local road network. Now, there is a huge backlog. I believe, in 2020, it was £1.5 billion for local road infrastructure, the bridges, et cetera. I believe that local authorities are saying that they welcome this capital funding and that it’s really good to see this coming forward. They’re asking, really, for £120 million, if possible. I’ve seen a letter from Flintshire council, and they’re saying that they need £3.5 million each year just to keep roads maintained at a standstill condition.

Climate change is impacting on roads, bridges, drainage culverts, as you’ve said, Andy, on the strategic road network, but local authority roads as well. So, regarding that, really, can you reassure us, in some way, that there will be funding going forward in the future as well, that it’s not just one-off funding? It takes a while to build a programme of funding up. They need to know now what funding is available as soon as possible. I know we’ve got the budget process, but an indication, because they have to plan the works to be ready as soon as there’s a dry period, to get cracking on it.

Cabinet Secretary.

Yes, thanks, Chair. And I’ll be as brief as I can, but I just want to touch on a few more points. The £25 million is a prevention fund for potholes. So, it will address 100 km of the strategic road network, but it will improve the entire service to prevent potholes from occurring.

Okay.

It will also lead to around 30,000 potholes being dealt with. The additional funding that we’re putting forward for the local borrowing initiative, which will enable £60 million to be borrowed, should then fix, if you extrapolate out the figures, around 60,000 to 70,000 potholes. So, we’re looking at a huge, huge degree of road maintenance that’s going to be taking place because of the investment that we’re making available in the next budget year.

And, as Carolyn stated absolutely correctly, pavements and roads are used by more than just motorists. Before I came back into Government in recent years, I think one of the biggest claims settlements against Welsh Government concerned a cycling incident and a pothole. Potholes affect, I believe the current figure is something like one in 10 motorists each year. According to polls, 50 per cent of motorists are concerned about the condition of roads because of potholes. So, this is a major concern for motorists and cyclists alike.

Okay. Diolch yn fawr iawn.

They just want clarity going forward, because they're hearing all these different funding things, but it's not very clear how much money they will have going forward in this year's budget. Thank you.

Absolutely, yes. So, we've got—. There’s money that’s made available through the revenue support grant, but there’s also the local borrowing initiative, which will amount to £60 million. My understanding is that local authorities would like that to be replicated in future years. That’s something that I’d very much like to see happen, but this is the beginning, I hope, of what will be a concerted effort to address the condition of the road network.

There we are.

Thank you.

Diolch yn fawr iawn. Right, we'll move on now then. Delyth.

Thank you. Good morning to you.

I’m going to ask about TfW’s budget. We have called for TfW’s total budget, not just rail, to be available for scrutiny. So, just to reiterate that point. And, in that vein, could you reassure us, please, that TfW’s total budget will be sufficient to deliver the plans and commitments, and, if there are any areas or any programmes that you feel are at particular risk of being either delayed or not being able to be delivered, could you outline those, please?

Absolutely. Thanks so much. I’m conscious that I could probably talk for hours on this subject. [Laughter.]

Oh, I don't think the Chair would let you do that.

No, I wouldn't allow that. [Laughter.]

No. [Laughter.]

To be brief, I think the main concern that I always have is with major infrastructure projects costing more than were budgeted for. The core Valleys lines enhancement programme is a massive programme, so the pressure that I’m most anxious about concerns that capital programme of work.

In terms of the overall budget, I think we’ve got a draft total budget that, if we haven’t already provided it to you, we can do. I thought we’d provided it just before Christmas—it might have been lost in the post. I will make sure that, if you haven’t had sight of it, you get it as soon as possible.

But in terms of where we are with financing Transport for Wales operations, obviously the rail subsidy forms the vast majority of the revenue that is allocated to TfW. But I think we’ve got a pretty good story to tell when it comes to the revenue that TfW themselves have been raising through the rail farebox. We're on course this year to see a 17 per cent increase in the farebox. That's a substantial increase. Next year, we're looking at a further 13 or so per cent. So, we're going to be preciously close to seeing the farebox smash through £200 million for the very first time, and that's down to a very significant increase in passenger numbers. The latest figures show a 25 per cent increase in passenger numbers year on year for the last quarter, so it is a huge increase, and over time my ambition is to ensure that TFW are able to increase the farebox, if you like, to climb out of the problem of continued revenue from the Welsh Government supporting and subsidising their services, and they'll grow out of it by increasing the number of passengers that use the network. They're doing that: a 17 per cent increase this year and a 13 per cent increase next year. I don't know whether Peter has anything to contribute as well. I'm conscious that I'm talking too long, Chair.

