Aberconwy MP and Wales Office Minister Guto Bebb spoke in a Westminster Hall debate on energy in Wales.
Ben Lake (Ceredigion) (PC)
I beg to move,
That this House has considered the future of the rural economy in Wales.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful for the opportunity to have a debate on a topic that is of great importance to the people of Ceredigion, whom I serve, and a subject that is close to my heart.
An economic strategy that facilitates growth in rural and urban Wales and forges stronger links between them is sorely needed if we are to avoid building a geographically unbalanced Welsh economy. I hope that we can debate the ways in which the current approach fails rural Wales and how those failings can be addressed. The rural economy is resilient and there is potential for greater development that should not be left unrealised. At the very least, I hope to persuade hon. Members that securing a prosperous future for the Welsh rural economy is not a cause that should be championed only by those fortunate enough to represent rural constituencies; it should be a priority for us all. As such, it is good to see right hon. and hon. Members from urban as well as rural constituencies here, and I look forward to their contributions.
The development of the rural economy should form a key part of an economic strategy for Wales if we are to avoid a national economy unhelpfully concentrated in a few areas or in one corner of the country. We need look no further than the UK economy to understand the consequences of an unbalanced approach to economic development. Page 218 of the “Industrial Strategy” White Paper illustrates all too clearly how focusing attention and investment on urban centres has meant that the productivity of rural areas is consistently below the UK average, in stark and rather depressing contrast to that of larger towns and cities. I am sure that we will hear a great deal in this debate about the supposed successes of the UK’s current economic approach, but who benefits from the status quo? If that approach gives rise to such grotesque regional inequality, can it truly be considered a success? It is not over-ambitious, let alone idealistic, to believe that the prospects for individuals living in the countryside should be just as promising as those for individuals living in cities.
Although I am not surprised, I am concerned that the development of the rural economy is not high on the UK Chancellor’s list of priorities. Last week’s Budget offered no sign of imminent change in the UK’s approach to rural development, and even less promise for the rural economy in Wales. Indeed, one is left to infer from the few policies on offer that the Government’s intentions for the rural economy, at least in England, amount to little more than improving existing connections between the countryside and the cities to ensure that the prosperity of the economic engines and powerhouses trickles to the rural periphery that little bit faster. Yet again, I fear we have a Budget that serves the south-east of England rather well, at the expense of the rest of the UK.
Buried deep in the Budget, however, there was a cautious and no doubt carefully worded announcement about a growth deal for mid-Wales. It does not overwhelm me with confidence, nor am I over-enamoured of the thought of delineating new economic areas without considering whether there are sufficient cultural, economic and social links to justify those new lines on the map. Nevertheless, I appreciate that the growth deal for mid-Wales—or perhaps the Welsh midlands—could be a real opportunity to deliver for some of those rural communities that have suffered chronic under-investment and neglect by successive Governments. It is also a chance to diversify the base of the rural economy to ensure that, just like the economic success stories of the cities, the economy of rural Wales is rooted in a rich mixture of sectors and industries.
Agriculture, the food and drink industry and tourism are at the heart of the present rural economy, as I am sure other right hon. and hon. Members will explain in more detail. A growth deal for rural Wales would need to safeguard those foundations, but it could also enable us to build a more mixed economy on them, and in so doing secure a more prosperous future for rural areas. It is therefore important to stress that if a growth deal is produced for mid Wales, it cannot mindlessly replicate the model used for city deals. The Government must do more than merely pay lip-service to the idea; they should work with the Welsh Government to engage with stakeholders and forge a bespoke package that focuses on addressing the unique challenges and opportunities facing the rural economy.
One fundamental problem that could be addressed by a worthwhile growth deal is the poor connectivity in many rural areas of Wales. Broadband, or rather the lack of it, is by far the most prevalent issue raised by my constituents in Ceredigion, which is among the 10 worst constituencies for broadband speeds—an affliction that also plagues the Minister’s constituency. Wales has the perceived benefit of being able to receive investment from the Welsh Government and the UK Government, but thus far both have failed to outline how broadband will be delivered to some of the most rural parts of the country.
Recently, the UK Government invested significant sums to improve broadband infrastructure in three of the four UK nations, but unfortunately not Wales. They managed to find £20 million extra for ultrafast broadband in Northern Ireland. For the time being, I am confident that residents in Ceredigion would happily settle for superfast broadband. The UK Government also managed to find £10 million for full-fibre broadband in six trial areas across England and Scotland, but what about rural Wales?
According to Ministers, the decision on where to invest that money was based on how likely they believed the investment was to stimulate economic growth. Rural Wales should not be written off as an area that has no potential, that would not be successful even if it had effective digital infrastructure, or that is simply not worth it. Why should shared office spaces and other opportunities afforded to start-ups and small businesses be poorer in rural areas? Why should essential utilities such as adequate broadband and mobile infrastructure be dismissed as luxuries for those who live in the countryside? If we are to make Ceredigion and other rural areas of Wales more practical places for businesses to locate and expand, and if we are to ensure that communities can fully benefit from the opportunities afforded by better digital connectivity, investing in broadband and mobile infrastructure is crucial.
Why stop there? A potential growth deal for the Welsh midlands—sorry, for mid-Wales—could also include an ambitious package of investment in transport infrastructure. Reopening the railway line between Aberystwyth and Carmarthen would help to reconnect north and south Wales. Installing a network of electric vehicle charging points would allow rural Wales to make the most of advances in electric cars. As well as improving connectivity, such investment by the UK and Welsh Governments would send a clear signal to budding entrepreneurs and start-ups that the countryside is open for business. It would be a strong statement of intent and confidence.
I am not alone in thinking that rural Wales is worth such an investment. Ceredigion has almost 9,000 microbusinesses, which account for up to 94% of all businesses in the constituency. They sustain the local economy and make up our communities, yet they are penalised by poor all-round connectivity. Improving that connectivity is key to supporting and sustaining those entrepreneurial, innovative and hugely important businesses while opening the door to new enterprises.
