Item 7 on the agenda this afternoon is a debate on the Economy, Infrastructure and Skills Committee report: 'City Deals and the Regional Economies of Wales'. I call on the Chair of the committee to move that motion—Russell George. [Assembly Members: 'Hear, hear.'] Good heavens above.

Thank you, Deputy Presiding Officer. And to my small fan club on this side of the Chamber. [Laughter.]

Motion NDM6634 Russell George

To propose that the National Assembly for Wales:

Notes the report of the Economy, Infrastructure and Skills Committee on City Deals and the Regional Economies of Wales, which was laid in the Table Office on 1 November 2017.

Motion moved.

I move the motion in my name.

Over the next 10 to 15 years, £2.5 billion will be heading to the Cardiff city region and the Swansea city region as part of the city deals, signed of course by the UK Government, the Welsh Government, local authorities and other partners as well. In north Wales, the Economic Ambition Board has submitted its bid for a similar agreement serving its area.

In our committee's report, we recommended that mid Wales should also have a deal,

'to complete the jigsaw in Wales', as we put it in our report. I was pleased to hear the Chancellor in the UK Government's budget say that he would consider proposals for a mid Wales growth deal. The Welsh Government has also been supportive, not least in its response to our report, but, of course, warm words won't improve the economy of mid Wales, and I'm conscious that, without greater input from both Governments, there is a danger that the heart of mid Wales will be forgotten. So, I am pleased that there is consensus that there should be a deal for mid Wales, and now we need, of course, to put flesh on the bones and build consensus amongst businesses, the public sector and the people of mid Wales to ensure that their deal meets their needs and do that sooner rather than later.

I am grateful to the Cabinet Secretary, as well, for allowing his official to come to a meeting that I organised last week with stakeholders. The meeting was probably more technical in terms of what areas should be covered and who should govern a deal, because I think it is, perhaps, a little bit too early to get into any detail.

Of course, city deals are already reshaping the economic development priorities of south Wales, and the Welsh Government's new regional approach set out in 'Prosperity for All: Economic Action Plan' supports this. As a committee, we took on this inquiry because we wanted to see what impact these deals were having, how they were progressing and to compare the Welsh deals with what is happening in other parts of the UK. Deals are very much being talked about as a key driver of future economic activity in Wales, so we need to ensure that there is clarity about what is happening, who is responsible for the plans and what happens if targets aren't achieved.

I'll give one example. We felt that there was a greater need for certainty that meeting the UK Government's drive for GDP growth and the Welsh Government's ambitions for a sustainable economy can both be achieved at the same time.

Whilst we in Wales were looking at our city deals, in the Scottish Parliament, the Local Government and Communities Committee have been doing something very similar to us. Their report, published two weeks ago, reaches many of the same conclusions that we did, which, I think, is reassuring. Interestingly, they also felt that there was a tension between the aims of the devolved and the UK Governments.

Their report says, 

'further clarification is required as to whether the focus should be on pure economic growth or inclusive growth.'

So, it's clear that this is an issue that hasn't been fully resolved in any of the devolved deals to date, and equally, it's clear that it needs to be.

Our inquiry revealed concerns about whether any positive impacts of deals would reach the most disadvantaged in the area, and whether competition between regions could see some places prosper at the expense of others. It's heartening to see that leaders of the deals are mindful of these issues, and there is some evidence of collaboration between Welsh regions, but it's not clear whether that will be enough to ensure that deals can avoid the creation of winners and losers.

I note that the Scottish local government committee also talks at length about the risk that economic activity will simply be displaced from one area to another. Like us, they worry that areas not covered by a growth deal could lose out twice. By that, what I mean is, once, by not having a deal of their own and, secondly, by seeing their home-grown businesses move to another deal area. This, of course, only reinforces our argument that all parts of Wales should have a deal.

The one area where the Minister has rejected the committee's recommendations is with regard to what we call 'fuzzy boundaries'. Our aim in this recommendation was to ensure that local authorities or other partners have the flexibility to contribute to more than one deal area. An example of which is, perhaps, Gwynedd and Pembrokeshire share some of the rural issues of Powys and Ceredigion, and I would urge the Minister to relook at this.

In Scotland, there are a number of local authority areas that participate in more than one deal. So, there is no reason why similar arrangements could not work effectively here in Wales. Should local authorities choose to go down that route, I absolutely accept that there would be issues around accountability and clarity that would need to be resolved.

Deals, of course, are at a very early stage and the tailoring to local needs at the heart of deals makes it difficult to learn conclusive lessons from other places. But, a constant issue is the need for partnership and an agreed vision for the region. This element of the south Wales city deal has also occurred, but will need to be sustained. The financial sums involved in these deals are perhaps less significant than they appear at first glance, because they are over, of course, a large period of time. But, the potential gains from collaboration, I think, between sectors, and the development of strategic development goals, could prove to be both the foundation stone and the lasting legacy of the city deal approach.

So, I'm very much looking forward to this debate this afternoon and what I hope will be an interesting debate. I hope that we will hear from Members, perhaps those not on committee as well, and I hope that, in general, there'll be consensus around some of the recommendations that the committee's report made.

