Item 6, then, is a debate on the Public Accounts Committee report on Natural Resources Wales's annual report and accounts of 2017-18, and I call on the chair of the committee to move the motion, Nick Ramsay.

Motion NDM6965 Nick Ramsay

To propose that the National Assembly for Wales:

Notes the Report of the Public Accounts Committee's—Scrutiny of Annual Report and Accounts 2017-18—which was laid in the Table Office on 26 November 2018.

Motion moved.

Diolch, Dirprwy Lywydd. It is regrettable that, just over 18 months on from when I stood here in this Chamber relaying concerns regarding issues of irregularity within the administration and governance arrangements in NRW, following the qualification of Natural Resources Wales's 2015-16 accounts—well, here we go again, following a qualification of the 2017-18 accounts due to the same irregularity issues, for new transitional contracts. The committee has found itself in a certain sense of groundhog day as we examined and re-examined a number of concerning issues surrounding the awarding of timber contracts by NRW over the last two years.

Back in March 2017, the then Auditor General for Wales laid before the Assembly a report on the accounts of NRW, setting out his reasons for qualifying the 2015-16 regulatory opinion on NRW’s financial statements. The report referred to NRW’s decision to award eight high-value timber sales contracts to a sawmill operator in May 2014. As a committee, we conducted an inquiry into these matters and published a report in June 2017, concluding that:

'We believe that NRW could and should have ensured that there were good governance arrangements in place in the contracting process, and in failing to establish effective governance arrangements, it is unable to demonstrate how it acted lawfully. We do not believe there is any evidence to demonstrate whether the contracts represent value for money.'

We also recommended at that time that NRW

‘undertake a full evaluation of its governance arrangements relating to contracting processes, clearly setting out lessons learned'.

Now, fast forward to 2018, and the committee found itself back in the same position, when the then Auditor General for Wales qualified NRW’s 2017-18 financial statements for a third year in a row, and for exactly the same reasons. We were extremely disappointed that, despite the findings of previous reports by the Auditor General for Wales and the Public Accounts Committee regarding NRW’s approach to timber transactions, NRW’s accounts were qualified for a third consecutive year. This led to us publishing a further report in November last year, in which we raised again a number of concerning issues around the awarding of these timber contracts, a number of which remain unexplained. 

Not least, we were left bewildered that the decision—when awarding these contracts—to follow a process outside of the procurement rules was taken against the backdrop of a scathing auditor general’s report that raised concerns about that specific type of process. Indeed, I recall Members of the committee, and one Member specifically, citing this as the crime that was committed twice, such was the concern on the committee at that time. This suggested to the committee that there has been a cultural failure within NRW in relation to governance procedures, and that a serious overhaul was needed.

We could only conclude that previous concerns had been disregarded, and the decisions that followed at NRW appeared to defy logic. These were decisions made by experienced staff, and it is difficult to view these actions as a result of incompetence. We could only conclude that we will never fully understand, or have an explanation for, what happened at NRW. I should add at this point that Natural Resources Wales had a new chief executive from February 2018, and that an interim chair took up post on 1 November 2018 for a period of 12 months. Together, they've stated their commitment to turning NRW into the organisation it aspires to be. The 2018-19 annual report and accounts will be the first complete accounts fully under their watch, so previous qualifications were prior to their appointments. I think it's important to make that point.

Moving forward, we fully welcomed and respected the decision of the new chief executive to commission a full independent review of the issues raised in the auditor general’s report on NRW’s 2017-18 financial statements. The review was undertaken by independent auditors Grant Thornton and, at the request of NRW’s chief executive, was to be a no-stone-unturned investigation to fully flush out the failings within the organisation and bring about wholesale reform.

The findings of the review were published on 4 February this year and considered by us on 11 February. The Grant Thornton review makes further uncomfortable reading as it explores in some greater depth the issues raised in previous reports on NRW’s timber transactions. However, the report did not reveal any surprises or, indeed, anything new, but it did raise further questions about when we will see change at NRW and, more importantly: are the issues relating to timber sales restricted to the forestry division at NRW, or do these issues reflect a fundamental flaw in the organisational culture? The Grant Thornton report highlights a lack of single organisational culture at Natural Resources Wales, and there are many lessons for the whole of the organisation to learn from this.