I am conscious that other hon. Members wish to speak, but it would be remiss of me not to speak briefly about the need to secure the current foundations of the rural economy, or about how a potential growth deal could help to steady nerves in what is proving to be a most uncertain time. Food and drink manufacturing contributes £1.5 billion to the Welsh economy, supports more than 22,000 jobs and generates more than £330 million in exports. It sits at the heart of the food and drink supply chain that generates a total of £4.5 billion for the economy and supports more than 240,000 jobs across Wales. Agriculture in Ceredigion directly employs more than 6,000 people. Some £40.8 million is spent on goods and services purchased by farmers, which in turn sustains additional spending of £96.9 million.
Although they are seldom associated with the rural economy, the teaching and research conducted in our universities also make a vital contribution: on Ceredigion’s economy alone, they have an annual economic impact worth approximately £250 million. The uncertainty surrounding Brexit is throwing our higher education sector into uncertainty. Clarifying future funding and visa arrangements would go a long way towards addressing that.
David Hanson (Delyn) (Lab)
The hon. Gentleman will know that sheep and beef farming are critical parts of the economy, not just in his constituency but in north Wales. Does he agree that the Minister should give an assurance that those products will eventually be tariff-free post-Brexit? If they are not, we will face potential loss of business and therefore loss of income to the rural economy.
I agree that an assurance that beef and lamb exports will not be subject to tariffs or non-tariff barriers post-Brexit would go a long way towards securing the future of agricultural industry and would settle a lot of nerves across the country.
It is imperative that any growth deal for mid-Wales takes account of the significant burden that leaving the EU places on such sectors. The UK Government’s steadfast pursuit of severing all ties with the single market risks undermining the rural economy. We should strive to build a more mixed rural economy, but we must also secure its foundations. I was therefore glad to learn that my Plaid Cymru colleagues in the Welsh Assembly have helped to safeguard the future of Welsh agriculture by securing £6 million of funding for a grant scheme to help young entrants to establish themselves in agriculture. With Brexit negotiations stumbling at every possible hurdle, such funding cannot come quickly enough. The right hon. Member for Delyn (David Hanson) alludes to the effect of Brexit on tariffs; it looks increasingly likely that any meaningful beneficial relationship with the single market and customs union will be abandoned.
I am deeply concerned that Welsh agriculture will be sacrificed in EU negotiations. We will have to compete with markets with far lower food hygiene and animal welfare standards, while losing unrestricted access to our main export market. Welsh farmers will be hardest hit by the double whammy of cheap imports and new regulatory barriers. A staggering 90% of Welsh food and drink produce, produced mainly in rural areas such as mine, is exported easily, directly and freely to the European Union. Do the Government expect farmers simply to replace 90% of their customers overnight? We desperately need certainty and clarity.
The damaging impact of Brexit uncertainty on the whole rural economy should not be underestimated. The National Farmers Union’s farm confidence survey in April showed that 20% of farmers are likely to reduce investment as a result. Without clarity on trading relationships or the support payments that make up to 80% of farm incomes in Wales, it is hardly surprising that many are postponing further investment in their businesses. That should alarm us all, because for every £1 invested in the farming industry, more than £7.40 is put back into the local economy. Our communities simply cannot afford to lose such investment. Without it, the future of the rural economy looks very bleak indeed.
Tourism is a £2.8 billion Welsh industry that employs 4,000 people in Ceredigion and contributes £70 million to gross value added. It often goes hand in hand with agriculture and is an important contributor to the rural economy. Plaid Cymru has proposed a 15% reduction in VAT for the tourism and hospitality sector, which would generate an estimated 5,500 additional jobs and an economic boost of £166 million. Our proposal is not innovative or pioneering thinking, but simply common sense. It would stimulate investment, create jobs, increase consumer spending and help to ensure that Wales’s visitor economy continues to thrive. Even the UK Government think it is a good idea: the Chancellor announced a review of tourism VAT in his Budget, although of course it applied only to Northern Ireland. If it is good enough for Northern Ireland, why is it not good enough for us? Could it not be included as part of a growth deal package for the Welsh midlands—sorry, mid-Wales? At the very least, it should offer resources to support organisations such as Mynyddoedd Cambria that work to forge closer links between the old market towns of the Elenydd—the Cambrian mountains—and ensure that coastal and inland areas benefit from tourism.
It is deeply frustrating that the potential of the Welsh rural economy was not adequately pursued in last week’s Budget, but a growth deal could be the first step towards correcting that mistake. Offering the support and investment required to sustain today’s rural economy will be crucial, but just as important is the opportunity to change how the rural economy is understood, recast how rural development is pursued, and rejuvenate our aspirations for such development. Such new thinking is already being explored by colleagues of mine, including a former Member of this House. The economic region of Arfor aims to develop west Wales into a more cohesive and connected entity. There is no reason why a growth deal for the Welsh midlands—or mid-Wales—could not support and work in conjunction with such an economic area.
I have already mentioned the importance of the agriculture, food and tourism sectors to today’s rural economy. Let us make the most of the opportunity presented by the growth deal to redefine the rural economy of tomorrow. If done properly, such a deal could begin to address the issues plaguing today’s industries and could implement the conditions necessary to facilitate a more versatile future for the rural economy. It could concentrate on improving connectivity and offering greater support to higher education institutions so that they can build on their expertise and cement themselves as centres for the technologies of the future.
After all, why should rural Wales not be at the forefront of biotechnology and research? It could be the centre of cutting-edge knowledge, tackling global issues such as food security. Aberystwyth University’s institute of biological, environmental and rural sciences is already an internationally renowned research and teaching centre for biotechnology and environment studies. It is leading the work to address some of the most pressing issues facing the agricultural sector, and it has already received support from the Biotechnology and Biological Sciences Research Council for its Aberystwyth innovation and enterprise campus. Just imagine the potential benefits of further investment in our other universities in rural Wales! Such investment could serve as the foundation of a bigger Welsh biotechnology industry, shaping the future of food and farming for generations and increasing the breadth of highly skilled and highly paid careers available in rural Wales. That is just one example that is open to the rural economy if we wish to explore it.