I'll keep this very brief. We've been on quite a journey on the TfW farebox and rail performance with this committee, and we are certainly reaching the point now where the net subsidy to TfW is starting to plateau as the farebox increases, albeit—you asked about uncertainties—the number presented in the budget is a net number, and that depends on farebox targets being met, which depends in turn on performance, on weather et cetera. So, on the revenue side, the farebox is probably the biggest uncertainty about whether we have sufficient funding. And on the capital side, the Cabinet Secretary notes the biggest pressure around the CVL, which is correct, although we're starting to see the end of that project now, so the risks in the next year or so should start receding.

Thank you both very much for that. So, just to clarify that I understand you correctly, in terms of any projects that you would be most concerned about that could be delayed or might not be able to be delivered because of any pressures, the principal one would be the core Valleys lines upgrading project.

Yes, because that's the big capital project that we have responsibility for. Everywhere else on the network is the responsibility of, currently, Network Rail—soon to be GBR. So, it's the core Valleys lines that cause us most anxiety. But equally, it's going to be the core Valleys lines that will deliver a huge uplift in the number of passenger journeys undertaken and therefore we'll see that plateauing of the subsidy from the Welsh Government to rail services, and hopefully in the future we will see a reduction in the sum that's needed. But it must be said that every new service TfW introduces carries with it a subsidy requirement. There are hardly any rail journeys on the network that don't require a subsidy. But because they are driving up the farebox so substantially, we're seeing that plateauing of the subsidy level, the overall quantum.

Thank you very much for that. We touched on performance as well in terms of budgeting. Your predecessor and her officials had said to us, not December of last year but December of the year before, I think, that there were plans for a performance board approach to managing TfW's performance and that that would involve the Welsh Government and the WLGA participating in TfW board meetings. Could you tell us, please, how that approach is developing and whether there are any examples you'd like to highlight about how improved value for money is coming about as a result of any changes?

It's a really good question, because unless we get value for money being achieved then there is very little point in doing this, but my understanding is that that has been achieved, because essentially this approach has brought better working between teams, alignment of corporate plans with Ministers' objectives and greater oversight of expenditure. The board is meeting. It meets every quarter. I think probably Peter is best placed to give some assessment of its success, given that he attends.

Thank you, Cabinet Secretary. There are two main interventions that we've put in place over the last 18 months. The first is that myself and Andrew Morgan, as leader of the WLGA, are now formal observers of the TfW board. And when you combine that, actually, with some new non-executives that TfW have appointed, I think the board dynamic is much stronger now. We're getting a lot of value out of that process. And in addition, Welsh Government officials hold TfW to account on a quarterly basis, and we use the TfW business plan as our framework for doing that. I know that that's something that the committee looks at regularly. We've got a new draft for next year to look at.

One of the challenges, for example, that I'm giving TfW at the moment is can we move from an annual budget-setting process to a multi-year forward-look process. We are obviously constrained by the structures of the Welsh Government's overall budget, but on things like rail, we've got a pretty good idea about how much certain things are going to cost in years 2 and 3. And on rail as well, it's very hard to make short-term decisions, but you can make medium-term ones. So, I'm setting a bit of a time horizon challenge to TfW at the moment. And I know that, certainly, as we get closer to—. Well, actually, we are within CVL delivery. It's happening already. As we've said before, it's a process not an event. I know that this is something that you, Cabinet Secretary, are looking to get more involved in in terms of your partnership with and scrutiny of TfW. So, the direction of travel is more and not less.

Thank you for that, Peter. Finally from me on this, do you think that there will be a time that we can anticipate when TfW's total budget can be published at the same time as or alongside the Welsh Government's draft budget? Are there any further hurdles that you could outline to us that you think could be overcome for that to happen?

I'll ask Peter to provide you with the challenges, but I think it's always going to be really difficult to confirm TfW's budget in advance of the publication of the Welsh Government's budget. It's always going to be difficult, without certainty. But, Peter, do you want to highlight some of the hurdles?