These committee reports are very helpful, and they reveal the real Russell George, I think, which we've seen as Chair of the committee, not the Russell George we'll see, perhaps, in the next debate. I think this is the true personality of the reasonable Assembly Member that is Russell George.

It's worth remembering that Adam Price referred to the city deal, during the previous economic debate, as the snake oil of city regions, and, in some ways, you can be critical of city deals for the fact that if they aren't connected to anything else, they're not likely to be successful. However, we've also got the Valleys taskforce delivery plan and we've got the Cabinet Secretary's economic plan. If those things are tied in together, then you get a much better economy of scale that can then deliver some of the issues that are reflected in the report. Therefore, I can see why, perhaps, the declining of some of the recommendations of the report was done by the Government. So, the declining of recommendation 10 on issues of accountability, but also the regional focus, is because they have to tie into the economic plan and into the Valleys taskforce. I can understand that, even though it's a bit disappointing that then you can't blur those boundaries across areas.

From my perspective, I think the city deals themselves, of themselves, on their own, are insufficient, but working together with those makes perfect sense, and what's important to me is that the city deal delivers for this area that I've described, in the north of my constituency, as the northern Valleys—those communities tucked away from the M4 and A465 Heads of the Valleys road that, perhaps, have not enjoyed the same level of investment as those places located closer to those transport hubs. That's why I've tried to develop this concept. Again, it's encouraging that the Government is recognising in some of their responses to the recommendations that we can serve those areas better by having those boundaries.

The city deal can facilitate, for example, strategic development planning, and I think strategic development planning is a fourth tool that can be added to draw things like housing, investment and business north, into the northern Valleys communities. Better Jobs Closer to Home should not mean that those communities are cut off, and, therefore, in addition to strategic development planning, transport planning is also key. The south Wales metro will also be a key factor in delivering this.

I'm pleased that the two Cabinet Secretaries have accepted the majority of the recommendations of the report. We have to provide a mechanism and a structure for joined-up working, and I think that it's based in this plan, with issues of accountability and regional focus being at its heart. If we can bear this in mind and we can get it right, then I know the Welsh Government will make it work, and I'll be supporting them in doing just that, but, at the same time, being a critical friend and bringing to this Chamber those issues where I feel the city deal doesn't work.

The Llywydd took the Chair.

It's a great pleasure to take part in this debate, even though I'm not a member of the Economy, Infrastructure and Skills Committee, but I've accepted the Chair's invitation and I'm willing to contribute to the debate.

The United Kingdom Government, through its city deals, and the Welsh Government, through its economic strategy that is committed to an economic development model that is regionally based, have set a new direction for economic policies for Wales. In a nation where wealth and public expenditure tend to be focused on one corner of the nation at the expense of other areas, giving due consideration to economic development on a geographical basis in an attempt to attract investment and opportunities to disadvantaged areas is to be welcomed. However, in so doing, there are risks that we must consider. The inquiry revealed concerns as to whether any positive effects of the city deals would reach the most disadvantaged people in an area, and whether competition between regions could see some places thriving at the expense of others.

However, one element that has to be welcomed from both Governments’ efforts to regionalise economic development is the collaboration that this entails between businesses, local authorities, the new city region boards, the Welsh Government and the United Kingdom Government. City deals make it easier to collaborate with areas over the border in England. Cross-border collaboration is important, not just for Wales, but for any nation in a globalised world.

However, nobody's arguing that the Welsh Government should prioritise establishing trade links between Cardiff and Bangor, for example, within Wales, which is 190 miles away, as compared to Bristol, which is only 40 miles away from Cardiff. However, we are in danger of looking to the east too often for the answers to our problems. In so doing, decisions such as those on investment in infrastructure are made based on this particular priority.

The Secretary of State for Wales, Alun Cairns, held a Severn growth summit this week, which saw businesses, local authorities and academics coming together to discuss the opportunities that may follow the abolition of the Severn bridge tolls. The decision to abolish these tolls on the Severn bridge could lead to the creation of a western powerhouse stretching from Bath and Bristol to Newport, Cardiff and Swansea, boosting prosperity and jobs, according to the Secretary of State. As I said earlier, cross-border collaboration is vital, but it must be based on a fair partnership that is beneficial to communities on both sides of Offa’s Dyke. This must mean that efforts are made to ensure that investment comes to Wales, to Cardiff, Newport and Swansea, to create quality jobs here and to not just facilitate a commute for people living here to jobs in Bristol or Bath.

Moreover, what about the area to the west of Swansea? With regard to the United Kingdom Government’s decision not to invest in the electrification of the railway from Cardiff to Swansea, the impression that this gives to investors is that there's no point considering investing in areas beyond Cardiff, not to mention beyond Swansea. The Economy, Infrastructure and Skills Committee’s report notes concerns that regionalisation could lead to winners and losers, with some areas benefiting at the expense of others. But it's impossible to overstate how dangerous this idea of city deals and economic regions are to communities in the far west of Wales, bearing in mind that the development of a cross-border economy is the priority of Governments at both ends of the M4. Thank you very much.

