Questions now from the party leaders. The leader of the opposition, Andrew R.T. Davies.

Thank you, Presiding Officer. First Minister, this morning, the Cabinet took the decision to not proceed with the funding package for the Circuit of Wales—and I appreciate that the Minister will be making a statement later on this afternoon. Yesterday, the most senior civil servant in the department gave evidence to the Public Accounts Committee, where he talked of this project having a very high impact project in the status that it was held in the department, and he also said it did deliver value for money—and these are his words I’m quoting to you—and it was a project that was ready, subject to finance, to be delivered.

Now, the Cabinet Secretary, with his statement this morning, says that, actually, the claims around the project were significantly overstated, and he says, historically there was little evidence, on an international scale, of any track on its own acting as a catalyst for further local employment. Those two statements—from the senior civil servant, and from the Cabinet Secretary—are completely opposed to each other in the views that they are trying to create. Who’s right and who’s wrong when it comes to this project?

No, they’re not, because phase 2 of the project is a technology park. That is something that we will proceed with as a Government. That is the project that will deliver the vast majority of the jobs. Unfortunately, the conditions that we laid down, as far as the circuit itself was concerned, could not be fulfilled by the company concerned. We wanted to make sure they had sufficient time to look to fulfil those conditions, but, unfortunately, that proved not to be the case.

I’m afraid that’s not what the statement that came forward from the Cabinet Secretary this morning indicated. As I said, in his written statement, he says that there is little evidence of a project like this delivering, on the numbers that have been talked about. In fact, it actually talks of only 100 whole-time equivalent jobs being delivered, on the circuit—I take that, and there is a park alongside it. But, actually, the permanent secretary, in that department, said yesterday that it was a project ready to be delivered, he had confidence and, again, reiterating his words, it was a very high impact project. So, obviously, he had confidence in the project.

Your Government, at the eleventh hour, withdrew its support for this project. You’ve offered a fig leaf, by saying that you’re going to reinvigorate the enterprise zone in Ebbw Vale, which has, to date, delivered very little investment to the area. I go back to the point: how can there be two wide-ranging statements, one from the Cabinet Secretary, one from the most senior civil servant, that are so opposed in the views of this project? I think the public deserve a greater understanding of why it has taken five years to get to this point.

I think he answered his own question by saying, ‘subject to finance’, and that is the issue here. We wanted to offer the circuit every opportunity to meet the conditions that we had stipulated. They weren’t able to meet those conditions, and so, as a result of that, the financial situation was not right for us to be able to support this scheme for the circuit. What we can, however, do is to deliver the vast majority of the jobs by delivering the technology park. We’ve spoken to potential investors. We’ve spoken to those in the industry. They are interested. They want to work with us on the technology park. So, yes, there are jobs to the tune of four figures that can be delivered as that technology park is taken forward. It’s not dependent on there actually being, physically, a race track there.

Well, you will not be delivering the vast majority of the jobs, as proposed in the original concept, because there were 6,000 jobs proposed around this project—

In the park.

[Continues.]—and the actual park that you are talking about delivering is a potential of 1,500 jobs with a 10-year delivery programme for that park. So, there is a dislocate. But the point I am driving at here, First Minister, is that you have the permanent secretary in that department at complete loggerheads with the Cabinet Secretary in his interpretation. The evidence is there, from the Public Accounts Committee, of this project—and, again, I repeat, a very high-impact project. So that is finance, that is jobs, that is regeneration. Otherwise, why would he have used such language? Do you have confidence in James Price’s ability to continue within his role or are you backing the Cabinet Secretary? [Interruption.]

It is, frankly, cowardice—cowardice—for any Member in this Chamber to name a civil servant in that way when they cannot respond. It is cowardice. I ask the leader of the Welsh Conservatives to withdraw it. [Interruption.]

I would like to reply to that, because when you accuse someone of cowardice—

No, no, I think it is—

That is out of order to call someone a coward.

[Continues.]—probably inappropriate for you to be naming a civil servant in this place when that civil servant is not able to be here to answer for himself. [Interruption.] So, I’m going to move on now and call the leader of UKIP, Neil Hamilton.

