Cofnod y Trafodion The Record of Proceedings Y Pwyllgor Cyfrifon Cyhoeddus The Public Accounts Committee 3/4/2017 Agenda’r Cyfarfod Meeting Agenda Trawsgrifiadau’r Pwyllgor Committee Transcripts 3/4/2017 Cynnwys Contents 4 Cyflwyniad, Ymddiheuriadau, Dirprwyon a Datgan Buddiannau Introductions, Apologies, Substitutions and Declarations of Interest 4 Papurau i’w Nodi Papers to Note 5 Adroddiad Blynyddol Llywodraeth Cymru ar Reoli Grantiau 2015-16 Welsh Government Grants Management Report 2015-16 35 Cynnig o dan Reol Sefydlog 17.42 i Benderfynu Gwahardd y Cyhoedd o’r Cyfarfod Motion under Standing Order 17.42 to Resolve to Exclude the Public from the Meeting Cofnodir y trafodion yn yr iaith y llefarwyd hwy ynddi yn y pwyllgor. Yn ogystal, cynhwysir trawsgrifiad o’r cyfieithu ar y pryd. Lle mae cyfranwyr wedi darparu cywiriadau i’w tystiolaeth, nodir y rheini yn y trawsgrifiad. The proceedings are reported in the language in which they were spoken in the committee. In addition, a transcription of the simultaneous interpretation is included. Where contributors have supplied corrections to their evidence, these are noted in the transcript. 30/1/2017 Aelodau’r pwyllgor yn bresennol Committee members in attendance Mohammad Asghar Ceidwadwyr Cymreig Bywgraffiad|Biography Welsh Conservatives Neil Hamilton UKIP Cymru Bywgraffiad|Biography UKIP Wales Mike Hedges Llafur Bywgraffiad|Biography Labour Neil McEvoy Plaid Cymru Bywgraffiad|Biography The Party of Wales Rhianon Passmore Llafur Bywgraffiad|Biography Labour Nick Ramsay Ceidwadwyr Cymreig (Cadeirydd y Pwyllgor) Bywgraffiad|Biography Welsh Conservatives (Committee Chair) Lee Waters Llafur Bywgraffiad|Biography Labour Eraill yn bresennol Others in attendance Gawain Evans Cyfarwyddwr Cyllid, Llywodraeth Cymru Director of Finance, Welsh Government Shan Morgan Ysgrifennydd Parhaol, Llywodraeth Cymru Permanent Secretary, Welsh Government Matthew Mortlock Swyddfa Archwilio Cymru Waales Audit Office David Richards Cyfarwyddwr Llywodraethu, Llywodraeth Cymru Director of Governance, Welsh Government Huw Vaughan Thomas Archwilydd Cyffredinol Cymru Auditor General for Wales 3 30/1/2017 Swyddogion Cynulliad Cenedlaethol Cymru yn bresennol National Assembly for Wales officials in attendance Claire Griffiths Dirprwy Glerc Deputy Clerk Fay Bowen Clerc Clerk Katie Wyatt Cynghorydd Cyfreithiol Legal Adviser Dechreuodd y cyfarfod am 14:00. The meeting began at 14:00. Cyflwyniad, Ymddiheuriadau, Dirprwyon a Datgan Buddiannau Introductions, Apologies, Substitutions and Declarations of Interest [1] Nick Ramsay: Welcome to this afternoon’s meeting of the Public Accounts Committee. Headsets are available for translation or sound amplification. Please ensure that electronic devices are on silent. In an emergency, follow directions from the ushers. No apologies have been received this afternoon. Mohammad Asghar will be joining us shortly. Do Members have any declarations of interest they wish to make for the record? No. Okay. Papurau i’w Nodi Papers to Note [2] Nick Ramsay: Item 2—papers to note. First of all, the minutes from the meeting held on 27 March and 28 March. Are Members happy with the minutes as an accurate record? Great. They’re agreed. We have a letter from the Welsh Government on the governance review of the National Library of Wales. Are Members happy to note that letter? The committee has previously agreed to scrutinise the National Library’s annual report and accounts in the autumn term, when these points can be pursued directly with them. 14:01 4 30/1/2017 Adroddiad Blynyddol Llywodraeth Cymru ar Reoli Grantiau 2015-16 Welsh Government Grants Management Report 2015-16 [3] Nick Ramsay: Turning to item 3, the Welsh Government grants management report, can I welcome our witnesses—and welcome, Oscar—to this afternoon’s meeting? Thanks for being with us. Would you like to give your name and position for our Record of Proceedings? [4] Ms Morgan: Shan Morgan, the Permanent Secretary for the Welsh Government. [5] Mr Richards: David Richards, the director of governance at the Welsh Government. [6] Mr Evans: Gawain Evans, director of finance at the Welsh Government. [7] Nick Ramsay: Great. Thanks for being with us. We have a number of questions for you, and I’ll kick off with the first few. Can I ask you, Permanent Secretary, how much importance will you be placing on getting grants management right and the key challenges in supporting and maintaining the appropriate culture and mindset across Welsh Government departments? [8] Ms Morgan: Thank you very much, Chair. I think that, perhaps, gives me the opportunity to set out a few thoughts if— [9] Nick Ramsay: Sorry, I did ask if you could make a short statement, so forgive me for launching into the question. [10] Ms