Aberconwy MP and Wales Office Minister Guto Bebb spoke in a Westminster Hall debate on the effects of Exiting the EU on Businesses in Wales.
Chris Elmore (Ogmore) (Lab/Co-op)
I beg to move,
That this House has considered the effect of exiting the EU on businesses in Wales.
It is a pleasure to serve under your chairmanship, Mr McCabe. The effect that exiting the European Union will have on businesses in Wales is incredibly important, so I thank hon. Members for attending. This debate offers an opportunity to recognise the challenges ahead and gives the Government the chance to clarify their Brexit plan for Wales, on which I sincerely hope for some detail from the Minister.
Businesses in Wales have serious concerns that the Government do not have a plan for how Brexit will work for them. The success of our local small and medium-sized enterprises should be a concern for us all. When local businesses do well, they not only generate jobs and meet the needs of our communities, but fill up our high streets, liven up our towns and inspire the businesses of the future. Businesses throughout Wales are facing dangerous uncertainty and need the Government to publish their plan for Welsh Brexit.
One of the starkest consequences of exiting the EU for businesses in Wales could be a widening funding gap. Each year the EU contributes about £650 million in investment to Welsh social businesses and SMEs. Each pot of funding that has helped our businesses to thrive seems only to have been made possible by EU contributions. The social business growth fund, for example, contributes £4 million, but £2.3 million of that is from the EU. Similarly, the Wales business fund provides £136 million, but £76 million is from the EU. In addition, we have low-interest loans from the European Investment Bank, which have enabled companies and public bodies throughout Wales to thrive; the European regional development fund, which, among other projects, will provide £106 million for phase 2 of the south Wales metro; and Horizon 2020, which has been pivotal for Welsh universities. Without Government planning for Brexit, our Welsh businesses could see a serious dent in their funding.
To the Government’s credit, the Chancellor has announced that the Treasury will guarantee all multi-year EU business funding agreed before Brexit, but we need confirmation of the Government’s plan for EU funding that does not fit that criterion. The Government must also provide clarity about the status of the cumulative £2.7 billion post-2020 EU funding that has not yet been underwritten by the Treasury.
Our departure from the EU might also have an impact on the availability of training in Wales. Jobs Growth Wales, the Welsh Government scheme to get young people into work, will support the creation of 8,955 new job opportunities for 16 to 24-year-olds over the next three years, and has only been made possible by the European social fund. Similarly, the Workways Plus scheme was made possible by £7.5 million from the European social fund. The scheme offers one-to- one mentoring to help long-term unemployed people become ready for work, gives an opportunity for people to gain new qualifications and finds paid positions for some.
Thousands of apprenticeships throughout Wales also rely on the EU and could be affected by our exit. The European Alliance for Apprenticeships, launched in July 2013, works closely with the Welsh Government to strengthen the quality, supply and image of apprenticeships. The alliance has been pivotal in securing and promoting opportunities throughout Wales.
Other consequences could include Britain leaving the single market or ending freedom of movement, which could affect businesses in Wales. Welsh universities, and the businesses reliant on them, would be particularly impacted by the end of freedom of movement. Each year more than 7,000 EU students enrol at universities throughout Wales. Were the Government to clarify their desired future migration arrangements, universities and associated businesses could plan accordingly. As things stand, the Government have given no clear indication of whether restrictions will be applied and the enrolment of EU students will decrease once we have left the European Union.
When this House debates the effect of exiting the EU, we sometimes allow the discussion to slip away from the reality on the ground, but I want to focus on the real impact that exiting the EU will have on one business in my constituency. It is one of the UK’s leading manufacturers in its industry. It has asked to remain anonymous, but kindly told me its concerns about the future, which I will share with the House. Its business is already being impacted by a downturn in construction activity and sizeable currency fluctuations. It tells me that the scale of potential change is vast, and that if widespread change materialises, the implications for resources and productivity are significant. For that industry-leading business, the level of uncertainty is of serious concern and must be addressed urgently.
This business employs people throughout the UK, not only in my constituency. It needs clarity on the form of Brexit, and it needs a plan. Specifically, it needs to know whether the Government plan to stay in the single market and the customs union. It tells me that it needs a commitment to ensuring that Britain can secure the right skills in the workforce. It also needs assurances that other policy voids, such as the one on energy efficiency, will be filled.
The bottom line is that business in Wales is crying out for a Brexit plan for Wales. When the UK leaves the EU in March 2019, in all likelihood the engine of Welsh business will not break down, but if the Government do not plan, it will slowly lose fuel and industries will come to a halt. Wales needs not a red, white and blue Brexit, as the Prime Minister suggested, but a comprehensive strategy to deliver the most secure outcome. Vague platitudes from the Government mean nothing and serve only to distract from the fact that, as things stand, we are being led into the night without a torch.
Wayne David (Caerphilly) (Lab)
Does my hon. Friend agree that Norgine, a Dutch pharmaceutical company with a manufacturing facility in Hengoed, speaks for many businesses in Wales when it states that it wants a very soft Brexit?
I completely agree with my hon. Friend. I am getting that constantly from businesses in my constituency. My hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), the shadow Secretary of State for Exiting the European Union, has asked the Government 170 questions on how the UK will be shaped after we have left. To minimise that, I will ask the Government only three simple questions about the effect of exiting the EU on businesses in Wales. Will the Government guarantee to replace post-2020 EU funding that has not yet been underwritten by the Treasury? What steps will be taken to ensure that there is not a training shortage in Wales once we have left the EU? How will the Government involve business in Wales in their EU negotiations, and in representations made by the Secretary of State for International Trade?
Mr David Hanson (Delyn) (Lab)
May I add a fourth question to my hon. Friend’s helpful list of three? Will the Government come clean on whether deals have been done with companies such as Nissan in the north-east? In my constituency and that of my hon. Friend the Member for Alyn and Deeside (Mark Tami), we have a large number of car manufacturers. For example, Vauxhall, although in England, and Toyota employ my constituents and those of my hon. Friend, and they depend on access to the single market.
I completely agree with my right hon. Friend. In addition, the constituency of my hon. Friend the Member for Bridgend (Mrs Moon), who could not attend today, includes the Ford plant that borders my constituency, and I would ask for similar guarantees on the automotive industry, because it has a direct effect in Ogmore.
I will be surprised if the Minister answers any of my questions, but I will conclude with a warning. Leaving the EU will inevitably have an effect on businesses in Wales, but the uncertainty that the Government have created is completely unnecessary. The Government need a plan for businesses in Wales, which they need to announce to the House for the attention of businesses in all our constituencies. The EU is embedded in businesses throughout Wales, and it contributes to funding, training and opportunity.
Mark Tami (Alyn and Deeside) (Lab)
The focus is often on the big primes—my constituency has Airbus and Toyota—but I am particularly worried about the supply chain, especially if it supplies other parts of a business in Europe. In that case, companies might think that they are better placed there and relocate there, which would cause massive harm to all our areas.
I entirely agree with my hon. Friend, and I echo his concern. I hear that constantly from small businesses, not only in my constituency but across the piece, living as I do in south Wales.
Geraint Davies (Swansea West) (Lab/Co-op)
Do my hon. Friend and the Minister agree that there should be a level playing field? If certain motor companies are selected for special subsidies through under-the-table deals, that discriminates against other companies, whether they are big, like Airbus, or smaller suppliers. We need support for all exporters and subsidiary suppliers that will be confronted by tariffs, so that they can continue to compete effectively.
I thank my hon. Friend for that intervention, which the Minister heard. My hon. Friend is right to make the point that we need a fair playing field for all businesses across Wales and, indeed, the UK.