We’re not going to move on very far, Llywydd, I’m afraid, because I’m going to continue the line of questioning by the leader of the Welsh Conservatives. Isn’t it now absolutely clear why this decision has been delayed until after the general election? And what the Welsh Government has done today is actually to kill the hopes of the people of Blaenau Gwent and a much wider area. There is nothing that the Government was able to discuss this morning that couldn’t have been discussed weeks ago. There’s nothing new at all in this decision. The limit of the Welsh Government’s obligations would be a maximum of £8 million a year for 33 years—that’s once all the buildings on the site were constructed. It’s not so the whole thing would be telescoped upfront and the money would have to be found tomorrow or within the next three years. Therefore, what this shows is a pathetic lack of vision on the part of the Welsh Government to kill this massive private enterprise scheme, which offered not just hope to one town in Wales, but actually to the whole of south-east Wales.

It’s difficult to be lectured by somebody who was part of the Conservative administration that closed down, actually, the very last mine, for example—the Marine/Six Bells in Blaenau Gwent—and was more than happy to do so. I mean, really, I can’t take what he says in that regard seriously. The reason why the decision couldn’t be taken at the time he mentions is because the due diligence process hadn’t finished. Or is he suggesting that decisions should be taken before all the information is ready? That is reckless, to say the least. He fails to understand what is behind this project. The jobs were in the technology park, not in the circuit. The circuit only provided to the region about 137 full-time jobs. That’s it. The rest of it—the thousands of jobs—were always going to be in the technology park and beyond, and that is exactly what we’re going to invest in as a Government.

He’s also wrong to say that this is simply £8 million over the next 33 years. We know, having explored this with the Office for National Statistics, who would refer this to Eurostat, that there’s a very high risk of this guarantee being regarded as being on the balance sheet. That means we would lose £373 million of capital funding, and £157 million would have to be found this financial year. That is, schools not being built, hospitals not being modernised, houses not being built. Now, surely, he has to accept that that high risk cannot be ignored.

Well, what we’re talking about here is a bean-counters convention. [Interruption.] It is nothing new. We knew in advance of the decision being taken, months and months ago, what the ONS rules and Treasury rules on how to treat long-term spending of this kind were. So, this is something that could have been decided a very long time ago. Why has the Welsh Government allowed this project to limp along for six years when that could have been recognised right from the start? What we need to do here, surely, is to change the accounting convention rather than just destroy the hopes of those who were relying upon regenerating the whole of south-east Wales. Because if it is the case that it is only the rules of the Office for National Statistics and Her Majesty’s Treasury in London that have killed this project, then that is an absolute disgrace.

We can’t change the rules. The rules are set by ONS. They are independent of Government, and they set rules in conjunction with Eurostat. We have to be aware of what that risk might entail.

He calls it a bean-counters convention. The risk is far greater than that. If we end up with £373 million on our books, that means it’s capital money we cannot spend. Surely he will understand—he’s been in Government, so surely he understands this—he will know that that is a risk that any Government must take seriously. He asks the question as to why this wasn’t identified before. This was part of the conditions. The conditions stipulated 50:50. The conditions haven’t been met. That’s why it’s a problem.

All the money that is going to be provided upfront to build the Circuit of Wales is private sector money. All that the Welsh Government’s being asked to do is to guarantee payments that will be made to the senior bondholders for less than half the capital employed, in a period that only starts when the whole site has been developed. So, there are physical assets then, against which the contingent liability of the Government would be secured. What we have now is a proposal from the Government to spend £100 million over 10 years—shed loads of money—on a series of empty sheds.

We have already assessed the demand and spoken to businesses. We know there is a demand for premises in the Heads of the Valleys, and we know that there are businesses who cannot move there because the premises aren’t there. So, it’s hugely important to make sure that we provide those premises as part of the technology park that is part of the circuit itself. The only thing, in many ways, that’s missing is the actual racetrack. The jobs—the vast majority of the jobs—are still there.