In his response to our report, the Cabinet Secretary states that city and growth deals have a strong role to play in our regionally focused approach to economic development. He accepts our recommendations 5 and 9 regarding the north Wales growth deal, the bid for which was formally submitted to both himself and the UK  Secretary of State for Wales by the six north Wales county councils and their partners last month. These stated,

'The North Wales Growth Deal negotiators should continue to work constructively with partners and neighbouring authorities both within Wales and across the border', and that,

'The Welsh Government should continue to support plans for a North Wales Growth Deal and use the influence it has to accelerate this process.'

The UK Government announced it was opening the door to a growth deal for north Wales in its March 2016 budget, and announced, as we heard, its continued commitment to this in its 2017 autumn budget. Although the UK's unemployment rate stands at a four-decade low, and new UK figures today show a further fall in unemployment in a faster-than-predicted pace of job creation, Wales, sadly, has rising unemployment and the highest unemployment rate amongst UK nations. After two decades of a Labour-led Welsh Government and billions spent on regeneration, Wales remains the poorest part of the UK, producing the lowest value of goods and services per head amongst the 12 UK nations and regions.

In the context of north Wales, the figure per head of population in the west Wales and Valleys sub-region, including four north Wales counties, is still bottom across the UK, at just 64 per cent of UK average, and Anglesey still sits bottom in the UK, at just 52 per cent of UK average. Even Flintshire and Wrexham have seen their combined GVA fall from almost 100 per cent of the UK level at the time of devolution, to stand at 89 per cent in 2016. 

The growth deal bid, therefore, seeks both to maximise the cross-border opportunities presented by England's Northern Powerhouse, and, clearly, to spread prosperity westwards. Our report states that, in north Wales, the provisional plan is to establish a board of local authority representatives, but also with co-opted representatives of higher and further education and the business community. Well, the north Wales growth board has now been established to finalise the growth deal and manage its delivery, once agreed with the two Governments.

Negotiations with both Governments are due to commence early this year, and we therefore need clarity from Mr Skates on the Welsh Government's position. Does it support the proposals and how will it be responding as negotiations over the growth bid now go forward?

Will you take an intervention? Just very quickly—thank you for taking an intervention. Is the Member aware—and I note that you called the Northern Powerhouse England's Northern Powerhouse—are you aware that north Wales is included in publicity material for the Northern Powerhouse, not as a partner for the English Northern Powerhouse to work with?

Well, the key thing is that we benefit economically and socially from that connection whilst clearly spreading that prosperity all the way to Holyhead.

The WLGA's north Wales co-ordinator told me in committee,

'it’s not just about people who are out of work, but there’s also the issue of low wages, and then there’s also the issue about being able to move to more, higher paid work'. 

The north Wales business council chair told me:

'We have to do everything we can to robustly package our economy in the region, including that with cross-border partners, and we’ve got to be doing it now.' 

To allow for working on an equal footing with areas across the border from north Wales, they also called for devolution of resources and powers at a regional level. The north Wales growth deal's lead chief executive, Flintshire's chief executive, told me:

'There are some areas of funding...if the controls were loosened and they were devolved to north Wales with some agreement of objectives with the Welsh Government, we could make more traction with that money.' 

And the North Wales Economic Ambition Board stated:

'Devolution of functions to north Wales that matches that of neighbouring English regions is a defensive necessity and a desirable enabler of growth.'

Their vision aims to create 120,000 jobs and boost the local economy to £20 billion by 2035. 

Yesterday, I asked the Cabinet Secretary to respond to the north Wales growth deal bid's invitation to the Welsh Government to support the formation of a regional transport body with powers delegated to the body from local authorities and the Welsh Government to allow it to operate in an executive capacity and with a fund of £150 million over 10 years, including the Welsh Government's existing £50 million for the north Wales metro commitment. His potentially concerning response was instead:

'We've already established the north Wales and north-east Wales metro steering group'.

Will he therefore have the courage to devolve the powers that north Wales is calling for, or could the Cardiff command-control mechanism compromise the whole project?

As has already been stated, city deals offer a new opportunity to bring together a range of stakeholders to really boost the economies of Wales. It offers a new, joined-up way of working. Importantly, they will be backed up by an injection of capital that could help deliver major infrastructural benefits. But it is important that we get city deals right, that their governance is understandable and recognisable. They must also meet the objectives laid out by the Well-being of Future Generations (Wales) Act 2015 and offer communities the opportunities they need.

These are the points I want to make today. Firstly, recommendation 2: democratic accountability is key to ensuring the city deals fulfil their potential to boost our economy. Governance must be transparent, expectations clear, and outcomes easy to monitor. It's important that communities know how their money is being spent. It's also vital that they, and their representatives, whether elected to this Assembly, to council chambers, or to Parliament, are able to purposefully engage and scrutinise decision makers. All this will help determine ownership. I understand similar points have been made by the Scottish Parliament's local government committee during its considerations of city deals in Scotland.

