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

Diolch, Llywydd. Minister, this morning, I had the pleasure of hosting a breakfast briefing with the Federation of Small Businesses and Economic Intelligence Wales to discuss some of the challenges facing businesses here in Wales. Of course, many of those challenges are macro-economic and fall under the remit of the UK Government. However, it was made very clear that there are several actions the Welsh Government can take to support businesses in Wales at this time too, and one of those actions is improving the skills landscape. I heard your earlier answer, but the reality is that you are responsible for skills. So, can you tell us what steps the Welsh Government is taking to support businesses to ensure they can fill their skills need and can recruit, retain and upskill staff?

We have a range of programmes—for example, I have announced more money, together with the education Minister, for personal learning accounts. We have all the advice that businesses can get can through Business Wales themselves. We continue to invest in our apprenticeship programme as well. I’ve unfortunately had to indicate that the delivery of 125,000 new apprenticeships will take an extra year. That directly comes back to the honesty that it’s important to have with business—I’m sure you’ve told them this yourself—about the reality of the pressure on our budgets, about the reality of the shared prosperity fund being redirected. Previously, money from former European funds funded over 5,000 apprentices a year. That’s money that has been redirected somewhere else. We also have unhelpful competition and a poorly designed Multiply programme. Previously, that money would have come here and we could have made better use of it. So, we do continue to invest in skills and in productivity. They’d be in a much better place for all of us if there was clarity about responsibility, not competition and if we had the budget we were promised we would have, with the full replacement of EU funds, rather than having over £1 billion taken away from us over three years.

Well, Minister, as you know, my committee is looking at post-EU funding, and I'm sure you'll welcome our report when we will publish it in due course.

Now, Minister, the Welsh Labour manifesto for the 2021 Senedd elections committed to promoting good-quality skills in the areas where we know the economy will grow and to strengthen regional skills partnerships to ensure supply meets the changing economic needs of Wales. Now, prior to the Senedd elections, the then Economy, Infrastructure and Skills Committee undertook two particularly important inquiries in relation to skills, one on regional skills partnerships and one on degree apprenticeships. Now, those reports made a series of very important recommendations to the Welsh Government on ways in which the Government could improve the system, and we should be seeing the benefits of implementing those recommendations now. So, therefore, Minister, can you tell us whether the Welsh Government has now fully implemented the recommendations of both of those committee reports?

No, I don't think we'd say we've fully implemented them. I think it's not a fair test to try to say that they should all have been fully implemented now, given what has happened in the intervening period, and given the reality of the different challenges we now face ahead of us. 

I look forward to reading the committee report. I'm sure I'll broadly welcome it. I may not welcome every single recommendation on every single page, but I look forward to receiving the report. And, of course, one of your Members, Hefin David, has undertaken a report for the education Minister, which is directly relevant to me, on how we look to improve not just the skills landscape, but the connectivity and the choices for young people. I'm looking forward to a constructive debate on that report. But, in a range of areas where there is growth and growth potential—think about aerospace, think about broader advanced manufacturing, think about the semiconductor world—these are all areas where it's possible to have degree programmes that work with them. We already see degree apprentices, we already see people who gain degree-level qualifications through the world of work. And our challenge is how we work alongside businesses to make sure the opportunities that come from investing in our workforce are real, and the bargain between the Government and public funds, and the clarity we can provide and what businesses themselves are prepared to invest not just in front-line workers, but crucially to invest in the quality and the skills of leaders and managers as well. That's one of the areas of the economy in Wales where we need to see more investment and more appreciation of the value of that for those individuals, for the companies and the businesses they run and, of course, the workers they're responsible to and for.

Minister, I think we are at a crucial point in time with the introduction of the new curriculum and with the creation of two free ports having recently been announced. We have therefore reached a critical period in my view, and we need to harness this opportunity and make some significant changes in this area. Now, you referred to the 'Transitions to Employment' report, published recently by the Member for Caerphilly, which considers the experience of professionals supporting learners in the transition from education to employment in Wales, and I hope very much the Welsh Government will respond positively to the recommendations laid out in that report too.

Now, Minister, I’ve been meeting with businesses and business organisations, and they’ve made it crystal clear to me that skills is a pressing issue and that they need more of a say on how skills are delivered here in Wales, and, of course, given the latest ONS statistics on Welsh employment rates and economic activity, it's more important than ever that you as a Government get this right. The Welsh Government must listen to businesses and ensure that there are sufficient provision, capacity and indeed resources in place to develop the skills needed for the future. So, Minister, can you tell us what discussions you're having with those delivering degree apprenticeships in Wales, and indeed vocational skills in Wales, and importantly, what discussions are you having with businesses and indeed business organisations too to ensure that all stakeholders are informing the development of skills delivery in Wales for the future? 