I am in no doubt that the Welsh and UK Governments desperately need to reconsider their approach to economic development and to refocus attention on the rural economy, to ensure that it forms an integral part of any economic strategy for Wales and that it is more than a simple afterthought, an also-ran, a non-essential addition to the real work of developing our cities and urban areas.
People should have a realistic hope of being able to pursue a career, and of being able to afford to settle down and lead a prosperous life in any part of Wales. I hope the Minister accepts the points I have raised in the spirit in which they are offered. The possibilities for a mixed and advanced rural economy in Wales are endless, provided that the potential is unlocked with the right investment and the right growth deal for the Welsh midlands—or mid-Wales.
Several hon. Members rose—
Mr Philip Hollobone (in the Chair)
Order. The debate is due to finish at 5.30 pm, which means that, under the rules of the House, I need to call the first of the Front-Bench spokesmen at seven minutes past 5. There are guideline limits of five minutes for the Scottish National party, five minutes for Her Majesty’s Opposition and 10 minutes for the Minister, with three minutes for Mr Lake to sum up at the end. Three Members are seeking to catch my eye, which means that there will be a time limit of eight minutes for each of them.
Susan Elan Jones (Clwyd South) (Lab)
It is a great pleasure to serve under your chairmanship, Mr Hollobone. Congratulations are very much in order for the hon. Member for Ceredigion (Ben Lake), the Member for the Welsh midlands—I like the sound of that. I am not sure what the comparative term would be for Members from north Wales; I think we will stick to north Wales. [Interruption.] My right hon. Friend the Member for Delyn (David Hanson) said, “Scotland”. We will stick to north Wales—we have better weather, I think.
I am conscious of the importance of the subject of the debate. My own constituency includes many rural communities. I will not be able to name them all, which risks offending people, but in its 240 square miles are the villages in the Ceiriog valley, Minera, Llangollen, Corwen, Cynnwyd, Glyndyfrdwy, Carrog, Llandrillo, many of the Maelor villages and many other areas the main industry of which may not be farming but which involves a considerable amount of agriculture. I was interested to hear from the National Farmers Union Cymru that about 60,000 people in Wales are employed full or part-time in Welsh agriculture. That is a staggering number, especially when one considers the ramifications for other industries in those areas.
I do not always quote the Countryside Alliance, but I would like to do so today. [Interruption.] I am glad that the hon. Member for Carmarthen West and South Pembrokeshire (Simon Hart) agrees with me. The points that the Countryside Alliance has made on the issue are superb. It notes, for instance, that Wales exported £12.3 billion-worth of goods outside the UK in 2015, of which 67% went to the European Union. It makes the point that it is vital that the UK Government seek to maintain tariff-free access to EU markets for food and agricultural produce. It notes also that if the UK Government do not establish a new trade agreement with the EU before leaving and do not adopt World Trade Organisation terms, the £12 billion-worth of food and agricultural produce that the UK exports to the EU each year will face the prospect of high tariffs, which would be damaging to UK producers, including those in Wales, and to EU consumers. That shows that the future of the Welsh rural economy is inextricably linked to what happens in, and how the UK Government and others deal with, the Brexit negotiations.
My right hon. Friend the Member for Delyn made the point well about beef and lamb exports. We also need to note that farmers in Wales must never become a bargaining chip. If the UK Government—in their trade deals with large meat-exporting countries, such as New Zealand, Australia, Brazil and the USA—do not listen to our farming industry, that will be devastating for our rural economies. I know that the Minister has always, in himself, made positive noises about our relations with the EU, and I make the point to him that where there is a transfer of powers post-Brexit in areas that are currently devolved, it is vital that those powers are devolved to the Welsh Government.
One spark of light after Brexit—if it ever happens—might be what happens with the common agricultural policy, or CAP. The NFU, in what I think is the reverse of spin, made the point that although Wales has only 4.7% of the UK population it has 9% of the UK CAP allowances. I do not think that that was meant to be spin; I think it was meant to show how important the rural economy is to Wales. If we are to look at a new CAP that will apply Wales-wide and UK-wide, we need to reshape it in a way that makes it less interested in supporting the likes of the Duke of Westminster and more interested in supporting the Welsh hill farmer—for the many, not the few, and for small family farms.
Tourism, of course, is vital to any discussion on the Welsh economy, and I was delighted that the “Under the Arches” festival at Pontcysyllte aqueduct in my constituency won a prestigious north Wales tourism award. There is so much in my area that is connected with tourism, such as the Llangollen railway extending, as it will fairly soon, into the middle of Corwen; the Dee Valley area of outstanding natural beauty; and much that is developing in the Ceiriog valley and in many other places. Will the Minister support our plans locally for the vital adaptation of Ruabon station so that there can be better disability access? I am sure he would wish to support those efforts.
Ian C. Lucas (Wrexham) (Lab)
Does my hon. Friend agree that that worthwhile step would best be made in conjunction with the introduction of a half-hourly service between Chester and Shrewsbury, along one of the most beautiful railway lines in the United Kingdom, so that more people from the west midlands and the north-west of England, as well as from the rest of the country, could see just how good it is?
Susan Elan Jones
That is a wonderful idea.
I would also like to mention the Welsh Government’s rural development programme. It has been innovative, with support for food, timber and other businesses, as well as farm business grants and even a micro small business fund. Many companies in my constituency, and other areas, have benefited, and I welcome the diversity of projects it provides.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Is it not the case that the Labour Government’s economic policy for rural Wales has been a complete and utter failure? Does the hon. Lady agree with Baroness Morgan, who also serves in the Assembly, that there needs to be a dedicated economic plan for rural areas in Wales, and that that indicates that the Welsh Government have failed?
