Questions now from the party spokespeople. The Conservative spokesperson, Paul Davies.

Diolch, Llywydd. Minister, it goes without saying that 2022 has been a particularly difficult year for Welsh businesses. We know that businesses are facing continued challenges in terms of cost pressures, high interest rates and global economic weaknesses. Businesses have made it clear that issues such as business rates, skills development and infrastructure investment continue to be a major concern. And whilst I appreciate the Welsh Government has provided additional support for business rates for some businesses in its budget, there is still more that needs to be done to ensure that businesses are in the best shape possible to help lift the economy out of recession through economic growth. Minister, the Federation of Small Businesses recently told the Economy, Trade and Rural Affairs Committee that one third of businesses said access to skills and helping skills growth was their greatest barrier to growth. Therefore, what immediate action are you taking to address this issue and ensure businesses can recruit and retain staff in the very near future?

Well, there is both the challenge that we face and indeed the action that we're taking. And the challenge that we face, the Member will know, because we've talked about it and it's a reality, is that the challenges in replacement European Union funds are a significant problem in the skills landscape. We funded a whole range of our skills interventions through former EU funds. The fact that the replacement funds deliver a significant cut in cash terms to Wales, of over £1 billion over three years, is a real problem for us. And, actually, the landscape in terms of having UK Government interventions that cut us out make it more difficult as well. I continue to try to have constructive conversations with the UK Government about how we could resolve some of those challenges. What we are doing, though, within the levers we do have, is you'll have seen there's the broad choice I've made within the draft budget in my department around what we're going to try to do to preserve the impact of some of our spending around apprenticeships and skills. That includes the training at the outset of someone's career, at various points in their career, and, indeed, personal learning accounts. I've been very pleased to work with the Minister for Education in particular, to look at maintaining the progress we've made on personal learning accounts, and, indeed, the skills investment we're looking to make not just across sectors, but, broadly going back to question 2, the points around how we have the right sort of green skills available in the economy. So, there's a range of things we are already doing in the skills space, but it will be a difficult challenge in the year ahead. But you'll continue to see direct Welsh Government support on exactly this issue. 

Well, Minister, the Confederation of British Industry have said that their recent employment trends survey found fewer than half of businesses expect to grow their workforce in the next 12 months, and they do rank access to labour and skills, followed by the cost of living, as their top three priorities. So, it's vital that the Welsh Government delivers pro-growth economic policies and, where it needs to, reverses policy making where there is evidence that it can damage businesses. For example, businesses across Wales have said that the proposed tourism tax will have an enormous impact on their businesses. They've also made it clear that changes to the criteria for a holiday let property to qualify for business rates will have a detrimental impact on them too. Minister, when businesses are telling you that your Government policy will have a detrimental impact on the economy, it's vital that the Welsh Government listens. Minister, why haven't you listened and dropped proposals for a tourism tax, and the 182-day holiday let rule, in light of the fierce opposition the policies have had from Welsh businesses, and what message do you have as economy Minister for those businesses in Wales that will be affected by the Welsh Government's plans?

Well, when it comes to anti-growth measures, the most significant anti-growth intervention, of course, took place in the six weeks of Liz Truss's premiership. That was a significant intervention that made all of the challenges that exist within the economy much, much worse. And it was amusing to hear the anti-growth coalition being talked about and then seeing the hole that was blown by Kwasi Kwarteng and Liz Truss. So, there's no need for any lectures from any Tory in this Chamber, or anywhere else, on this issue.

When it comes to what we are doing, we're delivering on the manifesto we were elected to deliver. That includes the measures we're taking on the visitor levy. It includes a conversation I had this morning with the visitor economy forum, where they're looking to work with us on the design of a levy that actually tries to do what it's supposed to do, and, in areas of the country where there is a challenge that local authorities want to reduce the levy, to then understand how that might be delivered in a way that works with the industry that we want to see carry on growing. And, actually, the biggest challenge facing that sector and others isn't the visitor levy, it isn't any policy position the Welsh Government takes; it's the challenge of not seeing enough growth in the UK-wide economy, the challenge of the cost-of-living crisis, the challenge in our ability to trade with other parts of the world, and what that's done to inflationary pressures in the economy that are above and beyond the Russian invasion of Ukraine. 