It seems unfortunate that the merging of three organisations into one has left a lasting legacy of deep-rooted cultural differences that have never been resolved. However, we welcome the commitment given to us by the new chief executive and chair of the board that work is under way to completely restructure the organisation, with a move towards a more place-based organisation that, it is hoped, will unite it more fully.

Now, we've listened to the chief executive and the chair of the board give assurances that the Grant Thornton review has really gotten to the core of the problems at NRW, and will provide a starting point for a fundamental rebuild. However, we remain concerned that the membership of the board lacks the timber sector knowledge—a point that was raised by Adam Price in questions yesterday—that we believe is much needed to provide the vital insight and expertise required to address the problems at NRW, and to break down the cultural divides by providing a crucial link between the board and the forestry division. We remain concerned about whether the board has the right skills mix and capacity it needs to turn around the fate of the organisation.

Over the last three years, the auditor general, the Public Accounts Committee and, finally, more recently, Grant Thornton have scrutinised events at NRW in a forensic fashion, exposing a number of fundamental flaws and misgivings of the highest magnitude, and it is to the credit of the current chief executive, actually, that that review was commissioned in the way it was. But one unanswered question does remain: where has the Welsh Government been throughout this process? Had this been a health board, we might have seen the organisation put into special measures as a matter of urgency, yet for the last three years or so, NRW has continued to operate out of control despite it having its accounts qualified for three consecutive years and its governance arrangements completely undermined and brought into question, not to mention millions of pounds of public money that have been mismanaged.

When I stood in this Chamber last July raising serious concerns about NRW, the Cabinet Secretary for Environment and Rural Affairs, as the title was then, was pleased that in response to the qualification of the 2015-16 accounts, NRW had conceded, with hindsight, that they would have handled things differently. The Minister added that the recommendations within our 2017 report were primarily a matter for the accounting officer and the board of NRW. She was assured that NRW had already put in place an action plan to address the issues raised by the auditor general, and that the Welsh Government’s role would be to support NRW in the work they needed to undertake to ensure robust procedures were in place for the future.

We were also told that Welsh Government officials intended to review the governance arrangements for arm’s-length bodies in Wales, and that, as an arm’s-length body, NRW is governed by a robust framework agreement that reflects the principles set out in ‘Managing Welsh Public Money’.

During our initial scrutiny, NRW requested a more precise definition for the terms ‘novel’, ‘contentious’, and ‘repercussive’ in their current governance framework. This request was made specifically to address the auditor general’s recommendation that the timber contracts were novel, contentious and repercussive, and hence they should have submitted their proposals to their sponsoring Welsh Government department in line with the current governance framework. This Chamber was told that, as part of the current arm’s-length bodies review, consideration will be given to providing greater clarity around these issues.

However, despite all of this, little has changed, it seems, leading to the qualification of NRW’s 2017-18 accounts, with the auditor general basing his qualification on NRW’s proposal to enter into transitional contracts that he considered to be novel, contentious and/or repercussive. Alarmingly, although NRW informed the Welsh Government of its intention to put in place transitional arrangements, it did not formally refer them to the Welsh Government as it was required to do. It seems to us that the Welsh Government’s seemingly hands-off approach did not work in this instance, and despite assurance after assurance, nothing at NRW has changed. 

To make matters worse, the Grant Thornton review highlighted the introduction by NRW of a new and novel contract form, standing sales plus, during 2016, which raises very serious concerns regarding the introduction, monitoring and accounting for these new contracts. These contracts are unusual, and we believe have potential implications for the auditor general’s regularity opinion on NRW’s 2018-19 annual accounts. The contracts relate to approximately one sixth of NRW’s annual timber sales. We are naturally concerned that this means there is a risk, potentially, that NRW will see its accounts qualified for a fourth consecutive year. Now, this should surely be the time for the Welsh Government to take more affirmative action to support and address the problems at NRW.

