Item 6 on our agenda is a statement by the leader of the house on the update on the Better Jobs Closer to Home programme, and I call the leader of the house, Julie James.

Thank you, Deputy Presiding Officer. 

When the First Minister formed this Welsh Government in May 2016, he made it clear that one of our central priorities as an administration would be to create better jobs closer to home. It was an instruction to all Ministers, across the Government, to spread opportunity across all parts of Wales and to use every devolved lever at our disposal to creatively support that ambition. That meant working in new ways, across ministerial portfolios and breaking down traditional Government silos to create meaningful job opportunities where the market was failing to do so. One of the most important responsibilities I was given at that time was to make further progress with a novel idea brought to us by the Wales Trades Union Congress to utilise the spending power of public procurement and, through the use of reserved contracts, use that lever to create jobs in areas of high employment need. The idea was a simple one, that, as well as providing new job opportunities for individuals who needed them, we could also put around those opportunities individualised packages of support and focus on the specific barriers that prevented them getting into work and then on into better paid work.

In many ways, the idea is not new. We have, across parties, talked many times about the potential of using the routine spending power of Government in this way. The challenge, as ever, is practically how to make that work on the ground. State-aid rules, procurement guidelines, contract law, European regulations and a whole suite of other practical barriers often stood in the way of turning what is a good idea into practical change in our communities. So, working with a talented and innovative team of officials in Welsh Government, together with social partners in the trade union movement and in industry, we have, over the last two years, been developing a series of pilot programmes that could help us overcome many of these practical problems and to test, through a small number of monitored commercial programmes in the Valleys taskforce area, a series of different models for how interventions of this kind could be taken forward.

The results of that work is what I present for Members here today: four pilots that we are now taking forward that, whilst on their own represent only a small fraction of the Welsh Government’s £6 billion annual procurement budget and total £15 billion overall budget, could, I believe, present us with an exciting lesson for how to harness the power of Government spending in future to usefully create more and better jobs closer to home. 

The first of these pilots is working towards a specialist garment manufacturing hub. Working in partnership with the social sector, we will appoint a social enterprise to operate a manufacturing unit in Ebbw Vale making high-end, specialist garments. One example of the type of product this unit might look to produce would be outdoor protective work wear, using breathable and abrasion resistant textiles for use in industries such as road working. The manufacturing unit will operate as an intermediate labour market, centred on people, and, with the aim of increasing long-term employability in the surrounding area, supporting those with aspirations to enter, remain and progress in employment. The benefits of this approach are the reinvestment of profits back into the business or the local community, so that, when the business profits, society profits.

Barriers to employment have been considered, including how they can be overcome as a part of this pilot. The available factory unit location, for example, is situated within five minutes' walking distance of both bus and train links.

We have established a strong working relationship with the Ebbw Vale enterprise zone so that early indication of longer term employment opportunities can be fed through to people within the locality.

I am pleased to report that the appointment of a social partner is expected to be completed over the summer, and I expect the factory to be operational by autumn of this year. The initial intention is to employ 25 people, with the specification focusing on their progression to longer-term sustainable employment through training and on-the-ground industry working experiences.

We are working hard to develop further opportunities for this company to become a valued supplier within the public and private sectors and to increase its employment numbers. Where we can, we are using those levers that are available to use to assist this, for example from public sector contracts such as Transport for Wales—just one indicator of our commitment as Welsh Government to the pilots through our own contracting mechanisms.

The second pilot involves a unit producing traffic and commercial signage such as highway signs, street nameplates, safety signs and hoarding boards. This is an existing social enterprise that employs people with disabilities, and the aim is to increase the hours of work for the current workforce. The hours of work will be increased as a result of my Better Jobs team brokering discussions between the unit and supply chains across Wales to place orders with them. The discussions are mainly with first-tier contractors who receive public sector orders to complete works, rather than with buyers within the public sector. These suppliers are purposely targeted to trigger the social and community benefit terms and conditions embedded within public sector contracts and frameworks in line with our public procurement policy. 

I am pleased that extra demand for this pilot’s products has already resulted in orders placed with the factory with two local authority main contractors, with the local authorities supporting my officials in these discussions, which I am grateful for. I'm also pleased to notify Assembly Members that Transport for Wales has stipulated the use of this factory for their signage requirements once the appointed operator enters the mobilisation stage of the new train operator contract. These orders are welcomed; however, to ensure financial stability within this organisation, shorter-term orders are also being explored by officials, and these include the Welsh Government administration estate contractor, the South Wales Trunk Road Agency and the Assembly Commission itself.