I think there's an important parallel here, perhaps, with the European Union. We know that EU funding helped deliver some really beneficial projects across areas like mine, but many in those communities never felt that sense of ownership. They didn't know where the money went, what it was achieving or delivering. This fuelled the anti-politics feeling that manifested itself in 2016's Brexit vote. We cannot let the city deals fall into the same trap. I welcome the Cabinet Secretary's strong response to this recommendation. Similarly, on recommendation 3, there should be clear recognition and awareness of exactly what success and failure looks like. However, as I've said, we need to be bold and dynamic and ensure this information is not just retained by deal partners, but shared and understood at the grass-roots level also.

The sixth recommendation is also very important. The well-being of future generations goals rightly underpin the work and objectives of the city deal initiative. For example, in terms of the prosperity and equality goals, it is good to note the Welsh Government's response to the report. The comment that spreading economic benefits across the regions is key to the city and growth deals is important. As a socialist, I am convinced that economic redistribution is key to measuring the success of the city deals. During evidence, we did hear some concerns from Colegau Cymru about the possibility of the Valleys being hollowed out. We must make sure that this hollowing out does not occur. Transport links, as previously mentioned, are critical to this and they must be genuinely two-way. They must bring investment and prosperity into the Valleys, just as they take Valleys workers out for jobs in Cardiff or elsewhere. The south Wales metro project will really be key to this.

I also briefly want to touch upon recommendation 10. When we heard from witnesses, the benefits of local authorities and private sector partners being able to engage with multiple city deals came through quite strongly. So, our recommendation that borders be fuzzy and flexible makes sense. This is also an area where I know first-hand from my constituency that such an approach would work best. For example, communities like Hirwaun look towards and have strong communication links with Swansea, although they're part of the Cardiff capital region and Cardiff capital city deal. These areas on the boundaries could really benefit from being able to engage in a bespoke way with both Cardiff and Swansea city regions. The response of the Welsh Government on this recommendation is therefore, I feel, disappointing. I previously raised this during a session of FMQs and welcomed the First Minister's expressed views that there wouldn't be any strong boundaries. I hope the Cabinet Secretary can give us further reassurances around this point when he replies to the debate today.

I've welcomed the opportunity to contribute to today's debate and to the wider inquiry conducted by the economy committee. My thanks to the Chair, to other Members, and the clerking team, and I would like to echo previously expressed thanks to all of our witnesses too. I look forward to seeing how the city deals work so we can see the development of the regional economies that Wales undoubtedly needs to compete and thrive in the future.

I've considered this report very carefully, and with the understanding that I'm sure that all in this Chamber want the Welsh Government to succeed in its stated aim of providing prosperity for all. However, before I comment on this report, I have to put it in the perspective that the Labour Party has been in power in Wales for all of this Assembly's existence, and, in that time, we've seen many strategies and Ministers come and go. My fear is that we still do not have a joined-up economic plan for Wales. It seems that any cohesive—. What comes out of this report is that it seems that any cohesive economic plan is obviated by the various and spatially different layers of delivery bodies charged with delivering this economic plan, a position that is exacerbated by a number of others being envisaged. This is hardly the bonfire of quangos that Rhodri Morgan promised 13 years ago.

One recommendation in this report was that the Welsh Government should put a duty on regional bodies to promote economic development and inclusive growth, with a discretion to spend a substantial amount of funding, whether from Welsh Government or raised within the region. But it is difficult to imagine this happening with the current outmoded 22 local authorities. This is not the fault of the authorities themselves, but is purely down to the size of the budgets they manage and the limited nature of their competences. The recent changes to local government spoke only of cross-regional collaboration, with no direct amalgamation of the authorities, which begs the question: was this strategy simply one of political expediency rather than economic viability? Is it not time to explore regional government based on the five regions of the Assembly, with the possible exception of splitting mid and west Wales into two regions, given the huge geographic spread? Surely this would be more likely to dovetail into the regional concept of the Government's economic action plan.

If the economic action plan is to give prosperity to all it must realise the need to reduce the tax burden on the hard-working families of Wales. This can only be achieved by cutting out the layers of bureaucracy and unnecessary governance that now exist. This multilayered multibodied economic model also means scrutiny of stated goals is made far more difficult. As to whose interventions have led to any success or failure, it will be almost impossible to evaluate. Let us create an economy in Wales that is founded on a dynamic business and manufacturing base, not an overburdened public sector. With the greater economic wealth this brings, we shall be better able to fund the vital services that make up that public sector.

We cannot overestimate the importance of the Development Bank of Wales and Business Wales in bringing about this sea change in Welsh economic policy. They will be fundamental in providing the finance and expertise necessary in building this entrepreneurial, business-led economy. The world outside Wales is changing dramatically and we need to embrace what is now being called the fourth industrial revolution, a range of new technologies that are impacting on all disciplines, economies and industries, and even challenging ideas about what it means to be human. Sir Terry Matthews believes we should move towards driving innovation and the focus should be on linking up business with the best research as a means of exploiting this new unknown. We acknowledge that our universities have a major role to play in these developments, so we welcome the £135 million innovation centre for Cardiff University, but would ask: should we be replicating this in north Wales?

