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Stephen Kinnock (Aberavon) (Lab)
I beg to move,
That this House has considered the effect on funding for Wales of the UK leaving the EU.
It is a pleasure to serve under your chairmanship, Mr Bailey. The debate is technically about budget decisions but, as we all know, making such decisions is not simply about working out how one reallocates figures. At its fundamental essence, the debate is about the people and the constituencies we represent, and their future, and that is where I would like to begin.
At the core of my constituency is the town of Port Talbot, which is home to more than 37,000 people. Since 1902, the beating heart of Port Talbot has been its steelworks—the largest and, I confidently say, the best in the UK, producing a third of the UK’s steel. Many people do not give a second thought to steel, but when they are driving their cars, having a can of baked beans or putting in a load of washing there is a decent chance they are using a piece of steel produced in Port Talbot. Everyone here today knows that the future existence of the works, as we call them, currently hangs in the balance.
The story of Port Talbot over the past 50 years is the reason for the debate. It is a story shared by many towns and cities across the country, from Stoke-on-Trent and its potteries to Dagenham and its Ford factory or Merthyr and its coal mines. Like them, Port Talbot was truly built, and grew, on the foundation of one industry and one company. Half a century ago, the works employed nearly 20,000 people out of a population of 50,000. Every other shop and business in the town depended on the custom of those workers and did a thriving trade, especially on Thursdays, which was payday. Times were good; the town centre was bustling and huge crowds would enjoy their summer weekends on the sandy beaches of Aberavon. As the plant churned out steel faster and better than anywhere else, we also produced extraordinary talent, such as Richard Burton and Sir Anthony Hopkins and, more recently, Rob Brydon and Michael Sheen.
The decline of the steel industry in the UK over the past 50 years can be seen in the standard of living in Port Talbot. The enormous lay-off of 6,000 people in 1980 led to huge numbers signing on to benefits. Today, the works employs just 4,000 people. They are in highly coveted jobs that still provide a decent wage, but nothing has replaced the jobs that were lost or the energy and pride that the industry gave Port Talbot. Icons of our community, such as the Plaza cinema, are boarded up, and smaller shops that depended heavily on steelworkers struggle on. Unemployment is 10% higher than in the rest of the UK, with one in four people relying on benefits to make ends meet. The level of education in our community is proportionally much lower than in the rest of the country. The people of Port Talbot are as warm, tough, hard-working and talented as anyone we could ever wish to meet, but many are losing hope that their lives will give them the kind of security that we all want. They simply do not see that there are opportunities for them. They know that we cannot recreate the jobs and economy of half a century ago, but they are frustrated that there are not the jobs and the economy for the next half century in which they can play a role.
I have told the story of Port Talbot today because it is a town that, despite recent improvements, is in long-term crisis. The future of my constituents hangs in the balance, and unless we take concerted action their prospects will continue rapidly to decline. That is why the debate is so important. As much as iron needs oxygen to be transformed into steel, our area, and the whole of Wales, needs investment to transform its future into one where people have security and opportunity.
And we now come to the crux of the matter. For years, the EU, in various guises, has contributed an enormous amount of investment in Wales, working closely with the Labour Welsh Government. Due to the consequences of the history I have described, south Wales qualified for the highest level of European structural and regeneration funding. All in all, EU structural funds and the common agricultural policy deliver well over half a billion pounds a year, in addition to money from other key funding areas such as higher education, culture and urban development. Working with Government, charities and businesses, the investment has made an enormous difference.
Albert Owen (Ynys Môn) (Lab)
European funding also provides leverage for getting matching funds from the UK and Welsh Governments, which makes it very valuable to our communities.
Stephen Kinnock
My hon. Friend makes a valid point. There is a clear multiplier effect with EU funding, because it provides the confidence that opens the door to all sorts of other sources and channels of investment. Although we are giving the raw data here, the multiplier effect is absolutely enormous.
Infrastructure built with EU funding is creating jobs and easier access for people and business, including through the Harbour Way road network, the new Port Talbot Parkway station and our town centre. That investment has helped to develop skills, funding 4,885 apprenticeships and 1,360 traineeships for young people, as well as programmes that have led to local people gaining 14,860 qualifications, which has prepared them for work. It has also been a catalyst for business, funding the Baglan energy park, upgrading our commercial centres and being a major investor in the SPECIFIC innovation centre. It has backed world-class industrial excellence in south Wales by being a principal backer of Swansea University’s bay campus, and has contributed to programmes—from historic gardens and activity centres to toddler play areas and community sports facilities— that have improved our family and community life, ensuring that one day Wales will once again dominate the Six Nations.
Christina Rees (Neath) (Lab/Co-op)
Does my hon. Friend agree that 16,000 farmers across Wales gain direct subsidies from the CAP? Without that funding, more than 90% of them would go bust. Will he join me in calling on the UK Government to commit to ensuing that the subsidies continue for all farmers?
Stephen Kinnock
I agree absolutely that the role the CAP has played in the agricultural industry in Wales and the UK, and indeed across the entire European Union, has been critical and has supported thousands of farmers and their livelihoods. I will talk a little later about how we need to see a clear commitment to long-term funding to replace every aspect of the European funding on a like-for-like basis, including the CAP.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on bringing this important debate to Westminster Hall. Does he agree that European funding has been used to great advantage, including in Northern Ireland, but that Brexit signals not an end to the funding of worthy schemes but rather a new way of distribution and the opportunity to ensure that the schemes that are funded are necessary and helpful to local communities? With that in mind, the Government have committed to helping to ensure that the farming grants and community schemes are retained within this Parliament, until 2020. Does the hon. Gentleman not accept that with Brexit, we have a new way of doing things?
Stephen Kinnock
There is an old phrase, “Never let a crisis go to waste”. Brexit has caused a crisis, and that opens up massive questions about where we go now as a country. A major part of that, of course, is what will happen in Northern Ireland. The Government have made commitments up to 2020, but 2020 is within the blink of an eye. We need a far more long-term plan and a strategy that goes way beyond that.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Gentleman on obtaining the debate. Is it not the case that Welsh steel and other industries will benefit from Brexit with respect to the procurement rules? Indigenous businesses in the construction industry and so on may prosper.
Stephen Kinnock
The way in which the Government have interpreted EU procurement rules has been completely wrong-headed for many years. There are ways to build in local content clauses in procurement, to ensure that the use of British steel in British projects is maximised. Unfortunately, the Government, because of their laissez-faire attitude, have hidden behind EU state aid rules. As a result, they have failed to use those rules in a way that could have benefited the steel industry, which is one of the industry’s five major asks. We have seen some improvements, but we need a proper industrial strategy in this country that clearly sets out how procurement can be used to promote British industry.
Stephen Kinnock
I will give way once more, to my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), but then I must make some progress.
Nick Thomas-Symonds
Does my hon. Friend agree that the real worry for steel outside the European Union is that the Government will simply put no trade defence mechanism in place?
Stephen Kinnock
That is a major concern. The British Government have been the ringleader of a set of countries trying to roll out the red carpet for China, to allow it to dump untold amounts of its unfairly subsidised steel on the EU and British markets. As we know, the Secretary of State for International Trade has said that he has no plans to support the steel industry with trade defence instruments. When combined with all the other uncertainty that Brexit has caused, that is a major concern for our industry.
Workways+ is a project that helps long-term unemployed people and people with complex needs to develop the skills and qualifications that will help them into paid positions. The Cynnydd Project works to help young people avoid the unemployment trap. BEACON is helping Swansea University to work with industry to pioneer renewable chemicals, fuels and other materials, bringing another key future industry to the area. Those are just three EU-funded projects already under way, and many others are in the pipeline. Each one makes the lives of our constituents better.
