Questions now from the party spokespeople to the Cabinet Secretary. Plaid Cymru spokesperson, Adam Price.

Diolch, Llywydd. Last week, as we know, the Government declined to support the Circuit of Wales project, based on the risk that it could be classified as being on balance sheet and, therefore, would have major implications for the Welsh Government’s budget. Now, I’m interested in the decision-making process that led to this assessment in relation to balance sheet classification, as it could arise in a whole host of other projects in the future. We know, from the Cabinet Secretary’s appearance at the Finance Committee this morning, that his department has amassed considerable expertise running into hundreds of pages in this area because it arose in the context of the mutual investment model.

In relation to this specific decision, can the Cabinet Secretary say if the person who prepared the paper on balance sheet classification, which went to Cabinet last week, is part of his team? I’m not seeking a name; I’m just seeking to understand departmental responsibility. Therefore, was the paper in question commissioned by him—by the finance Secretary—or with his knowledge? And did he have sight of the paper before last week’s meeting?

The lead Minister in relation to the Circuit of Wales is, of course, the Cabinet Secretary for Economy and Infrastructure. As part of the due-diligence work on the proposals submitted by the company, officials from my department were part of the work that went on in carrying out that due diligence and contributed to the assessment that, in the end, was put together and led by Ken Skates.

I mentioned the mutual investment model, but I understand, from what he Cabinet Secretary said this morning, that he does not believe that the issue, identified as part of the decision over the Circuit of Wales, has any bearing on the classification regarding the mutual investment model. Could he say a little bit more about why he has come to that view, and, if so, was not a similar approach considered for the Circuit of Wales project? Can he also say if he’s aware, in this case, whether any of the following were contacted to give their advice or guidance in relation to the Circuit of Wales balance sheet classification issue? I’ll read them out slowly: her Majesty’s Treasury public expenditure classifications team; the Office for National Statistics’ economic statistics classifications team; the ONS economic statistics classification committee; and, finally, Eurostat’s committee on monetary, financial and balance of payments statistics.

Well, the reason, Llywydd, that I said to the Finance Committee this morning that I didn’t think the decision in relation to the Circuit of Wales had a direct bearing on the mutual investment model the Welsh Government has put together is a matter of timing as much as anything else. The one preceded the other. We had already developed our mutual investment model. I had already made a statement on the floor of the Assembly here about it and answered questions about it, and we had already had to submit that model to the ONS and to Eurostat to allow ourselves to be satisfied that the way that that mutual investment model had been structured did not run a significant risk of those projects to be encompassed within it ending up on the public balance sheets. We did that, as you know, very much in the light of the Scottish Government experience, where their parallel model has ended up with many, many, many millions of pounds having to be found directly from public capital. So, that work is completed, and we’ve taken that advice. In that sense, I do not believe that it has to be revisited in the light of a completely separate project.

As to the Member’s detailed questions as to where advice was sought, I don’t have that information with me. I do know that the information and advice that came from those who had taken that advice was that the risk of the Circuit of Wales being classified to the public accounts was very significant, and that that would have had a very major bearing on the Welsh Government’s ability to carry out the capital investment projects that we have already announced and are committed to providing in Wales.

The First Minister last week said that the ONS are not able to give a definitive ruling until contracts are signed in relation to project proposals, but it is the case that they are able to give a provisional ruling on classification. I’m relying here, Cabinet Secretary, on the ONS official guidance on the classification process, which says:

ONS is occasionally asked to provide classification advice on policy proposals so that the government can understand how these proposals would be treated in the national accounts… Any classification decision based on a near-final policy proposal will be deemed as “provisional” and dependent on the proposal being implemented as described.’

So, my question, Cabinet Secretary, is this: did the Government, in relation to this project, seek not general advice as to the risk of a classification, but a provisional ruling, as set out under section 6, Government policy proposals, of the ONS classification process guidelines?

