The second topical question this afternoon is to be answered by the Deputy Minister for Economy and Transport. Suzy Davies. 

2. Will the Minister provide an update on the Swansea bay city deal following the publication of the Swansea bay city deal independent review? 290

Thank you. The report provides a solid foundation upon which the Welsh and UK Governments, and the regional partners, can move forward quickly with the delivery of the city deal. We will work closely with the leaders of each local authority to consider how the recommendations can be implemented. 

Thank you very much for that answer. I'm sure you'll remember, it's almost two years now since the original announcement was made, and you'll recall that other Members, including Mike Hedges and me, have stood up a number of times in this Chamber to say how difficult it has been and we've found it as Assembly Members—the relevant Assembly Members, with an interest in this—to get any meaningful dialogue with members of what was then the shadow board. That's not exactly in keeping with the core principles of the delivery of good governance in local government framework. So, I very much welcome this review, which has flushed out some of the worries that we, the interested Assembly Members, were hearing about for some time but had no realistic path of clarifying or, indeed, challenging. We all want this deal to work, so this has been a very helpful document today. 

I welcome your earlier confirmation that you believe that part 2 of Yr Egin and the Swansea digital waterfront project are almost over the line, and hoping that Governments will now work together to make sure that that happens. I wonder if you can give us any sense of a timeline that will be a step in reversing any loss of confidence that has happened in portfolio projects recently—not necessarily related to those two projects. 

My main questions, however, are on governance, and, again, the delay in getting a coherent governance model together has been the subject of some questions in this Chamber. It looks like there is still some fault with that model, with the four council leaders sitting on both the strategy board as well as the joint committee without the necessary Chinese walls and checks and balances to protect them, actually, against accusations of conflict of interest. It looks as if the lead council, Carmarthenshire, doesn't have the capacity to handle the work, so I wonder if you could tell us what you'll be expecting from the new director, who'll be appointed to assume this leadership role. Will this be an independent director? What sort of background and experience will you be expecting him or her to have? And can you confirm that neither Government will take part in the appointment process for that—it will be for the board to do that? And also, bearing in mind what you mentioned in reply to questions from Russell George earlier, about not all models are the same, can you confirm why it is that you've chosen a sort of Cardiff model, with a director, in order to try and solve the problem that's been identified in the review? I'm not saying it's a bad decision, but I'm quite interested to have your answer to that.

Recommendation 3 says that a best practice integrated assurance and approval plan should be put in place pretty quickly. So, I'd like to know what the risk and assurance processes are that are currently in place. Because, coincidentally, an internal review seems to have been done—presumably at the instruction of the board. Because we are talking about four council leaders here; the concept of risk and assurance shouldn't be new to them. So, what reasons were given to those who conducted the independent review for the failure to have—well, what looks like a failure to have—a sensible risk and assurance process in place at the moment? And, in particular, what process was used to appoint the strategy board members and how was the risk of that assessed? Why is there a lack of clarity about how much the councils will need to borrow? What were the problems identified in preparing a financial plan? One of the reasons the Governments haven't signed off the implementation plan is because there is no financial plan. And the role of the private sector—they're the main funders in this, after all—I think that remains underplayed and of minimal influence, except, ostensibly, in the one place where we've had a question about conflict of interest. If you can use those example questions to explain your views on the current system for risk and assurance, I'd be most grateful. Thank you.

Thank you for those questions. A number of them, I think, are best directed towards the city region. This, after all, is a local project. This is not a project the Welsh Government has sponsored. This is a project that's come from the region, and the Welsh Government and the UK Government, jointly, are funding this, and they've put in place a series of assurances that the money is going to be well spent and the strategy is going to be adhered to. So, many of the detailed questions you ask about appointing the strategy board and the financial plan and so on are ones that I'm not in a position to answer; those are the questions that the city deal themselves are to answer. Because, if we want genuinely place-based decision making, then the responsibility and the accountability must remain locally. Although, until now, it's been very different, I think our role does need to change, as I indicated earlier, into more of a partnership and less of a policeman role. But the city deal as currently constituted, as designed by the UK Government, does not give us that role explicitly.