He is not being honest with himself when he says that this is only about a guarantee. He knows full well that if £373 million are re-profiled so they appear on our books, we lose the money. It’s the same as a cut. It means we would have to find £157 million in this financial year. The problem we have is that we have pursued this with ONS and with Eurostat—with ONS—and their answer is, ‘We cannot give you a definitive ruling until we’ve seen the final contracts.’ It’s too late by then. That’s the problem. So the real risk here is that we end up not moving ahead with projects in-year that people have already been promised because of, yes, an accountancy device, but one nevertheless that the ONS have identified, and one that carries a high risk.

Plaid Cymru leader, Leanne Wood.

Diolch. I think you do have some further questions to answer about this, but I understand there’s an urgent question coming later, so I’d like to ask you about another aspect of the economy, and that is in relation to education and skills. Many concerns have been expressed to me by teachers about their workload, and, linked to that, growing sickness rates. Many people are considering leaving the profession now. Initial teacher training levels have been described as bordering on crisis. Do you agree?

No, I don’t. I think there are great opportunities for us when pay and conditions are devolved to put in place a holistic package for teachers to make sure that the responsibilities they have are reflected in terms of the pay that they receive. It has always been a strange anomaly that we have responsibility for education, but not for pay and conditions. That is at the heart of delivering a good deal for teachers, and that’s what we intend to do.

Well, perhaps if you’d had unity on the question of devolving pay and conditions within your own party before now, we might have got somewhere with that. But I’m concerned about your refusal to face reality. I’m not really surprised, but I am concerned. First Minister, the words I used, ‘crisis’, were not my own words. They were the words used by the National Union of Teachers. Back in April, Plaid Cymru warned that teacher recruitment was heading for a perfect storm. We are now in the middle of that storm. The secondary school intake for trainee teachers has dropped a third below the target. That target is based on need—the number of teachers we need in our system. There’s now a gap of around 280 secondary school teachers, and intake for primary school teachers has also now dropped below the target. We know from the Education Workforce Council that one third of teachers intend to leave the profession within the next three years. First Minister, in March, changes to teacher training were announced. How long is it going to take for those changes to stop this downward trend?

I don’t think it would be possible to put in place the right package until pay and conditions are devolved. Why? Well, people want to know what their terms of employment are, what their conditions of employment are, what they’ll be paid, and what activities they’ll be paid for. That all impacts, clearly, on a decision to go into a profession and that impacts, ultimately, on numbers. Now, next year, we’ll have the opportunity and the responsibility of controlling teachers’ pay and conditions. We want to work with the teaching unions to make sure we put forward a package that makes teaching more attractive than perhaps it has been for some people in the past, but getting control of pay and conditions is absolutely crucial for that.

So, you’re kicking it off again into the future then. The situation, First Minister, is worse than you are prepared to admit. The overall number of trainee teachers has dropped every single year since 2011, and the correspondence and conversations that I’ve had with teachers show that there is a deep problem here. From your answer, I’m not convinced at all that you’ve got plans to treat this situation with any sense of urgency. What I want to see is our teaching profession supported. Why don’t you talk to teachers and their trade unions and ask them what can be done in the immediate term to help with their workload and their mental well-being? You’re putting things in place now, which may well pay off in the future, but that decline in numbers has been evident for several years now. It’s not a new problem. The crisis is here, and the crisis is now. You’ve previously admitted that you took your eye off the ball in education, and at that point in time you indicated that your Government would up its game. Since you’ve made that admission in education, what exactly have you been doing?

We can see GCSE results are the best ever, A-level results going up, new schools being built all across Wales, the attainment gap closing, and the pupil deprivation grant making a huge difference. It’s a slightly bizarre comment from the leader of Plaid Cymru, suggesting we don’t talk to teaching unions. I mean, the response from the Cabinet Secretary was, I think, audible to most in the Chamber—in order, but audible. That’s what she does. The link between ourselves and the teaching unions is strong, but we all recognise that, in order to put in place the right package for teachers, we need to get that one last piece of the jigsaw, which is pay and conditions. We’ve got it and then it will be our responsibility, that’s true.