1. Questions to the First Minister – in the Senedd at 1:55 pm on 16 January 2018.
Questions now from the party leaders. Leader of the UKIP group—Niel Hamilton.
Diolch yn fawr, Llywydd. The First Minister will agree with me that in order to secure value for money in public contracts, it is desirable that there should be a reasonable spread of credible bidders. It wasn't entirely clear to me from the answer that the finance Secretary gave to Adam Price earlier what the legal impact is going to be of the collapse of Carillion in relation to Abellio's bid. There are only three bidders in the contest at the moment. If Abellio is removed from it, that means, of course, that there are only two bids. What are the implications of this for that general principle of securing value for money by having credible competition for these big contracts? This is a contract that affects not just the Wales and borders rail franchise, but also the electrification of the Valleys lines as part of the metro project, and this contract will be let for 15 years. So, it has long-term consequences. I wonder if the First Minister could give us a little more clarification on this point.
It's no secret that our preferred scenario would have been to be able to run Welsh railways via a not-for-profit, arm's-length, Welsh Government-owned business, but we were prevented from doing that by the Conservative Government in London. They're happy to let Scotland do it, but as far as Wales is concerned, they're not happy to let—[Interruption.] He's groaning away, the leader of the opposition, again, not supporting this, of course—but the reality is that we were prevented from doing that. But that, nevertheless, was our preferred option. We were stopped from doing it.
He asked the question about Abellio. Transport for Wales has the appropriate expertise in place to deal with this. We are in discussions with Abellio Rail Cymru about the complex situation—and it is complex—that arises from the announcement. Whilst the difficulties encountered by part of one of the consortium bidders is disappointing, it is important we remain focused on the evaluation to keep procurement on track. I can say that Transport for Wales continue to evaluate the competitive bids received whilst ensuring equality of treatment of the bidders in line with procurement law.
Well, with what's happened this week, whilst it couldn't have been predicted with confidence, there was clearly a high possibility that Carillion was going to get into difficulties from which it couldn't extricate itself. After all, we had the first profit warning in July. In September, the shares in Carillion fell by 60 per cent in two days. Three weeks after that, there was another profits warning. On 17 November, Carillion warned that it was on course to breach its banking covenants, which must have gone to the heart of the credibility of that part of Abellio's bid, and considering they were the preferred construction partner, this obviously had immense implications for the credibility of that bid.
Was there any action taken by Transport for Wales, or any involvement by Welsh Government in the period after July to try to protect the bidding process against the possibility of the collapse of Abellio's bid? Because, if Abellio had been able to obtain some other construction partner, or to keep one in the wings in the meantime, that might have been able to save this element of the bidding process.
I think there are dangers in Transport for Wales engaging in that way with a bidder. There has to be distance between Transport for Wales and the bidders themselves. It is a matter for Abellio Rail Cymru to put themselves in a situation where they are confident that their bid can move forward, and discussions will continue along those lines in terms of how that can be done. We know there was a profit warning in July. Hindsight is a wonderful thing, but I don't think anybody, let alone the UK Government, could have known the scale of the problems within Carillion. Clearly, they were unprepared, and I think that many would have found themselves in that situation. I think the feeling might have been that Carillion was too big to fail, but, unfortunately, we know that isn't the case. Nevertheless, we are talking about a part of one of the consortium bidders. It's a question now to see whether that part can be replaced.
Well, it's clear that the answer to my question is that both the Government and Transport for Wales sat on their hands during that period, but I'll leave that there.