The committee, through its work, has also considered the Welsh Government's internal review of arrangements relating to arm’s-length bodies, which resulted in an action plan published in January 2018. We also received correspondence from the Permanent Secretary to the committee back in September last year providing further information on the review, amongst other new arrangements in hand. The letter notes, and I quote:

'The removal of the ‘Calling-in Procedures’ i.e. a requirement for our Arm’s-length Bodies to refer to us for approval for particular categories of decision, such as single tenders above a specified threshold or issues which are novel and contentious.'

We have questioned the Welsh Government further about the removal of the calling-in procedure and how issues such as those that occurred within Natural Resources Wales would be identified in future. We were told by the Permanent Secretary, and, again, I quote:

'that has been one of the positive outcomes of the arm's-length body review, to make sure that we are giving very clear guidance and more support to them. We are communicating more regularly with them, we're setting out very clear guidance about expectations that we have, and, as I said, bringing them together three times a year for this forum to talk through priorities and share best practice, basically, on how we can manage public money most effectively.'

It seems that the Welsh Government is moving towards a system of enabling arm’s-length bodies greater autonomy at a time when one of its largest bodies is in dire straits, and has failed to report serious issues to the Welsh Government, or at best, adhere to governance rules and procedures. This new approach will reduce, we feel, the opportunities to provide necessary assurance around the actions of arm’s-length bodies.

Concluding, Dirprwy Lywydd, it can only remain to be seen what happens next for NRW under its new leadership, but it is clear that serious concerns remain outstanding, both in terms of internal governance arrangements at NRW and how it functions as an organisation. It is not yet clear to anyone how change will be delivered, and the task ahead is monumental, but NRW now has all the tools it needs to do the job of turning around the organisation, and delivering the services that the people of Wales deserve. We will give the organisation and its leaders the time and space they now need to deliver change, but we will be seeking an update at the end of the year.

This report by the Public Accounts Committee into the accounts of Natural Resources Wales reveals an organisation that is not fit for purpose. NRW is Wales's largest quango. It is responsible for anything from protecting habitats and wildlife, woodlands, monitoring water quality and flood risk to regulating power stations and waste processing sites. For an organisation so important to have its accounts qualified for three consecutive years, as Nick Ramsay just earlier said, is unprecedented and unacceptable. And it shows how blindfolded one Government can be.

The committee found it difficult to find any logical explanation for why NRW allowed this situation to arise. You could only conclude that their internal controls were not fit for purpose, or definitely substandard. What is particularly concerning is that the same issues of irregularities were highlighted three years ago. Then, the auditor general expressed concern that NRW had not appeared to fully accept his criticism of their action in respect of the award of long-term contracts and sought to downplay its significance. This is demonstrated by the controversy over how timber was sold, repeatedly, without going into open market. Fair trading rules were totally ignored in this instance. This scandal lost the Welsh taxpayer at least £1 million and resulted in the resignation of NRW's chair—a situation described by one Labour Assembly Member at the time, and his quote is:

'there needs to be accountability from the senior leadership of this organisation which does appear to be out of control.'

There has been a consequent and widespread loss of faith in NRW. Ten timber firms recently sent a joint letter to the Welsh Government saying that they had no confidence in NRW's ability to manage forestry in Wales. They claimed 12,000 jobs in the rural economy and £100 million of new investment over the next five years were at risk. These companies concluded they had no confidence in the ability of NRW to deliver a commercially viable, sustainable and economically driven service. 

This lack of faith in NRW appears to be reflected in the attitude of its staff. The result of an internal staff consultation exercise on restructuring the organisation was leaked to the BBC in December last year. Almost two thirds of NRW staff responded to this consultation. Deputy Presiding Officer, of these, 62 per cent agreed there was a need for change but were strongly opposed to the plan and highly critical of the process. Concerns were also expressed that the new structure would not provide a suitable service for the people and environment of Wales. Expertise would be spread too thinly and staff spoke of high stress levels with people feeling undervalued and worthless. Natural Resources Wales has systematically failed the people of Wales. The Welsh Conservatives have made it clear that we would scrap NRW and replace it with two separate bodies: one handling the regulatory duties undertaken by the organisation and the other its commercial aspects. We can all agree that the current situation cannot be allowed to continue.