In reality, the situation in Port Talbot, Aberavon and across Wales calls for far more investment to accelerate our recovery from decades of under-investment in the face of the impact of globalisation and deindustrialisation. Yet all that funding and all that progress is at risk after the referendum vote to leave the European Union. While the leave campaign made promises that all EU funding would continue to flow to Wales at the same levels, I think we know that those promises are about as valid as what could be printed on the side of a bus.
Wayne David (Caerphilly) (Lab)
My hon. Friend will be aware that the Chancellor of the Exchequer has made that promise, but he has also said that he wants to guarantee funding for projects that meet UK priorities. Does that not imply that the Government intend to use this opportunity to insist that money is spent on their priorities, rather than those agreed with partners and the European Union?
Stephen Kinnock
I thank my hon. Friend. One of the huge risks to Wales of Brexit is that we will see a power grab by the Westminster Government. We will start to see the Westminster Government using the opportunity to claw back funding. We know that the £350 million was a lie. The figure was far more like £190 million, but where will that money go? Will it just disappear into the black hole of the Treasury in Westminster, never to be seen again in Wales? That is a huge risk for Wales in light of Brexit.
Now that all the bluff and bluster of the referendum campaign is behind us, it is all about what the Prime Minister’s Government actually do. So far on that score, the signs have not been positive. Despite repeated requests from the First Minister for a commitment to full continued funding, so far the Government have pledged only to continue funding agreed EU-funded projects until 2020.
That is not as powerful a pledge as it may first seem, for a number of reasons. First, it is for only one additional year after we are scheduled to leave the European Union in March 2019. The Government have made zero assurances that funding will be retained after 2020. Secondly, the Chancellor made clear in his statement on 13 August that the pledge applied only to projects signed before this year’s autumn statement. Apparently, any projects signed after that will be assessed by a method that is yet to be revealed to us—a mystery method. Funding is therefore not guaranteed for multi-year projects signed after next month, even if they are in the current EU 2014 to 2020 funding round.
Carolyn Harris (Swansea East) (Lab)
I congratulate my hon. Friend on securing this debate. He is making an excellent case. Does he agree that uncertainty is the enemy of business? The Government have made no commitment on funding post-2020, and that could have devastating consequences for attracting investment to Wales.
Stephen Kinnock
I absolutely agree. We have seen in all the feedback since the Brexit vote that businesses are in a holding pattern. Many companies, both outside and within the UK and the EU, are waiting to see how things develop in the wake of Brexit. We have no idea what the Government’s top-level negotiating position will be in terms of hard or soft Brexit, and we have no idea what the plan is on the budgetary side in terms of replacing EU funding. That double whammy causes massive uncertainty for business. It relates back to the point on the multiplier effect. EU funding opens the door for other businesses coming in, and that uncertainty is the enemy of business, as my hon. Friend says.
Craig Williams
Almost, Mr Bailey. [Laughter.]
I thank the hon. Gentleman for securing this debate. On the multiplier effect—I know why he has not touched on this today—the Wales Audit Office produced the Wales transport projects report in 2010-11 about how the Welsh Government had spent EU funds. He mentioned half a billion pounds, but there was a huge concern that there had been wasted opportunity to the tune of £1 billion.
Mr Adrian Bailey (in the Chair)
I call Stephen Kinnock. He is definitely Stephen Kinnock.
Stephen Kinnock
I am, Mr Bailey.
I thank the hon. Gentleman for his intervention. My sense is that we are moving firmly off topic with that intervention, but delivering value for taxpayers’ money is a top priority for all Governments, including the Welsh Assembly Government. In light of the unemployment figures coming out of Wales at the moment, which are certainly going in the right direction, along with a range of other economic indicators, I would argue that the Welsh Assembly Government are definitely providing value for money for Welsh taxpayers.
Geraint Davies
Does my hon. Friend agree that Wales faces a triple whammy? First, we start from a position of generating only 70% of average UK GDP per head. That is why, secondly, we get multimillion-pound investment that we are about to lose. Thirdly, given the advent of tariffs that we are so dependent on and the inward investment that has just been attracted, we will end up in a situation where we lose trade and grants and start from a weak position that will be catastrophic for the people of Wales.
Stephen Kinnock
I agree absolutely with my hon. Friend. In many ways, this debate is about resilience. The resilience of the Welsh economy in relative terms is weaker compared with that of many other parts of the United Kingdom. With the impact of Brexit, the loss of funding and inflation—the weakening of the pound will send inflation up, and we know that the poorest are always hardest hit by inflation—his reference to the triple whammy is an apt and correct way of describing what is happening.
The third reason why the pledge is not as powerful as it appears is that the Government have not yet agreed with other EU Governments that UK-based applications for EU funding will be in any way affected. The EU funding programmes for 2014 to 2020 are well under way—they have either already been launched or are in the advanced stage of planning. I fear that the Government’s antagonistic behaviour towards the EU and their lack of clarity over future funding will harm the prospects of Welsh applications.
Fourthly, the Government appear to have no plan for how the underwriting of funding will work at a small business or charity level, which is so important. Fifthly, even if Westminster does replace EU funding, there are serious considerations as to how that will be done and calculated. The Government will likely be tempted simply to increase the funds available on the basis of the Barnett formula. However, as the Welsh Labour Government have made abundantly clear, the Barnett formula has disadvantaged Wales for years, and we simply cannot afford or accept such chronic under-investment any longer.
At a minimum, the chosen approach to replacing EU funds must be ring-fenced—it must be in addition to the block grant. Beyond that, a revision of the Barnett formula is long overdue. In short, there is no clarity and no confidence for the people of Wales. The Government must urgently make it clear that they will underwrite all project funds agreed in the 2014 to 2020 mechanism. They must make it clear that they will maintain EU levels of annual funding to Wales for at least a decade post-Brexit, and they must set out how the replacement of funds will work in practice for the Welsh Government and local organisations in the spectrum of Brexit scenarios.
Also, the Government must commit to including Welsh voices in the negotiations, especially with regard to other themed EU funding programmes such as the Erasmus student exchange programme or the Horizon 2020 higher education innovation partnership. Of particular concern to south Wales is the future of the UK relationship with the European Investment Bank, whose loans have helped to build the Swansea bay campus; improved the Welsh Water and Severn Trent network in 2015; and upgraded the Great Western mainline. The last loan was worth £430 million. Such institutions matter greatly to us. The head of the bank, Werner Hoyer, has already publicly made it clear that current levels of lending to the UK cannot be maintained after Brexit. Welsh voices must be heard in the negotiations as our future so critically depends on those relationships with the continent. The Government must make clear whether they will seek associate status to the programmes and institutions. They must bring clarity quickly as the futures of people, communities and organisations across Wales hang in the balance.
Although it looks likely that the entirety of the UK will suffer economically in the coming years as a result of Brexit, it is in many parts of Wales where it will hit hardest, as our economic resilience is relatively low. That does not take into consideration the impact of Brexit on the steel industry, which would be hugely endangered if EU tariffs are imposed on it. If investment in Wales is not maintained, vital projects will go under, followed by businesses. People will lose jobs, and unemployment and welfare bills will shoot up. Communities will fracture. Port Talbot and its people have been through enough. That does not have to be our future.