I think the main hurdle is that what we need to do, just as the draft budget is published, is marry up the top-down with the bottom-up. And unless you get the top-down number earlier than the publication of the draft budget, you can't do that marrying up in time to tell that story at the draft budget. So, I'm afraid that this may just be the nature of the system, albeit that we will always commit to provide a TfW addendum, just like we have done, once the draft budget is published but before we have this scrutiny session. We are open minded on options, I just fear that this is a structural part of the system.

Diolch yn fawr iawn. We'll move on to another area now. Carolyn.

On bus services, which are really popular, the bus service support revenue budget expenditure line has increased by about 7.4 per cent, but the Confederation of Passenger Transport called for a 15 per cent increase. Do you believe that this allocation is sufficient?

Yes. I outlined right at the start of the session how, within the context of connecting communities, securing the bus network is one of the top priorities for the Welsh Government, and protecting the existing network as we move towards franchising is something that we are very determined to do. So, we've increased the BEL for bus service support by 7.4 per cent, which is way more than the level of inflation at the moment, and it's equivalent to £9 million of revenue funding to support the network. But I do understand and I appreciate the Confederation of Passenger Transport calling for 15 per cent. If I was part of that confederation, I would be calling for more as well. But bus services and the revenue that they require are competing with other areas of our budget, and so I think that we've been able to allocate an increase as best as we possibly can.

Will it be used for delivering the network as it is, to help maintain it, or is it for specific grant schemes, to increase those?

My priority is going to be to focus on passengers—so, focusing on additional resource for bus grants and concessionary fares to make sure that we prioritise, as I've already said, access to inclusive public transport. Focusing on providing sufficient funding for the concessionary fare scheme is right up there at the top of my priority list.

They also asked for capital investment for bus priority schemes as well. Do you recognise the need to increase spending in that area, and how is that reflected in the budget?

Yes, I absolutely do, Carolyn. If we're going to make bus transport a more desirable option for people, other than the private car, then we have to make sure that buses operate punctually, that they are very regular. And that can only be achieved in many parts of Wales if there are bus priority managers implemented. That’s why they’re a part of the important local transport fund, and there are local authorities that are investing in schemes. Cardiff Council, for example, were awarded more than £2 million this financial year for strategic bus corridors. We are currently assessing bids as well, I should say, from other local authorities for 2025-26. But for sure, I do understand, appreciate and agree with the CPT that capital investment in bus priority measures is required. And in your region of north Wales, Carolyn, I know that you can point to numerous areas of north Wales where dedicated bus lanes would be fantastic in ensuring regular and punctual services, so I do agree that capital investment is vital.

They have raised some issues where roads have been taken up by bus priority schemes, active travel schemes, and there have been issues for walkers. So, everybody needs to think together in an integrated approach. And parking and congestion are issues as well.

I'll move on, before I get told off. On bus support also, we talked about the purchase of buses as well going forward, so will the bus support capital budget purchase new buses? How will this be allocated and which operators would benefit from it? Or has that not been thought of yet?

Yes, we are going to be purchasing new buses. I think it’s around half of the £18.5 million that’s been allocated to fleet, depots and charging that will be spent on buses, but most of it is going to be for low-emissions vehicles for the TrawsCymru network. That’s something that TfW are responsible for, so TfW will be purchasing them and then leasing them to the operators for the TrawsCymru service. So, approximately half, as I say, of that £18.5 million is going to be allocated to buses.

I think there’s a lot of exciting work that is taking place in the realm of zero-emissions buses concerning hydrogen as well. So, we’re looking at, in two parts of Wales—in north and south, in the Swansea area and in north-west Wales—how we can utilise hydrogen for bus transport. I think that’ll become a clearer feature of bus movements in the future.

The capital BEL has been reduced by £37 million, though, so that's raised a bit of concern.

Yes, and I’m going to say again that this is about clarifying and being more transparent with our budgets. Some elements of the funding previously supported through the bus capital budget have actually been moved to better reflect what their purpose is. For example, metro spend previously was part of the bus capital budget, but that’s now captured, rightly in my belief, by the regional transport budget. So, we’re trying to be far more transparent and clearer in the way that we present the budget to you.

Bus operators have said that the biggest expense for them continuing to operate can be the purchase of new buses, and there have been talks about Transport for Wales purchasing buses so that operators can continue to operate their services. So, is that something you're thinking of? And also, there have been talks about plans to buy strategic bus depots as well. Is that something that you plan to do?