The committee has made three recommendations. All three have been accepted by the Welsh Government and by NRW. NRW is drinking in the last-chance saloon. This is their last chance to make the changes required to deliver value for money for the taxpayer and to provide efficient and effective protection for the environment of Wales and put the faith of public funding in an organisation. Thank you.

I'm grateful to the Public Accounts Committee for its report. To me, it raises two far more fundamental questions, perhaps, than some of the details that we have been discussing. Both are questions—one related to the scope of the responsibilities of NRW, and the other related to the ability or the capacity of NRW to deliver against those responsibilities.

Now, the scope of the responsibilities is of course something that we have discussed from the early days before the creation of NRW, namely the ability of the organisation or otherwise to play a commercial role as well as a regulatory role simultaneously. I remember the term 'Chinese walls' being used more regularly here than anywhere else at one point when that discussion was taking place. And there are a number of voices from those days up until now who have been questioning whether that is appropriate, and another in the Western Mail today—John Owen Jones, the former Minister in the Wales Office, or the Welsh Office as it was then, and the last chair of the Forestry Commission here in Wales—who described the creation of NRW as a classic example of making bad policy, with not enough discussion with the forestry sector, in his view, as manifesto commitments were drawn up. Well, you know, I know that there's a difference of view, but it's come to something when we come to a point when Confor, on behalf of the sector, expresses a lack of confidence in the ability of NRW to deliver their responsibilities as we would want to see them doing.

And, of course, that statement of a lack of confidence is very significant, because they directly employ 4,000 people, they indirectly support 12,000 jobs in the rural economy, and they contribute £40 million in timber revenue to the Welsh Government every year. The sector is calling for the removal of that commercial timber element from NRW and the creation of a new entity within Welsh Government. For me, that justifies us asking the question, for us to take a step back and look—is it worth us having an independent inquiry? And we shouldn't fear that. It's entirely valid for us to ask the question. Five years into the existence of this organisation, are there lessons that we should be learning, and should we be reviewing their responsibilities? And if the inquiry would find that change is necessary, then there is also scope for an inquiry to suggest alternative models. Or if there is a finding that it is acceptable, then we should build on the work that has already started—and I accept that it has started within NRW—to rebuild the relationship with the sector.

So, I've touched upon the scope of the responsibilities, but then there is this ongoing issue of the capacity of NRW to deliver against its responsibilities in this area. As an organisation, it has seen a cut of 35 per cent in its budget in real terms since its establishment: a third of its budget—the non-flood grant in aid budget, I think that's the correct term—has been lost in just five years. And, of course, at the same time, we have seen the responsibilities increasing through the Well-being of Future Generations (Wales) Act 2015, the Environment (Wales) Act 2016, and most recently, of course, through the expansion of regulations relating to the reservoirs in Wales, which also bring significant cost, never mind Brexit and the flood waters that will face NRW in that context. They are on an unsustainable trajectory, given the budget and the responsibilities. The responsibilities are expanding but the budgets are contracting. It doesn't work and it's not sustainable.

Now, the non-flood grant in aid allocation from Welsh Government is down 5 per cent in this financial year, and that followed—[Interruption.] Oh, go on.

Actually, it's 3.7 per cent. We saw that in the environment committee today.

Well, I'm quoting the figure from the environment committee this morning. It's down 5 per cent in this current financial year, not in the next financial year. That's where we differ on that figure. But that's against, as well, a flat settlement last year—there we are, you've got me confused now as well—last year. So, we know exactly what that situation is. And those difficulties are now being managed, of course, through continued reductions in operating costs, it's seen a job re-evaluation scheme that's reduced its staffing by 50 and, of course, we've seen the whole organisation review happening so soon after the whole organisation came into being, I might say, which will mean that services will be reconfigured in the way that they're delivered. Some services will see delivery more slowly and some not being delivered at all. And there's one other, to conclude, fundamental question to Welsh Government: you have to decide, do you really want a properly funded, properly functioning organisation that is promoting and helping to deliver sustainability in Wales, or will it be starved of the resources it needs to do its job? And in all of that, spare a thought for the staff, the organisation's greatest asset—they are absolutely working wonders in what are very, very difficult circumstances.