The opportunities that the EU offers will be sorely missed if the Government do not create better circumstances for businesses in a post-EU Wales. Businesses in Wales are clear that they are willing to adapt to a post-Brexit Britain, but they need certainty and assurances from the Government about what that will look like. As Members of Parliament, it is our duty to go back to our constituencies and tell businesses what they can anticipate from Parliament and the Government in the near future, but I cannot give them any assurances because this House has not been given any by the Government. I am not asking for a running commentary—I leave that privilege to the Foreign Secretary—and I am not hoping for a line-by-line strategy; I am asking only for a few select assurances so that business in Wales can begin to plan.
I ask again: will the Government guarantee to replace the cumulative £2.7 billion post-2020 EU funding that has not been underwritten by the Treasury? What steps will be taken to ensure that there is not a training shortage in Wales? How will the Government involve businesses in Wales in their EU negotiations and representations made by the Secretary of State for International Trade? I suspect that the Government are unable to provide any answers, and I can only assume that is because they do not have any.
Ian C. Lucas (Wrexham) (Lab)
It is a great pleasure to be here today with you in the Chair, Mr McCabe. I represent a successful manufacturing and exporting constituency with many businesses that export both to and outside the European Union. The terms of trade that apply when those businesses deal with customers from outside the UK are extremely important for their day-to-day planning. As anyone who has run a business knows, certainty is precious and fundamental to the ease of running any business, but the one thing that we lack as far as terms of trade are concerned is certainty. That is a fundamental barrier to running a business in the UK with ease. The Opposition will therefore continue to press the Government to provide more certainty for businesses so they can start to plan for an imminent massive change.
That change is not just about terms of trade; the regulatory mechanisms that apply to any modern business and its area of operation are also vital. The automotive sector has already been referred to. When I was the automotive Minister, it was important that we had clear environmental regulatory standards that were agreed internationally, because the automotive sector operates internationally. Some people talk about “quickie divorces,” but those will not help businesses that need to plan ahead—to develop new cars to new environmental standards, for example. The international environmental standards that will apply need to be made clear to businesses, but at the moment we have no idea what the mechanism for establishing such standards will be in a post-EU world.
Stephen Kinnock (Aberavon) (Lab)
Does that not mean that certainty for businesses in Wales and across the United Kingdom will be conditional on a commitment to a transitional arrangement? We must not have a situation where the article 50 negotiations come to an end in 2019 and we fall off a cliff edge, because that would cause so much uncertainty, not just about tariffs but about the regulatory environment to which my hon. Friend refers.
Ian C. Lucas
Indeed. It seems increasingly likely that there will be some kind of transitional phase. I have talked about one set of standards—the environmental standards in the automotive sector—but different regulatory regimes will apply to all sorts of businesses right across the piece. Constructing the mechanisms that will apply to businesses and our relationship with the European Union after we leave will involve a huge amount of work. Regimes will have to be defined for areas such as financial services, broadcasting and pharmaceuticals, and those will have to apply very soon. If those systems are going to be in place within the next two years, we need to provide clarity to businesses that are making investment decisions now. Businesses in Wrexham that I represent, such as Wockhardt and Ipsen Biopharm, which are both exporting pharmaceutical companies, need to know what our relationships will be. If they do not, they may begin to reflect on whether the business environment in this country will be as effective, successful and supportive for them in the future.
My objective for post-Brexit Britain and Wales is for the UK to be as close as possible to membership of the single market while retaining the right to devise and implement immigration policy. If I were negotiating, that is what I would want. I would love the Government to provide that sort of clarity about its negotiating position. It is really important that we have access to the single market. Membership of the EU and the single market has benefited the Wrexham economy hugely—it has become very much an exporting economy—but the lesson of the referendum is that we have failed to manage migration to the UK. I am clear that we must apply a managed migration policy for EU citizens.
Does my hon. Friend accept that there is a need to differentiate between skilled and unskilled labour?
Ian C. Lucas
Absolutely. One of my questions for the Minister is: what migration system will apply to EU citizens? We already have a system in place for citizens from outside the EU, and I imagine that if we jump off the cliff that my hon. Friend the Member for Aberavon (Stephen Kinnock) referred to, EU citizens will by default be put in the same position as people who come to the UK from outside the EU. However, I have seen reports in the press that the Prime Minister thinks that the points-based immigration system for people from outside the EU that the Labour party introduced when it was in power is not restrictive enough. I would really like clarity on that question from the Government, because we need to have a system in place. In my constituency, we have really important multinational manufacturing businesses such as Kellogg’s and Solvay, whose members of staff travel regularly from mainland Europe to the UK. Those businesses need to know what system will be put in place for them to manage that.
My hon. Friend makes an important point. For Airbus, for example, if a wing is not fully finished in Broughton but needs to be fitted in Toulouse or Bremen, they will send workers, chase the wing and carry on the work that needs to be done. We clearly must not be in a position where they will have to apply for some sort of work permit to do that—that would be ludicrous—but we just do not know what is going to happen.
Ian C. Lucas
As my hon. Friend makes clear, there will be a system in due course and the issue will be managed, but we have no idea what the system will be. More importantly, the businesses that will be required to operate it have no idea. This is a massive task. If we are to have a new system—not the points-based immigration system that applies to citizens from outside the EU—the Government must tell business what that will look like, what requirements and burdens they will impose on employers and where responsibility lies.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend is making a strong speech.
Individuals are also incredibly affected, including constituents of mine who have found that contracts they were meant to be working on in other EU member states in collaborations, and vice versa, have been cancelled because of the precautionary principle, given the uncertainty about what will happen and the risk of not being able to work on the projects in the next five or six years.
Ian C. Lucas
My hon. Friend makes an excellent point. The clock is ticking on all these issues—I will sit down shortly because several of my hon. Friends want to make speeches—but what is really ticking is the clock for the Government. It is their responsibility to implement the policy they wish to see on these important matters, which could ultimately undermine confidence in business in our communities and affect the prosperity of our constituents.
We need a bit of straightforward clarity from the Government about the mechanics of what the new systems will look like, and we need engagement from the Government. That is not just about listening but about beginning to tell business what its responsibilities will be and what post-Brexit Wales will look like. That responsibility rests firmly with the Government, who have brought the situation about, and that must be made clear to our constituents. We need to have that clarity as soon as possible.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Diolch yn fawr. I thank the hon. Member for Ogmore (Chris Elmore) for securing this important debate. It is a pleasure to serve under your chairmanship, Mr McCabe. We find ourselves in a situation whereby there is a real risk that the UK Government will set sail on a course that is counter to the interests of Wales. The way in which we exit the EU is clearly still an ongoing fight. My priority is to argue for the least damaging option for the Welsh economy, which includes campaigning for the best possible outcomes for businesses across Wales and in my constituency.
Plaid Cymru has been united and consistent in its campaign to maintain membership of the single market and customs union from the very beginning. That is by far the least damaging option for the Welsh economy, first because of the wide-reaching benefits that being a single market and customs union member has for trade in Wales as an exporting economy. Of course, Wales has an annual goods trade surplus of £5 million whereas the UK has a deficit. Secondly, continued membership would enable Wales to qualify for certain cross-border and transnational programmes that promote research and innovation, both of which are integral to a dynamic and entrepreneurial business community.
The last report of the Federation of Small Businesses’ UK small business index showed that, for the first time in four years, more businesses were pessimistic than positive about the future. That was the third quarter in a row in which there had been a downturn in confidence. A glimmer of hope is that 55% of the businesses stated they wanted to grow in the coming year, which shows that ambition is still strong. Businesses want to prosper and, of course, they will do that only if they have the nurture they require, which only Government can provide.