Re-engineered paint provides the business niche for the third pilot. My Better Jobs team is establishing a special purpose vehicle to re-engineer waste paint collected from local authority waste sites across Wales. This will bring together the patent owner for the re-engineering process and a local social enterprise to replicate their operation, which is currently based in Birmingham. They will operate the same process from the Bryn Pica eco park within Rhondda Cynon Taf council’s boundaries. This means that waste paint from Wales can be collected, re-engineered and re-used in Wales. This is aligned with our decarbonisation agenda—every litre of re-engineered paint will reduce embodied carbon in this product by 1.3 kg.

Early planning on the pathway to employment is under way, and the host organisation will be a social enterprise based in Merthyr Tydfil. My officials are also working with the Cardiff capital region skills partnership, who have highlighted a shortage of painter and decorator trades in their region.

Finally, the fourth of our pilot projects focuses on recycled paper. It is based on an existing social enterprise that employs disabled, homeless and previously long-term unemployed people and operates as an intermediate labour market. The company collects, sorts and shreds waste paper but needs more tonnage of paper to increase the opportunities for employment within the operation and to become financially self-sustaining. The team continues to work across the public sector raising awareness of this organisation and its services. I am very pleased that the team has already gained a commitment from a local authority to provide the company with more waste paper, which is an early success for this pilot.

Deputy Presiding Officer, I conclude with noting that each of the pilots has a different intervention mechanism, and all are placed within the Valleys taskforce area. This is purposely planned so that we have a tested range of commercial interventions in areas of high joblessness first, and that this test-bed of opportunity can be measured for its success, and, potentially, be replicated elsewhere in Wales.

I will happily keep Members updated on progress, and look forward to sharing the success of the pilots with you as they come to fruition. Diolch yn fawr.

It is a matter of concern, particularly for Welsh Government, that, after 19 years of devolution, Joseph Rowntree Foundation's 'Poverty in Wales 2018' report found that the proportion of households living in income poverty in Wales remains higher than England, Scotland and Northern Ireland, and that poverty among couples with children has been rising since 2003. 

Throughout the second, third and fourth Assemblies I routinely called on your predecessors to tackle the causes of disadvantage, poverty and deprivation, not simply treat the symptoms. I therefore welcome the recognition in your statement that practical change in communities needs to focus on the specific barriers that prevent individuals getting into work and then on to better paid work. Some of your predecessors didn't quite articulate that or acknowledge that in the same way.

However, as somebody who proudly previously worked in the non-profit mutual or social enterprise sector for more than two decades, I also recognise that they're not a golden bullet, that they can be run inefficiently, they can lose money, they can go bust, they can make people unemployed, as can a for-profit body and even sometimes public sector bodies—although, generally, they're not allowed to fail in the same way. 

Given that, with Communities First, when the Wales Audit Office looked at Communities First in 2009, it produced a report identifying corporate governance failings in financial controls, HR controls and audit trails, what corporate governance checks and balances are you putting in place so the foundations are right, thereby maximising the chances for these social enterprises, often fledgling social enterprises, to rise and hopefully fly with their employees on board?

You talk about working with a talented and innovative team of officials in Welsh Government and social partners in trade union movements and industry. Given that the Wales Co-operative Centre is the body funded by Welsh Government to support the establishment and management of social enterprises, what involvement have you had with them, and also with the wider third sector, given the work that the Wales Council for Voluntary Action has done on successors to Communities First models in the future, community anchor organisations and so on, and also the work currently being done across Wales by the growing co-production network exactly in these sorts of areas?

How do you respond to the Bevan Foundation statement, following the ending of Communities First, that the programme

'did not reduce the headline rates of poverty in the vast majority of communities, still less

in Wales as a whole' and that therefore a new programme

'should be co-produced by communities and professionals and not be directed top-down',  based on

'A clear theory of change that builds on people’s and community’s assets not their deficits' and that

'local action should be led by established, community-based organisations which have a strong track-record of delivery and which have significant community engagement'?

They also said that if people feel that policies are imposed on them, the policies don't work. So, how can you assure the Assembly and others outside that, in addition to the initiatives you describe in your statement, you're embracing those approaches to ensure that we don't repeat the mistakes of the past?