Susan Elan Jones
The hon. Gentleman always puts it so well in his own way, does he not? The points my good colleague Baroness Morgan made referred to the need for development programmes in specific areas. In the same way as we speak of the north Wales deal, I think she was thinking of something dedicated specifically to certain parts of west Wales. I think that the hon. Gentleman is being a bit mischievous in referring to our elected Government in Wales as a failure.
On the Welsh Government’s budget for the forthcoming year, I very much welcome the extra support on homelessness in the £340 million for the building of 20,000 affordable homes. We need to recognise that homelessness is not just an urban problem. I also welcome the courageous decision to suspend the right to buy on council houses. That was not an easy decision, and it was not uncontroversial in its day, but it made the point. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) might agree with me a little more on this point: if we are serious about tai, gwaith, iaith—houses, jobs, language—as a driver in rural Wales, we must look at that sort of policy.
I will say a quick word on rural areas in Wales, Welsh-speaking areas and planning laws. I very much support the Welsh Labour Government’s policy—it is supported by others, too—for 1 million Welsh speakers in Wales. That is an important policy, and consensus on it is vital.
I sometimes think we are a little reticent in Wales when it comes to planning issues. In some cases, that is simply because of our history as a nation, and that is a mistake. In Cornwall, Cumbria and other parts of the UK, people are prepared to look thoughtfully at issues connected with second homes and affordability. As we look at the rural economy and parts of Welsh-speaking Wales, we should not be frightened of doing that.
Finally, one has to say something about broadband. I am delighted to have been able to work with other representatives in making Gwynfryn, Llandrillo and a few other places a bit more connected. I welcome the Superfast Cymru project, but we have more to do to ensure that that is connected in every part of Wales.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
I congratulate my hon. Friend the Member for Ceredigion (Ben Lake) on securing this significant debate. As the youngest Welsh MP—I do not know whether he likes me reminding him of that fact—it is evident that he has already played an inspiring role in representing his constituency and his country.
Considering the interest in this debate and the comments that have already been made, I will be as brief as possible and confine my remarks to one key issue: addressing the need to counterbalance the dynamics in Wales between the east and the west. There is a cognitive block in viewing the geography of Wales in terms of north and south, and that in turn blocks our growth as a nation. Undoubtedly there are some unifying factors among north Walians—the gogs, as we call ourselves—and our compatriots in the south. For example, the gogs will always call milk “llefrith”, and the south will wrongly insist on having borrowed the word from Latin and so call it “llaeth”. We do enjoy these differences, but let us never forget that the language unites us along a north-south axis, while our historic infrastructure and economic convention would have us looking east-west all the time.
Wales’s cities and large towns generally lie in the east, but in the west, rural Wales is made up of villages and market towns. The public sector, agriculture and tourism are the pillars of the economy in those communities. None the less, it is in those rural villages and towns that we find the highest concentration of Welsh speakers, and I am proud to represent Dwyfor Meirionnydd, the constituency with the highest proportion of Welsh speakers anywhere in the world. Sadly, in my constituency and other rural Welsh constituencies, we also find some of the lowest wages in Europe. As already noted by other Members, the economies of the region—the public sector, agriculture and tourism—are teetering on the brink of crisis. We cherish all those economies, but they are all vulnerable.
With massive outflows of young productive people, EU funding at risk and a Westminster Government hunkered down in the south-east and, frankly, focused solely on the needs and interests of that region, rural Wales faces unprecedented challenges. This re-formulation or resetting of how our nation of Wales could be perceived is best summed up by the work of my colleague Adam Price AM. He is sitting in the Public Gallery, and I welcome him. His concept of Arfor would see a new socioeconomic map drawn for Wales along a more appropriate boundary, acknowledging the east-west norm, but also looking at the issue from an alternative and counter-balancing north-south axis. That would not only allow investment to be more appropriately targeted to suit areas in the east and west, but foster greater north-south integration. That simple re-imagining or re-perceiving could not only save economies and communities, but safeguard our language and those rare communities where Welsh is not a minority language and is used by the majority. That is important to our perception of the use of the language. Bringing these majority Welsh speaking areas together to offer real opportunities for young Welsh speakers will give our language the environment in which it can thrive into the future.
To finish, I will give three examples looking at how Arfor could energise the economy of the west of Wales and Wales as a whole. First, we could transform tourism jobs from being a gap-year filler to offering the living wage and a long-term career. As a first step, we could set up a tourism academy linking business to universities and further education colleges to ensure we have the skills and expertise we need—skills made in Wales, for the needs of Wales, for the salaries of Wales and that stay with us.
Secondly, we could have a community bank for west Wales. As commercial banks disappear from our high streets—even ATMs in rural areas are under threat—rural people are left without basic services. A new model of community banking could fill the gaps.
Finally, we need the conventional and digital infrastructure that will truly transform west Wales. Let us consider reopening the Aberystwyth to Carmarthen rail line and the digital infrastructure that my hon. Friend the Member for Ceredigion spoke about so eloquently. We need swiftly to move people, bits and the knowledge economy across Wales to move into the future.
Rural Wales has been the cauldron of Welsh culture and remains the heartland of our language and its traditions. Let it be the pair dadeni—the cauldron of rebirth. Economically, it faces its greatest challenge in modern history, yet I am confident, despite everything and everyone—er gwaetha pawb a phopeth—that we need only to be given the tools to build our own future.
Albert Owen (Ynys Môn) (Lab)
It is always a pleasure to serve under your chairmanship, Mr Hollobone. I genuinely congratulate the hon. Member for Ceredigion (Ben Lake) on the tone he set in opening the debate. I pay tribute to him and his predecessor Mark Williams, who for many years adopted the same tone of consensus in Wales. He brought people together to speak as Welsh MPs in the House of Commons.
I congratulate the NFU on providing a concise brief, much of which the hon. Gentleman referred to, and I make no apologies in echoing some of the statistics that it provided. Indeed, farming unions have been helpful to Members over many years, and I pay tribute to the work they do not just for their members, but for the communities of rural Wales. They play a very positive role in the social fabric of Wales, and I thank them for that.