Llywydd, if we want a Wales economy fit for the twenty-first century, we must have a delivery plan that is lean, dynamic and free from bureaucratic red tape.

This is a useful short report to highlight some of the benefits, but also some of the hazards, potentially, ahead. I think it's fantastic that we've got 10 local authorities in the Cardiff capital region collaborating together, because obviously when we're trying to sort out our connectivity and other transport arrangements we need to make for our communities, we need to work together. It's ridiculous to have artificial boundaries. So, that's all very well and good, and I note the positive comments of Andrew Morgan, saying that, because the local authorities have worked well together, that has also encouraged the Welsh Government to work effectively with those 10 local authorities. So, that's all very good stuff.

I think some of my concerns relate to some of the things that the report mentions that are around governance and transparency, because I'd like to think that I pay quite a lot of attention to the Cardiff capital region, not least because, at the moment, most of the money is going to be going into the transport arrangements for the region, and that's something I have a particular interest in. But I note the concerns of the Bevan Foundation and the Joseph Rowntree Foundation about the lack of transparency, and that's a little bit what I experience myself. I really don't know how decisions are being made as to how this £734 million for stage 2 of the metro is being decided. Because if it's merely going to go into upgrading the existing railway lines, it's good news for the communities who already benefit from those railway lines, but not at all good news for those communities that don't have any of the benefit of the railway lines that were closed long ago under Beeching. There's a lack of clarity in my mind about how we're really going to have a comprehensive approach to ensuring that all our communities are connected so that we don't have communities left behind. That's one of the other things that was flagged up by the Bevan Foundation and Joseph Rowntree—you'll have a tunnel effect of pulling in resources into particular areas that will suck out resources from other areas. Those are things we absolutely have to guard against.

There are massive concerns around the unknowns. It obviously will be of benefit for Wales to have control of its own transport destiny, because it's interesting to remember that, in the high-level output specification that is determined by the Secretary of State for Transport in Westminster, one of the two objectives was to electrify the line between London and Swansea, and we all know what happened there. So, at what point do they suddenly change the goalposts in relation to Transport for Wales and the electrification of the Valleys lines? I think there are risks in all of this, and also there are other risks that we've also seen played out elsewhere in the UK, around the north-east of England franchise that was bid on by Virgin and Stagecoach and then shortly into the contract they've decided to hand it back. Obviously, there are huge financial risks if our preferred bidder for the all-Wales franchise gets it wrong.

I welcome the report because it highlights some of the things that we really need to focus on. I think it's particularly important that the auditor general highlights the importance of tracking the performance of the metro phase 2 project so that we are able to see where the slippage is and where things are going wrong and where things are not being delivered. We've already seen some worrying ballooning of the M4 relief road estimates and we clearly need to ensure that we are clear about what we're setting out to do with this £734 million and what are the milestones that we're supposed to be achieving with that money. But, for myself, I don't feel I've been consulted or that my constituents have been consulted on the shape of the metro at all at this stage.

Can I begin by thanking the committee for conducting this inquiry? I think it's a very valuable examination of progress and obstacles identified to date. As Members in the Swansea bay city region will know, we’ve had an absolute devil of a time trying to get the shadow board to meet with us for a briefing session on progress. I tend to agree with Jenny and Vikki Howells, bearing in mind the comments made about transparency in this report; it’s worth all city deal leaders remembering that they can only gain from engagement with all parties collectively. Being open and candid with us now, particularly with those of us who will be interested in scrutinising this as it goes along, can only be of help in building trust.

I was struck by the report’s findings on the opacity of the governance structures generally. As a relative newcomer to the world of these deals, I would have hoped to see some evidence of the Welsh bodies learning lessons from those who have gone before. I have no problem at all with each deal and its structures being different. Attempts at unified approaches in the name of consistency or an all-Wales identity have seen many a promising policy flounder in delivery as the best local outcome has been sacrificed on the altar of homogenous processes. Even so, some or maybe all of these deals, as they stand now, have really tested the conclusion that I’ve drawn over my years as an Assembly Member.

In terms of accountability and contrary to received wisdom, I've often found it easier to get answers from arm's length bodies—separate, independent bodies, anyway—than I have from Government itself, and so far, these deals don't fit that conclusion. So, I'm pleased to see that recommendations 2, 3, 6 and 8 all speak to scrutiny, understanding, assessment and monitoring, not in a way that is about ensuring that boards stick to a Government-determined process, but in a way that allows us to see clearly what a board is hoping to achieve, and that their chosen way of getting there is effective and fair. And I think that's going to be especially important when these deals are approaching their fifth anniversary.

