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Present

  • Rt. Hon. Mark Drakeford MS (Chair)
  • Rebecca Evans MS
  • Vaughan Gething MS
  • Lesley Griffiths MS
  • Julie James MS
  • Eluned Morgan MS
  • Ken Skates MS
  • Kirsty Williams MS
  • Jeremy Miles MS
  • Hannah Blythyn MS
  • Jane Hutt MS
  • Julie Morgan MS
  • Dafydd Elis Thomas MS
  • Lee Waters MS

Officials

  • Shan Morgan, Permanent Secretary
  • Carys Evans, Principal Private Secretary First Minister
  • Will Whiteley, Deputy Director, Cabinet Division
  • Toby Mason, Head of Strategic Communications
  • Jane Runeckles, Special Adviser
  • Madeleine Brindley, Special Adviser
  • Alex Bevan, Special Adviser
  • Ian Butler, Special Adviser
  • Kate Edmunds, Special Adviser
  • Sarah Faye, Special Adviser
  • Paul Griffiths, Special Adviser
  • Clare Jenkins, Special Adviser
  • Andrew Johnson, Special Adviser
  • Gareth Williams, Special Adviser
  • Mitch Theaker, Special Adviser
  • Tom Woodward, Special Adviser
  • Jonathan Scourfield, Specialist Policy Adviser
  • Dewi Knight, Specialist Adviser for Education Reform
  • Tracey Burke, Director General, Education and Public Services
  • Andrew Goodall, Director General, Health
  • Andrew Slade, Director General ESNR
  • Reg Kilpatrick, Director General COVID-19 Crisis Coordination
  • Christopher W Morgan, Head of Cabinet Secretariat (minutes)
  • Damian Roche, Cabinet Secretariat
  • Piers Bisson, Director European Transition
  • Ed Sherriff, Deputy Director European Transition
  • Leigh Franks, European Transition Team
  • Helen Lentle, Director Legal Services
  • Diane Dunning, Senior Lawyer

Item 1: Minutes of the previous meeting

  1. Cabinet approved the minutes of 19 December.

Item 2: The EU – UK Trade and Co-operation Agreement

  1. The First Minister informed Cabinet that the details of the EU – UK Trade and Co-operation Agreement (TCA) had only been received on 25 December. It was not a deal that would have been negotiated by the Welsh Government and Welsh Businesses should now expect significant barriers to trading with the EU in 2021.
  1. The Counsel General and Minister for European Transition, along with relevant policy Ministers, would provide a brief analysis of the issues of most concern to Wales and the state of preparedness. There would also be an opportunity to discuss the arrangements for the recall of the Senedd, which had been scheduled for the following day.
  1. The Counsel General and Minister for European Transition confirmed the TCA provided for tariff-free and quota-free trade between the UK and the EU, but significant new impediments would also be introduced.
  1. There would be customs checks on imports and exports, adding costs and delays to trade, with the requirement for goods to have export certificates and VAT being chargeable. In the case of animals and Products of Animal Origin (POAO), Export Health Certificates would be required and certain types of processed meat exports would be banned. There would be a requirement to demonstrate that products complied with ‘rules of origin’.
  1. There would be no mutual recognition of conformity assessment, meaning that UK bodies would not be able to confirm that products manufactured in the UK had met EU standards. The EU had rejected ‘diagonal cumulation’, which would have applied to goods from states with whom both the EU and the UK had free trade agreements. This meant that UK manufactured products heavily reliant on components from outside the EU may be liable for tariffs, which would have a significant impact on the automotive and aerospace industries in Wales.
  1. The EU had refused to recognise the equivalence of UK Sanitary and Phyto-sanitary (SPS) standards meaning that animals and POAO would be subject to import checks and the UK would not be included in the EU’s REACH system of chemical registration, which would likely pose problems for the chemical industry.
  1. In terms of services, UK companies would no longer benefit from automatic recognition of their right to do business in the EU and British businesses would be governed by the different legal requirements of the 27 Member-States. Similarly, the negotiations had not delivered any comprehensive system of mutual recognition of professional qualifications.
  1. The EU’s position on financial services had been maintained, and the recognition of the equivalence of the UK’s regulatory adequacy would remain a unilateral matter for the European Commission. Similarly in terms of data adequacy, this remained a unilateral matter for the EU although there would be a short-term bridging arrangement for 6 months.
  1. In terms of regulatory alignment, there was a commitment to ‘non-regression’ from current standards, with a complex arbitration mechanism. In reality, the TCA continued in effect to tie the UK into EU regulations as divergence could lead to tariffs being imposed. In order to allow for the proper oversight, the UK and the EU had committed to publishing each year a ‘forward look’ of new regulatory measures and to following a structured approach to consultation on new measures under consideration. This would have implications for the Welsh Government.
  1. In addition, the UK had made a commitment to legislate on the basis of a set of principles, which were similar to EU state aid legislation.
  1. The TCA involved a very complex and intense set of governance arrangements, at the apex of which was a Partnership Council and at least 25 different Specialised Committees and Working Groups. It was unclear how the devolved Governments would be involved in this process.
  1. Ministers reported major concerns across the fishing industry, particularly around quotas and the length of the five and a half year transition period before the UK will conduct annual negotiations on fishing opportunities with the EU. The agriculture industry had welcomed the decision on tariffs, but had raised concerns about the regulatory regime and the lack of qualified practitioners to provide the required documentation.     
  1. It was recognised that the UK Government had chosen to participate in three EU Programmes, Horizon Europe, Euratom Research and Training and Copernicus, but not Erasmus +, which would have significant implications for students in Wales. The UK Government was introducing its own ‘Turing’ programme as a replacement, but this would not offer the same level of financial support as Erasmus +.
  1. In terms of preparedness, most of what had been planned for under the reasonable worst case scenario would still be required. Resources to support businesses were being updated on the Welsh Government and Department for Business, Energy & Industrial Strategy websites.
  1. Cabinet discussed the proposals for a debate in the Senedd the following day and noted that it would not be possible to table a LCM on the Bill as Welsh Ministers had not had the opportunity to consider the full impact of the legislation on Wales. The tabled motion would signal the Senedd’s regret at not being in a position to determine consent, given the legislative timetable in Westminster.

Item 3: COVID-19 update

  1. The Minister for Health and Social Services advised Cabinet that even though there appeared to be some levelling off in the all-Wales transmission rates, they were still high and there was continued growth in north Wales cases. The new variant had been identified as a factor in the rapid growth in the number of cases, which was a real threat to the NHS in Wales and its ability to respond.
  1. Health boards across Wales were under increasing pressure as more and more patients were being admitted with COVID-19. The current number of beds occupied in hospitals across NHS Wales was higher now than at the peak in the initial wave in April 2020. While there were physical beds available, staff absence and the nature of the hospital environment meant that usable capacity was limited and varied on a daily basis.
  1. Critical care was under the greatest pressure and had seen the number of COVID-19 patients increase by 24% since 21 December, and was likely to increase over the next two weeks. There were a total of 210 critical care patients in beds, half of which were COVID-19 related, which was well in excess of normal capacity for 152 patients. Staffing pressures, including sickness, were reducing the options to expand and it appeared that mortality rates were making a bigger contribution to the freeing up of beds. The Ambulance Service was also under a great deal of pressure.
  1. Latest Public Health Wales data indicated an all-Wales rate of just under 500 per 100,000, with a greater increase in the north.
  1. The Oxford AstraZeneca vaccine was expected to be approved by the Medicines and Healthcare Products Regulatory Agency later that week, with the roll-out across Wales expected the following week.
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