Having spoken to various stakeholders in my constituency, it is clear that the certainty and stability of the UK market has taken a hit. They are very much alert to the fact that the forthcoming negotiations will have long-term implications across the country. The Federation of German Industry in the UK, which represents German companies in the UK, has representatives in my constituency who are particularly concerned about the loss of confidence in the UK market. Among those companies, CeKa, long-established in Pwllheli, has expressed clear apprehension about the volatile exchange rate. It is also concerned about cost increases from possible new tariff and non-tariff barriers. The Government should be doing all they can to mitigate those uncertainties now. We could achieve that by remaining part of the single market and customs union.
SMEs are the backbone of the Welsh economy and, with the right support, they can be adaptable, responsive and resilient. When handled well, they have every potential to flourish as one of our most important assets in Wales. We need to put a support framework in place now and do everything we can to help them weather the storm.
Continuing with the German theme, Plaid Cymru has long emphasised the need for a Welsh “Mittelstand”—that is the term used to describe indigenous medium-sized firms in German-speaking countries. Such companies are locally grounded but successful exporters, with strong brands in specialised niches and with long-term growth potential. They characterise one of the strongest and most resilient global economies.
Another area of concern for a company in my constituency, which is of substantial significance to the local economy, is the uncertainty surrounding that which will replace the rural development programme and, for that matter, the common agricultural policy. South Caernarfon Creameries employs 130 staff and also has 130 suppliers selling Welsh milk from Welsh farms. I emphasise that it collects milk from farms across Wales. As a result, the creamery generates at least £30 million a year for the local economy. It has recently expanded as a result of moneys provided by the EU and is planning on doing so once more. Since the vote to leave the European Union, however, the Government have failed to shed any light on how they intend to compensate for the millions of pounds lost.
Kirsten Oswald (East Renfrewshire) (SNP)
It is interesting to hear how South Caernarfon Creameries, which is of great significance to the rural economy in the hon. Lady’s constituency, has relied on money generated by the EU for expansion. Will she join me in expressing concern about the way in which the common agricultural policy is repatriated and implemented in the eventuality of the UK leaving the EU?
Liz Saville Roberts
I share the hon. Lady’s concern, not least because the National Farmers Union has presented evidence to the Welsh Assembly that indicates that if the money that reaches Wales from the common agricultural policy were to be Barnettised—to go through the Barnett formula—that would result in a 40% decrease in the money reaching Wales.
To return to the creamery issue, we have yet to see any real clarity on how that will be addressed, and that is of considerable importance to anyone involved in agriculture and the rural economy. As we know, Wales is a net beneficiary from the EU to the tune of £79 per individual a year. Businesses must not be left second-guessing where their future lies and how they can plan ahead.
I will refer specifically to business rates. Businesses in Gwynedd have experienced an average increase of 8.9%, which I believe is the second highest after the county of the Under-Secretary of State for Wales, the hon. Member for Aberconwy (Guto Bebb), who will address us anon. I join my Assembly colleagues in pressing Labour’s Welsh Government to investigate all available powers to ensure that business rates do not penalise businesses. For example, they could use: index business rate multipliers to the consumer prices index rather than the retail prices index; variable multipliers so that small businesses are not disproportionately taxed; three-yearly revaluations, because Gwynedd waited eight years for its most recent revaluation, which had a considerable impact on the increase; and an equitable valuations appeals process. In addition to that, I strongly urge the Welsh Labour Government to consider adopting Plaid Cymru’s business rates support scheme, which would be likely to benefit tens of thousands of businesses across Wales.
Ian C. Lucas
I want to make the point that the delay in the revaluation was because of a decision by the UK Conservative Government. It was nothing to do with the Welsh Labour Government.
Liz Saville Roberts
I emphasise that business rates are devolved and that there is great potential for the Welsh Government to use that as a means to support business. Businesses are seeing 100% increases in their business rates valuations under the present arrangements, and that is extremely difficult for them. Plaid Cymru’s scheme would mean that all businesses valued at £15,000 or less would benefit, and those valued at under £10,000 would not pay anything at all. That would be likely to affect 80% of businesses in Wales, and I think some 70,000 would end up paying no business rates at all, which, knowing my local businesses, I am sure would be greatly welcomed.
Businesses are the backbone of the Welsh economy, and with the right support they can be resilient. To enable that, the UK Government need to come clean on their strategy and Labour’s Welsh Government need to use their devolved powers creatively and boldly to do everything to enable Welsh businesses to weather the storm. Every possible safety net must be put in place to mitigate the potentially tempestuous period in front of us, and both the UK Government and the Welsh Government should have a plan to ensure the long-term resilience of Wales.
Geraint Davies (Swansea West) (Lab/Co-op)
It is a pleasure as always to serve under your chairmanship, Mr McCabe. As has already been said, there is great uncertainty about Brexit among the business fraternity across Wales. If article 50 is, in fact, triggered on 31 March 2017, the remaining EU27 countries will determine the deal that we have to live with, no matter what has been said in this Chamber and elsewhere. There is a natural concern that that deal will be in the interests of those 27 countries and others that are not leaving the EU.
There is the spectre of tariffs. Some people have said there will not be tariffs because we import more than we export. However, only Germany and the Netherlands have a net trade surplus with us, so other countries may have an incentive to impose tariffs. Indeed, German car makers may want to block, for example, Japanese car makers that use Britain as a platform to launch into Europe. Of course, that is why there has been an under-the-table deal with Nissan, which has been referred to, while several other large conglomerates have naturally come forward to ask for money to offset prospective tariffs.
As I said when I intervened, it is particularly important that Welsh businesses and all people relying on exports to the EU have a level playing field and subsidies and support, so that they can continue their terms of trade after Brexit—assuming that Brexit goes ahead. My constituency of Swansea West is part of the wider Swansea Bay city region, where 25,000 people’s jobs involve exporting to Europe. Alongside that, there is obviously a farming community that is helped by the common agricultural policy, which may be under threat, and we also benefit from billions of pounds of convergence funding. I am looking to the Minister to provide assurances on all those things—namely, the level playing field, the matched convergence funding and, indeed, what the farmers may need in CAP.
A big employer in my area is Swansea University, which is an engine and an asset for economic growth. It has now doubled in size with the new bay campus in the constituency of my hon. Friend the Member for Aberavon (Stephen Kinnock). It is a jewel in the crown of engineering research and development capability across Europe, and the problem is that we may not be able to maximise our opportunities of utilising that; it is not only an asset for young people to grow and learn, but for producing innovative products for export.
The European Investment Bank played a critical role in funding the bay campus, which is indeed one of the jewels in the crown of Welsh higher education. Does my hon. Friend agree that some assurance on how to deal with our exiting from the European Investment Bank is desperately needed from the Government?
As my hon. Friend knows, the three primary sources of funding for the bay campus were the European Union, the European Investment Bank and the Welsh Government. We need clarity about those future relationships and future funding. Thank goodness it has actually been built. Clearly, if Brexit had occurred a couple of years ago we would be in all sorts of problems. We are looking for assurances from the Minister on tie-ups with the network of universities across Europe in the future, on possible funding streams and on support for exports that are driven by innovation from that campus. My hon. Friend knows the campus is linked with Rolls-Royce, Tata and other big manufacturers. The idea was to have an integrated approach to export delivery, and we do not want to put that in jeopardy.
There is great concern among the business community across Wales about the prospective falling consumer demand following Brexit and in the light of the autumn statement, which showed that an extra year of austerity would be inflicted upon us and that Britain’s debt would grow to 90% of GDP. Incidentally, it was half of that—45%—when the last Labour Government were in power in 2010. The debt is completely out of control. The Chancellor’s Brexit evaluation is that we will all have to pay an extra £1,000 in future taxes. On top of that, the inflation that has occurred owing to the falling value of the pound is equal to a 5% cut in everybody’s income, which they then cannot spend in local shops and on domestically grown products. There are concerns, and we want reassurance, and the business community wants those assurances without further ado.