Knowing what good enough progress against agreed key performance indicators looks like at this milestone has to be a priority, I think. The risk of central Government funding, from both sides, not being forthcoming at this five-year point could be high, and it worries me that almost a fifth of the time, at least in the case of Swansea bay, has slipped by and we haven't even pinned down the governance structure. The gateway assessment phase has 'political football' written all over it if progress is dilatory, and I for one would rather be singing the praises about how the lives of my constituents are starting to improve as a result of economic growth, than kicking that ball around in the predictable and traditional blame game.

There are two findings I'd particularly like to look at, as they're especially relevant to my region, and they're touched upon in a number of recommendations, and the first is the alignment—I'm a bit worried about the word 'alignment', but let's use that—with Welsh and UK strategies. I start from the point that the intrinsic autonomy of these deals offers the chance to actually outstrip these various strategies in terms of outcomes, but there is little sense in working at complete cross purposes and ending up in a spaghetti bowl of competing initiatives. The Valleys taskforce, for example, needs to be in harmony but not necessarily clamped to the city deals in terms of vision and mutual leverage.

I think the structures embodied in the future generations Act could facilitate some common objectives, or they could be more spaghetti in a bowl; I really don't know. But where I think the Act's influence must come to bear is on bringing some flexibility on this issue of well-being being an outcome of the deal, as well as GDP, because the latter really is not of huge significance if it doesn't actually improve the former. I'd also like to see, as a core ambition, a demonstrable move towards co-production, where the beneficiaries of economic growth, namely our constituents, are active participants in the process. It's a real opportunity for a better balanced approach to achieving common goals. 

Secondly and finally, recommendation 10. I also urge you, Cabinet Secretary, to reconsider your view on this. The harmony of vision is not about markers on maps, and I'm really concerned that the boundary between these two city deals runs right through South Wales West with an artificiality that clashes with local identity and local potential workflow. And the worry is not that Bridgend will get the best of both worlds but that it will benefit from neither, at the same time as the council carrying financial risk of failure to get past the gateway assessment. By all means suggest mechanisms to protect from abuse of accountability, Cabinet Secretary, but please let the deals take responsibility for managing fuzzy boundaries instead of obliging them to bang their heads on solid walls. Thank you. 

Can I also join others in thanking Russell George and the committee for this report? The report certainly highlights a number of very important issues about the need to focus on delivering improved outcomes for our communities from the deals, and to avoid the burden of bureaucracy that runs throughout that report. And that's never easy because, for example, since this particular scrutiny work started, we saw the publication of 'Our Valleys, Our Future', which is another layer of expectations to be delivered by many of the same bodies. Yet, that vital relationship between the city deal and the Valleys strategy doesn't seem to have formed any clear part of the committee's considerations, at least not that which is reflected on the face of the report, which I think is a point that Hefin was making. And I accept that that may just be a matter of timing, because there is evidence in the report—from the submissions of the Bevan Foundation, Joseph Rowntree Foundation and the Wales TUC, and, indeed, Russell George alluded to it himself in his opening remarks—that the needs of our most disadvantaged communities were raised. I'd be interested to hear how those matters weighed in the deliberations of the committee.

Llywydd, the comments I want to make are not aimed specifically at any particular recommendations but are more general to the report's conclusions as a whole. But again, to echo some of the points made by Hefin and also by Vikki Howells, to achieve that end, the deal has to deliver tangible benefits to all the citizens in the region. So, if Cardiff and Newport get shiny, new investments out of the deal, I won't be complaining about that—they'll be regional assets and we'll all use them. But clearly, that in itself will not be sufficient to say that it's been a success. Success will be the upgrading of skills and economic opportunities in places like Merthyr Tydfil, delivering even better connections from the wider region into Merthyr, identified as arguably one of the most significant Valleys economic hubs. That will be absolutely vital, because with better connections into places like Merthyr, then public investment decisions, including locations for public sector investment, not only make sense but can be justified with tangible outcomes like jobs and economic growth.

Success will be areas like the upper Rhymney valley feeling an uplift because many of the partners across the wider region, including the other nine local authorities now in partnership with Caerphilly, will have seen and recognised the needs of these communities. Success will be seeing areas like neighbouring Blaenau Gwent benefiting, because that Heads of the Valleys axis of Merthyr, Rhymney and Blaenau Gwent are the very areas most in need of what I would call a better deal, not just a city deal. If I can quote from the Chair's foreword to the report,

'If deals are to be a key driver of future economic activity in Wales, then we need to ensure there is clarity about what is happening'.

Well, those of us who represent Valleys communities have a very clear view about what needs to happen in those areas of greatest disadvantage. A city deal must help improve the places that need that better deal. Only then will it be a success.   

I call on the Cabinet Secretary for Economy and Transport, Ken Skates. 

Diolch, Llywydd. Can I start by expressing my appreciation to Members for the opportunity to respond to this debate today and also put on record my thanks to committee members in particular for their insightful report, including the Chair of the committee, Russell George, who I agree has shown an admirable degree of balance and objectivity in leading this inquiry?

