3. Statement by the Minister for Economy: The Foundational Economy

Part of the debate – in the Senedd at 3:22 pm on 9 November 2021.

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Photo of Vaughan Gething Vaughan Gething Labour 3:22, 9 November 2021

Thank you for the comments and questions. I hope that we heard a more positive Luke Fletcher than last week, when he talked about how he self-described as rather negative and seeing the downside. Actually, I think there's a lot to be positive about in the foundational economy, and as I say, we started the challenge fund in particular following a budget agreement with his party in the previous Senedd, and that's allowed us then to start the challenge fund.

Again, much of what he said at the start of his contribution about recognising the value of anchor institutions and how they can have a much bigger impact on the local economy was definitely at the heart of our thinking. It's why we were able to reach agreements on doing that previously. That's part of what I'm looking to take forward. I'm not going to try to unpick the lessons we've learned, but how can we do more and be more—not just enthusiastic, but actually more ambitious about what we can do in practice. That's why I'm really pleased that, within six months, we've done what I've said with the £11 million of extra NHS spending in Wales that, previously, was going outside Wales. That's significant, and I expect us to be able to identify more NHS spend coming back into Wales in the future, progressively. As I've said to Paul Davies, I'm certainly looking to monitor that together with the health Minister, because I want to understand how we've done that successfully in practice, and then to reset our objectives to do more in the future, rather than simply saying, 'We've done enough, let's forget about this and move on.' This is part of the future, not simply something for one statement and then move on.

On your point about how that value needs to be there, I think your points about procurement and supply chain are really important. We know we've made a difference on procurement over the last term and before. We know that there are more Welsh businesses and more Welsh jobs because of the way we've changed our approach in procurement. But the challenge is, again, how we do more, not to be defensive about what we've done or haven't done so far, but how do we say we can do even better. The backing local firms fund is part of that, but it's all the other things that I've outlined earlier today. The work that CLES have done with us, the lesson learning they're already doing with public services boards—they're doing lesson learning to get to the end of this financial year for us to understand more about what we already have done, to then be able to move on and make greater progress. It's already the case that we understand that, within the supply chain, there are some businesses that have a postcode for payment, but all of the activity certainly isn't in Wales. That's, again, part of our challenge—how do we understand as we go through the management of the supply chain itself that we're not just getting primary contractors who are based here, but as you go to the next two steps down, are those businesses genuinely located in Wales, and the jobs are here? And crucially, how do we get Welsh businesses further up that chain within the supply chain so that they're the primary contractor and not the third or the fourth iteration of it?

I expect you will see more of that as we go through what the backing local firms fund will help us to do—and more of the advice that Business Wales will continue to provide within the sector as well. So, I think there is room for optimism because we have already done some of this. A good example of the backing local firms fund is the optimised retrofit programme, similar to your point about the green economy. We've announced £150 million to spend with an objective that should make a big difference for the homes that people live in. That's part of our objective, and the bills and the costs for people that live in those homes. But from this perspective, it's the jobs that will go in that. Where is that £150 million going to be spent? How do we positively identify Welsh firms, Welsh businesses, Welsh jobs that will be taking advantage of that money? And again, that's very clear, and this is a good example of a much more joined-up approach between my colleagues in climate change, Julie James and Lee Waters, and this department to make sure we take advantage of those opportunities.  

I'm not persuaded that we necessarily need a just transition commission, but I think what we have set out, with your points about fair work and also the objectives we have with the social partnership and procurement Bill—fair work will be at the heart of that. There will be lots more to talk about in the scrutiny of that piece of legislation, as well as our approach in a range of other areas. But I do recognise that we have more that I think we can do in the way we choose to spend money, and how we persuade businesses to come along with us—that's by exhortation but it's also about the requirements we have of how we expect Welsh public money to be spent. And that will include our ambitions on reducing the gender pay gap, because I recognise that as the economy is structured, there are many jobs that people assume are jobs for men or for women and yet, actually, we know that that divide need not be the case. We are looking to positively encourage people to consider different careers, as well as, with our foundational economy approach, looking to raise the pay of areas where we know that there are often low-paid women. So, that's why we're talking about social care as a really important sector, but it is also why we'll continue to take proactive and positive steps to encourage women into careers, into skills and training to get those jobs, and for employers to change the workplace. 

I'll finish on this point, Deputy Llywydd. I can honestly say that I have worked in workplaces with different groups of people in different teams, and the best teams that I have worked in are teams that are more balanced between men and women—the most enjoyable teams, the best culture within the teams, the best way to get the most out of each other. So, it isn't just about wanting to do the right thing from an ideological perspective; there's good evidence, not just in my experience but more generally, that businesses tend to do better if they can address this issue about who works for them and, crucially, the fairness of how people get paid.