When it comes to skills and labour, we are recognising those issues and challenges, and that's why our interventions could and should make a difference. We have challenges in labour supply that we are looking to address earlier in the life cycle of people, as well as what we're doing on skills investment. We need a much more grown-up conversation about migration and its value to the future of the economy. We need much more recognition of the cost-of-living challenges, which, if left unaddressed, will mean businesses will not last into the longer term future. And that's why the energy relief scheme for businesses is so important. And the difficulty is—and this came up very much today, and in other business meetings that I've had—that if the UK Government don't pass the legislation, discounts won't get passed on to businesses. So, you may find businesses that can't wait until the review is up, and they understand what will happen in the longer term future, who may not be here to deal with that future.

So, when it comes to the immediate challenges that are facing businesses, those are the direct conversations I'm having with them, and, indeed, that I look to have with the UK Government, where the real focus for action should be in the here and now. 

Minister, the reality is that, with one hand, you're trying to offer an olive branch to some businesses via additional rate relief, and, with the other hand, you're implementing policies that could be fatal for hundreds of Welsh businesses. I guess the Deputy Minister for Climate Change was right when he said that the Welsh Government didn't know what it was doing when it comes to the economy. So, let me try another one. The Institute of Chartered Accountants in England and Wales's latest business confidence index for Wales shows that business confidence has fallen for the fifth consecutive quarter, and they are right to say that it's vital that 2023 is the year to develop environmentally sustainable long-term economic growth. There are significant opportunities in the move to decarbonise the economy, and I know that work is currently being done by the Development Bank of Wales to fast track a new invest-to-save scheme to support businesses to decarbonise, but, unfortunately, businesses continue to delay in investing in green solutions due to to rising costs. Therefore, Minister, can you provide an update on the development bank's decarbonisation programme? And I listened very carefully to your earlier answer to Sioned Williams, and I understand that you will be making further announcements next year, but can you tell us when you'll be making those further announcements? 

Let's just deal with some of the challenges that come here. And I do say this as gently but as honestly as I can, to the Member: when it comes to talk of anti-growth policies, when it comes to talk of whether you know what you're doing, actually, you just need to look at what happened in the disastrous six weeks and what it did to tank the economy across the UK. Your party, that many of your own members were celebrating not just the election of Liz Truss, but celebrating the plan that she introduced, now need to look long and hard at themselves, at what actually happened. And it's not just that. If you look at what the CBI are saying, they say the UK Government does not have a plan for growth. And, actually, without a plan for growth across the UK, it will make our challenge much, much harder.

When you look at what we are doing, I will be announcing, early in the new year, with the Development Bank of Wales, a scheme to support businesses to grow, a scheme to support businesses to decarbonise and improve their bottom line. I'm looking forward very much to the announcement early in the new year, and I then look forward to a constructive response from Members in this Chamber and beyond. I'm very clear this Government thinks that, in a very difficult year ahead, there will be opportunities to help preserve Welsh businesses and Welsh jobs, but also, in a range of sectors, to see real growth, where we do have opportunities. I'm determined to do that, whilst calling out the incompetence of the UK Government at every possible turn. 

Plaid Cymru spokesperson, Luke Fletcher. 

Diolch, Llywydd. Minister, the announcement in the draft budget relating to business rates relief has been broadly welcomed by businesses across Wales, especially so in the hospitality, retail and leisure sector. The Federation of Small Businesses said, for example, that the measures will go some way to alleviate the pressures on small firms that they are facing. However, I am sure the Minister is aware of comments made by Wales Fiscal Analysis in Cardiff University, saying that it is arguably a blunt instrument to use when dealing with a recession, and, of course, by their analysis, larger businesses instead of smaller ones would benefit more from this non-targeted support. How would the Minister respond to that?