I'll conclude by referring to an event I hosted in April here with the Bevan Foundation and Big Issue Cymru on prevention and inclusion, when I sat beside and introduced the founder of The Big Issue, Lord John Bird. How do you respond, perhaps, to his statement, quote, 'Too much time is spent analysing poverty, not enough on dismantling it, too much making people a little bit more comfortable being poor, too little bringing the poor into the equation' and, he said, 'We need to get poor people'—his words—'to change the way they think about poverty, to open up so they can encounter the problems around them, turning social security into social opportunity', and, finally, to his comment that 80 per cent of social intervention money is spent on emergency and coping, but almost nothing on cure, and that when considering social spending we must therefore always ask whether the social pound is prevention money?

Well, I know the Member is extremely well intentioned in what he's seeking to do, and I'm just going to run through what the aims of this project are, and they are to use Government procurement spend in a market intervention where the market has really failed to produce any kind of employment opportunities in areas of very high unemployment, particularly in the foundational economy for people who face multiple barriers to work. Of course, we want to do that as part of an anti-poverty programme, but these are very specific, targeted pilots in order to see if any of these vehicles can produce the kinds of sustained employment engines that we hope to see to allow people to climb out of poverty in well-paid work. Because we know—and I'm afraid the benefits system that the Conservative Government at the UK level is currently implementing is exacerbating this—that poorly paid work actually drives people into severe poverty and mental health. A lot of the people who live in poverty are actually in work, so it's not for us to be creating poor working conditions. The whole point of this TUC initiative is to get people into better jobs, closer to their homes, so that we tick off a large number of things that I'm sure every Member in this Chamber shares. So, these four different pilots are all specifically designed to test a model that allows us to divert Government spend or to use the leverage of Government spend in order to produce those results that I'm sure we all want.

The concept of Better Jobs Closer to Home is one that Plaid Cymru supports fully. The outward migration of young people from the Valleys to other parts of Wales and to the UK is a blight on our communities and this problem is not isolated to the Valleys, because as we see in our predominantly Welsh-speaking communities in the west and the north of Wales, outward migration due to lack of economic opportunities is having a negative effect on the Welsh language as well. 

Public procurement has been a major economic tool at the Welsh Government's disposal for several years now, and in recent years at least, the percentage of Welsh purchasing in the public sector has fallen. Even purchasing made by the Welsh Government itself, which it claims is leading by example, has fallen from 44 per cent to 41 per cent since 2015-16. So, can the leader of the house outline how this scheme fits into the wider Welsh Government public procurement strategy, and how you are going to turn around these rather disappointing figures? 

The leader of the house indicated in her statement that state aid rules and the EU public procurement regulations have been a barrier to implementing this scheme. State aid and public procurement are both policy areas that are set to return to Westminster following the agreement between the Welsh and Westminster Governments on the EU withdrawal Bill. So, could the leader of the house indicate how these new barriers will impact this scheme both now and in the future? 

We've just received a statement on the future of rail in Wales. A Government's transport investment plans reveal its intentions with regard to wider economic policies and, in particular, where the labour force is likely to be concentrated. The franchise agreement with the private for-profit operator KeolisAmey will see both literally and figuratively all lines from the Valleys effectively leading to Cardiff. I agree that investment is needed in public transport links to Cardiff and, indeed, within Cardiff as well—much needed. However, as I understand it, the joining of the Merthyr and the Rhymney lines to create the so-called circle line of the Valleys won't be included in the south Wales metro, which is in direct contradiction to your ambitions for creating better jobs closer to home. So, therefore, can the leader of the house please explain how the Welsh Government's wider transport policies are supporting your ambitions of creating better jobs closer to home? 

Well, I'm glad that Leanne Wood started by saying she supports the initiative Better Jobs Closer to Home, and I wasn't entirely sure from the rest of her contribution quite how she supported it. 

On the procurement strategy, I did not say it was a barrier; I said there were a number of things that we had to take into account when constructing a scheme that allowed the Welsh Government to use its procurement spend and its procurement levers to establish a market intervention in order to create employment for people who were experiencing serious employment barriers in areas of high unemployment. I completely agree with you that there are areas of high unemployment scattered around Wales, and that there are a large number of communities who have different barriers and different issues. What we are doing here is trialling four different pilot projects of different ways of intervening in the market, so that we can use them as genuine pilots to see whether they work, and to see whether they're scalable, or to see, for example, whether they're very specific place-based things, because there are some communities that would have a particular preponderance of skill and residual community feeling for a particular area, for example. One of these is the scheme in Merthyr that already exists, and we're hoping to get it to be a much larger enterprise using our leverage.