Well, Llywydd, I’m very familiar with the guidelines that the Member has just read out, because in relation to the mutual investment model, that is exactly the position that the ONS have taken. They have provided us with a general view that the model, as we have developed it, would not end up with classification on the public books, but reserve the right, in any particular project that we then take forward through that model—whether it be Velindre or the Heads of the Valleys or whatever it might be—to give us a separate ruling in relation to that project. So, the methodology that Adam Price has read out is exactly the way that the ONS goes about its business.

The Government was satisfied, Llywydd, from the advice that we received, that the risk of classification to the public books of the project as presented to the Government was too great for us to proceed on the basis that that had been set out.

The Conservative spokesperson, Janet Finch-Saunders.

Thank you. Cabinet Secretary, I was unable to get a clear commitment from the First Minister yesterday with regard to the inclusion of a clear poverty reduction stream within future local authority reform. Now, your White Paper notes the need for a golden thread that links community-level aspirations with well-being goals to become a reality. So, therefore, will you commit today to ensuring that a golden thread in terms of poverty reduction is similarly prioritised as a reality within your proposed legislation objectives going forward, with clearly marked strategic direction, ambition, objectives and deliverable outcomes?

I’m not certain, Llywydd, I completely follow what I’m being asked to commit to. What I will commit to is this: that local authorities in Wales, by the nature of the services that they provide, are often the final resort of the welfare state in dealing with people whose circumstances are so difficult that they require the assistance of homelessness services, or social services departments or public health departments, too. So, there is a golden thread, it seems to me, already in what local authorities do in making sure that they provide services for those who most need them.

My approach to local government, Llywydd, is the one set out in the White Paper. My aim is to provide all local authorities in Wales with a renewed, refreshed and extended toolbox so that they have a greater set of possibilities that they can deploy in the way that best meets their local needs and circumstances. And then we must be more willing than we have been in the past to allow them to make those decisions, to be accountable for them to their local electorates, and to be able to respond to the circumstances that they face and are closest to in their own localities.

Thank you. Of course, this golden thread—your words, not mine—will require close working between community councils, local authorities and other public bodies, public service boards and any regional arrangements, and reform may require reorganisation of public service boards. Your White Paper proposes that they collaborate or even merge across local health board boundaries. Given that the proposals for community area committees have now been scrapped, there is little mention of public service boards in the previous Bill’s regulatory impact assessment. So, Cabinet Secretary, what analysis have you undertaken in regard to the costing of these such changes coming forward?

Well, Llywydd, of course, the costs and benefits of the proposals that we will bring forward will be set out in the regulatory impact assessment that will accompany the local government Bill that the First Minister announced as part of the second year’s programme when he made the legislative statement last week. And there will be a new regulatory impact assessment that reflects the set of proposals that will then be in front of the Assembly. I think the Member makes an important point about local service boards, and she’s right to pick up the fact that there was interest in the consultation about the way that we would maybe realign public service boards so that they are better able to match the new set of circumstances with a greater emphasis on regional working and so on that the White Paper set out. And I definitely do intend to pursue some of the views that came through in consultation, and to look at public service boards in the context of these new arrangements.

Thank you again. Of course, local authorities spending on central administration is set to rise by £11 million this year, whilst spend on roads and transport will fall by £2.73 million, and on libraries, culture, heritage, sport and recreation by almost £4 million. The Welsh Labour Government have talked the talk on more streamlined local government, but these figures suggest increased bureaucracy and red tape. Years of uncertainty over reform and reorganisation has not helped in the slightest. Cabinet Secretary, can you suggest why these costs are set to rise so dramatically, and will you commit to ensuring that there is solid and responsible budgeting in this area?

Well, Llywydd, the single greatest contribution to the rise in that £11 million figure is the figure from Conwy County Borough Council, and the Member, of course, raised that with me in the Chamber last month. To another extent, there are some classification issues that lie behind the figure—just things being classified in a different way.

