Item 4 is topical questions, and the first this afternoon is to be answered by the Deputy Minister for Economy and Transport. Llyr Gruffydd.

Thank you, Deputy Presiding Officer. Of course, the context of this question has changed slightly since it was tabled, but it remains valid.

1. In light of the uncertainty regarding the Tomlinsons Dairy milk processing plant, and the fact that 70 dairy farms and hundreds of jobs are dependent upon it, what steps is the Welsh Government taking to support the company and the workforce? 351

Diolch yn fawr iawn. Clearly, it's very disappointing news that the company has gone into administration, and this is distressing for the workforce and the wider supply chain, and our thoughts are with those affected. We understand some 331 people have been affected: 247 of them were laid off yesterday and the remainder retained for a short time. As I say, our thoughts are with them, as is our support. The Welsh Government is working with Wrexham County Borough Council to help all staff affected. We've set up an immediate taskforce to respond to the redundancy situation at the company, and the support and signposting event for staff will take place on Monday at Plas Pentwyn resource centre in Wrexham.

Thank you for that response. Of course, there are a number of questions emerging from what has happened. First of all, people are scratching their heads and asking themselves, 'What went wrong?' Because, just in 2017, the company was given £22 million in investment—£5 million of that from the Welsh Government, a further £2 million from Finance Wales—and then, months later, at the end of the financial year up to March 2018, the company was registering losses of £5 million and then £2 million again in the last financial year. So, we want an assurance from Government, and we would want to see the Government showing evidence that you have done the work of researching into these plans before making that investment.

The Government, as I've seen in press reports, have said that you were aware that there were difficulties within the company and that you had been working with them for 18 months to try and work through those issues. Can you explain, perhaps, what kind of resources you provided to that end and why you didn't succeed in turning the situation around?

You mentioned the future of the workforce, and we hope very much, as you suggest, that the Government will turn every stone to ensure that there are employment opportunities for those who will lose their jobs. But the greatest question is on the future of the site. After such a substantial investment, then clearly it is a site that has brand new kit. I would assume that there would be potential to attract alternative investors to try and process milk on that site. I would want to hear what steps you are taking to attract those investors.

And the timing of going into the hands of administrators also means—it happened, in fact, just at the time when the farmers and milk producers were supposed to be provided with their cheques for milk provision in September. That means that the company has had six weeks of milk free of charge, and that will cause great losses to those farmers. So, what work is the Government doing to try and ensure that they will be paid, or receive some sort of payment, or at least be compensated in some way for that milk?

And what does this development tell us about the state of the milk processing sector in Wales? Last year, we lost Arla in Llandyrnog, now Tomlinsons in the same part of Wales, to all intents and purposes, has gone. The Government, and all of us, put great emphasis on the importance of developing a Welsh brand. Well, as a result of this, the milk won't be branded as Welsh milk but as British milk. So, it does, of course, undermine the efforts of Government to build the food and drink sector in Wales, and I want to know what you are doing to build a more viable dairy sector here in Wales.

Thank you for those questions. I share the Member's concern and frustration, but one could be forgiven for thinking, from listening to the tone of his contribution, that this was somehow the fault of the Welsh Government. This is a commercial company. The Welsh Government has bent over backwards to help this company, as have the company's own commercial lenders. The majority of the funding given came not from the Welsh Government or the development bank, but from the banks—the banks who, we can only assume, did their own due diligence and made their own commercial judgments about whether or not investing multiple millions of pounds in this business was a sound judgment to make. They judged it was. Both the commercial lenders and the Welsh Government and the development bank reached the point towards the end of last week where clearly we thought that providing more and more credit to a company that is racking up debts and that is yet to produce any recent accounts was no longer a prudent thing to do. 

Now, you asked for evidence of our support, and I can assure you that, as the local Assembly Member, Ken Skates, and Lesley Griffiths as the Minister, have ensured that Welsh Government have been paying close attention to the company. We have been in constant dialogue with them. You mentioned some of the practical support we've given them—a £5 million grant in 2018 that they fully discharged. We helped them to divest themselves of a bottling plant, which they were able to sell for around £6 million. We helped to release some of the grant obligations in that site to help give them the best possible chance of survival. The development bank themselves provided loans, not all of which have been repaid. So I don't think you can reasonably say that the Welsh Government hasn't done everything within its power to help what is a commercial company.

Now, you're right to be concerned about the impact on the industry at what is already a difficult time for the industry. Our view remains that this is a sound business if properly run, and we are hopeful that the administrators will be able to find a buyer who will be able to continue to run this facility on the site and to re-employ as many local people as possible. We have, I think, reason to be optimistic about that: GRH Food near Porthmadog was taken into administration some six months ago, and is now back functioning. So I think, in terms of the capacity of the food industry and our strategy, we can have confidence that that is in the right direction, but we can't micromanage every business nor be responsible for every management decision they make. We can do our best through our offices and through our partners to support and help, and we are confident we've done that.

The Llywydd took the Chair.

Thank you for your statement so far, Minister. I'm speaking, obviously, as the rural affairs spokesperson, and obviously the support to the workers who've lost their jobs is of critical importance. To hear the drop-in event that is arranged for Monday—hopefully it will be a first stepping stone to getting many of those individuals back into employment.