In Port Talbot, Aberavon and across south Wales we are seeing the enormous potential to accelerate what we are doing. There is innovation. One company, SPECIFIC, has developed a steel-based paint that acts as a solar cell to generate power. It could turn every building in the country into a power station—except perhaps for Boris’s Foreign Office. The Swansea bay tidal lagoon is a world-leading project to capture wave energy. The Swansea bay city region proposal, Internet Coast, could transform south Wales into one of the best digitally connected places in the world. All that is being done without any sign of a proper industrial strategy. Imagine if we actually had one.
Alongside the Government’s Brexit negotiations, they must also present a modern industrial strategy, backing skill development, innovation, modern manufacturing, sustainability and the digital revolution. The strategy must focus on regions such as south Wales, where we have so much underdeveloped talent. When the Welsh Secretary declares that we should not simply replace EU money with Westminster money because we have to address underlying issues, we have to laugh. First, of course we need to address the underlying issues. Unlike him, I am unwilling to settle for basic skills. I am ambitious to ensure my constituents have the high skills needed for new industry to flourish in south Wales. Secondly, it seems blindingly obvious that financial support is a precondition for building such industries and developing skills. Finally, it was very nice of the Welsh Secretary to say that publicly, but it is his Government’s responsibility to come up with the solution, so he may wish to get on with it.
The Government must recognise with humility and sobriety rather than the gung-ho hubris they have shown so far that, if Wales does not continue to receive funding for crucial programmes, communities will be devastated for generations, with everything that that means for people’s lives. It will result in a lack of security, a lack of dignity and a lack of hope. I therefore hope that the Government will reassure the people of Wales quickly that they will ensure the floor is not ripped out from underneath them.
Ian C. Lucas (Wrexham) (Lab)
Parallel to the UK’s membership of the EU has been the rise of one of the most successful businesses in the world: Airbus. One of the real threats to business is the arrangement concerning communication between the multinational aspects of that business. It is essential that the Government work closely with business to preserve a premier economic powerhouse such as Airbus.
Stephen Kinnock
I agree absolutely with my hon. Friend. There is no better example than Airbus, which is an exemplar of a cross-country, cross-industry collaboration. Airbus has worked as a consortium that has developed through its supply chains a world market-leading capability. When people say the European Union is a sclerotic project that does not work anymore, there is one answer to that question: Airbus. It is a fantastic example, as my hon. Friend has described. We must now see a commitment from the Government to continue to support such projects moving forward. It will be more difficult in the wake of Brexit, but it is still possible. It is up to the Government to show leadership to ensure that that happens.
We need a comprehensive funding and industrial strategy that does not say our best days were in the coal and steel boom years of the 1960s. We need a strategy that says our best days are still ahead of us.
Several hon. Members rose—
Mr Adrian Bailey (in the Chair)
Order. There is great pressure on time. Nine Members indicated in advance that they wished to speak in this debate and I have had another three since. I want to call the Front-Bench speakers at around 10.30 am, so we will start with a time limit of four minutes, which I might reduce as time goes on. I also ask that Members recognise it will be necessary for speakers to take no interventions. If Members persist in intervening, they may lose their priority on the speakers list.
Also, the clock controlling the time limits is working here at the desk, but not up there on the wall, so the Clerk will hit the bell one minute prior to the end of the time limit. The bell is not a fire alarm; you do not need to vacate the building. It is simply an indication to the speaker.
Byron Davies (Gower) (Con)
I am delighted, as the real Byron Davies, to have the opportunity to contribute to this debate, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing this debate. I am pleased that we are all here contributing to what should be a wider and national conversation about what happens to Wales post-Brexit. I am sure that we here today recognise the importance of ensuring Wales gets the best possible deal from Brexit. The UK Treasury has of course guaranteed European structural and investment funds in Wales for projects signed before the UK leaves the EU. The Treasury has also guaranteed funding received directly from the European Commission: for example, the universities participating in Horizon 2020. The guarantee also includes pillar 1 of the common agricultural policy, so the agricultural sector in Wales will receive the same level of funding it was expecting under the 2014-2020 programme. The access of the UK, and consequently Wales, to the EU funding programmes will be subject to negotiations during the withdrawal process. Even once outside the EU, it is possible that the UK will receive funding from it.
Although it is essential that we support the Secretary of State for Wales and the Minister, who are ensuring we have funds for important infrastructure projects, as part of this process we must scrutinise how the money is spent. I must admit that I was shocked that Carwyn Jones did not have a plan for Wales after Brexit and failed to lobby the British Government prior to the referendum. Apparently, it was too political. That means he did not obtain any guarantees about having funding matched. That is staggering, given the importance of the current funding to Wales. The fact that the First Minister, of all people, did not think of that or secure it is beyond me. It could be argued, however, that it is part of a deeper undercurrent of thoughtlessness and evidence of the Welsh Government’s blasé attitude to the spending of public money. Unfortunately, Wales’ lack of scrutiny is part of the problem. It is due to myriad factors, including a lack of a competitive national media, which leaves the public with an information deficit, and the processes in the Assembly, which mean that many parts of Welsh policy and spending decisions have received a woeful lack of scrutiny. It is no longer good enough to say that the Assembly will get there or that things will change. It has been two decades, and in this place and the Assembly we must seriously start to look at and tackle the problems that the Assembly and Wales face post Brexit.
Wales has received three rounds of EU funding worth almost £4 billion in less than two decades. In the heady early days of devolution, the then First Minister, Rhodri Morgan, said that the first round of funding was a once-in-a-lifetime opportunity to shape a new Wales, shake off the shackles and take advantage of the myriad opportunities and the booming years of the early 2000s to create a hi-tech, trading nation that is proud of its industrial past. We were told that it would grow to become a confident, outward-looking nation once again. Two decades on, we are on our third round of funding.
The Welsh Government’s wasted spending includes a £7.5 million Government procurement card for luxury hotels, iTunes, Victoria’s Secret underwear, yacht wear and other vital uses of taxpayers’ funds for Welsh Government officials. Some £1.6 million was spent on a martial arts centre that never opened in north Wales. Tens of millions of pounds in business loans went from the former economy Minister to firms that went bankrupt, despite warnings about their viability. Some £1.8 million was spent on chauffeur-driven cars; £20 million was spent on properties on the M4 relief road, without a spade in the ground; £3.4 million was spent on a heritage centre that closed within three years; and hundreds of millions of pounds have been spent on major road projects that a 2010 Wales Audit Office report said cost 61% more than estimated and hampered wider transport objectives. My point is that, although it is of fundamental importance that we debate and discuss the future of funding for Wales and support the Wales Office in achieving that—
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing this debate. I agree with much of what he said in his excellent introduction.
As a democrat, I fully accept the referendum result, but that does not mean that the ideological Brexiteers in charge of Government policy at the moment can act with impunity. There is an ongoing fight for the type of Brexit we will have, and my priority is to campaign for the least damaging option for the Welsh economy and for Welsh funding and finances. That is why Plaid Cymru and I have been united in our campaign to maintain membership of the single market and the customs union from the very beginning. That would be by far the least damaging option for the Welsh economy, first, because there are wide-reaching benefits to being a single market and customs union member for trade in Wales; and, secondly, because it will enable Wales to qualify for certain cross-border and transnational programmes for research and innovation funding, which the hon. Gentleman mentioned in his opening remarks.
Wales is more exposed to a hard Brexit because we are an exporting economy. We have a trade surplus of £5 billion per annum, whereas the UK has a massive trade deficit. Wales’ great trade figures are aided by our membership of the single market—the world’s largest trading bloc—and the 53 international trade deals that we have by being a part of the customs union. The Centre for Economics and Business Research found that more than 4 million jobs directly and indirectly depend on exports to the EU. That is approximately 200,000 jobs in Wales—about 14% of our workforce. That should make our eyes water.