I welcome both the committee's inquiry and their recognition that city and growth deals offer Wales and our regions an important opportunity to unlock additional UK Government funding to support interventions that can deliver inclusive economic growth. I'm pleased that we have been able to accept the vast majority of the committee's recommendations. I also welcome the acknowledgement in the report that city and growth deals are not merely about funding. They are not simply another funding stream through which to pursue individual, stand-alone projects that are unable to secure support in any other way. They are, together with our economic action plan, a way in which collectively we can develop a stronger and more strategic economic agenda that can support the communities, businesses and individuals in that area.

Now, as a Government, we have recognised the importance of a regional approach and we're proud of our record on jobs, with over 185,000 supported in the last six years. Over the last year, the employment rate in Wales has been at or close to record levels with more people in employment than ever before. As I've said on numerous occasions now, the benefits of economic growth have not fallen evenly. There are still large differences between different parts of Wales. We recognise that not every part of Wales has had its fair share of growth and we recognise that Wales is composed of regions that have their own distinct opportunities, their distinct identities and, of course, their distinct and unique challenges.

So, by introducing a regional dimension to economic development through the economic action plan, I believe that we can develop the distinctive strengths of each region in Wales, working in partnership with city and growth deal areas. Each region of Wales will therefore have a specific focus in this new model of regional economic development. Chief regional officers have been appointed and are already engaging with stakeholders across the regions and, of course, with one another, to ensure that activities across the regions are complementary and co-ordinated. This will help us shape Welsh Government delivery, so that we can better respond to the specific opportunities in each region.

Llywydd, both city deals in Wales have solid foundations already and a strong basis to achieve their economic ambitions, and within each region, progress is clearly being made. The £1.2 billion Cardiff city region city deal has the south Wales metro at its very heart, and that is our major contribution to that particular deal. Led by Welsh Government, the procurement process is well under way, with a memorandum of understanding agreed between the Welsh Government and the city deal joint cabinet. But as Vikki Howells said, city deal should not lead to growth in some areas and to no growth or, indeed, to decline in other areas. City deal should and must lead to inclusive growth, delivering wealth-creating opportunities across regions, and I do think that the metro is designed to do just this—to bring new life to dormant communities. I do think that our approach to the development of Merthyr in recent years can act as a blueprint for the regeneration of many, many more communities across south-east Wales.

We've welcomed the plans to invest £37 million to create a world-leading technology cluster in Newport as the first project to be supported by this £1.2 billion deal. This is expected to create more than 2,000 jobs and is backed by £12 million from Welsh Government. Following the signing of the £1.3 billion Swansea bay city region deal, detailed business cases are being developed for 11 projects. Governance arrangements are also being agreed to provide strong leadership and accountability for the deal's successful delivery, and we are continuing, of course, to work with the north Wales region and the North Wales Economic Ambition Board to consider how a north Wales growth deal can best support their aspirations to bring further economic growth—further economic growth to build on the success that we have driven in north Wales.

We only need to look at the investment that Welsh Government is making in north Wales to realise the potential of that region if the UK Government opens its pockets and invests in north Wales as well. There is £600 million ready from Welsh Government to invest in infrastructure, such as the A494, a third Menai crossing, the Bontnewydd to Caernarfon bypass, the A55, the Welsh advanced manufacturing institute, the Development Bank of Wales's headquarters, the Business Wales hub, M-SParc. I'm looking forward to fully scrutinising and supporting proposals contained within the north Wales bid.

But, of course, the big ticket item in north Wales that people constantly speak to me about is transport. I'm responsible, in many respects, for transport, but there is a huge ask on the UK Government to uplift the spending on rail infrastructure, which has lagged behind the UK average. It's lagged behind for far too long. We've only enjoyed approximately 1 to 1.5 per cent of rail infrastructure spend in the last five years. That is simply unacceptable, given that we have 5 per cent of rail infrastructure in Wales.

Now, in mid Wales, Powys and Ceredigion are developing Growing Mid Wales—

Will you take an intervention?

Yes, of course.

On that point, what was the figure when Labour were in Government?

When Labour were in Government, I think it's fair to say that investment in rail was substantial, but there is always room for a further investment, and that's why Welsh Government is investing in the metro in south Wales—more than £700 million—and that's why we are investing in the north Wales metro with initial seed funding of £50 million. I would urge the Member to support, not denigrate, the work that is being done to ensure that the north Wales metro is a huge success.

As I say, in mid Wales—[Interruption.]—Powys and Ceredigion are developing Growing Mid Wales, which draws together local and national Government to create a vision for the future growth of mid Wales. We've welcomed details from the Growing Mid Wales partnership on how a deal could support this vision. Again, Welsh Government remains committed to fuelling economic growth in mid Wales, and I'm pleased that we've been supporting the rapid growth of businesses in Welshpool, including Zip-Clip and Charlies, and the infrastructure of Newtown, with spend on the much-needed bypass. I do believe that a deal could build on this significant investment.

But to meet the challenges of today and the opportunities of tomorrow, our economic action plan sets out how we, as a Government, will continue to grow the economy and spread opportunity, and in doing so, provide a stronger voice for our regions. We remain committed to delivering successful deals across Wales as part of that vision in the plan—a plan for driving inclusive growth.