Does the First Minister share my amusement that Philip Green, the chairman of Carillion since 2014, was an adviser on corporate responsibility to David Cameron and Theresa May as Prime Minister, and that the previous chief executive of Carillion, Richard Howson, was allowed to leave the company a few months ago with a 12-month payoff of £660,000 in salary and £28,000 in benefits whilst the company has been making small firms wait for up to 120 days for payment on their contracts? The Welsh Government has a policy on social responsibility with the companies that are contracting with it. Surely prompt payment is one of the essential elements in that. The Welsh Government has a policy of paying all invoices on time, and when the Welsh Government receives bids from firms for large contracts that it's going to award, or agencies like Transport for Wales, what protection is going to be given to small firms who are now left, as in this instance, probably, high and dry, and lots of them will not be paid? That could be pivotal in the question of whether small businesses themselves, as a ricochet effect from the collapse of Carillion, also go out of business.
Cash flow is all to a small business. It's not clear yet what the extent of Carillion's collapse will be on small businesses in Wales. I know that the Cabinet Secretary is looking to obtain information on that, but of course what we can't do is govern the way in which large businesses fund themselves. There are many issues there that the leader of UKIP has rightly highlighted—moral issues. It seems to me that quite often, in some businesses—not all, of course, and not even most—bonus payments are made regardless of performance, and also that people are paid off with substantial sums of money in order to go away even where performance is well below the standard expected. There are issues there.
There are issues in terms of how empowered shareholders are. They hold the board to account, of course, but in terms of knowledge and expertise, it's not quite as easy as that. I think there are, as a result of what we've seen from Carillion, lessons to be learned in terms of looking again at company law and the way in which companies govern themselves. Is there sufficient governance in larger companies to ensure that this kind of situation doesn't happen? We've seen from Carillion that the answer to that is 'no'.
The leader of Plaid Cymru, Leanne Wood.
Diolch, Llywydd. First Minister, today's independent report on health and social care highlights the importance of staff well-being and says that there should be a sharp focus on staff engagement and well-being. Now, all political parties regularly praise NHS staff, and that's quite right. It's well deserved, because without them the NHS would be nothing. Do you think enough is being done to support the well-being of NHS staff?
These are matters primarily for the local health boards, but, again, I join with the leader of Plaid Cymru in offering a tribute to that incredibly hard work that's been done by members of staff. I know that the director of health and social services has been around the different accident and emergency departments around Wales, listening to their experiences. We know the situation is easing compared to what it was a few weeks ago, but, yes, we'd encourage local health boards, of course, to make sure that there are the right mechanisms in place to ensure that staff feel supported beyond the words that we as politicians express.
First Minister, in recent weeks disclosures have been made to me by workers in our NHS about serious problems with staff morale and well-being. People serving on the front line claim to be at breaking point as a result of some of the pressures that are being put upon them. Now, I've only had permission to refer to one of these disclosures so far, but the person's asked me specifically to raise it with you in Government.
First Minister, a serious allegation is being made that, at times of high demand, ambulance service prioritisation is putting people at risk. In the past few weeks, it's alleged that patients categorised as suitable for a 20-minute response have had to wait up to six hours for an ambulance. I'm told that these include patients who have had a stroke, heart attacks and breathing problems. The person revealing this information to me is currently off sick with stress and cannot speak about their job without breaking down into tears. First Minister, how can this situation be defended, and what are you going to do about it?
Without knowing the full facts it's difficult to give an answer today, but there is sufficient there for me to investigate, in my mind, and I will write to the leader of Plaid Cymru, putting to the ambulance trust what she has said today, and when I get a response from them I will of course share it with her.
Thank you for that, First Minister. I would urge you as well to ask your health Secretary to assess the well-being of staff in the NHS, as the letter that I received mentions that counsellors from a charity have had to be brought in to speak with ambulance control staff, such is the level of that stress. If that is true, that is a really shocking situation and it's an emergency within our public services. Can you confirm that counselling has been offered to NHS staff? And when it comes to ambulance resources, can you assure us that prioritisation will be under review and that responding to red calls is not putting anyone classed as an amber call at risk of death or further injury?
That, again, needs further investigation. If the leader of Plaid Cymru will allow me, I will investigate those further matters as well, and when a response is received, I will of course share that with her.
Leader of the opposition, Andrew R.T. Davies.