The hon. Gentleman talked in great detail about many of the different types of funding streams that we qualify for due to our membership of the European Union. The UK is the most unequal member of the European Union, in terms of the geographical gap in wealth. The richest region in northern Europe is London and the south-east. Nine of the poorest regions in northern Europe are also in the UK. Tragically, they include the communities that I and many colleagues here serve.
In contrast, the UK has no regional policy for moving wealth from richer to poorer parts of the state. The EU has a very successful regional strategy, and Wales has qualified for three rounds of the highest form of structural funding. Of all the funding streams that we receive from the European Union, the loss of that structural funding—we probably qualify for a fourth round, given the state of the Welsh economy at the moment—would be the biggest hit for us. We could also lose very cheap finance from the European Investment Bank, which has helped to deliver the excellent new campus at Swansea University, which the hon. Gentleman mentioned.
Wales has benefited from many other EU funding opportunities, including for agriculture, fishing and rural areas, education, training, and research and innovation. The education, training and research schemes will still be available to us if we remain a member of the single market and the customs union, but the huge support our rural economy receives in common agricultural policy payments will not. I believe that we received about €3 billion to support our rural economy between 2007 and 2013. Our economy depends on those streams. Even under my preferred deal, we would not qualify for CAP payments. Norway gets around that by paying the CAP payments and tariffs that it would receive if it were in receipt of CAP. Unless we have those guarantees from the UK Government, I fear dark days lie ahead for the rural economy and the Welsh economy as a whole. Diolch yn fawr iawn.
Geraint Davies (Swansea West) (Lab/Co-op)
Britain has been terrorised by clowns, and we now know that their ringleader is a peroxide blonde with a German name and a red nose masquerading as the Foreign Secretary. He promised a mixture of lower costs, market access and lower migration, but we are obviously going to get higher costs, which is why the deficit reduction plan has been torn up, no market access—it sounds like it will be a hard Brexit—and increasing migration, as ever. Boris said that we could have our EU cake and eat it, but Donald Tusk has said that all we will get is salt and vinegar.
The referendum took place immediately after the Welsh Assembly elections, so the Welsh people did not have time to contemplate all the ramifications of Brexit on their grants, and 16-year-olds and people living abroad were not allowed to vote. It is now coming home to us that we face the triple whammy that I mentioned earlier. Wales starts from a position of having something like 70% of UK GDP per head. As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said, 200,000 people who rely on EU trade—25,000 of them are in Swansea bay—face tariffs.
There is enormous uncertainty. We hear today that the promised electrification to Swansea may not proceed, and we do not know what is happening about the lagoon or the Swansea city deal. Tariffs are going up, and companies such as Nissan want compensation. It is like someone going to a shop and buying a mobile phone that they are told has a colour picture, but when they get home they find it is black and white. In other words, if the promises that were made were not a reasonable representation of the future—the falling pound, the loss of investment and the loss of jobs—the British and Welsh people deserve a referendum on the exit package before we trigger article 50. Article 50 should not be triggered until something like next October.
David T. C. Davies (Monmouth) (Con)
Does the hon. Gentleman agree that the fall in the pound has been excellent for exporters?
Geraint Davies
I assume that the fall in the pound to a 30-year low was designed to make Polish workers better off when moving abroad. The weak pound is a nightmare that will generate huge inflation in Britain. People will not be able to go on holiday, except on the £14 visa. If the hon. Gentleman thinks that, he should have said before the referendum, “We are fighting for a lower pound and less investment, and we are ripping up our deficit strategy.” In fact, the hon. Member for Cardiff North (Craig Williams), who has now left the Chamber, seems to think that we should have £1 billion less, because we are wasting our money—so much for representing Wales. Last week when I asked the Minister in Question Time about the “body blow” of Brexit, he said simply that Swansea had voted for it, as if to say, “Well, it’s their own fault—like it or lump it.”
In reality, we need support where it is most necessary, and we need promises from the Minister to ensure that funding is sustained and that we still have the city deal, the lagoon and the electrification. We need a helping hand to succeed in difficult days. If possible, we should also have another crack at this with an exit package referendum, so that people can have a say on what they get and whether they want to go ahead. They have said that they want to go ahead in principle, but in practice is a hard Brexit what they wanted? No.
Nick Thomas-Symonds (Torfaen) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bailey, and I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this important debate.
In my home town of Blaenavon, in the northernmost part of my constituency, are the Blaenavon ironworks, with their iconic balance arch, which are a very good example of a successful regeneration project. The houses in the ironworks, including No. 2 Stack Square, where my father was born, are each set out in the style of a different era, giving a flavour of the industrial heritage of the Eastern valley. The project has been a great success and my local authority, Torfaen, deserves great credit for it, but if someone walks out of the Blaenavon ironworks they will see outside the European flag, indicating the European structural funding drawn upon by such regeneration projects.
I totally respect the result of the referendum of 23 June, but it does not mean that the leave campaign can escape from the promises that were made in the weeks and months leading up to it. What promises were made? I have with me the letter written on 14 June, released under the headline, “Leave Ministers commit to maintain EU funding”. What did they say exactly? The letter states:
“After protecting those now in receipt of EU funding, we will still have billions more to spend on our priorities. We propose that at least £5.5 billion of that be spent on the NHS by 2020, giving it a much-needed £100 million per week cash transfusion, and to use £1.7 billion to abolish VAT on household energy bills.”
That was a specific pledge made nine days before the referendum, not for some slipping date in the future, but by a specific date—precise figures, specific pledges.
Furthermore, there is no point in the Prime Minister trying to distance herself from the promises made. I know she virtually went into hibernation for the course of the referendum campaign, but none the less, of the signatories to that letter, one is now the International Development Secretary, another is the Transport Secretary and a third is the Foreign Secretary. They are now in government, and they should honour the pledges that they made. Unfortunately, however, as my hon. Friend the Member for Caerphilly (Wayne David) alluded to in his intervention, it already looks as if those promises are slipping.
We know about the pledge on projects started before the autumn statement, but we have no idea about what will happen after that, as my hon. Friend the Member for Aberavon said. Even worse, the Secretary of State for Exiting the European Union said at Question Time last Thursday—I listened very carefully:
“Most EU funds will be guaranteed post-departure by the Treasury, as we said in August.”—[Official Report, 20 October 2016; Vol. 615, c. 950.]
“Most” is simply not good enough—the pledge made on 14 June should be honoured. My constituents deserve not only a continuation of EU funding, but the extra funds promised as well. Any failure to deliver will be a gross betrayal.
Mr Mark Williams (Ceredigion) (LD)
Thank you, Mr Bailey, for the opportunity to say a few words in this important debate. I thank the hon. Member for Aberavon (Stephen Kinnock) for speaking for the heart of industrial south Wales on this important issue. If I can do half the job speaking for rural Wales that he did for that area, I will be doing a good thing, because it was an excellent speech.
Farming is crucial to our economy, directly employing 58,000 people and with an output of produce worth about £1.5 billion. Some 80% of Wales’s land area is farmed, so there is no doubt that farming contributes substantially to the landscape, which is a vital element of our tourism, and—this is key—to producing and selling food tariff-free in the EU. Any possible funding loss to our farmers, therefore, will inevitably have a wider impact on Wales’s economy. A survey taken before the vote on 23 June revealed that two out of five businesses in the countryside depend on farms, and each of those farms contributes £100,000 to the local rural economy.