Hon. Members may know that my position is that the triggering of article 50 should be delayed until next November, after the French elections in May and the German elections in October, to provide an opportunity for real negotiation up to that point. People should then have the final say on whether it is a good deal or not, with the default position of staying in the EU. As time moves on, not only the business community but everyone will see that the balance of costs and benefits is heavily weighted towards costs, and in my considered view, we are better off staying in. People should have the final say because, frankly, they were given false information when they voted in the first instance.
Assuming for a moment that we trigger article 50, we need those assurances from the Minister now. Businesses desperately want to plan for a prosperous future, rather than an uncertain future of fewer sales.
Christina Rees (Neath) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate my hon. Friend the Member for Ogmore (Chris Elmore) on securing this important debate.
The uncertainties of leaving the European Union are hazardous and wide ranging. Structural funding, environmental protections and workers’ rights, trade with the EU and the impact on the economy and growth are all areas of concern for the businesses and people of Wales. The lack of clarity is both frustrating and worrying, as the absence of a plan creates an inertia that stalls economic growth and investment. Businesses in Wales have already suffered from the impact of austerity and poor economic UK growth since 2010.
The Office for Budget Responsibility has estimated that cumulative potential output growth will be 2.4 percentage points lower than it would otherwise have been in 2021 had the referendum not happened. Growth forecasts from the consultancy company Oxford Economics have been downgraded in all regions, with growth in Wales expected to be about 0.25 percentage points lower than the pre-referendum forecast.
Structural funding has played an important role in the regeneration of a post-industrial Wales. The statistics may suggest that it has struggled to achieve its aim of increasing GDP and wealth, but that is not the whole story. When I visit communities across my constituency and the wider region, I find vibrancy, tenacity and life, despite hardship and economic decline. In the last round of funding, projects financed through our membership of the European Union across Neath Port Talbot have helped to launch 485 businesses, support 7,300 people into work, create 1,355 jobs, provide 14,870 qualifications and enable close to 5,000 people to complete an EU-funded apprenticeship—all in that county borough alone.
Projects such as the £22 million valleys regional park have built the tourism infrastructure of my constituency, and more and more visitors are coming to enjoy the beautiful scenery of Gnoll country park and the industrial heritage of Aberdulais Falls. The regional essential skills scheme has helped thousands of people to acquire the competencies necessary to return to work. Neath Port Talbot has also been a lead partner on the pioneering transitional employment initiative, Workways.
I must pay tribute at this point to the leader of Neath Port Talbot Council, Ali Thomas, who last night announced that he will be standing down after many years of service. In fact, he took over from the previous leader, Derek Vaughan, who went on to become our Labour MEP. They are two great men of Neath.
Does my hon. Friend agree that, even with the prospect of the European Parliament seats for Wales being abolished, Derek Vaughan continues to fight for Wales and for all of us to secure the best deals on European funding for our constituencies?
I absolutely agree that Degsy, as he is known in Neath, is continuing to fight Wales’s corner. He is vice-chair of the European Parliament’s budgetary control committee, so he has great influence in Europe.
Neath Port Talbot has been the lead partner on the pioneering transitional employment initiative, Workways, which has helped to tackle barriers that prevent individuals from finding or returning to employment by supporting the job search, CV writing and interview skills, and access to training. The Workways project would never have happened without EU structural funds. It received a contribution of £16.7 million towards its overall costs. The scheme is held in such high regard that a second phase has been funded—Workways Plus—which began in April this year and will support at least a further 1,000 people into employment.
Swansea University’s science and innovation campus, the Bay campus, which has had a substantial impact on Neath and the region, simply would not have happened without the £95 million of funding received from the European Union. Derek Vaughan’s legacy before he left as leader of Neath Port Talbot County Borough Council was to make sure that the campus was just inside the council area.
And the Aberavon constituency.
And inside the Aberavon constituency, as my hon. Friend points out. Neath Port Talbot is also home to a company called SPECIFIC, which uses coated steel to make world-leading, innovative technologies that produce, store and release energy. SPECIFIC is hugely concerned about leaving Europe, not least because of the essential funding it has received, without which it probably would not exist.
My hon. Friend is making a powerful speech. On the issue of steel, which is at the heart of the SPECIFIC project, the Welsh Government have taken action to deliver £8 million that will be spent on reducing energy costs at the Port Talbot plant, and £4 million for skills and training. That is precisely the sort of industrial strategy that we need. By contrast, the UK Government continue to be completely asleep at the wheel.
My hon. Friend makes a very powerful point, with which I agree wholeheartedly. Not only will SPECIFIC lose its funding, but it will lose its potential market: it could sell its innovative products to Europe. Also, 16,000 farmers gain direct subsidies from the common agricultural policy. More than 90% would go bust without continuing subsidies from the UK Government via Europe.
Those examples illustrate direct investment across the public and voluntary sectors, but we must note the derived benefits to the private sector and all forms of business. Projects such as Swansea University’s Bay campus have supported hundreds of local businesses—contractors, subcontractors, cafés, shops, fuel stations and bus companies; the list goes on. Those who have been on an EU-funded training scheme have taken up employment with local businesses, which in turn have benefited from a revitalised, skilled workforce. The businesses that make up our tourism industry have been safeguarded and developed through additional investment in projects that have encouraged visitors to the area, who have been renting accommodation, eating out in restaurants and pubs, and enjoying the activities and facilities run by local businesses.
The triggering of article 50 is a leap into the unknown. Any process or deal on exiting the EU needs full scrutiny. The Government need to be held to account for their decision, whether it is for a hard Brexit or a red, white and blue Brexit. Whichever Brexit we end up with, we need fully to consider the implications of a Britain outside the single market or the customs union. The British Retail Consortium has already suggested that if we rely on World Trade Organisation rules and tariffs, the price of meat will rise by 27%, and of clothing and footwear by 16%. Those are costs that my constituents can ill afford during the good times, without the loss of funding and the threat of unemployment on top of that. What will the Government do to protect the 100,000 jobs in Wales that depend on our trade with Europe?
Beyond the fear of losing structural funding and trade with the EU, my constituents have concerns about the protection of workers’ rights. We have already seen this Tory Government going at it hammer and tongs over assent to the nasty and pernicious Trade Union Bill. How can we trust them on workers’ rights? I am simply not convinced that the Prime Minister and her Government will be committed to protecting workers’ rights after Brexit and the repeal of EU employment laws. As to whether EU regulations on businesses bring costs or benefits, I appreciate that there are arguments on both sides, and only time will reveal which of those opinions is true.
All in all, this is a troubling time for the people of Wales, and our businesses are no different. Some 95% of businesses in Wales employ fewer than 10 people, and it is those micro and part-time businesses that will suffer the most from poor UK growth, the absence of structural funds, the lack of a single market, and the disappearance of EU regulations.
My hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), our shadow Secretary of State for Exiting the EU, has said that we need to see the Government’s plan before article 50 is triggered. We need sufficient detail of the plan so that the Exiting the European Union Committee and other parliamentary Committees can scrutinise it. We need enough detail so that the Office for Budget Responsibility can cost the plan. We need the devolved nations, such as Wales, to have input, and we need consensus, so that the plan will work for 100% of people, not just 52% or 48%. I look forward to the Minister’s comments on the plan.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr McCabe, and to follow the excellent speeches by colleagues from Wales. I congratulate my hon. Friend the Member for Ogmore (Chris Elmore) on securing this debate. We have all been listening to and hearing the concerns of businesses in our constituencies, which is why we are here today. I hope the Minister will have some helpful responses to the concerns that we have raised.