I know there are many people who say the merger of these three organisations was bound to fail, but I'm not one of those naysayers. I don't agree with John Owen Jones. I actually think that the way it was done is obviously something we need to learn from, but that, actually, there is a huge strength in bringing together the different functions of this environmental body into one organisation, and I'm hoping that it is now going to work.

The reason why I think they need to be in one organisation is that the well-being of future generations Act requires us to look at all our various responsibilities holistically, so that we understand about climate change mitigation, we understand about how we can use our forestries to act as a carbon sink, as well as for biodiversity, as well as creating enough timber to build the environmentally appropriate housing that we're going to need in the future, for example, as well as tapping into the fantastic public goods we have that we are blessed with in Wales, which is through renewable energy, which enables us to diminish any reliance on carbon for generating energy. We could also use that as an export. So, I think there are huge possibilities for NRW, as well as, obviously, some challenges to rectify the mistakes that have been made in the past.

Clearly, the governance arrangements at NRW were completely inadequate, and that's one of the things where I think we need to really reflect on how it was that we had a board that really didn't understand exactly what their job was. I'm pleased to say that the internal audit and risk-assurance committee did do, I'm sure, what was an extremely painful review of how they acted, or didn't act, and I think that there's some evidence that they were not getting the information they needed, but nor did they seem to have the sense of enquiry to probe a bit deeper as opposed to just simply taking things as read.

They've now got a new chair of the audit and risk-assurance committee, and I feel sure that the group of people who've been brought together at the very senior level to oversee the level of change required to ensure that these timber contracts are never let in an inappropriate way in the future are going to get to the bottom of that. But I agree we need to look forward to make sure that problems don't pop up in a different direction, just because we've sorted out the way in which we manage our wood assets.

I know that several people are saying that—. Nick Ramsay said, 'Well, maybe they need a timber expert on the board.' Well, I'm not sure they do, because if you had a timber expert on the board, instantly there'd be a question mark as to whether there was some vested interest that would cause a conflict. If they were somebody who'd come from another continent who'd had experience of timber contracts, maybe, as long as they were no longer in the business. But I think just as important would be somebody who has experience of letting large contracts. It doesn't really matter what the product is, it's about knowing that you've got the legal and financial expertise to understand the value of whatever it is you're trying to trade and ensuring that it's being done in a way that meets our obligations under European regulations, as well as what the Welsh Government requires us to do.

So, I would agree that, at the ground level, there are lots of fantastic people at the coalface of NRW doing fantastic work, and you've only got to remember places we visited where we've met these people on the ground who are all incredibly enthusiastic about what they're doing. I do think, having spent a lot of time with the senior leadership of NRW this week, both in the Public Accounts Committee and in the Climate Change, Environment and Rural Affairs Committee this morning, that they do have the skills required to turn this situation around and make a success of it. So, I don't think that an independent inquiry is required at this stage. Were they to fail, then, obviously, that might be a different matter, but I have confidence in the current chief executive and chair, having seen them in action, as well as the director of resources who was with us this morning. So, I very much hope that we can look forward to what is a really, really important organisation for ensuring that Wales can maximise the opportunities from our fantastic natural resources and not see them being thrown away.

Well, this report by the committee and, indeed, the subsequent Grant Thornton report and the previous reports by the Wales Audit Office certainly have laid bare a—how can we say—systemic collapse, really, of ordinary rules of governance and audit, and leadership, I think, more generally, and there are issues of capacity as well, as Llyr Gruffydd has said. But I think they've also pointed out a sector that is in deep crisis. I think some of the roots of that crisis do lay, I think, in a failed—or, has been, based on the evidence—a failed merger hitherto. And I would take issue with the question of whether the lack of subject matter expertise present on the board is irrelevant here, because it would be unthinkable, for example, under the days of the Forestry Commission, or indeed in the Forestry Commission in England and Scotland now, for there not to be forestry commissioners that knew something about forestry. Yes, you have other skills there, but you certainly would always have had people that had deep knowledge in the field. And then the issues of conflict of interest are addressed in that case, as they are in every other sector or case. [Interruption.] Yes.

But surely you can have that expertise through the director of forestry or the director of land management, who is an executive officer as opposed to a non-executive person who needs to bring broader skills.