So, I didn't say that the rules were a barrier. I think the characterisation of what's going to happen as a result of where we are with the withdrawal Bill is not one I share at all. I really don't think a race to the bottom without any rules across the UK for how we would do state intervention in local industry, or how we would have procurement spending rules so that we didn't all start to compete each town with the other, each village with the other, would be a sustainable position. I'm sure the leader of Plaid Cymru doesn't really maintain that that's a situation that any of us could have. It's obviously in all of our interests to have a set of rules that allow us to support our local population and to get economic prosperity, whilst not indulging in a race to the bottom or a race to the top of the amount of money you have to offer every employer to come to your locality, and I'm sure she didn't mean to suggest that.

In terms of the transport system, of course we have looked very closely to see what the transport links for all of these hubs are, because a large number of the problems of, for example, the higher Valleys, are to do with the speed of transport links to employment hubs. But this isn't really about transport links; this is about getting the jobs in the place where the people already live, and especially for those with multiple barriers like people with caring responsibilities, who are mostly women, or people who have been economically inactive for some time. Any kind of transport cost or barrier can be a real issue. So, these are centred around trying to get local employment for local people. I'm very pleased with the pilots and I hope very much that I can come back and tell people a really good story this time next year when we've had a whole year to run, but if we can't tell that good story, at least we'll be able to transparently say what the issue was and how we might be able to rectify it using some of the levers at our disposal.

I thank the leader of the house for this statement. Of course, UKIP welcomes any project that promotes employment opportunities in some of our most deprived areas. It is especially appropriate that it is in design to engage those who have not been employed for some time and that there is a mention of work for disabled people. However, on the subject of the disabled, would it not have been a good idea to have set up one of these pilot units to employ only disabled people, rather on the line of the Remploy factories, which were so tragically shut down over the last few decades? We know from enquiries made by the EIS Committee that Wales is significantly behind England in providing apprenticeships for unemployed people. Would the leader of the house consider setting up such units, that is those dedicated to employing people with all sorts of disabilities, as the project is extended? We would then be able to put people into work who would find it difficult to find employment in the purely private sector.

Well, the issue about disabled people is a good one, and obviously one of the pilots in particular is looking to expand on a current operation that does employ a number of disabled people already. Actually, Remploy never employed only disabled people; there were always people in the management echelons, for example, who were not disabled.

What we're looking to do with these pilots is make sure that people have a range of opportunities for intermediate labour market opportunities. So, for example, if you take a garment factory, there will clearly be people who are producing the actual garments, doing the sewing, doing the cutting and so on, but there will also be people who are learning how to do the business production, the sales, the marketing, the running of the factory, the budgeting, the management and so on, and we are very insistent that all of those opportunities are available to all the people who are going through the intermediate labour market route, so that you don't just learn to be one of the things; you have a range of opportunities and you're able to try out your skills in a range of the opportunities available.

It's perfectly possible that some of the people who go in on the basis of being an intermediate route to another market may find that, actually, they're not able to move on and we may find that we have some sheltered employment for people with disabilities who aren't able to move on, but the aim is to ensure that everybody can go out and get a productive job, a better job closer to their home, with good, fair, working conditions and that these pilot schemes will be the engines of that skills increase. But, Deputy Presiding Officer, if, in themselves, they turn into highly competitive, large employers, then I will be delighted with that as an outcome as well.

Minister, I'd like to welcome the statement that you've made here today. As a representative of a Valleys community, you'll be aware of my long-standing passion in regenerating communities such as my own, and a key part of that absolutely has to be bringing better jobs closer to home. So, it's really good to see the detail that you've set out for us today, and I particularly welcome the work that's been done at Bryn Pica eco park in my constituency on one of these projects.

My question to you is around the foundational economy. We know that the Cabinet Secretary for Economy and Transport is running some pilot projects around this, and, clearly, procurement is one essential strand of the foundational economy. What mechanisms are in place for cross-Government working on this, so that lessons that are learned from the Better Jobs Closer to Home pilot can be absorbed into those foundational economy pilots as well?