I have been listening to businesses in my constituency of Cardiff South and Penarth. I have spoken to small, large and medium-sized businesses and to individuals who have raised concerns with me at surgeries, on the doorstep and on many other occasions. There is a lot of concern. The issue is not minor; it comes up again and again. There is a willingness to get on and make things work, but there are a lot of questions and a lot of uncertainty.
Having listened to all those concerns, I am not prepared to support a blank cheque for the Government in activating article 50, particularly when there is so little information available about the plan. Members may be interested to know that the Brexit Secretary has been speaking to the Brexit Committee while we have been sitting; he has confirmed that no plan will be published until February at the latest, because, apparently, a lot of research and policy work needs to be done. He says there will be a transitional deal only if necessary. That is concerning. When in February? How late? If we are talking about activating article 50 on 31 March, we will not get any clarity on the Government’s plans until very late in February.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
I do not think there is anything new in what the Secretary of State has said. Did not the Opposition accept the argument that article 50 will be triggered by the end of March on production of a plan before that?
If the Minister checks the voting list, he will see which way I voted on that matter. I am speaking about my own views on this issue and I certainly have a great deal of concern about the lack of information.
Does my hon. Friend also accept that even if we did agree to this last minute plan, whatever it is, once article 50 is triggered the 27 EU countries will decide to give us what they want, not what is in the plan?
I have a great many concerns about the negotiating process, but I want to turn to three areas of particular concern that businesses have raised with me: regional funding, the single market and the situation for universities.
It is worth reflecting, as some colleagues have, on the importance of the scale on which businesses engage in the single market. There are 191,000 jobs dependent on EU trade, and that affects everything from steel to the high-tech products in my constituency; 500 firms in Wales export more than £5 billion annually to other EU member states and 450 firms from other EU member states, located in Wales, employ more than 50,000 people.
Several hon. Members have spoken about funding and I will come on to that, but, without referencing specific names, the sorts of things I have been told about include workers’ rights to travel to engage in cross-European projects; contracts—which I mentioned in an intervention; and concerns about research collaboration and major long-term projects being put at risk. The message is very clear that businesses do not want a hard Brexit, if there is to be a Brexit. They want it to be as soft as possible, and are particularly concerned about tariffs and access to the single market. Those concerns are constantly raised with me.
Businesses were positive with me about the work that the Welsh Labour Government are doing to try to provide some certainty and optimism in the economy in uncertain times. There is particular praise for the work of the First Minister and Economy Secretary, who went to the United States and Japan to stand up for Welsh businesses and the links that we have with those two markets. Whether it is a case of fighting for funding for the south Wales metro or for other projects, the Welsh Assembly Government are trying to ensure that some positive things happen during the uncertainty.
There is also continued investment in infrastructure projects and building, including a lot going on in Cardiff at the moment. There is the city centre redevelopment; we have plans for new stations; we have an enterprise zone, where there is a lot of investment; and—to give credit—there is some degree of cross-party agreement on a city deal. It is vital that such investment in infrastructure and business should continue, particularly now while there is a lot of uncertainty.
We understand that the Government have given some assurances about the continuation of what would have been European funding. Does my hon. Friend share my concern about the fact that the Government are also talking about changing expenditure priorities?
I do. I am yet to be convinced about the certainty on levels of funding, let alone the sectors. That will be greatly worrying to many in my constituency. It is worth reflecting on what the Office for Budget Responsibility said in the economic and fiscal outlook published in November: that as a result of the referendum decision, the potential output growth will be 2.4 percentage points lower than it would have otherwise been in 2021 without the referendum. As to the impact on Wales, the House of Commons Library briefing mentions that there could be
“lower business investment…the impact of a less open economy on productivity…a reduction in investment in research and development”
“costs associated with adjustments to new regulations or new markets”.
There will obviously be costs and changes: how are they to be minimised?
On the matter of regional funding, €5 billion for Wales is planned for 2014 to 2020, and potentially £2.7 billion post-2020. I still do not feel that we have had the guarantees from the Treasury. Why does that matter? It matters for specific projects such as the south Wales metro, which is vital for people’s ability to get around, do business, get to work and take advantage of opportunities in my constituency and the whole south Wales area.
We might be able to achieve those things in part outside the south Wales metro project. I have supported, for example, the proposals for a St Mellons parkway station, which potentially could be funded by other means. There is a good degree of cross-party agreement about the importance of Network Rail and Department for Transport funding for it. However, fundamentally, the south Wales metro has the potential to be a transformative scheme for the south Wales economy. I am pleased that the First Minister was in Brussels arguing for the £110 million-worth of funding. The European Commission was very clear in saying that it could not comment about what would happen after the UK leaves. Such uncertainty is causing concern, so perhaps the Minister will provide some assurances—particularly about that project, which is so crucial to the economy of south Wales.
I have mentioned concerns about access to the single market, which will affect all businesses. I should be particularly worried if we were to consider putting tariffs on goods produced in Wales. The First Minister has made it clear that that is a red line for him. It would affect industries such as the steel industry in my constituency.
I have spoken many times in this Chamber about companies such as Celsa, based on my patch. It does significant amounts of exporting. It is a European company from Catalonia in Spain and works across the European Union. Forty per cent. of direct sales of British and Welsh steel go to the EU. That is similar to the overall total—41% of total goods exports from Wales go to the EU. What assurances can the Minister give to companies such as Celsa that export so much to the EU, let alone other places? What tariffs might they face in the future? What additional trade restrictions might they face?
We have heard a lot of talk about Airbus, which also has a major facility, Airbus Defence and Space, in a neighbouring constituency to mine, Newport West, where a number of my constituents work. Concerns are being expressed about European collaboration on space projects. High tech is an important growth industry in which the UK has been investing more. I should hate such jobs to be lost from our communities—let alone the wider aerospace industry in south Wales.
I want finally to discuss universities. The total value of future research income to Cardiff University, from the seventh framework programme and Horizon 2020 up to July 2016, was £23.5 million, with further applications in the pipeline of up to £15.7 million; work from the European structural fund was worth £23.6 million, plus a potential £35.2 million of projects in development. Those are significant sums.
To give an idea of the sorts of projects involved, I should say that they include the Cardiff University brain research imaging centre, which is doing pioneering work on dementia, multiple sclerosis and other neurological conditions. We should be proud that that work is going on in our capital city. Many researchers from my constituency work in and around the university. What if such things are to be put at risk? I am hearing a lot of concern from the university sector in my area, from individual workers and universities. What assurances can the Minister give?
There is uncertainty about whether the excellent Erasmus programme in which students from Wales can study in Europe will continue. It has benefited many students from my constituency, and, I am sure, from across Wales.
My hon. Friend makes an excellent point: 18% of Cardiff University’s home undergraduates are defined as internationally mobile—so they have taken part in Erasmus or one of the other types of exchange schemes, often with other European countries. That adds to their value—their opportunities to contribute to the global economy in the future and bring value to the economy in Wales. That is even before we get on to considering the contribution of international students, researchers and experts to our university sector in Wales. What assurances can the Minister give that those opportunities will not be lost in future for the Welsh university sector?
I have outlined three key areas about which concerns have been raised with me. I hope that the Minister will provide some reassurances and guidance for those who have expressed them. It is clear that this is an uncertain time for all involved. I am not happy for the Government to be given a blank cheque over the negotiations. I want to secure the best deal for businesses, individuals and the academic sector in my constituency and Wales.