But if I could just raise two issues with you, the NFU upstairs had an event at lunch time that highlighted the impact on the dairy farm sector. About 100-plus producers were supplying the factory, as I understand it. Many now will have to take their line in the queue of creditors to the company that's in administration, and it's looking as if six weeks' worth of supply of milk most probably won't be paid for. What support can the Welsh Government give to try to make sure cashflow isn't interrupted through the autumn via the single farm payment scheme? There was an example that was highlighted to me that, under the loan scheme that the Government have made available under single farm payment, if you've had that loan within the last three years, you wouldn't be eligible for this year. I don't know whether that's correct or not, but if you could confirm that I'd be most grateful. Because apparently if you've had the loan in the last three years you are unable to, but given these force majeure circumstances for these dairy farmers, it is vital that cashflow is maintained.

Secondly, it was pleasing to hear that you're reasonably optimistic about the future of the plant, because we do not have much processing capacity regrettably for liquid milk here in Wales. Are you able to update how optimistic you believe you are in securing the long-term future of this plant so it can be put back to good use, and turn Welsh milk back into a drinkable product that can arrive on consumers' shelves and into fridges as quick as possible? Because if we do lose this plant, I believe I'm correct in saying we will not have a major liquid milk processing facility here in Wales.

Thank you for the questions. We're as confident as we can be, but, obviously, that depends on all other things being equal, and all of the things are not equal. We know that the industry is under considerable strain. The company has faced some issues unique to the company, but also faced the issues that others are facing. The volatility of the exchange rate since the UK Government failed to deliver the deal it negotiated with the European Union, and the uncertainty that has caused, has been a significant factor in the company's position, especially in the availability of cash flow. That is a problem across the industry. [Interruption.] I'm afraid I can't hear the honourable gentleman heckling me, but I'm trying to answer the questions he poses; it may not be the answer he was looking for, but it is the truth. The impact of the uncertainty of the position with Brexit is having a palpable and real effect on the industry, and has had a specific effect in this case. It was not the only factor, but it is a significant factor. [Interruption.] The gentleman is saying it is a scandal. I would say to him that it is a scandal that he's sticking his fingers in his ears and not seeing what is happening around us and the impact of the reckless policies he's pursuing, and has been pursuing with abandon for the last three years. Well, this is the consequence of it. This is what it looks like—jobs, livelihoods, the future of industry in our country, in north Wales—the consequence of the uncertainty and the fluctuation of the exchange rate, and the impact on cash flow of businesses. Now, we can do all that we can, but that's all we can do. We cannot stop these forces that are being unleashed by him and his reckless colleagues.

In terms of the specific comments that he makes—[Interruption.] He says 'utter rubbish'. Well, I'm afraid, he quoted a loan scheme that he says has been going for three years that's only been going for one year. So, if he wants to exchange comments of 'utter rubbish', we can both play that game. I'd be happy to write to him on some of the detailed points he made.FootnoteLink I can give him a sincere commitment: we will do all we can to secure the future of this industry, and this business, but there are limits to what we can do.

Information further to Plenary

Five million, I believe, of the £22 million investment in Tomlinsons in 2017 came from the Welsh Government, and, of course, that raises questions about the degree of contractual protection for the public pound. But, as we heard, this is the second milk processing plant in Wales to close, meaning that more than half of milk production is now having to be transported elsewhere. The dairy leadership board last met four years ago, but its conclusions still stand, including the need to attract top-end processors into Wales. Wales is a top milk producer across the European continent and beyond. Milk production is moving north and west because grass grows better here. How, therefore, are you, or have you, since that recommendation from the dairy leadership board four years ago, taken the actions necessary to develop and protect the processing sector in Wales, not only in terms of milk, but also in maximising the commercial opportunity to develop the components of Welsh milk, which offer exciting chances to deliver rural economic growth in the future, and marketing that to new potential owners, as you seek someone who will take it on as a growing concern?

I do find it curious that the thrust of the criticisms is that we haven't done enough to protect the company, and then he questions the support that we have given. The two pieces of support we've directly given—the £5 million grant was for a specific scheme to help them develop and become more resilient, and the food business investment grant, which was carried out in line with due diligence and all the grant conditions were discharged—the additional support was from the Development Bank for Wales, which was to help them with cash flow and other matters, and, clearly, along with the commercial investors, we have been not able to secure the full repayment of that. But if we can be accused of anything, it's certainly not of not offering enough support to the company.

But there are things that we can't control. We often hear the gentleman talking about the merits of market. Well, the markets are at play here, and commercial, individual companies make decisions, management make decisions, and there are consequences to those decisions. We remain confident that there is a good business to be run here, and we hope the administrators are successful in providing alternative providers. We'll work with them to continue supporting them. On the broader points that the gentleman makes about support for the industry, I'll ask my colleague Lesley Griffiths to write to him to provide a detailed response.

Thank you, Deputy Minister. The next question is to be answered by the Minister for International Relations and the Welsh Language, and the question is to be asked by Alun Davies.