I’ve not met a single local authority leader, Llywydd, who doesn’t tell me how anxious they are to try and minimise the amount of money that they spend on those functions in order to free up money for the front line. The truth of the matter is, as I’ve said here in the past, and I repeated to local authority treasurers again last week, they face even tougher times ahead. The budget available to this Government goes down next year, the year after, and the year after that again, and there is no escaping the fact that those reductions will have an impact on our ability to fund our partners to do all the things that they would like to do, too. So, the incentive and the impetus for local authorities to squeeze as much money as they possibly can out of backroom services, sharing administrative arrangements, being more efficient in the way they produce support services is very well understood in local government, and the reforms that we will bring forward will assist them in doing so.

UKIP spokesperson, Gareth Bennett.

Diolch, Lywydd. Minister, you’ve just been talking about the local government proposed reforms. One of the issues that I think has emerged, from what you’ve told us so far, is the theme of localism versus the need for systematic and mandatory ways of working, to use your own phrase. In other words, we need councils to be able to operate in their own way to some extent, and that they have to conform to Wales-wide standards in some areas. We had the issue recently in England of whether or not a council could or should have excluded the press from a meeting. Now, there is an issue in Wales of the variability of tv coverage of council meetings, so how far will you go down the road of enforcing systematic and mandatory working in this area?

Thank you, Llywydd. Well, Gareth Bennett will be aware—I know, because he’s raised it with me before—that our White Paper makes a series of proposals that will place greater obligations on local authorities, both to broadcast their proceedings and to make their proceedings available to the public. Those parts of the White Paper, I think, were broadly welcomed in the consultation. We have relied, to an extent, on encouragement in this field in the past. The local government Bill will give us an opportunity to legislate to make sure that standards of openness and accessibility that exist in very many of our councils are made available in them all.

Yes, thanks for that. I think the approach of encouraging first is certainly wise, although at some point there may be a need for actually enforcing what you’ve brought in. So, moving on from that is the issue of when you do intervene in cases if a council gets into difficulties. For instance, there have been long-running pay scandals in local government in Wales in recent years, at least one of which is still going on. Now, I don’t want you to comment on any specific cases, but in general, is there a role for you to intervene in cases where there are long-running problems, which don’t seem to be getting resolved and which may tend to bring local government into disrepute?

Well, Chair, there are—and quite properly—established procedures that govern the way that Welsh Ministers can intervene when things go astray in local government. That often relies on advice from the regulators, including the Wales Audit Office, and where we have had to intervene, where there have been failing education departments or failing social services departments, those protocols and those ways of doing things I think have generally been effective. They’ve allowed us to identify the places where intervention is needed, and very importantly, they include a pathway out of intervention as well. So, where local authorities are able to demonstrate that they have put right the things that had been identified, then we’re able to withdraw and allow them to resume those responsibilities, and we see that being done successfully at the level of individual services. And in the case of Ynys Môn, in the case of the council as a whole, a successful recovery by that local authority. What I would say to Gareth Bennett is that I think it is very important to learn the lessons from that and, where we have other instances where processes may appear to go on for too long and be difficult to reach a resolution, then we need to look back at that and see whether those processes need to be tightened up and, where they rely on the ability of Welsh Government to intervene, to make sure that those circumstances are clear and cannot be avoided.

Yes, thanks. You’ve cited the example of Ynys Môn, where there was a resolution, and I think you’re right to look at past examples and where there has been success from the Welsh Government to look at that as a way of dealing with cases that come before you in future. Now, again, it’s slightly sticky because I don’t want to refer to a specific instance, but if there is a case where a pay dispute has been in the news quite a lot and it’s been going on for four years, would the four-year mark tend to interest you as a point at which you may need to get involved in that theoretical case?

Well, Llywydd, I think I would put it like this: that even in such a case, there will be a set of rules that are being followed, and I would be wanting to make sure from the Welsh Government’s point of view that the rulebook, as it exists today, is being followed scrupulously. The assurance I wanted to give the Member in answer to his second question is that when that matter does come to a conclusion, what I will want to do will be to revisit that whole process to see whether we think that the rulebook, as it operated, was commensurate with the issue that it was there to resolve. And if we feel in the light of that experience that the rulebook needs to be revised, and a fresh set of arrangements put in place that ensure that intervention is possible in a timely way and which allows issues to be resolved, then that’s the set of lessons that I will hopefully be able to learn from that experience.