Kirsten Oswald (East Renfrewshire) (SNP)
It is a pleasure to serve under your chairmanship, Mr McCabe. I thank the hon. Member for Ogmore (Chris Elmore) for obtaining the debate, which has been incredibly interesting. The speeches were all notable and it is a vital topic.
I was particularly interested in the speech of the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). It is an extraordinary fact that there is such a lack of strategy and clarity about the UK Government’s plans. Clearly, Scotland voted unequivocally to remain in the EU, and that is our focus, but for our friends in Wales I reflect on the wise words of the hon. Lady, who talked about a tempestuous period before us. Her focus, and that of other hon. Members who spoke, is rightly on securing the best possible outcomes for businesses in Wales. Instead of the clarity that we would want from the UK Government in this context, we continue to hear such phrases as “Brexit means Brexit”, “have your cake and eat it” and “red, white and blue Brexit”. It is like “The Great British Bake Off” or some kind of punchline. It is just not funny; in fact, it is highly irresponsible.
It is quite extraordinary and very disappointing that before negotiations have even begun, the UK Government appear to have given up on retaining membership of the single market. I understand well the concerns that hon. Members have expressed. Small and medium-sized businesses, which the hon. Member for Ogmore talked about, are watching this kind of debate carefully because they are looking and hoping for clarity and reassurance. Although I have the greatest respect for the Minister, I fear he cannot possibly deliver that because essentially there is no plan.
For all the devolved Governments, it is vital that there is real and proper engagement on the EU, for business reasons, social reasons and other reasons across our society. The hon. Member for Ogmore highlighted a business that had already raised concerns about negative impacts and rightly warned that platitudes are simply no substitute for plans. The hon. Member for Cardiff South and Penarth (Stephen Doughty) spoke of uncertainty among businesses of all sizes about the implications of Brexit. We also heard a sensible question from the hon. Member for Ogmore about whether Welsh businesses will be involved in negotiations. I will wait with bated breath to hear the Minister’s response on that.
There is a significant issue with the involvement of the Scottish Government, demonstrated by our long, unanswered call to the telephone hotline. There is a dearth of real dialogue and opportunity to input. For Wales and Welsh businesses, that attitude—which is in stark contrast with the clear and planned proactive engagement of Scotland’s First Minister—rightly rings alarm bells, as the Brexit vacuum continues. That cannot be more starkly illustrated than by the hon. Member for Cardiff South and Penarth’s helpful comment that it is likely to be February before the UK Government publish any plan.
The hon. Member for Wrexham (Ian C. Lucas) spoke of the need for certainty, which keeps coming up. Businesses are the backbone of the Welsh economy and can be resilient, with the right support. They undeniably require certainty and clarity, which are simply missing. The UK Government must come clean. We want to hear something from the Minister on the Government’s strategy for exiting the EU. The Welsh Government need to put into place a framework of support to ensure they are doing everything possible to help business weather the storm. It seems that the ideological Brexiteers who are sitting right at the heart of power are preventing us from seeing this plan from the UK Government. All we hear are bull-headed assurances that a land of milk and honey awaits—it does not, and businesses can see that.
The hon. Member for Wrexham described what his Brexit negotiating position would be. His particular focus was on migration. The hon. Member for Caerphilly (Wayne David) spoke about skilled migration. I was pleased to hear a mention of universities from the hon. Members for Cardiff South and Penarth and for Croydon Central. Universities have significant concerns. I have had several meetings with representatives of higher education institutions.
Although I did have an association with Croydon Central, I am the MP for Swansea West.
I thank the hon. Gentleman for that important intervention.
I have met several university representatives, both before and after 23 June. They express particular concerns about the sustainability of courses and the finance of universities. Those issues would be hugely compounded by the reported UK Government plans in respect of overseas students. That is a huge issue economically, socially and in educational terms, and the UK Government need to get a grip on that.
More generally, all of us here need to be clear on what we mean when we talk about migrants and migration. It is vital that, as politicians, we never leave any doubt in people’s minds about the value we place on people from elsewhere who have chosen to make their homes alongside us. The First Minister of Scotland made that very clear when she spoke about the EU nationals who have chosen to make Scotland their home. She said:
“You remain welcome here. Scotland is your home and your contribution is valued.”
It is undoubtedly the case in Wales, as it is elsewhere in these nations, that people who have come here more recently, as well as longer ago, have made a significant contribution to our society and continue to do so. Specifically, they have contributed to business, including universities, social care, healthcare, small and medium-sized enterprises and big business. All those things are vital to the Welsh economy.
The hon. Member for Dwyfor Meirionnydd expressed a concern that the UK Government need to act in the best interests of Wales. She emphasised the importance for Wales of single market membership and customs union membership. She also mentioned the business confidence figure for Wales, which has fallen, despite the great ambitions of the business community. Business is concerned. She gave a striking example of the potential significant impact on important companies such as South Caernarfon Creameries.
It has been quite challenging for me to sit here today and hear hon. Members trying desperately to look on the bright side. There really is not much to look forward to, should we leave the EU. It is no wonder that hon. Members such as the hon. Member for Swansea West seek reassurance. It seems clear to me, as someone who represents a constituency where 74% of people voted to remain, that there are vital benefits to remaining in the EU, as the hon. Member for Neath (Christina Rees) said. She spoke of workers’ rights, which are very important, as well as economic benefits and social protections. I echo those sentiments.
I also highlight the importance of cultural and business benefits, which we could lose if we leave the EU. Some 99% of Welsh businesses are SMEs. The hon. Member for Dwyfor Meirionnydd emphasised the need to adopt or adapt systems similar to those favoured in Germany to ensure the potential of those businesses is achieved. She is focused on achieving the best deal for Wales, for her constituents and for Welsh business.
My focus is on protecting Scotland’s interests. Of course, our aim to remain in the EU is strong and unequivocal. The UK vote means that Scotland faces being taken out of the EU against our will. That would be unacceptable and democratically unsustainable. Just as the hon. Member for Dwyfor Meirionnydd focuses on protecting Wales, it is right that my focus and that of my party is on considering and pursuing all possible steps to ensure Scotland’s continuing relationship with the EU.
To conclude, it is essential that we get far more from the UK Government than the limbo, woolly words and clunky slogans we have had so far. For all our businesses, all our communities and all the people living in them, it is essential that the UK Government start to have real, meaningful discussions with the devolved Governments and much more constructive discussions with our friends in Europe.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate my hon. Friend the Member for Ogmore (Chris Elmore) on securing his first Westminster Hall debate on this important subject and on the powerful case he made. He was right to underline the huge uncertainty for businesses in Wales at the moment and the role that the Welsh Government have played in utilising EU funds to support jobs in Wales through initiatives such as Jobs Growth Wales, which, as he outlined, will lead to 8,955 new job opportunities. He also highlighted the work to support initiatives such as the south Wales metro, Horizon 2020 and the support the Welsh Government have given to universities.
We have heard from a number of hon. Members from across Wales, who have made clear the risks of our departure from the EU for businesses in their constituencies. It is really positive to see the number of constituencies represented by Opposition Members—my hon. Friends the Members for Ogmore, for Wrexham (Ian C. Lucas), for Swansea West (Geraint Davies), for Caerphilly (Wayne David), for Neath (Christina Rees), for Aberavon (Stephen Kinnock), for Alyn and Deeside (Mark Tami) and for Cardiff South and Penarth (Stephen Doughty), as well as my right hon. Friend the Member for Delyn (Mr Hanson) and the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). That is in complete contrast with the lack of Members on the Government Benches, which I hope is not an indication of their view on businesses in Wales.