I will concentrate my contribution on a matter that has been affecting my constituents for a long time, but in particular since 2010: the over-centralisation of many of the UK Government’s services, away from rural and semi-rural areas to the towns and cities of Wales and the UK. I will also touch on food and drink and the importance of agriculture, tourism and connectivity.
The Welsh food and drink industry is hugely important, as the hon. Gentleman said, to the whole economy of urban and rural Wales. The backbone of the food industry is Welsh agriculture. As has been said, it is a progressive, outward-looking industry that exports much of its produce across the European Union—some 90% of it is freely traded across the EU. A third of the lamb that the United Kingdom exports is Welsh lamb, which is without a doubt the finest lamb in the UK. It is hugely important, and we need to pay tribute to our agriculture industry and our farmers and offer them help and support.
I know the Minister listens carefully to what is said and represents our views to Government as a Minister in the Wales Office. He talks about securing EU funding to 2020, but I challenge him to go further than that. Our farming industry needs safeguarding post-Brexit. The money we receive from the common agricultural policy needs to be ring-fenced. If the funding is done through the Barnett formula, we will lose out. That is the challenge for the Government. When they talk about agriculture and rural Wales, they need to safeguard the monies we receive now. Alternatively, the Minister can tell us exactly how he will replenish that money.
Liz Saville Roberts
I beg the hon. Gentleman to bring to bear what influence he can on the Welsh Government to get them to commit to maintaining the same level of income for farmers when that money is transferred from Westminster under the devolved processes, whatever they may be.
That is the point I was making: it should not just go through the Barnett formula, because we would lose out by getting only a certain percentage. We need like-for-like funding, because when the European Union negotiates the amount, it looks at need in a way that is fairer to rural communities.
Connectivity is also important. In north-west Wales, and indeed in Ceredigion on the west coast of Wales, we suffer from a double whammy in being not just rural communities, but peripheral communities. Often a Cardiff or London-centric view predominates in the United Kingdom, so we have to fight harder for services and the connectivity that we deserve. I consider north-west Wales to be the heart of the British Isles. I do not see it as peripheral; it is only peripheral to someone looking up towards it from down south. It is the heart of the British Isles, because to our west is the island of Ireland and Northern Ireland, to our north is Scotland, and to our east is England. We are the heart of the British Isles, and need to start speaking with that confidence.
When there are roll-outs of programmes such as 5G, which we heard about in the Budget, it should be started and test-piloted in difficult rural areas, not just in the large towns and cities of the United Kingdom. That is the challenge for the Wales Office in the UK Government. Swansea deserves its connectivity, but so too does rural Wales. If the Government are serious about spreading wealth across the United Kingdom, they need to pilot projects in rural and peripheral areas.
Does the hon. Gentleman agree that the technology already exists? It is available in the Alps, in Norway, and in the highlands of Scotland. The technology is, to some extent, proven. What is actually required, as I am sure the Minister will confirm, is political will.
The hon. Gentleman has asked me a question and answered it in the way that I would have: it does require political will. Each time the Government trial something, I ask them to go not for the easy towns and cities, but for rural and peripheral areas.
Tourism is hugely important. It is the fastest-growing industry in the United Kingdom and in the world, and we have some of the best brands in Wales. Many visitors to Wales come for our coastline, our national parks, our areas of outstanding natural beauty, and the tranquillity, which is best seen on the Isle of Anglesey—the heart of the British Isles. In my opinion, Anglesey is very much the jewel in the crown of Welsh tourism. There are, however, serious challenges in rural Wales. If we are to develop a 21st-century economy, we need 21st-century tools to do the job. As I said, in the digital age we do have better connectivity in broadband and mobile, but it is still behind many parts of the UK. We should address that problem, and the Ministers from the Wales Office need to fight for it.
I commend the roll-out package that was put together in partnership between the UK Government, the Welsh Government, the EU and BT. I hope that the EU money can be replenished in some way in the future, because that package has worked in many places. I have been working with BT, the Welsh Government, and indeed the Ministers in the Wales Office, including the Minister here today, who has listened to what I and other Members have been saying.
When I talk about rural Wales, I talk about inter- dependency with urban Wales as well, which is very important. My main point is about the centralisation of UK Government services. We have seen court closures over many years, which not only result in denial of local access to justice but damage to local economies. Many of the local economies created by solicitors’ offices and the extra boost given to the economy by the areas around the courts are lost for good. Many personnel move from those areas to where the courts move to. We have seen HMRC, for example, moving its offices from the west to the east, to central Wales, down to Cardiff. That does not help rural economies in north and north- west Wales.
Ian C. Lucas
I am afraid this is an irresistible opportunity to talk about the Government’s appalling proposal to shift HMRC from Wrexham in north Wales, my constituency, which has many rural areas, to Cardiff’s city centre. Is that not exactly the opposite of what we should be doing?
Yes, it is. The Government talk, as many Governments do, about decentralisation and devolution of services, but they act in the opposite way, pulling out services from rural areas. Those rural areas have very competent people, with the skill sets to do those jobs for many years. The services are being moved just to save the Government money, and in the long run communities are getting left behind.
My final point has nothing to do with the Government, although the Government need to take some responsibility. We need to get proper banking policy in this country. When high street banks close in rural areas and in small and larger towns, it rips the heart out of those communities. Local government, the Welsh Government and the UK taxpayer are paying for those communities, yet banks just walk away. We know what banks have done to our global economy; we see the recession across the world and in this country. Those banks have responsibilities, but we need to plug those gaps, because often buildings are left empty, jobs are lost and the local high street suffers.
Rural Wales needs a strong voice and, with Welsh MPs across the parties, we have one. We also need a Government here in the UK that are listening and putting devolution into practice, with real delivery of jobs and services in our rural communities, so that rural and urban Wales can compete on a level playing field with the rest of the United Kingdom. I thank the hon. Member for Ceredigion for giving me the opportunity to say that, because I want to stand up in future and say how much better things are in Wales because rural and urban areas have worked together to create the best place to live, work and visit in the whole of the United Kingdom.