We note that funding under pillar one of the common agricultural policy will be upheld until 2020 as part of a transitional arrangement, and there was thanks from the farming community for that, but we need further clarification on the situation post-2020. We need clarification on structural and investment fund projects and agri-environmental schemes, and we need more detail on environmental stewardship policies. Despite the red tape and many criticisms over the years, the CAP did and does ensure that family farms survive. Post-Brexit, there is a huge challenge that is fundamental to the whole rural economy, and the Department for Environment, Food and Rural Affairs, working with the Assembly Government, needs to have a holistic rural strategy that combines food, farming and biodiversity. To date, such a strategy has been lacking. We need an early and clear communication, post-Brexit vote, on the subsidy regime and the position of seasonal foreign labour.
The maintenance of a subsidy regime to 2020 was welcomed, but the sector has been encouraged to diversify and invest for its survival. Investment, however, not least in negotiation with banks, requires certainty over cash flows and a baseline on which to continue operations. In that context, a three-year window until 2020 for the farmers whom I represent is completely inadequate. Between 2014 and 2016, net farm incomes in Wales declined by about 25% to some £13,000 a year. There is also the impact on secondary businesses in the rural economy. EU support amounted to £250 million a year, together with an investment programme of some £500 million for 2014 to 2020. Such funding is vital.
The UK Government have been giving conflicting messages. The Secretary of State for Environment, Food and Rural Affairs has implied that funding will continue, but her junior Minister, the hon. Member for Camborne and Redruth (George Eustice), said at the Royal Welsh show this year that the Government cannot guarantee that future agricultural support will be as generous as the current subsidy regime. That is completely unacceptable to the rural community that I represent and would have a dreadful effect on the capacity of family farms to function in the future. The farmers and businesses of rural Wales need clarity and answers from the Government, which so far have been woefully lacking.
Chris Elmore (Ogmore) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing the debate.
As matters stand, the implications of the UK leaving the EU will be seen in each town, city and village in Wales. Although we can be blasé about EU funding, and it is often not obvious, it has contributed enormously to each of our communities. In my constituency, agricultural funds have had a tremendously positive impact on all the farms. The common agricultural policy provides funds for more than 16,000 farms in Wales, and the European structural fund has also made a considerable contribution to various projects throughout Ogmore. Farmers throughout Wales benefit hugely from such funds, and in the same way, people in other industries have benefited from other such projects and funding, as my hon. Friend said so eloquently.
According to the Welsh Government, EU funding and projects have supported more than 200,000 people to gain qualifications, helped more than 70,000 people into work and created close to 40,000 jobs. The effect on funding for Wales of the UK leaving the EU should not be understated, and unless we plan accordingly, that funding will be sorely missed.
Uncertainty clouds the future of every aspect of EU funding in Wales. As I mentioned, the EU makes a fantastic contribution to our farming industry, but although the CAP pillar one scheme will be upheld until 2020, we do not know any detail of the arrangements with which the UK will replace it. Our farmers are therefore left in the dark and cannot feasibly plan for the future—they have no idea what funding they will receive in only four years’ time.
Those set to benefit from the proposed south Wales metro have also been left in the dark, as that project was almost certainly going to receive EU funding, without which it has become far more ambitious and possibly harder to achieve.
In August, the Chancellor offered what he referred to as a funding guarantee, which in truth is nothing of the sort. According to First Minister Carwyn Jones, the funding that the Chancellor referred to covers only about half of Wales’s regional funding. The Treasury’s guarantee to back EU-funded projects signed before this year’s autumn statement should be applauded, but there remains uncertainty for many other projects. Uncertainty benefits no one, and I hope that the Government will recognise that and clarify their position. The Welsh Government have worked well to ensure that Wales is on the way up, and I am sure that we all hope things will stay that way.
The future of Wales is in the hands of those who are managing our departure from the EU, and I fear that they do not understand the scale of the EU’s contribution to Wales. If agriculture funding is not replaced pound for pound, farms will close and jobs will be lost. If the Government do not replace the funding that would have come from the European social fund, there will be a skills shortage. I am sure all Members can agree about the success of the Jobs Growth Wales scheme, which is partly funded by the EU and has been led by the Welsh Government for several years. Likewise, if funding from the European maritime and fisheries fund is not replaced, those industries will suffer. The effect of the UK leaving the EU on funding for Wales could spell the end of some of the greatest projects in Wales and Welsh prosperity, and I hope that the Government will work to ensure that that is not the case.
Albert Owen (Ynys Môn) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bailey. Like the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) and my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), I am a democrat and accept the result of the referendum. Indeed, my constituency and Wales mirror the United Kingdom in that roughly 52% voted to leave and 48% voted to remain. We are talking about the future, and although the Prime Minister has said that she has a mandate from the 52%, we must talk for 100% of the residents of Wales and 100% of our constituents. It is important to put that on the record.
I was shocked, as many people were, that the previous Prime Minister, David Cameron, did not have a contingency plan. There was a simple question—leave or remain—and I could not believe that the Government did not cover both those bases, and particularly a leave outcome. We are in a difficult position. The captain—the then Prime Minister—has abandoned ship and left us rudderless and clueless about how to move forward.
I am a strong advocate of the European Union. Indeed, I am a strong advocate of unions—the EU and the Union of Wales, Scotland, England and Northern Ireland. I do not like the word “Brexit”, because it excludes Northern Ireland. We must have a better, more positive word about the United Kingdom’s future outside the European Union.
I worked with the Minister on structural fund projects before he came to this place. He knows how important structural funds have been to the development of Ynys Môn and north-west Wales. It is wrong of Conservative Members to say that that was a waste of money. The social cohesion that those funds have brought to my area after decades of under-investment is a testament to the European vision and the vision of the Welsh Government, which worked with the UK Government and the European Union to develop those areas.
My constituency is the gateway to Wales. It contains the major port of Holyhead, which links Wales to the Irish Republic. The Dublin to Holyhead route has been called the new Dover to Calais route, yet because of our exit from the European Union, that link is now uncertain. We need to look at that, because it will impact hundreds of jobs in my constituency. I remember working with our then MEP—it just happens to be Glenys Kinnock, the mother of my hon. Friend the Member for Aberavon (Stephen Kinnock), who moved the motion—the Welsh Government Minister and the UK Government to get extra resources for that port. They understood the importance of linking Wales and the UK with the rest of Europe.
It is important that we have a vision for the future. Guaranteeing structural funds until 2020, as has already been committed to, is not good enough. We want a clear vision and a clear plan for the future. I want devolved Administrations, the farming unions and rural Wales to be part of that—I want them not on the fringes, but at the centre making decisions. Many of the issues that we are talking about are already devolved. I do not want them to be centralised here in the UK Parliament. I want devolved Administrations to have a direct voice in the future of Wales and the future of the United Kingdom.
Chris Evans (Islwyn) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock), who spoke movingly about his constituency and his fears about our impending exit from the European Union.
I take issue with the hon. Member for Gower (Byron Davies), who said that Carwyn Jones did not have a contingency plan. I ask the hon. Gentleman to look at the Treasury’s recent evidence to the Public Accounts Committee, in which it said that it had no contingency plan because the referendum was not a general election and the Government’s official policy was to stay in the European Union. It therefore made no plans. How naive can it be?
Wales receives more EU funding than any other part of the UK. The Wales Governance Centre estimated in 2016 that Wales received a net £245 million from the European budget in 2014. That equates to £79 per person, yet Wales voted out, with 52.5% opting to leave. Like many others, I am at a loss to understand why the nation voted against the public interest. However, as a democrat, I accept the result. Unlike Members of some other parties in the House, I believe that we cannot continually have referendums until we get the answer we want from the people.