Thank you, Presiding Officer. First Minister, the Government, before Christmas, brought out their new economic action plan, 'Prosperity for All'. This is the fourth action plan that the Labour Party have brought forward since devolution started. The first one was 'A Winning Wales' in 1999, 'Wales: A Vibrant Economy' in 2005, and 'A new direction' in 2009. If you actually look at the document, it doesn't offer much hope as to how the Government are actually going to increase wages here in Wales, which are significantly below other parts of the United Kingdom. In the 20 years that you've been in Government here in Wales, or the nearly 20 years you've been in Government in Wales, gross value added has only increased by half of 1 per cent. It doesn't offer much hope as to exactly how you're going to get a real momentum behind GVA here in Wales. How can we have confidence that this document will be any different to the three predecessors that it had?
First of all, if we look at unemployment, unemployment is low in Wales, and is often lower than the UK average. In 1999 it would have been fanciful to claim that. We were perpetually above the UK average and that is something that shows the success of what we've done to encourage business and investment.
Secondly, there is a challenge in terms of increasing GVA per head. How is that done? To me, there are two ways. First of all, you ensure that, when you look to secure investment, it's investment that pays highly. In the late 1980s and early 1990s, the policy pursued by his party was to replace well-paid jobs in coal and steel with badly paid, unskilled jobs. So, although the unemployment rate did not necessarily increase, GVA went down because the jobs weren't so highly paid. We saw, at the end of the 1990s and the early part of the last decade, many of those businesses leave Wales because they were going somewhere where wage rates were even lower.
We are not prepared as a Government to sell ourselves to the rest of the world on the basis that we are a cheap wage economy—which is what the Conservative Government did in the early 1990s, on the basis of, 'Come to Wales because it's cheap'—no more. We see the fruits of that. We see, of course, the investment from companies like Aston Martin, we see the further investment in Airbus up in the north, we've seen investments recovered in Pembrokeshire around the port of Milford Haven, all of which are much better paid than jobs that used to come here. That's one part of it.
The second part is training. The question we get asked more than any other when we speak to businesses that want to invest in Wales is: 'Have you got the people with the skills that we need?' They're not interested in cost, they're interested in skills. Increasingly, we can answer that question positively. So, it means working with further education colleges, in terms of apprenticeships, and we have our commitment to 100,000 all-age apprenticeships in the course of this Assembly. It's by raising people's skill levels that we can make sure they can put more money in their pockets, and thus increase GVA.
First Minister, you raise the issue about wages. If you take Scotland as an example, back in 1999, a Welsh worker and a Scottish worker took home the same take-home pay. Today, a Scottish worker takes home £49 more in their pay packet each week than a Welsh worker does. That's a fact. In this document, wages are only mentioned twice. Taxes, business taxes, are only mentioned once out of 17,000 words. Automation, which is the huge challenge we face, where potentially 35 per cent of the workforce could lose their jobs or have their jobs remodelled over the next 29 years, has a bare mention in this document. There doesn't seem to be any answers around the real challenges that we do face in the next decade or two.
This document, I presume, is the driver for economic policy coming out of the Government for at least the next four to five years, depending on the mandate, and yet again I go back to this point—it is the fourth document that has come out of the Welsh Labour Party in Government here in Wales, and I highlighted the poverty in wages here in Wales as opposed to other parts of the United Kingdom, and this document doesn't have that solution. Give us some inspiration as to what we can look at in 2021 on wages, on wealth here in Wales, and above all on companies re-establishing themselves here in Wales.
Well, it's already the case that we know there are challenges with automation. Indeed, my colleague Lee Waters, I think, has got a short debate on this tomorrow, on automation. He is somebody who has been very keen to make sure that we look at the fourth industrial revolution, as it's described, and I know it's something that the Cabinet Secretary is very much aware of.