I disagree. In any instance, non-executives also, to be able to perform their function of critical challenge, need to be able to ask good questions, and they can only do that from a basis of knowledge, and that's been lacking in this case.

It's an important sector economically. It's actually bigger in terms of value added than agriculture and, indeed, in terms of the rural economy, its importance is even more significant. In terms of climate change reduction, it's absolutely central, which is why, of course, the Welsh Government has had to increase its target, in response to the Committee on Climate Change's recommendation, to 4,000 hectares. As I pointed out in First Minister's questions, this is one of the worst areas of performance against any Government target. So, the target was 2,000 hectares a year of new woodland planted. We've been achieving, in the last year, I think, 200 hectares. In fact, in the last four years, it's been the worst four years of new woodland planted since 1971. Restocking rates—they're the worst since 1990. NRW itself has a land bank—these scars you see on the Welsh landscape at the moment of areas that have been felled but haven't been restocked. They have 6,000 hectares at the moment that they haven't restocked. That's four years' worth of production. The reason that they introduced the infamous 'standing sales plus' contract in 2016 was because NRW didn't have the funding to be able to build the infrastructure or to undertake restocking themselves, and so these contracts were meant to be used as a mechanism for them to harvest timber and restock at minimal cost. Well, it obviously hasn't worked; the figures speak for themselves. And, of course, if you look forward into the future, it gets even worse, because the current prediction is that there is going to be a 47 per cent cut in softwood availability in Wales over the next 25-year period.

This underperformance in this sector comes at a time when timber prices are at a 30-year high. Why? Partly because, of course, of the demand from biomass, and so everybody in the sector in Wales—which is why the Minister has received this letter from the 10 companies in question—is saying, 'Look, we could build this industry up; it's a huge resource for Wales,' and yet we are massively underperforming. NRW, actually, itself currently produces 800,000 tonnes a year. That is set to fall by 34 per cent over the next 20 years or so to 531,000 tonnes, and it's completely unnecessary. Whatever the structural solution to this question—and we may have different views on that in this Chamber—can we at least admit that there has been an absolutely critical failure here in this area of public policy? It's important economically, particularly in rural Wales, but it also affects our ability to meet the Government's own other target in terms of climate change, and it's the Minister that should take the responsibility here, fundamentally.

Natural Resources Wales exists to make best use of our resources, to protect our environment, to conserve our natural heritage and to enforce environmental protections. Unfortunately, NRW is dysfunctional, as highlighted by the Public Accounts Committee Report into NRW’s 2017-18 accounts. I would like to thank the Public Accounts Committee for producing their report, and for the fact that they will be keeping a close eye on the organisation over the coming year.

In the face of global ecological disaster, environmental protection and nature conservation are some of the most important tasks for government. The decision to merge the functions of the Countryside Council for Wales, the Environment Agency and the Forestry Commission was not wrong, but to turn them into little more than an underfunded and under-resourced Government department was unforgivable.

Climate change threatens our very existence, and, as highlighted by yesterday’s Institute for Public Policy Research report, policy makers and politicians have failed to grasp the gravity of the environmental crisis facing us. It is therefore vital that we have organisations—preferably arm’s length away from Government—that can protect our environment and conserve our biodiversity.

A measure that assesses how intact a country’s biodiversity is suggests that the UK has lost significantly more nature over the long term than the global average. The index suggests that we are among the most nature-depleted countries in the world. According to the RSPB’s state of nature report, between 1970 and 2013, 56 per cent of species declined, with 40 per cent showing strong or moderate decline. Of the nearly 8,000 species assessed using modern red list criteria, 15 per cent are extinct or threatened with extinction from Great Britain. We lose around 2 million tonnes of topsoil due to erosion each year in the UK.

I realise this debate is about the financial accounts of NRW, but it is important to outline the scale of the challenges facing the organisation and the vital role they play in protecting our nation. The fact that NRW have had their accounts qualified for the third year running calls into question their financial management and places doubt on their ability to protect our biodiversity and safeguard against the changing climate.