There is no future in debating our past; we should debate where we go from here. Let us begin by trusting the people of Wales. President Abraham Lincoln said:
“I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts”.
He went on to say “and beer.” As we know, we like some of that in Wales too. The UK Government here in London and the Welsh Assembly both have a role in ensuring that Wales continues to prosper even after exit from the European Union.
We must demand from the UK Government a new funding settlement for Wales. EU funding is critical to Wales’s development. We have heard from many hon. Members about the projects in their constituencies. Those must be funded beyond 2020. I find it embarrassing, frankly, when companies that are wondering what exit from the European Union will mean for them come to see me and want to be briefed. At the moment, I have no answers. I was extremely disappointed that when the leaders of the nations of this country met the Prime Minister yesterday, they too were told that the Government had no answers. It is no good for the Prime Minister to go on saying, “We’re not giving a running commentary on the exit from the European Union.” She needs to give facts, a rationale and a road map right now. [Interruption.] I have started, so I will finish.
However, Brexit must be seen as an opportunity. Wales cannot rely solely on EU funding or the public sector. Wales is an innovative country. In my constituency, General Dynamics UK in Oakdale and Axiom in Newbridge both stand up to that. The Welsh Assembly must create an entrepreneurial spirit. Wales is a trading nation. Our exports to EU countries in the year to the end of the second quarter of 2016 were worth £4.7 billion but, as a trading nation, Wales must have a dedicated trade ambassador who reaches out across the world and ensures that Wales is the place to do business. I have attempted to do that in Islwyn by encouraging businesses that I meet to come to Wales. It is time for the Welsh Assembly Government and the Government in London to step up to the plate. We need a trade deal. We need a strategy for Wales to prosper. Even though we are disappointed, exiting the EU provides a real opportunity for Wales.
Mr Adrian Bailey (in the Chair)
Order. I now intend to call the Opposition spokespersons. It would be helpful if you could keep your remarks within 10 minutes to leave adequate time for the Minister to respond and Stephen Kinnock to summarise at the end.
Kirsty Blackman (Aberdeen North) (SNP)
Thank you, Mr Bailey. It is a pleasure to serve under your chairmanship. I will be well within 10 minutes. I thank the hon. Member for Aberavon (Stephen Kinnock) for bringing the debate before us.
As was said by numerous Members, for a number of reasons, Wales stands to lose a huge amount—more than many other areas in the United Kingdom—from the UK’s exit from the EU. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) talked about Wales’s trade surplus. Wales is a trading nation with a massive trading surplus, so it stands to lose out from the massive changes proposed to the way in which trade works.
The hon. Member for Ceredigion (Mr Williams) talked about the rural community and the common agricultural policy in particular. The Government have given certainty on that up until 2020, but farmers need certainty way longer out than that. They are planning 10 or 20 years ahead and thinking about how their land will be used well into the future. As he mentioned, 80% of Wales’s landmass is used for farming, so it is really important that the Government give certainty. That is a major area in which Wales stands to lose out.
The hon. Member for Aberavon talked about Wales’s industries and its post-industrial areas. One problem that Scotland and Wales have in addition to a democratic deficit—our voices are rarely heard because the UK Government is never made up from a majority of Scots—is that the UK Government often poorly understand some of the industries and things that are most prominent and prevalent in our local communities. The UK Government, made up mostly from the south-east and less from the north of England and from Wales, poorly understand what it is like to live in a post-industrial place. They poorly understand what it is like to live in a heavily industrialised area and how communities rely on those industries. As a result, when the UK Government negotiate with the EU, those areas will be forgotten. Those things are not high enough on the priority list.
We keep hearing about how the City will receive special deals, but what about industry? What about areas in Wales and Scotland that actually need that support and have received, for example, EU structural funding? They are really important. It is vital that the devolved Administrations have a major voice in the exit negotiations so that we can explain to the UK Government how the industries work and how our communities live so that they can ensure that they prioritise them and not just the views of the City of London.
In a huge number of cases, people voted in protest against Tory austerity. It would be shocking if the UK Government used that as an excuse to centralise power in Whitehall, as a Labour colleague said. In the exit negotiations there is a real risk to Wales, Scotland and the north of England that our voice will be too small, too quiet and not heard enough. Leanne Wood, the leader of Plaid Cymru, said:
“The Prime Minister’s commitment to “a country that works for all” will ring hollow if Brexit leaves Wales in a weaker position than before.”
The UK Government need to reflect on that.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this important debate and on the powerful case he made. We have heard from an array of hon. Members from across Wales who have a variety of views on what leaving the EU will mean for their constituencies, for Wales and for the people of Wales. The one theme that has come through is that the next few years will be an uncertain period for all, and for our communities and businesses in particular, as highlighted by my hon. Friend the Member for Swansea East (Carolyn Harris).
The Government have a clear and pressing duty to reduce that 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.
As my hon. Friend the Member for Islwyn (Chris Evans) highlighted, Wales currently receives a significant net gain from the European budget because west Wales and the valleys qualify for the highest level of EU regional development funding. The Welsh European Funding Office estimates that projects in the 2007-13 round of funding created 11,925 enterprises, supported nearly 40,000 jobs and helped more than 72,000 people into work and 56,000 people into further learning. As my hon. Friend the Member for Neath (Christina Rees) said, 16,000 farmers in Wales get direct subsidies from the common agricultural policy, without which 90% would be in financial difficulty. My hon. Friend the Member for Ogmore (Chris Elmore) highlighted the positive impact that that funding has on farmers and the risk posed by leaving the EU.
Wales is set to receive £2.7 billion in structural funds up to 2020. We have heard examples of local regeneration already delivered across Wales. Many communities have been transformed with the support of EU funding, including many in my constituency. We heard my hon. Friend the Member for Aberavon outline the iconic Swansea University campus and the Workways+ and BEACON schemes, which have been supported through the EU.
My hon. Friend the Member for Ynys Môn (Albert Owen) highlighted the important point of matched funding and what that means in supporting EU funding to go even further in regenerating Wales. My hon. Friend the Member for Swansea West (Geraint Davies) highlighted the regeneration projects in his area and the lack of reassurance coming from the Government.
Despite that, Wales voted in line with England to leave the European Union, and we respect that decision. However, Wales did not vote to become poorer or to damage its public services. That is why, as we begin the process of leaving the EU, we need to work together to ensure that Wales, its economy and its communities get the best deal.
Albert Owen
Does my hon. Friend understand that many people who voted to leave were under the impression that some £350 million saved from Europe was going to be spent on the health service in the UK? Five percent under Barnett would give Wales about £17 million. Does he think that should be honoured by the Government, or at least debated?
Gerald Jones
My hon. Friend makes a correct point. During the referendum campaign lots of lies were told and comments made, and the people of Wales and the rest of the UK voted for a specific set of circumstances. They did not vote to make our services poorer. Indeed, the investment promised by the Brexiteers—as highlighted by my hon. Friend the Member for Torfaen (Nick Thomas-Symonds)—in the pledge signed on 14 June should be honoured.
Geraint Davies
Further to that, will my hon. Friend accept that the people of Wales and Britain voted in good faith in principle to leave and that that was subject to the exit package set out? There is a strong case for another vote not on the principle of whether to leave but on the exit package and whether it represents the reasonable expectations of voters, because already something like 7% of the people who voted to leave now say they do not want to leave. As this is a once-in-a-lifetime choice, surely they should look at the exit package in a referendum.