Mr Philip Hollobone (in the Chair)
We now come to the first of the Opposition Front-Bench speeches. The guideline limit for both the Scottish National party and the Labour party Front Benchers is five minutes.
David Linden (Glasgow East) (SNP)
Tapadh leibh, a Cathraiche. It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Ceredigion (Ben Lake) on securing this timely debate. He is a passionate campaigner and champion for the people of Wales in this House. In the less than half a year that he has been here, he has done an enormous amount to hold both of Wales’s Governments to account, and I have no doubt he will continue to do so in the coming months and years.
The focus on the future of our rural economy is timely, because we stand at a fork in the road, given our Brexit negotiations. The decision of the United Kingdom to leave the European Union, which was rejected in all 32 of Scotland’s local authorities, will have potentially catastrophic consequences for rural communities across these islands—not least in Wales, which has benefited enormously from EU funding. Indeed, in some cases, it is the only money that has come into Wales in recent years. The current negotiating position taken by Her Majesty’s Government is deeply flawed, isolationist and wrong-headed. I will outline one or two areas in which I feel a change in tone and position could help soften the forthcoming Brexit blow to our economy. I will also outline a couple of ideas from a domestic policy perspective that would deal with some of the challenges facing our Welsh colleagues.
First, I will add a bit of context to the scene so eloquently set out by the hon. Gentleman. Given that time is at a premium, and I am conscious that I am something of an intruder on this debate, 1 will focus solely on food and drink. Quite rightly, food and drink is a priority economic sector in Wales, with 170,000 people contributing to gross sales of £17.3 billion. Much like Scotland, Wales is staring into the abyss as we look over the cliff edge of a hard Brexit, to which we have been driven by the Back Benchers of the Conservative party. Although Wales as a whole narrowly voted to leave the EU, it is worth noting that not all areas did. Ceredigion, for example, which is mainly rural, voted 54.6% to remain, and Gwynedd, with a large agricultural industry, voted 58.9% to stay in the EU. If the Minister is serious about being Wales’s voice in Whitehall, and not Whitehall’s voice in Wales, he should immediately commit to joining the Welsh and Scottish Governments in calling for our membership of the single market and customs union to be maintained.
On trade, it is abundantly clear that access to the single market is essential for our agriculture sector. No one wants to see prime Welsh lamb, or any other fresh produce for that matter, stuck on a lorry, in a queue, waiting for customs clearance. I very much echo what the right hon. Member for Delyn (David Hanson) said. I will not get into the battle about whose lamb is better—I think I might lose that one. As it stands, what will happen is that lamb will be stuck in a queue on a lorry.
On labour, it is vital that our sectors retain the ability to recruit staff from across the European Union. That is why free movement of people must be protected, which can easily be achieved by remaining in the single market. Scotland and Wales’s problem has never been immigration; it has been emigration. Just as in Scotland, Wales needs to build a strong rural economy that will encourage young people to stay, and not exacerbate the brain-drain problem outlined by the hon. Member for Ceredigion.
We need action on a domestic front from the Conservative Government in London as well as the Labour Government in Cardiff. It is important that we ensure that the right infrastructure is in place to support the rural economy. That means action to improve broadband provision, and investment in mobile coverage and drastically improving the rail network. To give an example, in Scotland every year we provide more than £1 billion for public transport and other sustainable options. I know from personal experience of visiting and holidaying in Wales—I spent some time in the summer of 2016 in the constituency of the hon. Member for Ynys Môn (Albert Owen) in north Wales and I echo what he says about connectivity—that the rail network is particularly poor and could do with upgrading. The hon. Member for Ceredigion has already outlined why and how that can be done, including a rail link between Aberystwyth and Carmarthen.
Before I conclude, I want to say a word about how we support the most vulnerable and those on low incomes in our rural communities. With respect, my advice is perhaps aimed more at colleagues on the Labour benches, who would do well to take a leaf out of the SNP Scottish Government’s book and axe the bedroom tax and the public sector pay cap, which affects people in rural communities. Delivering for the many, not the few, cannot just be a soundbite. It needs to be backed up with action, because with devolved power comes devolved responsibility, and there is a moral responsibility on the Welsh Labour Government in Cardiff to act here too.
If the right hon. Gentleman wants to indicate how he is going to lift the public sector pay cap, I am happy to give way.
I think the hon. Gentleman will find the bedroom tax is not devolved in Wales.
My understanding is that the Welsh Government have spent something like 0.44% of what the SNP Government have spent on discretionary housing payments. I am happy to give way again if the right hon. Gentleman wants to correct that. I see he does not want to.
Wales cannot be stuck between an isolationist Government in Westminster and a lethargic Government in Wales. I very much commend the hon. Member for Ceredigion for bringing this matter to the House.
Chris Ruane (Vale of Clwyd) (Lab)
Let me first congratulate the hon. Member for Ceredigion (Ben Lake). To have a debate this late in the day and to have 10 Welsh MPs here shows the importance of the subject; to have five of them from north Wales and five of them Labour shows the importance of the debate to north Wales.
It is vital that we carefully consider how rural Wales can respond to increasing digitisation, the global economy and the challenges of leaving the European Union in a time of austerity. The Welsh Labour Government are committed to the success of their rural communities and have rolled out several initiatives to that end, but law makers in Cardiff have had their hands tied. The most recent Welsh Government budget, published in October, has been developed against a backdrop of unprecedented cuts and ongoing austerity.
In the referendum, the people of Wales did not give carte blanche to this Government to leave the single market or the customs union, or to make Wales and people in rural Wales poorer. Access to the single market and customs union membership, whether permanently or in a transitional period before long-term arrangements can be made, is necessary to provide the economic activity and jobs on which a sustainable future for rural Wales can be built. That is true of the UK generally, but especially in Wales where our economy has depended on EU funds for so many years. That investment is really appreciated in Wales, particularly by farmers and the farming community.