Well, as ever, we're using the tools that we do have at our disposal, and the understanding of a scheme that people understand, because of the way that we have supported businesses in this area before, and, of course, we already have a range of reliefs built in to our system for smaller businesses in any event, and we've got a cap on the amount that businesses can benefit from as well. That actually means that the largest businesses won't have an even bigger amount provided to them. The cap means that we can then recycle more of that money that would otherwise go to larger businesses into our smaller and medium-sized firms. As ever, we're always interested in how we can have better and more targeted tools. There is, though, a pay-off or a trade-off in all of these. A scheme that is simple and easy to understand and administer, that can get money out rapidly, can have some edges around it that are more fuzzy. If you look for a more targeted scheme, it will make it more complex, and you're going to have to invest more time, energy and effort in the design and the delivery of it, and the more targeted and more complex a scheme, the more likely you are to see businesses fall through the gaps in it. So, there's always a choice to be made here. I'm comfortable we've made the right practical choice in where we are, and we'll need to continue to flex, as we move through the next difficult year ahead, with a recession that even the Chancellor of the Exchequer acknowledges we're at the start of, and, as I say, it will be a difficult year ahead for many businesses in the sector, which is why we've made this announcement of support over the next two years. 

Thank you for that answer, Minister. Of course, one of the things that they mentioned was that smaller businesses would miss out on that support. So, isn't it the case that we need that targeted support? There is a recognition that support is needed elsewhere. We've heard about energy today, and that business rates themselves, of course, as well, need reform. That, of course, was the view of the director of the CBI, who said that we should use the reprieve now in Wales to see how we can reform business rates. I'd be interested in knowing the Minister's view on that. Of course, we're at the time of year where hospitality in particular relies on the revenue made now in order to survive those much quieter few months in the new year. It's true, of course, generally, we've seen increased footfall, but spend per head is down, and today's news on inflation paints a very bleak picture for the hospitality sector in general.

I've mentioned previously in the Chamber—we've heard it again today from both Sioned Williams and Paul Davies—about the need to help small businesses go green. But what the sector is also facing is a recruitment crisis. In what way does the Minister see the Welsh Government's role in addressing this recruitment crisis? This crisis was an issue during the pandemic, it's continued to this day, yet very little seems to have been done by the Welsh Government to address it effectively.

There are two things. On non-domestic rates reform, that is a conversation that I continue to have with the finance Minister, who, as you understand, is the ministerial lead when it comes to reform of taxation. There's a significant programme of reform that continues to move at pace on broader taxation. You know of the work we're doing on council tax reform, for example. So, we are looking at what the future might look like. Understanding how we deliver a different scheme is really important to understand how you smooth out winners and losers within it to get to a better or a fairer system. That is work that we continue to look at.

When it comes to the particular challenges facing hospitality, it is one of the things that I am genuinely concerned about, when it comes to how much consumers will spend in this period of time that is really important for the hospitality sector and what that means for those businesses and their ability to survive in the new year, when January is normally a slower month, and whether businesses will look again, as a number of them already are doing, at whether they reduce the hours or the days that they're open as a means of dealing both with the reality of reduced consumer spend and the staffing problems that you've referred to. 

During the last year, we have worked alongside the industry to try to do something more positive about recognising it as a sector that people can go into for careers and not simply casual work, which is the way that it's portrayed by some people as the only way of working in the sector. I've committed to looking with them again in the new year at what we might be able to do to encourage people to take this up as a job, as a career, to try to address the reality that we're not seeing people who want to come to work in the sector. As we've discussed in the Chamber and outside before, part of the challenge is the way that consumers behave in some parts of the hospitality sector, and about recognising, whilst the sector is short staffed, to show some kindness and understanding for those people that are there, as well as looking to get more people to want to come to work in the sector at a rate that is fair in terms of our ambitions around fair work and fair pay and also allows the businesses to plan for their own future.