Yes, absolutely—both. Both, you're totally right on. It's going to be quite exciting this year for buses with the bus Bill, and I'll have more to say about the purchase of new buses when I present the Bill to the Senedd.

In regard to depots, where we can identify commercial reasons, exceptional reasons for purchasing them, we will do. We're going to obviously focus, first and foremost, in south-west Wales, where the first franchising initiative will commence. But if, anywhere else in Wales, a depot is identified that would be valuable to us, then we'll look at purchasing. But I can't go into any detail on specific ones that we're looking at at the moment, because we don't want to undermine our own negotiating abilities.

Rail service patronage has increased significantly post pandemic, but bus usage has decreased and we've not seen concessionary pass holders return to using it. In England, there's been a £2 bus fare cap. Scotland has introduced free bus travel for under-22s. I know that operators would like to see a scheme for young people, to encourage them, and bus transport is a significant barrier to accessing education, training and employment for young people. The travel pass is welcome, with a third off bus fares, but we'd like to see a pilot or a scheme for young people. Is that something that you will consider going forward?

Yes. I've regularly said that we have to have a fairer fare regime in place, and, obviously, the Bill's going to be very important in franchising services, but it will I think also enable us to roll-out a fairer fare regime across Wales. In the meantime, pilot schemes have been initiated; there's one bus scheme in north Wales that caps travel across the whole of the region for young people. There's MyTravelPass, obviously, which has helped an enormous number of young people, and I had an incredibly productive meeting with Stagecoach—just on Monday, actually—where we talked about various options to support young people to access bus travel at a reasonable cost. We're providing quite a significant sum to the bus sector in the next financial year, about £132 million, and I would love to be able to roll-out greater support for young people. That will be something that would be right up there at the top of my priority list if I had additional revenue.

And we're also learning from other areas; we're learning that, in Scotland, actually, the initiative that was introduced there, free bus travel for under-22s, has actually resulted in some pretty challenging problems, so that might not actually be the scheme that you'd want to look to introduce, and, of course, in England, the fare cap is being increased to £3, which demonstrates the challenge of affordability.

So, we're steadily, I think, reaching a position where we can say with a greater degree of certainty what sort of initiative works best, and, if the revenue were to become available, I would dearly, dearly like to introduce a scheme that makes bus transport more affordable for young people, not least because it would also, I think, help address the challenge that we face with learner travel across Wales. So, this is right up there, as I say, and I can assure Members—we're going to be having a debate on learner travel in Government time shortly and we're going to have the summit on it—this is a key feature of my thinking at the moment, how we can drive a greater degree of patronage amongst young people onto our bus services, how we can deal with the learner travel challenge, how we can increase the farebox to make bus services more resilient, more affordable, more sustainable, and, in tandem, how we can introduce franchising to shape a better network right across Wales.

So, just if I may interject there, then: what do you think accounts for the fact that passenger numbers are way, way behind the rest of the UK in terms of recovery when it comes to Wales?

It's the concessionary fare carriers, the concessionary card carriers, that have not returned. Now—

But why specifically in Wales and nowhere else?

Well, it's possible it's because of the numbers that we have in Wales. So, there was a heavy reliance by concessionary card carriers pre COVID. COVID has changed behaviours; it's made some people more anxious about—

That's true of elsewhere, as well, isn't it?

—about transport. But I'll bring in, if I may, Peter, on this point.

Sure. I think it's probably most interesting to compare us with comparable regions in England, rather than the England aggregate, because what we don't have is the more concentrated urban areas that we often find bring up the averages. It also links to services as well, so if, through franchising, we could find ways to run additional services, that would have a feedback loop as well. We're trying very hard to maintain current levels of bus services, subject to funding.

I'm afraid I don't have a better answer other than it's just the general ecosystem at the moment. But what the investment in the rail network shows is that you can buck the trend if you invest in it, and, certainly, as we come to the end of the big CVL project, we'll have a much more wider range of budget choices on the capital side, which Ministers and the committee will be interested in reflecting on, where we seek to spend the money that we'll be no longer spending on the CVL project. Over the medium term, there's a much greater range of choices.

Okay. Yes, that's a good point. Okay, thank you for that. Right, I'm keen to move on, so I'll bring Julie in here now and then we'll try and cover a few more bases in the 15 minutes that we have left.