Gerald Jones
As I mentioned earlier, it is important that we respect the result, but it is also important that we ensure we get the best deal for Wales and for the UK in the coming negotiations. Despite the many challenges ahead, we must ensure that Wales has a positive voice throughout the negotiations to secure the best possible outcome. It is essential that the UK Government work closely with the Welsh Government and other devolved Administrations to ensure that their negotiating strategy works for the whole of the UK, not just for England.
The Joint Ministerial Committee met yesterday, although clarity was lacking on the current position and on what future discussions will look like. As we begin the process of exiting the EU, Wales has several priorities. We must prioritise the protection of jobs and ensure business confidence in the aftermath of the referendum. Full and unfettered access to the EU single market is crucial for Wales. Welsh businesses currently benefit from our trading relationship with the EU. If we were to leave the single market, and if tariffs were to be imposed on Welsh goods, that could have a crushing impact on our manufacturing and agricultural sectors. We need certainty about funding for current and future EU programmes.
The First Minister of Wales sought an urgent guarantee, immediately following the referendum, that Wales would not lose a single penny of EU funding up to the end of the EU financial perspective, running until 2020. This month the Treasury pledged to extend the guaranteed funding for all projects agreed before the UK leaves the EU. However, it has not given any commitment to replace the funding, further into the future, that we would reasonably have expected to receive if the UK were to remain in the EU. That is vital to our universities and agricultural businesses. Wales currently receives £650 million in EU funding, in particular through the common agricultural policy and structural funding. Campaigners for leave said that Wales would not lose a single penny in European funding, and we will hold them to that promise.
As my hon. Friend the Member for Aberavon outlined, the case for revision of the Barnett formula arrangements for Wales is now even stronger, to ensure fair funding for Wales during and after the current EU programmes. The Wales Bill provides an important opportunity to consider future funding arrangements for Wales. I urge the Government to reconsider their opposition to delivering a much needed fiscal framework to Wales as part of the Bill, and perhaps the Minister will comment on that.
It is my view, and the view of my party, that EU citizens working and living in Wales now should be able to remain here after the UK’s exit from the EU. EU citizens should not be used as bargaining chips in the negotiations, and we must stamp out the unacceptable abuse that has, sadly, risen since the referendum result.
Christina Rees
Since the referendum the UK Government have said little more than “Brexit means Brexit,” but Ministers have alluded to a hard Brexit. Will my hon. Friend agree with the Welsh Labour MEP Derek Vaughan who has said that as a result of that stance the EU has withdrawn behind its lines, and we will end up with a hard Brexit?
Gerald Jones
I do indeed agree. As I said in my speech, the people of Wales and the UK voted to leave but not to reduce public services. They certainly did not vote for a hard Brexit. It is important to have the clarity that we need as we go forward. It is essential that we remain outward looking, internationalist and pro-business. We require that we remain committed to fairness and opportunity for all, and I look forward to some reassurances, perhaps, from the Minister this morning.
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
It is a pleasure to serve under your chairmanship this morning, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing the debate, and the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones), who I think is appearing in Westminster Hall in his new capacity for the first time. I also congratulate him on being the only Member from the Opposition ranks who has understood the commitment given by the Treasury on EU funding in Wales. A number of Opposition Members have raised questions in relation to its running out at the autumn statement; but that is not the case. A further letter has been delivered to the Welsh Government, highlighting the fact that the Treasury would be willing to underwrite EU programmes in Wales up to the point of exit. That is a crucial and important Government commitment.
Nick Thomas-Symonds
I respect what the Minister says about what the Treasury has said; but what about the letter of 14 June that I read? Is it now Government policy simply to ignore that?
Guto Bebb
The hon. Gentleman must understand that initially, in the immediate aftermath of the referendum, the Government gave a commitment to support EU funding up to the autumn statement; but a further Treasury commitment has been made since then. Those letters have been delivered to the Welsh Government. Indeed, I assure the hon. Gentleman that the First Minister of Wales has given a genuine welcome to the Treasury’s commitment to trying to ensure that there is a commitment to the 2020 programmes in a Welsh context. Opposition Members should be aware that in claiming, in contrast with the Labour spokesman, that there is no commitment up to the exit from the EU, they are doing the people of Wales and their constituents a disservice.
Wayne David
The Chancellor of the Exchequer said that there will be a guarantee, but only for those projects that “meet UK priorities”. That is a qualification, surely.
Guto Bebb
It is a terrible thing for hon. Members to speak from a position of lack of knowledge. The commitment that has been given is very clear. Where a project is considered to be a Welsh Government priority it will be accepted by the Treasury as a priority for the UK Government as well. I recommend that Opposition Members read the comments by the Treasury. Some of them have raised the issue of a south Wales metro, and I recommend that they read the comments about that made by the Under-Secretary of State for Transport, my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), to the Select Committee on Welsh Affairs yesterday. It will be well worth their while. The Welsh Government need to get on with that project, because if the scheme is in place in good time the money will be forthcoming from the EU. If it is signed off before our exit from the EU, again, the Treasury will give a commitment. Opposition Members peddle scare stories about the commitments we have given. It is important for them to get their facts right.
Nick Thomas-Symonds
It is not a scare story. I quoted precisely from the letter of 14 June, not just about guaranteeing EU funding but about additional funding for the NHS and a pledge on VAT, both by 2020. Is that the Government policy now or not?
Guto Bebb
I am unsure which letter of 14 June the hon. Gentleman is referring to. I am referring to the Treasury commitment of October this year. I think that a commitment made this October trumps a letter of 14 June. The hon. Gentleman has also raised a number of issues about promises made in the referendum campaign that imply a lack of understanding of how a referendum campaign works. It is not about electing a Government. In the referendum campaign there were members of the Labour party on either side of the argument, and the same was true of the Government. To claim that promises made by the referendum campaign are binding on the Government is nonsense, and I think that the hon. Gentleman knows it.
Albert Owen
A few years ago the Minister would have been agreeing with us. It is the first time I have ever been accused of scaremongering for quoting the Chancellor of the Exchequer and Finance Ministers. As to the referendum campaign, we are not talking just about individuals making commitments. We are talking about the Foreign Secretary, the Secretary of State for International Trade and the Secretary of State for Exiting the EU. Those are three leading individuals. Will the Minister hold them to account, on behalf of the people of north Wales?
Guto Bebb
Again, I highlight the fact that comments made about the letter of 14 June do not reflect the Treasury’s position as it has developed. [Interruption.] Also, it is important to understand that those individuals from the leave campaign who joined the Government have done so with the intention—[Interruption.]
Mr Adrian Bailey (in the Chair)
Order. Members have had the opportunity to intervene. They must not continue to harass the Minister from a sedentary position when he is trying to respond.
Guto Bebb
I thank you, Mr Bailey. I assure you I was not feeling harassed.
It is important to point out that the individuals from the leave campaign who joined the Government will serve in relation to the Government’s agenda, which, to a large extent, is still based on the manifesto commitment of the last election.
I need to move on to reflect on some of the comments of the hon. Member for Aberavon. He began with an important comment about the way a single-industry town is affected by the fact that that single industry has contracted. He highlighted the changes that have happened over a period of years. However, the debate is about European funding in Wales. That funding has been important, but there is no denying that we have qualified for three rounds of such intervention. I do not believe that there is fault with Brussels in the fact that we still qualify for the highest percentage of support from the European Union, but Opposition Members should reflect on the fact that time after time we have ended up still qualifying for the highest level of intervention.