As has already been quoted, 67% of Welsh exports went to the EU. The corresponding figure for all food and live animal exports was 83%; for meat exports, it was 93%. Agricultural goods generally carry higher import tariffs than other commodities, and if this Government fail to secure tariff-free trade post-Brexit, the effects will devastate the Welsh agricultural sector overnight.
Brexit also raises challenges for Wales in the way of European subsidies and structural funds. The Minister will be aware—I have mentioned this time and again—that I helped to secure European structural funds for his county of Conwy and for my county of Denbighshire.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
The Minister should know that history. It is a huge amount of money for the whole of Wales—€320 million per year in direct subsidies from the common agricultural policy, with a further €355 million to support rural development.
I ask the Minister, as I have asked him before, to make sure that we have extra funding beyond 2020. Our urban and rural communities have been supported by extra funds from Europe over the past 17 years. We want to be treated as well by Westminster as we have been by Brussels. We have had a big dollop of jam—a big dollop of funding—for Wales. We do not want it taken away and for the jam to be spread thinly across the whole of the UK. We need that funding and the Minister must do his job and make sure that we get it.
On productivity and broadband, thanks to the efforts of the Welsh Labour Government, unemployment in rural Wales in 2016 decreased roughly in line with the Welsh average of 4% and productivity continues to increase. However, productivity in rural communities still lags behind the Welsh average. The Welsh Government recognise that and are helping boost productivity with the “Superfast Cymru” project, rolling out superfast broadband across the country. In an increasingly digital economy, the effects of high-speed internet are really needed in our rural communities. Sadly, Wales’s biggest export has been our young people. There has been a brain drain out of Wales for decades. Superfast broadband offers a chance to stop and reverse that. People want to live in rural communities, especially when they are bringing up families. To do that, they need access to superfast broadband to make sure that they can conduct their digital businesses from areas such as rural Wales.
I just want to touch on the north Wales and the mid-Wales growth funds. I ask the Minister to ensure that the funding allocated to those projects is as great as the funding allocated to city deals in England and Wales.
Mr Philip Hollobone (in the Chair)
If the Minister concludes his remarks no later than 5.27 pm, that will allow Mr Lake time to sum up the debate.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
It is a pleasure to serve under your chairmanship, Mr Hollobone. I also join in the congratulations for the hon. Member for Ceredigion (Ben Lake) on what was a very constructive speech and the tributes to his predecessor, who was also always constructive in this Chamber.
We have had a wide-ranging and constructive debate. It is a pleasure to be able to highlight some of the success stories and some of the work that needs to be done. The hon. Gentleman highlighted the need for a mid-Wales growth deal, although he was not particularly generous in his support for the comments made by the Chancellor in the Budget. I think it is a major step forward.
Since 2015, we have had a city deal for Cardiff and the 10 local authorities surrounding Cardiff and we have had a regional deal for Swansea—not just for Swansea, but for Swansea and the region surrounding Swansea, including Carmarthenshire, Neath, Port Talbot and Pembrokeshire. We are working on a growth deal for north Wales; I had the privilege yesterday to be at the acceptance of the bid from north Wales. I was joined at the session by the hon. Member for Wrexham (Ian C. Lucas). It was a constructive session and there was engagement across the political spectrum. We had leaders of local authorities in north Wales of all political colours. We had a Plaid leader in the session, a Plaid member who was also a leader but not currently a Plaid leader. I am not quite sure what is going on in my own county of Conwy, but we do have a good leader, who was there, and we also had leaders from other north Wales counties, who were of a Labour party persuasion.
I want to say on the record what I have said to the Minister privately—that he should involve Welsh MPs from north Wales in the growth deal. Yes, let us have bottom up and get the bid, but we have a mandate from the communities as well.
I am absolutely delighted to welcome that comment. It was great to see the hon. Member for Wrexham there. In addition, I am engaging with north Wales MPs and there will be a roundtable session in Gwydyr House with the bid authors and north Wales MPs in due course.
The hon. Member for Ynys Môn (Albert Owen) made a very important point in highlighting the fact that growth deals are bottom up. The key thing is that the proposals from north Wales were coming in from local authorities representing the whole of north Wales. Our responsibility down here in Westminster—the responsibility of the UK Government—and the responsibly of the Welsh Government is to work constructively with the partners in north Wales.
This is the template for an approach for mid-Wales. One of the key things I am aware of as a UK Government Minister representing Wales is the importance of ensuring that we do not forget mid-Wales. One of the key things that we highlighted in the Budget is that, although of course we need to deliver a growth deal for north Wales—after all, in the context of this debate, a significant part of north Wales can undoubtedly be described as rural—we also need to deliver for mid-Wales. I want to be able to stand up and say categorically that we will have delivered growth deals for every single local authority in Wales. We have already delivered for 14 local authorities in south Wales. We are working with the six in north Wales, and we are opening the door to a deal in mid-Wales.
We passionately believe that such deals should come from the bottom up. That is why, in the discussions with the leader of Gwynedd County Council and the chief executive of Carmarthenshire County Council, and in the discussions that Lord Bourne, my fellow Minister in the Wales Office, had yesterday with the chief executive of Ceredigion Council and the vice-chancellor of Aberystwyth University, we were very clear that we do not think that the mid-Wales deal has to be confined to Powys and Ceredigion.
I am sure the hon. Member for Glasgow East (David Linden) is aware of examples in Scotland of counties involved in more than one growth deal. We are keen to ensure that if the proposers from mid-Wales say that they want involvement from south Gwynedd—Meirionnydd, for example—Dyffryn Teifi in Carmarthenshire or even north Pembrokeshire, that is something we can look at, because we want to work to deliver the growth deals that are needed in every part of Wales. If people are telling us that the way to do that is to expand or to work as two counties in mid-Wales, we will listen. I am pleased to say in the spirit of co-operation that, over the past few years, the relationship with the Welsh Government Minister for the economy has been extremely constructive.