Well, what the Member sets out is exactly what the Government is doing. My officials have regular conversations with further education providers and higher education as well; we're continuing the roll-out of degree apprenticeships; we're doing exactly what we said we would do in our manifesto, and, of course, at almost every appearance at your committee, with your other hat on, Hefin David takes the opportunity to talk about this, to remind us of our commitments, and I've always given a positive response to that. We continue to engage directly with regional skills partnerships as well in every part of Wales, and not just my officials, but I take an interest directly in this. For example, I met businesses last week on exactly this subject—about the skills that are being provided, what that means for the learner as well, but also to make sure that those skills are directly relevant to the world of work for today. So, it's a conversation that needs to have a direct loop involving the Government, involving businesses themselves, including through our regional skills partnerships and those people providing the training and the skills for learners to make sure that they are directly relevant. I want to make sure we get good value for the public money that we invest in that, and that learners themselves get good value to enhance their career prospects.

So, I recognise the points the Member makes, and it's exactly what this Government is committed to doing, and taking advantage of the new curriculum that is broadly welcomed by people in the field of business.

Plaid Cymru spokesperson, Luke Fletcher.

Diolch, Llywydd. Last week, the ONS published data on sub-regional productivity across the UK as well as the performance of city or regional growth deals within this context. On the basis of current price output per hour worked, not one of Wales's local authorities is above the UK average, and in the case of areas such as Gwynedd, Ceredigion and Powys, the gap is over 30 per cent. A simple reality is that, in Wales, our low productivity means we work longer hours for less pay, and this has largely been the situation for the best part of a quarter of a century.

Now, to their credit, early Welsh Governments did draw up targets in an effort to close the productivity gap with the rest of the UK, however these have long since been abandoned. While the Welsh Government's current economic action plan acknowledges the problem, it does nothing to commit to any specific or meaningful targets to deliver improvement in this area. So, my question is this: if the Minister does not think that targets are necessary to measure whether or not we're successfully closing that productivity gap, what methods does he think are effective in doing so?

So, we do actually publish information on what we're doing on productivity, not just in relation to the UK overall, but in particular regions, and that's also published objectively as well, and we continue to invest resources that we do have in areas that we know will help to improve productivity, whether that's support for capital—my colleague Lesley Griffiths; there's a programme available for up to 40 per cent capital investment going to help to improve the productivity of business in the food sector. We continue, as the previous conversation has just shown with Paul Davies, to invest in the skills of individuals—that's perhaps the biggest lever we have available to us. But, actually, over the course of devolution, there has been an increase in productivity here in Wales, and it's actually been faster than most regions within the UK.

The confounder is actually in London and the south-east that significantly outperforms every other part of the UK. Boris Johnson hasn't always been straight with people in every statement he's made, but he did say, he did recognise at one point, when he talked about levelling up, he recognised that London and the south-east are significantly unequal with the rest of the UK. The challenge has been actually having a series of not just policy announcements but budget choices, working with people responsible for a number of these areas, to make sure that the resource follows the argument. That's what we still haven't seen, and I'm afraid we won't see that until we see a Labour Government with a Labour Prime Minister and Chancellor in Downing Street.

It's worth remembering, obviously, that productivity isn't an abstract concept of significance only to economists; it's a fundamental measure of how the labour of a workforce is valued. I think of what Paul Krugman said:

'Productivity isn't everything, but in the long run it's almost everything. A country’s ability to improve its standard of living over time depends almost entirely on its ability to raise its output per worker.'

Of course, last week's set of ONS data is now one of a series of releases showing the weaknesses of the Welsh economy, and I have to say, as a young person—and, Llywydd, I'm not over 30 yet—all I hear is how I should be looking to get out of Wales and the rest of the UK. The outlook is bleak. I mean, what faces my generation and the generation after mine? Stagnant wages, increasing costs, being unable to afford rent or even buy our own houses. I mean, what would the Minister say to a young person today—what are the merits of staying in Wales? Because, so far in this job—I've been in the job now just over two years—all I've seen are endless strategies and warm words acknowledging that there is a problem, but very little action or progress.

When I actually talk to businesses and sectors and individuals, there are some who face real challenges—that's true and undeniable; I've never tried to walk away from that. But there are also a range of sectors that are very optimistic about their opportunities here in Wales and why they're here in the first place. And what we have tried to do is to gather a sense of not just optimism, but based in the reality of why businesses choose to place themselves here in Wales in growth sectors. I talked earlier about aerospace, about advanced manufacturing, about semiconductors—all growth areas with really good jobs. Good jobs in those areas well above the real living wage, well above the average wage. If you look at engineering jobs that help to underpin all those jobs, we're investing in more engineering subjects, getting more people interested in those, and manufacturers and businesses around engineering want to come to Wales and want to know that the skills and the talent are there.

So, for young people, it is in areas where there are opportunities, there's a Government here that doesn't just see the opportunities, but looks to invest in that, pre 16 and post 16, when people are around the world of work and within it. That's why so much of our skills programme supports people already in work as well, to improve and change their skills. It's why the tech and the fintech sectors see such growth here in Wales and a whole range of different opportunities. There are reasons to be optimistic about the future of Wales, if we have the right investment, if we have partners to enable us to make that investment in an environment that is stable, and that is why businesses recognise that they can come to Wales and they want to grow here as well.