In terms of the timeline, it's our very clear hope that we can get these projects over the line. But, as I've said, this has to come from the city region themselves. Alun Cairns and I have both expressed our hope to the council leaders—and we met them last week—that we would like a pipeline of projects, with momentum. So, if we can get the first two over the line no later than the end of April, we'd like to get more before the summer and before the end of the year. However, it is worth noting that the independent review that the Welsh Government and the UK Government jointly commissioned put all the projects at red risk. Now, this is a very significant finding, placed right at the end of the annex of the report, but it certainly took my eye. So, I don't think we can responsibly put into stone any firm deadlines until we can be assured that the lessons can be learned by the joint board and that the cases are going to be robust enough to meet the tests that we have in place.

You asked about the role of the director and who will appoint that, and the role of the Welsh Government. And you're quite right—this is a local appointment; this is not a role for the Welsh Government to be involved in. I'd expect and hope that they will be advertising that role, and I think the person they get into that role is crucially important. The independent review makes it clear that this should be somebody of equal status and standing to a chief executive in order to provide a challenge and scrutiny. And, to be fair, of the three reports that have now been published—the Wales Audit Office report, the Welsh Government-UK Government report, and then the independent report, jointly commissioned by the four local authorities and carried out by their own internal auditors—that I think is the most rigorous of the reports and the most unsparing in its criticism. And I think some credit needs to go to the city region that they themselves have commissioned that—it's the public sector who have carried out that, not some private sector consultants—and they've published it. So, they've been completely open in the criticisms they've made of themselves, and it's not a comfortable read, but I think, to give them due credit, they have done that and it's now for them to fully absorb the lessons from that report and to implement them. So, I hope I've answered the questions that the Member has raised.

I won't go over ground already covered, but, as I mentioned yesterday during the business statement, from my perspective it is particularly worrying that the first recommendation within this independent review looks to encourage, and I quote, 'direct and regular face-to-face' talks between the region and both the UK and Welsh Governments. These are basics, aren't they? Are you disappointed that it took a review team to tell you that? As it stands, the city deal structure and relationship between the region and UK and Welsh Governments is not designed to deliver. It is far too bureaucratic, as we've heard, and it does seem adversarial at times. Do you agree with that assessment as well?

As you've said, what we need to see now is far more of a partnership approach of both Governments working with the city deal team to work through any of the issues, because we've heard—I've certainly heard—from local authority leaders in the region about their frustrations from their side. The city deal team have consistently called for the release of UK and Welsh Government money for the two most advanced projects: the Swansea waterfront development and Yr Egin development in Carmarthen. The review echoes that sentiment, recommending that it should happen immediately. 

We need to see Government funding flow, therefore, as soon as possible. It is simply a farcical situation whereby Yr Egin development in Carmarthen has already been built, has been officially opened and is nearly fully occupied, yet the UK and Welsh Governments have still not released the funding. The funding that was meant to be front-loading now is in danger of not even back-loading. The city deal team are understandably saying, 'What more proof do you need? Just release the cash'. But, instead, the project is still tied up in the discussions between the region and the Governments. Will you now commit to releasing the funds for those two projects as a matter of urgency?

A further question: recommendation 5 in this independent review talks of the need, as we've heard, to appoint a portfolio director before the end of April 2019 to provide independent advice to the board. Is this realistic, considering that we are now coming towards March—the end of March 2019, the last time I looked?

And, finally, the controversy around the suspensions at Swansea University is something that hangs over the city deal, so can I ask: what discussions are you having with the university on this? Clearly, the sooner that this issue is resolved, the better it will be for confidence in the city deal.

Thank you for those questions. I'll try to answer them in turn. I think, in many ways, the Member's comments compound the problem we've been seeing, in that there's been a very different perception of the way the city deal is being run depending on which part of the M4 you're coming from. So, the Member's repeating many of the things I've heard said from the city deal end, which is a different perspective from the one in the reports and the one that the Governments have. So, for example, he repeats the call that money be released in an early way to allow these projects to proceed, but we can't release money until there has been a proper business case agreed and submitted. So, I think that is irresponsible—to call for public money to be endorsed in this way without the proper checks and balances put in place.