Diolch. The Welsh Government's response to our last draft budget report said it's

'not possible to assess the impact of our budget'

on bus services. So, I wondered if you could comment on why that is, and I know that you have said that you're trying to make it all much more transparent, but it is worrying if you're unable to assess the impact of the spending of the Welsh Government. How can you be sure that the bus service support grant and the bus network grant provide value for money?

I must confess I didn't read the Welsh Government's response to your last draft budget report from last year, if that's where the reference to not being able to assess the impact of budgets on bus services is concerned. My understanding is that, actually, the bus network grant carries a definitive requirement for each lead local authority to submit a monitoring return. So, that's in place with the bus network grant, my understanding is. Officials can correct me if I'm wrong on that—

Peter's got his hand up.

Thank you, Chair. I'm happy to clarify. So, yes, there are some things that we do know about bus services, but we don't know everything, and that reflects that, unlike rail and unlike a capital scheme, the buses are currently a privatised network run by private companies. So, whilst we do provide funding into them, they get funding from other sources, including from their shareholders, and it's those private sector operators who then determine the level of bus services. We know the patronage levels, because we've just had a conversation about levels of concessionary fares. We know the services that are currently being run, and we get returns from the local authorities about how the grant is being used. But what we cannot do is tell a direct relationship story between how did each £1 of Welsh Government money go into the black box of the bus balance sheet, which is privatised, and determine what came out the other end. We will have a much better handle on that in a franchised world. This is the unique parameter of bus at the moment, that it's still privatised, which is quite different from rail, and that makes it harder to say directly what each £1 of Government money has delivered.

Thank you very much. I think that does clarify that. As in previous years, we had asked that your paper included a table detailing total and per capita allocations for bus service and community transport support in 2025-26 compared with each of the previous three years, broken down by individual funding stream. This hasn't been included in your paper, and is this data available?

Peter, there's no reason why we couldn't do this. I know that it'll require a fair amount of work, but I think that we should provide the committee with it if we at all can.

I think we can, Cabinet Secretary, and apologies to the committee that we weren't able to do it in the time available for the original document. There are a couple of points of follow-up from today, and we can include it in that.

Thank you.

Thank you. I'll move on to rail services now. The increased capital funding for rail services support includes a £54 million transfer from within the MEG. Can you outline where this funding has come from and what it'll deliver?

I'll bring in Peter again on this, but it is largely associated with that huge capital project that is the core Valleys lines.

Yes. We have had to make some difficult budget choices while we conclude the CVL. The end is in sight and we are nearly past the point of maximum risk, but it is difficult in a balance sheet of our size to do multiple big things all at once, and we are doing the A465 and the south-east Wales metro at the same time. That limits the amount of ambition we can have in other areas. But, as I said earlier, we will have more options as the CVL concludes. And that's why we've had to move things around and bring in additional support to support the CVL in this budget line for the next financial year.

Thank you, and I think you have said earlier on how the increased farebox revenue is going to improve things. In our latest scrutiny session, you stated that you were 'hopeful' that the metro would now be complete in 2027. How have the delays affected the subsidy levels that are needed and will additional allocations be required in future years?

Again, I'll bring in Peter just to outline what we're doing to ensure that we have best value for money on the revenue that we provide.

Of course. I think I've made this cliché before to the committee in terms of thinking of the south-east Wales metro and CVL as a process not an event. And I think that's really brought through by the timetable upgrade that happened back in December, and the fact that the new electric rolling stock is now operating. So, it is not that there will become a point in time in 2027 when—big bang—everything happens at once; it has already started and we are already seeing the uplift in patronage and in the farebox, and there will be continued improvements between now and when the project concludes. And from that point, we can, hopefully, make any further improvements. If we can think of them more as bite-sized chunks, then we can make comparisons with other places where you could do infrastructure investment. Once you get over the hump of a big project, there'll then be a series of things you could do to make the CVL even better, but there is a series of things you could do to make the road network better, there is a series of things you could do to make the bus network better. And once you break it down to those realisable bite-sized chunks, you have far more choices available, and we are really reaching the point now where the bulk of the work will have been done on the CVL in the next financial year, and then there'll be more choices for Ministers.

Well, the first chunk—well, the chunk that's been done—is very impressive, just to say that.

There we are. Diolch yn fawr. Carolyn.