It's a very good point, and absolutely, we have a number of—. One of the reasons I'm the lead Minister for this is that it's a cross-Government working arrangement. I'm looking at my colleague Rebecca Evans who has been very involved in large parts of it as well. There are a number of Cabinet colleagues who've been involved in setting it up.

Absolutely, one of the reasons I was praising the team who have been instrumental in this is because their cross-Government working is excellent, and that's exactly what we're trying to do. We're trying to make sure that we have four distinct pilots that allow us to trial distinct interventions in the procurement market so that we can evaluate the strength of those interventions, their efficacy and how they work and that we can then spread them out as appropriate, or not—if we can grow them where they are. One of the things I'm very interested to know is whether they're place specific or whether we could pick the model up and put it down somewhere else in Wales and it might work.

So, there are a lot of things around. If you take the one that you mentioned at Bryn Pica with the paint re-engineering, one of the great things about that is that it reduces the carbon footprint, because the paint is travelling much less distance and so on, but it may well be that doing that once for the whole of Wales in that location isn't the best outcome and that another one in the north or in the west might be a better carbon footprint. There could be linked factories so that you have shared skills and all the rest of it. But I'm very interested to see how we can do that.

While we're on the subject of the Bryn Pica eco park, it's also good to see what a cluster can do. We've got the big anaerobic digester there, which is part of the Welsh Government's very successful food recycling programme. That generates electricity and heat, and of course, that gives us the opportunity to run factories and other things in that locality that benefit from that already generated recycled electricity and heat. So, there's a real virtuous circle to be had, and what we're looking to do here is have an intermediate market model that allows people to experience all of the skills and employment opportunities that such a cluster might bring, with two expectations for that: (a) that it will be able to grow and we'll be able to recycle far more items—paint in this instance, but a number of other items that Members, I know, are very interested in—and (b) that those people will gain very valuable high-level skills that will enable them to move into other jobs in our communities and increase the skills level overall, which, after all, we all know is one of the holy grails of life in the twenty-first century.

And finally, Jenny Rathbone.

Thank you, Deputy Presiding Officer. I think it's a really interesting statement. I'm very pleased to hear about these four pilots, but I'm obviously a bit frustrated that we haven't been able to extend this further, because it's great that we're getting new businesses going into the Valleys, but for many of my constituents, having to travel more than half an hour is a real barrier to work, because the further you've got to travel, the more childcare you've got to pay for and the more difficult it makes the equation of being able to afford to go to work.

So, I'd really like to hear a bit more about the barriers to mainstreaming this, because I would've thought that it's something that the Federation of Small Businesses and the Wales Co-operative Centre would really be enthusiastic about. And it must be in line with the Well-being of Future Generations (Wales) Act 2015 that people are not having to normally travel more than half an hour to get to work, because it's bad for their health, it's not good for the environment and it's definitely not good for children, because the time taken means that it's time not being spent with your children. So, I'd be interested to hear what are the barriers we can overcome.

The Member makes a number of points, which these pilots aim to look at. And I do emphasise the 'pilot' point here. I don't want to overemphasise the barriers that we faced in getting to this point, but it has not been simple to construct four separate pilots using different procurement and Government spend leverages in order to do this. I do pay tribute to the team that's managed to do it.

But I absolutely emphasise that what we're looking at here are genuine pilots, because I completely take the point that the Member makes: absolutely this is about better jobs closer—the 'closer' word is just as important—to home, for exactly that reason. We do not want people to have long commutes. Even where we're facilitating that, we still don't want that. And actually, what most of the communities in the more rural parts of Wales, and sometimes the inner cities—I also represent an inner city area that has similar problems—what people want is the ability to have a good job around the corner from their house so that they can have a work-life balance and they can have their caring responsibilities taken into account and their children can attend local schools and so on.

So, these pilots are very much designed to see whether they work and whether, as I said, we can then pick them up and put them down in other communities, perhaps as linked hubs, perhaps as a single business with multiple outlets—a number of possibilities. And we've worked closely with a whole range of stakeholders across the Government to get to where we are, and I'll certainly be looking forward to reporting back on the pilots and this whole issue of scalability and whether they're placeable and all the rest of it in about a year's time, when we've got some data from them.

Thank you very much, leader of the house.