City and growth deals have the potential to make a lasting impact on our regions, providing that they respect the devolution settlement. And in that context, I do welcome the strong cross-party support again shown in this debate today.

I call on Russell George to reply to the debate.

Thank you, Presiding Officer. Can I thank all Members for taking part in this debate today, especially Members who are not members of the committee? It's always welcome to have contributions from Members who didn't take part in our committee as well.

I'll comment on a few of the items that were mentioned today. Hefin David and Dai Lloyd, particularly, talked about getting the collaboration right and getting the right deals, and, of course, made points about the goals being set by the local areas and that being a particularly important matter for all the city deals. For me, I think that's very much what I would agree with, and it seems that the Welsh and UK Governments would agree with that position as well. Of course, Dai Lloyd, Hefin David and, indeed, Jenny Rathbone also talked about the need for working together, and it got me thinking, as all three spoke, that it's pretty amazing that 10 local authorities can— . It's difficult to get two local authorities working together, but 10 local authorities working together—of different political colours—and coming together with a joint plan, but also having the UK Government and the Welsh Government sat around the table as well, all agreeing a plan together and signing that plan—that, of course, I think, is what politics should be about, and that's what I think the public want to see.

Mark Isherwood, as you would expect, also talked about the north Wales growth bid and the need to link and work with the Northern Powerhouse. And, of course, the North Wales Economic Ambition Board has submitted its bid and we hope that we'll soon be able to talk about a third deal for Wales, followed by a fourth deal after that. 

Can I thank David Rowlands for his contribution and for widening out the debate to other thought-provoking areas as well? And Dawn Bowden also, of course, in her contribution, talked about other areas that the committee perhaps could look at in the future—that's how I took what Dawn's contribution made to the debate. I have to say, it was a very tight remit that we had. It's a big issue to look at all the growth deals and the potential for a mid Wales growth deal, so our remit was tight, to a certain extent. But some of the issues that you mentioned, Dawn—I think there's scope in there for further work that we can do as a committee.

I'm coming on now to talk about the fuzzy boundaries. Suzy Davies talked about this and about markers on the map, and she gave the example of the potential difficulties for places like Bridgend in this regard. And, of course, Suzy made a point about local authorities being able to make this decision and take note of these matters for themselves. I'm hoping that we can persuade the Cabinet Secretary to change his position on the fuzzy boundaries recommendation. Vikki Howells made the point that she had raised this, of course, with the First Minister in First Minister's questions, and that he was very much supportive of a fuzzy boundaries model. So, we have got an ally around the Cabinet table, but we've also got other allies as well, because I should say we've got Hannah Blythyn and Jeremy Miles, who also were part of this committee, and I should thank them for their part and their work with the committee. But, of course, they're also very keen on and very supportive of this particular recommendation as well. So, we've got at least three allies around the Cabinet table. On a serious note, I hope that the logic that we've provided with regard to our fuzzy boundaries will, perhaps, change the Cabinet Secretary's mind at some point as well. 

I'm also pleased—

Will you also accept an intervention on fuzzy boundaries? [Laughter.]

Yes.

As a Member of a constituency where people look south to your constituency, they look south-west to Owen Paterson's constituency, north to Wrexham and Delyn, east to Chester, and west into my colleague's area of Wales, I think it's absolutely essential that we respect that economic development sees no boundaries. But there is also a need for governance arrangements that are very clear.

My belief is that there will be no need for fuzzy boundaries, provided the deals are complementary, and given that we're establishing the roles of chief regional officers to ensure that those deals are complementary and to make sure that communities and businesses across each of the regions can benefit, not just from interventions and projects in their own growth or city deal regions, but also in those that are adjoining—. I'd say that not just for the developments that have taken place within Wales, but also on a cross-border basis in England as well. So, that's why we're very keen to ensure that there's full complementarity of the projects that are contained within the growth deals on the English side of the border to those that are contained within those here in Wales.

I very much agree with what the Cabinet Secretary said. In the new, potential mid Wales growth deal, there's the cross-collaboration work in there with the midlands engine, but I appreciate, as a constituency Assembly Member like me, you also represent a constituency that absolutely has to work across boundaries. I think, in many ways, we're perhaps talking with crossed wires to a point where we're agreeing with each other. Certainly, in Scotland, we've seen the example there of city deals overlapping across their boundaries as well. But I absolutely accept the argument for clear governance. I think, perhaps, we're not too far away; perhaps it's just an issue of terminology.

Can I, really, end by thanking all those who took part in the debate today? I also want to put on record my thanks to those who gave time to the inquiry and gave their expertise to the inquiry, in particular the staff of Glasgow city deal, FSB Scotland and RSPB Scotland, who generously welcomed us to Scotland's largest city. I'd also like to thank the committee clerks and the integrated team for all the support that they've given us as Members as well in putting this report together. Of course, I do thank the Government for accepting the vast majority of our recommendations.

The proposal is to note the committee's report. Does any Member object? The motion is therefore agreed.

Motion agreed in accordance with Standing Order 12.36.