Can you outline the process used by Transport for Wales in relation to setting unregulated fares? And how do you balance the need for increased revenue with affordability for passengers? So, earlier, you said 'increased passengers' and I know that fares have increased as well, so how do you balance—? It's great that we've got that extra money coming in, more passengers, but how do you balance the affordability as well, because people very often say, 'Oh, it's expensive'? Also, it's raised quite often with us that fares in certain areas are more expensive—in north Wales—than they are in certain areas. I don't know if that's because of historical funding or something.

It is. These are really, really good questions, because it's such a complicated scene, and it relates to privatisation. But TfW are getting to grips with it; they've begun to implement what they call a fares simplification strategy right across the network. And the focus of that strategy is to increase the use of airline-style ticket pricing for longer journeys, with low fares available for passengers especially on less busy services.

Now, I think it's 70 per cent—I stand to be corrected on this, but I think it's 70 per cent—of TfW's farebox that relates to unregulated fares, and they're responsible for unregulated fares. So, the vast majority is something that they do have some control over. But they're looking at this fares simplification strategy to make sure that, through the restructuring of fares, they can create a fairer, simpler and more transparent charging mechanism and one that's distanced based—that's the crucial thing, distance based—and eliminate the lumpiness, if you like, in the fare regime that we have at the moment, where some routes in Wales carry larger fares than others. But, to the point about the difference between north Wales and elsewhere, actually, Transport for Wales have been doing a pretty effective job of bringing down the disparate nature of tickets in north and south Wales to the point where, now, I think it is actually a level playing field. But, Peter, you may be able to confirm whether that's the case.

It's not quite a level playing field yet, but we are getting there, and what you are finding is that, each year, we deregulate—or, sorry, TfW deregulate—more fares in order to give themselves more flexibility in order to address that imbalance. And more generally on fares, it’s a really tricky balance, because, on the one hand, you want to maximise patronage on the rail network and, on the other hand, you want to minimise the net subsidy from the taxpayer, as we were discussing in the early part of this session. And what we are finding at the moment is that, if you take a long-term perspective and think of what minimises the cost to the taxpayer over the long term, then, actually, that's quite consistent with the highest patronage possible. And so, now that we're out of the high inflation periods I would hope that we can start to mitigate some of the rail fare increases we've had in the past in a way that is still consistent with that overall net subsidy plateauing and not increasing. But it is a tricky balance, and at the same time, we are trying to deliver simplicity objectives, and also fairness objectives, as the Cabinet Secretary was stating. It's also worth saying that the pay-as-you-go system is working really well in south Wales. It's the first place outside of London where that is operational. That incurs fewer administrative costs to TfW for operating. So, if we can get more people using pay as you go, especially on the Valleys lines, as that gets up and running, that's really helpful as well.

Thank you very much. The Cabinet Secretary for finance told the Finance Committee that, after discussions with the UK Government, an £18.7 million revenue and £20.3 million capital funding increase for the core Valleys lines in this financial year has now been baselined into next financial year's block grant and beyond. So, could you just enlighten us as to where those additional revenue and capital allocations totalling £39 million appear in the draft transport budget and what will they fund?

It's within the general revenue and capital for TfW. Essentially, that £39 million, which is very welcome, I should say, relates to operations, maintenance and renewal of the core Valleys lines. But it is part of the general budget. As we see patronage increase, as we see fareboxes increase, we are going to see that plateauing. So, if you like, £39 million perhaps can't be identified within the general budget, but it's in there.

That will be used flexibly, then, will it, in terms of potentially where you feel the demand is.

Yes. Specifically, the capital side is being allocated for operations, maintenance and renewal of the CVL itself.

Thank you. The final question, I think, to Janet, in the couple of minutes that we have left.

Thanks. Given that the south Wales metro project costs have already increased significantly—. I must say, when we went as a committee, I was so impressed. I would love a similar model up in the north, as you know, and I'm sure that the Chair would agree.

To Taff's Well, indeed. Yes.

Recent comments made to this committee stated that the work should be thought of as a process, not an event. How do you ensure that the project is providing value for money? Also, how does the draft budget support the development of the north Wales—and I have got to include Joyce's area as well now, in this—and south-west Wales metro projects?

We, as north Wales Members, in particular, and no doubt Joyce has the same issue—. It's 'Oh, it all happens down in south Wales'. I was so impressed with the metro scheme. Obviously, we want some of that over by us. But in terms of the budget, how do you ensure that the project that you have already done is providing value for money, and what are your next steps as regards the north and other areas in Wales?