The work of the committee and the Auditor General for Wales highlights multiple governance issues at NRW. I fully support the Public Accounts Committee’s recommendations. The fact that it has taken so long for the Welsh Government to act in the face of serious failings at NRW means that the independent review of governance of NRW is long overdue and must be made public. The fact that the Public Accounts Committee will keep a watching brief on NRW reforms is most welcome, but, given the importance of NRW’s role, it is vital that we also have a review, not just of the governance of the organisation, but of its entire remit, to ensure that it is fit for purpose. This goes way beyond mishandled timber contracts. The functions of NRW are vital to our nation. We must ensure that the organisation has the right funding, the proper resources and the best staff in order to carry out those functions. Diolch yn fawr.

Thank you. Can I now call the Minister for Environment, Energy and Rural Affairs, Lesley Griffiths? 

Thank you very much, Deputy Presiding Officer, and thank you for the opportunity to respond during this debate today. There were three recommendations made by the Public Accounts Committee following their scrutiny of NRW's annual report and accounts and NRW has responded to the first two recommendations. I wrote to the committee on 11 January setting out the Welsh Government's response, and I agreed to consider the findings of the independent review NRW commissioned, together with the evidence they gave to the committee earlier this week.

I welcome the committee's report and its work in challenging NRW and Welsh Government to ensure our natural resources are maintained and enhanced now and in the future. I want to give the Assembly my assurance that Welsh Government is fully prepared to grasp the issues described in the committee's report. We're determined to see through the necessary changes at NRW and to learn lessons. We recognise and welcome the National Assembly's role in scrutinising this process and making its contribution to driving that change.

Since the auditor general's qualification of NRW's accounts last summer, I've appointed an interim chair and six new board members. These changes to the board mean the full complement of the longest-standing members' strengths combined with the new members will ensure we have the mix of experience and knowledge required to ensure strong leadership of such a large and complex organisation. Indeed, during the PAC session on Monday, the interim chair outlined to the committee the positive impact the new board's leadership was already bringing to NRW, and, in his remarks, I think the Chair, Nick Ramsay, alluded to the change that the new leadership is now having on the organisation.

I've spoken in detail to the chief executive about the independent review of NRW's commercial forestry operations, conducted by Grant Thornton. I'm satisfied she and the interim chair are taking a strong lead on putting things right in the organisation. The organisation accepts the findings and recommendations of the Grant Thornton report and is making progress at pace against them. They will be keeping me appraised of their progress against these at our regular meetings. The report, which has been made publicly available, is a powerful driver for change. The required changes to contract management set out in the report are especially urgent. I know NRW is taking advice from the appropriate agencies to support them with this. They've assured me that, where Grant Thornton has suggested issues require further investigation, their internal audit team are doing so. 

At the Public Accounts Committee evidence session this week, the chief executive stated that their internal audit team are reviewing the remaining contracts not covered by the Grant Thornton review. The results of these will be available to their audit and risk assurance committee, which includes representatives from Wales Audit Office and the Welsh Government. 

Yesterday, I met with representatives of the Confederation of Forest Industries. They have told me they are willing to work with NRW and Welsh Government and are confident there are clear solutions to the concerns they have expressed in the past. I'm assured from my discussions with Confor and NRW that we are now in a stronger position to see the forestry sector deliver even more value to the Welsh economy and the industry can make an even greater contribution to protecting and enhancing our natural environment. 

I would like to remind Members—and this is especially Mohammad Asghar—that NRW is supported by many hardworking, committed staff across the whole country, who deserve our respect. I was very disappointed to hear you say that they've failed the people of Wales. At times, the public discourse surrounding the challenges in one area of NRW's work has neglected the fact that the organisation delivers some of our most fundamental responsibilities to the people of Wales. 

Today, and every day of the year, NRW staff are protecting people's homes from the devastating impacts of floods, they're tackling the scourge of illegal waste, they are defending our most vulnerable native species from extinction. They are doing outstanding work—as referred to by Llyr Huws Gruffydd and Jenny Rathbone—often in extremely challenging circumstances, and I urge Members to take the opportunity to show their appreciation and I want to put on record my sincere thanks to them.