It is important that we highlight the risk of the Government’s lack of certainty and clarity about their post-exit plans and the huge uncertainty that is causing businesses. As my hon. Friend the Member for Wrexham underlined, businesses and investors hate uncertainty, yet at the moment that is all we have from this Government. That reflects the views expressed in discussions that I have had with businesses in my constituency of Merthyr Tydfil and Rhymney.
My hon. Friend the Member for Caerphilly highlighted the view of Norgine in Hengoed in his constituency and its hope for a soft Brexit. That message is repeated by businesses across Wales.
My hon. Friend the Member for Alyn and Deeside highlighted the work that Airbus does, the various plants that it has across Europe and the need for flexibility to travel. When I met Airbus representatives some weeks ago, they talked about workers who may go to European plants for two hours, two days or even two weeks—it is very uncertain, so there is a need for flexibility.
My hon. Friends the Members for Swansea West and for Aberavon highlighted the role that universities play and particularly research and development, the risk to future funding and the uncertainty that that is causing at the moment. My hon. Friend the Member for Neath highlighted the absence of a plan for exiting the EU and the uncertainty that that is causing for business.
Does my hon. Friend agree that once article 50 is triggered, all the MEPs will be involved in the negotiations because they will have to have a vote at the end of the negotiations to ratify the proposal before it goes to the European Council to be ratified, so it would be fair for all Members of this House to be involved in the negotiations as well?
My hon. Friend makes a very important point. It underlines the position that we are in: we have no direction from the Government. They say that Brexit means Brexit and they are not willing to give a running commentary on what is happening. We understand that up to a point, but we are not asking for a running commentary. As hon. Members know, we are asking for the UK Government’s direction of travel, but unfortunately that has not been forthcoming.
I pay tribute to the comments of my hon. Friend the Member for Cardiff South and Penarth on the work of the Wales MEP Derek Vaughan, who continues to stand up and speak out for Wales. I also agree with my hon. Friend’s comments on the Welsh Government continuing to promote Wales and secure funding for infrastructure projects. We heard just today the announcement about a range of large-scale infrastructure projects taking place across Wales.
The last time that I spoke in a Westminster Hall debate from the Front Bench, I said:
“The Government have a clear and pressing duty to reduce…uncertainty. We have all heard of investment decisions that have been delayed and of businesses that are genuinely worried for their futures. People voted to leave, but they did not vote to damage our economy, so the Government need to step up and set out their plans more clearly to deliver the clarity and business confidence we so badly need.”—[Official Report, 25 October 2016; Vol. 616, c. 40WH.]
I still stand by every word of that today. Despite the time that has passed, neither the Minister nor the Government have done anything to give businesses any clarity or certainty, leaving people, as my hon. Friend the Member for Ogmore so clearly pointed out, in the dark about their futures, their careers and their businesses.
At the recent Welsh questions, my hon. Friend the Member for Clwyd South (Susan Elan Jones) quite reasonably asked the Minister:
“Can he tell us whether his officials have made any estimate of how many jobs in Wales will be lost if the UK leaves the single market and what he and his Government are planning to do about it?”
We are elected to Parliament to represent our constituencies and their interests. As the Opposition, it is our democratic duty to scrutinise and challenge the Government. That was not an unfair, partisan or trick question from my hon. Friend. It was asking what assessment the Minister’s Department has made of the biggest issue facing our country since the second world war and what plans the Government have to help mitigate the negative effects. However, the Minister replied:
“I am somewhat disturbed by the hon. Lady’s comments. Time and again, I hear Opposition parties talking down the Welsh economy.”—[Official Report, 30 November 2016; Vol. 617, c. 1509-1510.]
That was not an appropriate response. In fact, it was quite shameful, and it does a disservice to the office that the Minister holds not to engage with that as a genuine question.
If the Government are planning to offer support to protect jobs, businesses in Wales need to know what that package will look like and when it will come. So far, this has been a Government of smoke and mirrors, confusion and obstinacy. Whether through ignorance or incompetence, they will not give a straight answer to the simplest of questions.
Furthermore, in a written question, the shadow Secretary of State, my hon. Friend the Member for Cardiff Central (Jo Stevens), asked what estimate the Secretary of State has made of the economic value to Wales of the UK’s membership of the single market. However, again, rather than answering the question, which might help to highlight what the impact of a hard Brexit could be on Wales, he said:
“I recognise many businesses in Wales trade with the single market”.
Given the significant impact that the EU exit could have on Wales and, more importantly, the impact that the wrong deal could have on our country, that excuse for an answer is completely unacceptable. Is it asking so much for the Minister to share with us the assessment that he has made of the biggest challenge facing our country? Will he today put on the record the Government’s assessment of the economic value to Wales of the UK’s membership of the single market?
My hon. Friend the Member for Cardiff Central also asked at the last Welsh questions whether Ministers would commit to supporting jobs at the Ford plant in Bridgend post 2020 by offering Ford the same post-Brexit guarantee as the Government recently gave its competitor, Nissan. It is vital for the future of that site and the jobs that are linked to it through the supply chain, as we have heard this afternoon, that post Brexit, it is able to operate on the same terms as competitors such as Nissan. In refusing to give guarantees to Ford, the Secretary of State is offering businesses in Wales a worse deal than those in Scotland or Northern Ireland. We know that because his Cabinet colleagues, the Secretaries of State for Scotland and for Northern Ireland, committed at the Dispatch Box to offering the same protections for businesses in their respective countries as those offered to businesses in England. Is Wales getting a worse deal than Northern Ireland and Scotland? If so, can the Minister tell us why? If not, why will he not guarantee Ford the same deal as its competitors? It looks like a game of playing favourites. My right hon. Friend the Member for Delyn highlighted the support needed for industries such as the automotive industry.
Labour Members believe that a modern industrial strategy for Wales should be more than just picking winners from Whitehall. Companies in Wales should get at least the same deal from the Westminster Government as companies in England. If the Minister will not give that commitment to Ford, perhaps he will consider another major company in Wales, one of the biggest employers and investors—Airbus. It, too, needs to know what the future looks like. We need a straight answer from the Minister. Will Airbus get the same deal from the Government as Nissan? Airbus spends £4 billion with suppliers, supporting approximately 110,000 jobs. Millions of pounds and hundreds of thousands of jobs are on the line, so we need answers from the Minister. Will he offer a deal and protect the future of 100,000 jobs in Wales?
I have said this previously, but for the avoidance of doubt I will repeat it. Labour respects the result of the referendum, but we must get the best deal for people and businesses in Wales from the coming negotiations, and we will get that only if the Government provide some clarity on what their strategy is and what businesses can expect. It is essential that the UK Government work closely with the Welsh Government and the other devolved Administrations in preparing for the EU exit. They owe that to the businesses and people of Wales. I look forward to some clarity from the Minister on what he and the Government are doing to provide any reassurance to the people and businesses of Wales.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
It is a pleasure to serve under your chairmanship, Mr McCabe. I, too, extend congratulations to the hon. Member for Ogmore (Chris Elmore) on securing the debate, and on winning a by-election in Ogmore —a task that was beyond my capacity back in 2002.
This has been a good, detailed debate, but it has been lacking in constructiveness. Its title on the Order Paper is “Effect of exiting the EU on businesses in Wales”, but throughout the debate, an acknowledgement of Wales’s strong position has been sorely lacking. There has been no mention of the fact that in the past year, Wales has performed extremely well on jobs. On every single measurement of employment, the Welsh performance has been positive, and it has been in the top three of the 12 UK regions and nations. As we debate our exit from the European Union, we are in a strong position, both as regards employment levels and how businesses are performing in Wales. It is a shame that those comments have not been made in this debate.