One thing that has been highlighted in this debate is that we have an east-west issue in relation to economic development. I would argue—perhaps some Opposition Members would agree—that there was perhaps too much emphasis in the early years of devolution on strengthening ties within Wales, which was perfectly understandable. When a new institution is being created for Wales, there needs to be a coherence to Wales. But we also need to recognise the economic realities, including the links between Newport and Bristol, and the cross-border links in north-east Wales. We need to ensure we have a strong Welsh economy that is able to work with our partners in other parts of the United Kingdom.
The hon. Member for Ynys Môn said that Wales is not a peripheral region. I could not agree more. The north Wales growth deal can link to the northern powerhouse and the success stories that are Manchester and Leeds, and a sector deal for the nuclear industry could make a huge difference not just for north-west Wales, but for the entirety of the north Wales economy and the north-west of England economy. That shows clearly that we are not a peripheral region and that we have a huge contribution to make.
I want to touch quickly on the involvement of universities. The hon. Member for Ceredigion was absolutely right to highlight the importance of universities for economic development. He is fortunate to represent not one but two universities in his constituency. The contribution of Glyndwr University and Bangor University to the north Wales growth deal is an example of what can be done. I was pleased that Lord Bourne met the vice-chancellor of Aberystwyth yesterday, because universities will have a crucial role in any mid-Wales growth deal. I encourage the hon. Gentleman to highlight the importance of the university and further education sector in developing growth deals.
I am aware that time is short, so I will highlight some other issues that were raised in debate. Concerns were raised about broadband connectivity. Listening to the hon. Gentleman, I could be forgiven for thinking that I was listening to his predecessor. Broadband connectivity in Ceredigion is indeed a very serious issue, as it is in many parts of rural Wales, although there are some areas where that is not the case. For example, the connectivity in Aberdaron on the Llŷn peninsular, which is much better than the connectivity in the majority of my constituency, is an example of what can be done. Rural Wales can be served if there is a desire to serve rural Wales, but we need some honesty in this Chamber. For broadband connectivity to be supplied across Wales, there has to be a partnership between the private sector, the Welsh Government and the UK Government.
Back in September, I announced the £56 million of addition spending to be made available through the claw-back on the contract with BT, but it is disappointing that that figure was lower than the 11% secured for Wales in 2011 because take-up in Wales had been lower. There has been a lack of transparency in Wales about why and how the priorities for rolling out broadband were set. It is unacceptable that Ceredigion—an area with two universities, which can make such a contribution to our rural economy—has been so ill-served by the way the Welsh Government have rolled out the contract. We can rectify the situation, and we need to do so, but that can be done only if we work together.
I expected that the agricultural sector would be more of a key part of this debate. We understand the importance of the agricultural sector for Ceredigion and most of rural Wales, including Powys. The Government have gone a long way in trying to reassure the sector. First, we guaranteed that the funding will be in place until 2020. We also said that there will be comparable funding until 2022. I hear what the hon. Member for Vale of Clwyd (Chris Ruane) is saying about getting guarantees post-2022, but a funding guarantee until after 2022 would be a longer period of certainty than we would have had if we had decided to remain within the European Union. The farming community appreciates that guarantee.
The hon. Member for Ynys Môn made an important point, which I am happy to accept, about the importance of ensuring that our share of future agricultural funding is based on the historical trend, rather than a Barnett-based system. The Wales Office and Ministers representing Wales in the Wales Office will be making that case, but we have to do so with sensitivity because we cannot say to the Welsh Government, “This is a chunk of money for you, but you must spend it on this specific area.” If we did that, we would be accused of a power grab.
Liz Saville Roberts
Will the Minister give way?
I am afraid I cannot take an intervention from the hon. Lady because I am coming to the end of my speech.
This has been a constructive debate and the Wales Office is more than delighted to continue it with hon. Members. Our door is always open. The way we are working in north Wales and the way we have worked with the city deals in south Wales show what can be done when we work together on a cross-party, cross-governmental basis. I want to be part of a success story in mid-Wales to follow on from the success story in north Wales.
Thank you for chairing this debate, Mr Hollobone. It has been a pleasure to serve under your chairmanship. I thank all Members of Parliament—particularly the 10 Welsh Members of Parliament—who attended. That reflects the importance of the rural economy for Members of Parliament from Wales.
I outlined some of the problems facing the future of the rural economy, and we have had a broad discussion about them. We have covered issues relating to what our relationship with the European Union means for our trading arrangements and the future of rural development payments. We also outlined some of the possibilities and opportunities for the rural economy in Wales.
The hon. Member for Ynys Môn (Albert Owen) set out the problem of centralisation and the need for decentralisation. It would send a very strong signal if the UK and Welsh Governments were able to decentralise a lot more of their institutions to rural areas. I am fortunate in Ceredigion to have a Welsh Government building in Aberystwyth, but perhaps there is more we could do to implement that.
I am glad the hon. Gentleman has highlighted that point. Is he as disappointed as me that the Minister did not refer to that? The Government have responsibility for it, and by keeping agencies open they would help local economies.
I agree. The Government, and the public sector more broadly, can play a very important role in investing and locating agencies in more rural areas. That would send a signal—a vote of confidence in rural areas—to the private sector that the countryside is open for business, as I said earlier.
I am conscious that time is getting the better of me. We have an opportunity with the growth deal in particular to work on a cross-party basis. This debate has been constructive, which can only be a good thing. We have an opportunity not only to safeguard the current rural economy, but to lay the foundations of the rural economy of tomorrow. Making better use of our higher education institutions and improving connectivity would be a great way to start. Just like decentralising some of the Government agencies, getting the growth deal right would send a clear signal to the outside world—to businesses and entrepreneurs—that the countryside is open for business, and that they should locate our businesses with us. Diolch.
Question put and agreed to.
That this House has considered the future of the rural economy in Wales.