Hope—the hope is this: Wales is a place, a destination where companies from all around the world want to come; that Wales is a place where people are seen as being innovative, as being entrepreneurial; a place where people have the skills that are needed to survive, not just in the next five or 10 years but beyond, to meet the challenges of automation; a place where there's not a fragmented education system, but one that works together in order to make sure that people have those skills that are required; a country where there's a Government that works closely with businesses, goes out to different countries and encourages businesses to come to Wales and to invest in Wales—that's why we have the highest figure for foreign direct investment for 30 years—but also a Government that understands that it's not a question of securing overseas investment, it's a question of ensuring that our small and medium-sized enterprises continue to be established and grow.
One of the issues we face in the Welsh economy is that too many of our SMEs grow to a particular level and then sell—the owners sell to a bigger company. There's always been that issue of how we encourage those people to actually grow bigger, to have more companies listed on the London stock exchange, listed on the alternative investment market, because we're under-represented on them and want them to grow rather than say, 'Well, I've done my bit now. I'm going to sell the business.' We have the entrepreneurs, there's no question about it. I see it with younger people: they have a drive and a confidence that we didn't have, because we were put off it actively when I was in school. Harnessing those people, making sure they have access to business support and advice, making sure they have access to support through Finance Wales, making sure that they have the skills that are needed to prosper in the future—that's the key to the Welsh economic future that I want to see and I believe the people of Wales want to see.
I've had it put to me that that's the 'ladybook' analogy of what you want for the economic future, First Minister, because, in fairness, there are 17,000 words in this document. I had hoped that you would have given us something firm, a road map, which would lift Welsh wages. As I've highlighted, over the 20 years, a Scottish worker is taking home £49 more in their pay packet than a Welsh worker is taking home, and GVA has increased by half of 1 per cent over the 20 years. That is hardly a record to be proud of. I want to see Wales thrive economically just like the picture you've painted, but I had hoped that you would have drawn something out of this document that was brought forward by the Cabinet Secretary, because this is the blueprint that you're basing your economic model on, and it doesn't offer much hope when taxes are mentioned once, when wages are mentioned twice, and automation is only mentioned six times.
And if I could ask you on taxes in particular: do you believe that the tax environment the Government is putting forward will make Wales a more competitive tax environment to attract businesses into Wales? I've had representations brought to me by businesses on the land transaction tax, the LTT, that show that Wales will ultimately be at a disadvantage. I know the Cabinet Secretary for Finance has met with industry leaders on this particular issue—who are really concerned that the write-downs that businesses are going to have to put into their balance sheets because of the higher tax environment that your Government is putting forward. So, do you believe that the tax environment that you will be creating here in Wales will put Wales at an advantage in attracting some of these new jobs and new enterprises that will help us tackle the automation generation that is coming our way?
Well, I think he means 'Ladybird' book, rather than 'ladybook'. I trust that is the case.
But he asks the question: 'Am I confident in the land transaction tax and the tax environment it creates?' The answer to that is 'yes'. Am I confident that what we're doing as a Government adapts—. You mentioned the fact that there were four different plans—well, of course there are. If we'd still got the same plan from 1999 we'd be ossified in the past. In 1999 I remember Dr Phil Williams standing up in the previous Chamber and telling us all about broadband, and none of us knew what he was talking about, and he acknowledged that, in fairness to him, but he was ahead of the game. He was ahead of the game. In 1999 nobody talked about broadband. Now, of course, it's a fact of life.
So, we have to adapt, and the fact we've had different approaches over the last 20 years is a sign that we have adapted to make sure that we deal with the difference circumstances that the world throws at us, and I have to say, I am more than happy to defend our record as a Government on the economy, to defend our ideas, to defend the fact that we are a proactive Government. We take stakes in businesses where we believe businesses are going to be successful. We put our money where our mouth is. Where are his ideas? Where are the Welsh Conservative ideas? I have absolutely no idea what their economic policy is, and judging by the blank looks on the faces over there—their heads are all down—I don't think they do either. By all means, let's have a debate on economic ideas, but let's hear what yours are first.