Morgan: Yes, but I think that gives me the opportunity anyway. So, if you bear with me I’ll explain how I’m approaching this very important subject. I started in the job eight weeks ago today. The time has gone incredibly quickly. I’m trying to build up my understanding of the organisation and its ways of working every day, working with colleagues, and I’m also continuing very much to shape my own priorities. But as you will have seen from the report, more than £2 billion of hypothecated funding was granted by the Welsh Government in 2016. So, obviously, the management of grants by the Welsh Government is going to be an absolutely essential area of focus for me as principal accounting officer for the Welsh Government. I will be focusing very hard on the regularity, propriety and value for money of our expenditure and the systems that we have to back that up and give me 5 30/1/2017 assurance. [11] Grant funding is obviously one of the Welsh Government’s most important levers for delivering the objectives set out in the First Minister’s programme for government, so we have to make it work. I’ve committed to taking part in training in grants management to both improve my own knowledge and to test out the training that we have available for our staff. I think it’s really important. I’ve been told that there have been very significant improvements made. I want to test that out for myself. It’s clear to me, overall, from everything that I’ve learned—and, in fact, from what Derek told me before he left—that the Welsh Government has put a substantial amount of work into the improvement of grants management in recent years. And I know that the work of this committee and the Wales Audit Office was very much a catalyst for that work, and that you have been very helpful and supportive through that process. [12] I think there were five, perhaps, key achievements I’d like to single out. Sorry—four over the last five years, carried out by my predecessor. First—and I think this is a really important one—establishing the centre of excellence within the Welsh Government to bring much more consistency to our policy, training and systems. Second, the introduction of an enhanced information and communications technology platform called PayGrants. Third, significant improvement in face-to-face and online training, which I’m going to sample for myself. And fourth, the introduction in 2016 of a due diligence hub, and I’ll probably keep coming back to that because I think that was also an extremely important development. [13] I’ve met many of the staff involved and I’ve been really impressed by their expertise and commitment to the work. I’ve participated in my first audit and risk committee and, again, been impressed by the commitment of the members of that committee. But, equally, I’ve had a very close look and will continue to focus on some of the cases where our grant funding has, to be honest, gone wrong, and where we’ve been criticised. So, I have to say upfront I’m not at all complacent about this work and about our performance. It’s clear, including from the Public Accounts Committee’s own recent report of Kancoat, for example, as well as some successfully prosecuted fraud cases, that there are improvements in our practice that still have to be made and we’re working on those. I will be working with my additional accounting officers whom you already know, and with the two directors in particular on either side of me to assure myself that that work is in hand and that we are continuing to improve our performance. Of those, 6 30/1/2017 I’ve got four areas—a common theme today, No. 4. I consider my priorities over the next 12 months to be: counter-fraud, due diligence, administrative savings, and the timing of the grants management report. Chair, if you have time, I’m happy to give you just a couple of practical highlights of what I plan to do in each of those areas. [14] On fraud detection, we’re obviously never going to be able to eliminate it completely, despite our best intentions, but we’ve got to keep improving our record. So, I’ve asked the team to press ahead as quickly as possible with the introduction in the Welsh Government of the national fraud database. That will enable us to access data on confirmed cases of fraud, and I think it should be a significant step forward. I’m also going to ask an external body to review independently our processes and systems to detect fraud, and there I’m thinking of bringing in somebody with expertise from a large public sector body that awards significant grant funding. It seems to me a good idea to get challenge from outside. It’s not that I’ve got any reason to be concerned about the systems, but I think it’s always really important to keep reviewing and challenging.