As my hon. Friend the Member for Gower (Byron Davies) stated, when we qualified for the first round of intervention the expectation was that it would be a one-off opportunity, because eastern European countries were joining the European Union whose standard of living was significantly lower than that enjoyed in Wales at that time. However, we have qualified again and again, and it appears that Opposition Members here expect Wales to qualify again in 2020. That is an indication of the failure of the Welsh Government in Cardiff to make the best of the funding available.
I fully accept that some European schemes across Wales have been successful and have made a difference, but no Member can deny that other schemes in Wales have been wasteful and inefficient. The real issue Opposition Members should face is that Welsh GDP per head is continually falling, despite the intervention that has been described by Opposition Members as absolutely crucial to the future of Wales. I believe we need a funding stream in place to support Wales, and I will fight for that as part of the Wales Office, but the crucial point is that to claim the status quo is the way forward is to ignore the realities on the ground in Wales, which were reflected in the referendum. The only two parts of the west Wales and valleys region, which receives the highest level of European intervention, that voted to remain were Gwynedd and Ceredigion. Opposition Members should reflect on that.
Geraint Davies
If the Minister expects GDP per head to go up in Wales, does he accept that the Government should stick by the cast-iron promise from the previous Prime Minister to electrify the railway to Swansea? The Government could make Swansea bay part of the wider electrified European network and give us the tools to export, rather than cutting us off at the knees and laughing as they are now.
Guto Bebb
The hon. Gentleman asks where the money is from a sedentary position. It would be a very irresponsible Government—perhaps like the one down the M4 in Cardiff—who would commit funding to a project without even having the costings. The hon. Gentleman should also be aware that we have a commitment to look carefully at the Swansea tidal lagoon. The Wales Office is working hard to ensure that that project has an opportunity to succeed, but it has to work for both the taxpayers and the people of south Wales.
I will take no lessons from the hon. Gentleman. He claims to be a democrat, but on several occasions in the debate he has called for another referendum. I think what we are seeing is an individual who perhaps did not fight as hard for his beliefs as he should have during the referendum and is now asking for a second chance. On the electrification of the south Wales main line, I will take no lessons from the Labour party, which did nothing to electrify the south Wales mainline, when the Government have just delivered improvements to the Severn tunnel and a new service from Swansea that started yesterday, and we will see fast trains getting to Cardiff and Swansea in due course. I expect the hon. Gentleman to welcome that. [Interruption.] The excitement of Opposition Members indicates to me that they are aware that some truths are being told.
Chris Elmore
I am not getting anywhere near as animated as the Minister suggests. Specifically on electrification, the chair of Network Rail yesterday said there is no money beyond 2019 to fund electrification to Swansea, which affects my constituency and affects the electrification of the valley lines. Will the Minister confirm whether the Swansea electrification will be completed by 2024, as previously committed to by the Welsh Secretary, the Transport Secretary and, I believe, the previous Prime Minister?
Albert Owen
I assure the Minister that none of us in objective 1 structural fund areas wear it as a badge of pride. He and I were on the same side in the 1980s and 1990s fighting for such funds; the then Conservative Government refused even to apply for them, which is why we are now in a dire situation. Will he commit, post-Brexit, to fight for the assisted areas scheme in Wales, to help the areas that need the greatest help?
Guto Bebb
The hon. Gentleman makes a constructive point, which I welcome. We are discussing EU funding in Wales post-2020, which will not happen because the people of Wales, along with the people of the rest of the UK, made a decision to leave the European Union.
It is imperative that we highlight the need to continually support Wales, which is clear from the Government’s commitments to Wales that have been highlighted: we are increasing revenue funding to the Welsh Government to £370 million; we have provided a funding floor to the Welsh Government, which has never been provided previously by the Labour party; over £900 million in new capital funding has been made available to Wales; there is a commitment of £500 million for the south Wales metro; we are waiting for proposals on the Swansea city deal; and we are in the process of encouraging a growth deal for north Wales. It is clear that the Government are delivering on our commitment to a regional policy that works for the whole of the UK.
I think the hon. Member for Ynys Môn (Albert Owen), who is making signs from a sedentary position that are unworthy of him, if I may say so, should be aware that the failure of EU funds in Wales to help our GDP position was not the fault of the EU funding. There is no denying that the way in which that funding has been utilised on three successive opportunities is a reflection on the Labour Government in Cardiff.
I am glad to say that the relationship between the Wales Office and the Welsh Government is extremely good, and I am glad to say that we have an understanding of the historical failures of EU funding streams. We are getting a constructive approach from the Welsh Government—unlike their colleagues in Westminster—who want to see a way forward in giving stability in the short term so that people who are committed to European projects know that those funds will be in place until 2020, which is precisely what we are offering.
Beyond 2020, it is important that we develop a strategy for the whole of the UK, which is exactly what we will do, working hand in hand with colleagues in the Welsh Government. Opposition Members should not take to their high horses and claim that they have no responsibility for the situation we face in Wales; they do, and they should acknowledge that. The people who vote for them highlighted their concerns in the referendum, which was a reflection, in my view, on the mismanagement of Wales by the Welsh Government for a very long time.
Kirsty Blackman
I have not been in Westminster Hall for quite a while, but I did not expect that Opposition Members would ask important, constructive questions and that the Minister would stand up and throw out political points. Will he commit to actually replying to the wide range of issues raised by Members on this side of the House and to providing a comprehensive response?
Guto Bebb
To be frank, I am astounded to be accused of making political points by a Member from the Scottish National party; there are always firsts in life. In relation to the crucial question that was asked, which has been misunderstood by Opposition Members and which is the point I want to make sure that people in Wales hear, there is a commitment to EU funding in Wales up until the point that we exit the European Union. That was the misunderstanding that was highlighted in the speech of the hon. Member for Aberavon who secured the debate, and is the point that was misunderstood by many Opposition Members, although it was properly understood by the hon. Member for Merthyr Tydfil and Rhymney. It is important to highlight that.
I will finish on agriculture. Concerns have been expressed about the future of the agricultural sector. As with general EU funding for Wales, there is a commitment to agricultural funding up to the point of exit from the European Union. The hon. Member for Ceredigion (Mr Williams), who represents a rural constituency, will be as aware as any other hon. Member that there are complexities involved in ensuring that we develop a support structure for the agricultural sector moving forward. That work is in hand and information will be provided in due course. The hon. Gentleman will understand that the complexity in the change we are facing is something that will take time to resolve, but I assure him that the Government are committed to ensure that that issue is also reflected in our work.
Stephen Kinnock
I thank all of my hon. Friends and other hon. Members for making powerful and passionate speeches. We have seen how high passions are running on these vital issues, which is because the future of our communities is at stake. We will defend the fact that we need funding and resourcing until our dying day. The Government are teetering on the brink of a gross betrayal of our communities. The Minister made the point that, although we have had all those years of funding from the EU, the west Wales and valleys, for example, still qualifies for it as it is below 75% of EU GDP. That is not something we would ever wish to celebrate, but can we really argue that EU funding has been the cause of that difficulty? Surely to address that issue we need to continue the funding and support?
There are three questions. First, what happens after 2020? Secondly, what about the projects signed after the autumn statement and what is that secret method? Thirdly, what about Welsh applications that are suffering because of the antagonistic behaviour of the UK Government towards the rest of the EU? Those are the three questions that I asked in my opening remarks and that my hon. Friends have continued to ask. Unfortunately, we have not received answers today, but I assure the Minister and his colleagues that we will continue to press for those answers.
Question put and agreed to.
Resolved,
That this House has considered the effect on funding for Wales of the UK leaving the EU.