There has been acknowledgment of the strength of various parts of Welsh industry, and of success stories in parts of Wales, but we need to look at the overall performance of the Welsh economy since 2010. Wales’s employment growth has been well above that of the UK as a whole. We have seen unemployment in Wales fall, and I am happy to say that that is because of a constructive relationship between the UK and Welsh Governments. That is something we should hear a bit more about, rather than the scaremongering we hear when people continually ask whether there will be job losses as a result of leaving the European Union.
Does the Minister agree that the most disappointing aspect of this debate has been the absence of a single speech from a Conservative party Member of Parliament for Wales?
I thank the hon. Gentleman for his intervention.
Glyn Davies (Montgomeryshire) (Con)
Will the Minister take an intervention from me?
I will of course give way to my Parliamentary Private Secretary—no, had I better not. Certainly, the debate has been interesting, but hon. Members are well aware that Members have responsibilities in different parts of the House and are in different debates that are going on, and it is unworthy of the hon. Member for Caerphilly (Wayne David) to try to score that political point.
Going back to the success of the Welsh economy, we need to identify the fact that small businesses are a great part of that success story. Small businesses are growing. Indeed, we have seen the figures that show that small businesses’ growth in turnover in Wales has been among the best in the UK during the past year. The best performing part of the entire UK has been small businesses in Cardiff, which have enjoyed 12% growth in turnover, outpacing the situation in London. I pay tribute to all small businesses in Cardiff that have been part of that success story.
I pay tribute to them, too, as I did in my speech. On the Minister’s earlier comments, to be fair, I did make it very clear that there had been work on the city deal and on the enterprise zone, and that kind of constructive work needs to continue through this period of uncertainty. Does he agree that the very real concerns being raised by a number of businesses in my constituency, despite that growth, are valid and need to be answered?
As a Minister in the Wales Office, I fully accept that small businesses have concerns—indeed, all businesses in all sectors of the economy in Wales have concerns—but they also see opportunities, and we have heard precious little on those opportunities in this debate. The Secretary of State for Wales and I have been out dealing with stakeholders regularly—those in the farming industry, the third sector, the university sector, and the further education sector; businesses small and large; the Confederation of British Industry; the Institute of Directors; and the Federation of Small Businesses. We have been talking to all those stakeholders. We have been doing that because this change—the decision made by the people of Wales and the United Kingdom to leave the European Union—is huge, so it is imperative that we talk to individuals, businesses and stakeholders who will be affected.
A Government who were arrogant enough to think that they had all the answers are not a Government I would want to be a part of. The fantastic thing about my involvement in the Wales Office since March has been the opportunity to meet so many stakeholders in Wales and listen to what they want from the decision that was made to leave the European Union.
I am grateful to the Minister for showing his usual courtesy in giving way a great deal. Will he give me an example of one opportunity arising from Brexit that the university sector has told him about?
The hon. Gentleman asks an important question. I have to respond in the same way as some of the hon. Members who mentioned businesses in their constituency but indicated an unwillingness to name them. I was recently in discussion with a university in Wales that saw huge potential to increase its attractiveness to students from outside the European Union; however, it is not a case of either/or. It wants to attract an increasing number of students from outside the European Union, but it also wants to ensure that it keeps the markets that it has in the European Union. These discussions are wide-ranging, and it is fair to say that the responses that we are getting, even from the further and higher education sector, are not as negative as the hon. Gentleman implies.
It is interesting that the Minister has come to the subject of universities, which I mentioned. Does he care to elaborate on his suggestion that universities do not particularly see this as a negative, because that is contrary to the discussions that I have had with them? Also, will he talk about overseas students and the impact of his Government’s plans for overseas students on universities in Wales, Scotland and elsewhere?
The whole point of having consultations with universities is to understand their perspective. Their perspective is that, yes, they have concerns about elements of the decision to leave the European Union, but they are not entirely negative. I am not speaking about a single university; between myself and the Secretary of State, we have spoken to most of the higher education system in Wales since the decision to leave the European Union. We have listened to those concerns, but we are also hearing that they see opportunities. More than any sector, the higher education sector is aware that its success and ability to play a full part in the development of cutting-edge technologies, for example, is dependent not only on our membership of the European Union, but on our partnerships with all parts of the world. I argue that the doom and gloom of some people here, when it comes to us no longer being part and parcel of European projects supporting higher education, can be challenged through agreements with states such as Israel. Again, we need to be slightly more constructive when talking about the response.
Several hon. Members rose—
I have to make progress, because I have only five minutes left. We also need to talk about exports. We are doing extremely well: Wales has doubled its exporting since 1999, which has been a great success, and many people have highlighted the fact that we export some 60% of our products outside the European Union. We appreciate the importance of the single market to businesses in Wales, but it would be wrong to think that the single market is the only option for Welsh businesses. I welcome the comments about the importance of the city region deals; they are important. I would not want to underestimate the importance of the guarantee given by the Chancellor that European funding will go on until the point at which we leave the European Union. I am grateful that that has been recognised by some Members.
On Wales’s involvement in the negotiations, we should take some comfort from the fact that there is an ongoing engagement process from the Wales Office and across Government. The Secretary of State for Exiting the European Union and the Secretary of State responsible for foreign investment have been to Wales, so the engagement is there. In addition, cross-Government committees have been set up to ensure that the voices of the Northern Ireland Assembly, the Scottish Parliament and the Welsh Assembly are heard. I have sat on those committees, and I say to the spokesman for the Scottish National party, the hon. Member for East Renfrewshire (Kirsten Oswald), that the contributions made in those committees by members of the Scottish national Government in Edinburgh have been incredibly constructive and positive. Of course there are differences, but the efforts to create a structure that allows all the Parliaments and nations of the UK to contribute to this discussion are very important.
It is only fair to respond to the questions asked by the hon. Member for Ogmore. It is fair to say that we have offered guarantees on European funding up until the point of exit from the European Union. The questions on funding after our exit from the European Union also relate to what we would qualify for after our exit from the European Union. That still needs to be looked at and considered carefully. I am unable to give any assurances on that issue at this point in time; indeed, it would be irresponsible of me to do so.
I was asked about skills, and there is an issue about that. We have had huge investments from European Union funds to support skills, but it is imperative to highlight that some degree of certainty is offered. In addition, I point the hon. Gentleman to the fantastic agreement between the UK Government and the Welsh Government in ensuring that there is a support structure in place for the apprenticeship levy; I hope that he welcomes that. Another issue that has been highlighted is the triggering of article 50. Most, but not all, hon. Members on the Opposition Benches have supported the fact that there will be more information provided before we trigger article 50. Obviously, the Labour party has stated that it will support the triggering of article 50, and I welcome that development.
We are moving forward, and a detailed plan will be forthcoming, but it is important to stress again that the reason why we are not providing an ongoing running commentary is that we have an obligation to listen to the views of people in Wales and the rest of the United Kingdom. Hon. Members, especially those sitting on the Opposition Benches, ask for clarity; today I have heard a degree of difference in the calls for membership of the single market. For example, the hon. Member for Wrexham (Ian C. Lucas) highlighted that there are genuine concerns in his constituency and other parts of north-east Wales about migration. He will be aware that any efforts to deal with that issue would have an impact on our membership of the single market. That is a more subtle response than we have heard from some hon. Members.
Finally, on this desperate need for information, I fully accept that businesses in Wales need to know more. However, I share the concerns of the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts); I have had more correspondence relating to business rates than on this specific issue. We have the responsibility to do the right thing. I am confident that we will, and in February more information will be made available.
Motion lapsed (Standing Order No. 10(6)).
Sitting suspended for a Division in the House.
The debate is also available online at https://hansard.parliament.uk/commons/2016-12-14/debates/2AC9E065-C230-44E3-8AB4-A00D3AFC1AAF/ExitingTheEUBusinessesInWales.