Following on the comments made by my colleague Llyr Gruffydd, I think we would all recognise the picture that you're painting of the very excellent work that staff do in very, very challenging times. But how confident are you that they are adequately resourced to do that? Because there is the question that Llyr raised of, essentially, staff being asked to do more for less. I know that's the situation across the whole of the public sector in Wales, but this is so important.

I agree. Obviously, it is the picture across the whole public sector, and it is a question that I've asked around capacity; a few Members referred to capacity and capability. Obviously, they have had cuts to their budget. They don't just get funding from us, though—I think that should be recognised—and we have worked with them to ensure that they are able to look at other opportunities for getting funding brought forward. I've also been able to give them not huge amounts but significant extra money on top of their budget. That is a discussion I had with the chief executive just yesterday. I met with her again, and she assures me that is the case. But I think it's something that we have to keep a very close eye on. 

I know that PAC Members—I watched the session, and I thought it was very good that they indicated that they want to go out and visit NRW on the ground. I know many Members have already done that. But I do think it is an opportunity to see the great work that they are doing. 

There is more we need to do to ensure NRW is in a position to fulfil its vital role to the high standards that Welsh Government and the people of Wales expect. I don't think an independent inquiry would be of benefit at the present time. They've just gone, obviously, through an independent review. We need to look at what's come out of that in the first instance. I've got confidence in both the interim chair and the chief executive. I've no doubt they will stand by their commitments that they made to the Public Accounts Committee earlier this week and they will see through every change necessary. 

As I stated in my response to the committee's report, I will now take the time to review the evidence that they gave to the committee on Monday, together with the Grant Thornton report, and I will write to the committee with my considerations by the end of March.

Thank you. Can I now call on Nick Ramsay to reply to the debate?

Diolch, Dirprwy Lywydd. Can I thank Members who have contributed to today's debate? I think, as has been made clear, there were two fundamental issues at the heart of this debate today: what's gone wrong with governance at NRW and how long it will take to put it right. 

The fact that NRW has had its accounts qualified for the third year running, and will possibly have them qualified again in future, shows that there have been failings in the organsiation, which I think everyone appreciates needs to be addressed. This is not saying that the hardworking staff at NRW aren't to be commended. Of course, they are. We all recognise as members of the committee, and this came up time and again, just how hard they do work and how necessary their vital work is right across Wales. But it's important, as Helen Mary Jones alluded to, that they have that necessary resource, that they have that support, so that is the intention behind this debate and our review.

We welcome the new chief executive and chair. I share the Minister's comments with regard to those. The committee was very impressed with their appearance before us at committee. They clearly have inherited what they have inherited, and it's for them to try and turn the organisation around. What is going to be vitally important is it's not just operational issues that are turned around, but that there is a cultural change—a deep-seated cultural, deep-rooted change at Natural Resources Wales. That hasn't happened in the past. That will be necessary to address this in future.

If we're going to have an organisation created from mergers, then there has to be a proper merger of cultures, and I heard what Jenny Rathbone was saying about those strong arguments for having a merger of organisations into an NRW-type body. If that's going to happen then we need to make sure that there is a proper interlinking between all arms of that new organisation, because I think the chief executive and the chair told us that they didn't feel that that had happened in the past. They appear to have the determination necessary to rectify the issues. They commissioned the Grant Thornton review, which does turn over all stones and expose many issues, some of which we weren't aware of before, such as the standing sales contracts. Interestingly, the disagreement between Adam Price and Jenny Rathbone—or the discussion, I should say—about whether or not there should be forestry expertise on that board, well, whether or not it's on the board, or what form it might take, we certainly agree that there needs to be more of an awareness of current forestry issues within NRW. That's been lacking hitherto, and hopefully the new chair, the new team, will put that right.

These are problems that they've had for a long length of time. They will not be resolved overnight, but they will have to be addressed over the medium term, as I believe the Minister has recognised, because this is too large an organisation and it's too important an organisation to be allowed to continue to have these problems over the longer term. The purpose of this debate is to highlight these issues, to give the chief exec and the chair the support they need to make sure that, in the future, these problems can be rectified and NRW can be fit for purpose.

Thank you. The proposal is to note the committee's report. Does any Member object? Therefore, the motion is agreed in accordance with Standing Order 12.36.

Motion agreed in accordance with Standing Order 12.36.