I am going to deal with value for money second. I'll deal first of all with Swansea bay and west Wales and north Wales and the metro programmes for those parts of Wales. I know that I have talked about it fairly regularly, but I think that it has to be emphasised again that the investment that is going to go into the north Wales main line to enable Transport for Wales to run 50 per cent more services across north Wales from 2026 is a huge uplift in what we can expect to see on the tracks in north Wales.

Metro-type services are defined as 'turn up and go'—four trains per hour. If Avanti West Coast—or if Great British Railways takes them over and nationalises—reintroduce the services that were lost, because we have seen a reduction in the number of services across north Wales and down to London, if that can be achieved, effectively, for most of the day, we will have four trains per hour operating across north Wales, serving many, many stations. So, that metro-type regularity of services could come as a result of the investment in the north Wales main line by the UK Government and our introduction of new services, or additional services, from 2026.

The other key component of the north Wales metro vision is the Borderlands upgrade, to provide metro-type services there—four trains per hour not just from Wrexham to Bidston, but from Wrexham right the way through to Liverpool. That particular programme of enhancements is something that forms the priority list of the pipeline of enhancements that we have agreed at the Wales rail board with the UK Government. There are other areas of investment that are required to provide metro-type services across north Wales. One is easing congestion at Chester station. Again, we’ve placed that in the Wales rail board list of priorities, because unless congestion can be dealt with at Chester station we can’t get trains in and out of Wales, we can’t utilise the north Wales main line as much as we would wish. So, that work is taking place.

In Swansea bay and west Wales, the programme is centred around seven new railway stations in the Swansea bay urban area. And of course, the funding for regional transport in the draft budget plays a huge role in progressing the metro schemes in the Swansea bay area and in north Wales.

It should be stated—I’m sorry that this is obvious, but it should be stated, Chair—that the CVL is in our ownership. In all other parts of Wales, the rail network is in the hands of Network Rail. So, we’re seeking to work in partnership with the UK Government to deliver rail investment here in Wales through the Wales rail board—ultimately, when GBR is established, through a Wales business unit—to provide the investment that is required to bring our rail network up to the standard that passengers should expect, and rightly should expect.

Thank you.

Thank you. Joyce, very briefly, and we'll have to conclude then.

Just a final note. There are things happening in mid Wales, particularly the 700 hectare site that was formerly Nant Helen opencast mine, which is the Global Centre of Rail Excellence. I think it would be worth it, Cabinet Secretary, if you could give us an update on what is happening there. The project is owned by the Welsh Government, it will be a global centre for rail excellence, leading the way again here in Wales in driving innovation in technology, production and all that surrounds that. I do think we would gain an advantage from knowing what is happening with that project. I just thought I would mention that, because mid Wales hasn’t been completely left out.

I agree entirely with Joyce Watson. I think, Chair, an away day to the Global Centre for Rail Excellence might be in order, and I’d be happy to join committee members, because huge progress has been made there. This is a project that could create 1,100 jobs in the first decade. Great progress is being made. It’s right at the end of the A465, utilising our investment, therefore, in dualling the Heads of the Valleys road. They’re making great progress in securing funding. I remain fully committed to the project. I know other Ministers are fully committed as well. I think an away day there would provide you with what you need, which is to see the site for yourselves. It’s a phenomenal place.

It is.

That's another one for us to consider. I'm very grateful to you for flagging that opportunity up to us. Diolch yn fawr iawn.

I think we've concluded our session. Can I thank you, Cabinet Secretary, for joining us this morning, and your officials as well? Diolch yn fawr iawn i chi i gyd. You will be sent a draft copy of the transcript to check for accuracy. With that, we will consider and reflect upon the evidence that you’ve shared with us this morning and respond accordingly when the time comes. Diolch yn fawr iawn. Thank you.

Diolch yn fawr iawn.

Committee, we have another item before we go into private session, and that's to note a number of papers, 4.1 to 4.7 in our paper pack. Are we happy to note them collectively? Yes. Diolch yn fawr.

Item 5. I propose, in accordance with Standing Order 17.42(vi) and (ix), that the committee resolves to meet in private for the remainder of this meeting and for the start of the meeting on 23 January. Are Members content? Everyone is content. So, we'll go into private session. Thank you very much.