He also says: why is it that the different parties are not talking to each other? Well, I'm not sure if he's had a chance to properly read both the reports, but I'd suggest that it's worth the investment of time, because it does address many of the points that he asks. So, for example, on page 13 of the independent report by the local authorities, it says, and I quote, that 'business cases are presented to UK and Welsh Governments prematurely, resulting in UK and Welsh Governments undertaking due diligence checks they'd expect the regional office to have undertaken, which is further frustrating the process.'

And I think that this is at the heart of the matter, that much of this challenge and rigour, which the report, led by Pembrokeshire, says was not in place, should be done at a local level and has not been done at the local level. The cases are then sent to the different Governments, who are then having to knock them back because they're not ready, which is creating further tension and misunderstanding and fuelling the degree of suspicion there has been. If they had the skill set and the portfolio approach embedded,  they'd be able to carry out those checks on each other, rather than passing them to us to be checked and prematurely submitting those business cases, and I think that really has been at the heart of the problem. So, it's incumbent on us now to reset the way this deal has been operated to give it the best chance of success and to help the local authorities to be able to carry out those checks themselves. 

He mentions again, as he did yesterday, the Egin being fully occupied and officially opened and the funding not released. Again, my understanding is the funding in the city deal is for phase 2 of the Egin. It's phase 1 of the Egin that is open and has been occupied, not phase 2. So, I think there's a misunderstanding there about what projects we're talking about.

He asks about a portfolio director being in place by the end of April 2019. Is that realistic? I don't think it is realistic. We could, of course, press ahead with appointing someone, but I think it's really important that the right person gets this job. So, I think we should be more charitable in the way we look at that suggested deadline.

He also asks have we been in discussions with the university. Of course, the university are not partners in the city deal; they're partners of some of the projects within the city deal. And, now that we're moving to a portfolio approach, it's for the city deal themselves to decide how they flex and change the current range of projects they have within their portfolio and whether or not there's still the same appetite to go ahead with them and whether or not they can pass the tests that remain in place. 

And, finally, Mike Hedges.

Thank you, Deputy Presiding Officer. I won't repeat anything that Dai Lloyd or Suzy Davies have said, but can I say that we've oft spoken as one on this for the whole period of time? There are not many other issues that you can say that about. But we really have stood together, because we realise how really important this is to the economy of the Swansea bay city region. Will the Welsh Government continue to provide all the support necessary to the Swansea bay city region? And does the Minister accept that to increase the GVA in Wales we need to develop more high-paid highly skilled employment, which is what the Swansea bay city deal is about? It's about getting jobs that pay at a higher level to get our GVA up. 

Yes, indeed. In terms of providing all support necessary, we really want this to succeed. The UK Government want this to succeed. Members here want it to succeed. The local authorities want it to succeed. In some ways, it's not been necessarily set up to succeed in the structures that we've put in place, in the insistence of the five-case business model, which the local authorities have struggled to respond to—that level of scrutiny and rigour. I think the important thing now—. And I stress, in all the reports, it's stressed that there is criticism of all sides here.

We had a very good meeting with the local authority leaders on Friday, in which I emphasised—and there was unanimity on—that there's no profit in pointing fingers here. Clearly, if we want this to succeed we need to press on, learn the lessons, reset. That is certainly the spirit in which the Welsh Government—and, in all the conversations I've had with the Secretary of State for Wales, the UK Government too—are entering into this endeavour. But, ultimately, this is a local-led project. So, in terms of all support necessary, we will give it every support we can, but also, in the spirit of partnership, that leadership has got to come from the local area, and not from us. But we must see it within the spirit of developing regional economic plans and work together on them as equals and, as I say, move away from the policeman to the partner model. 

Thank you very much, Deputy Minister.