Welsh Rural Economy

(Limited Text - Ministerial Extracts only)

Tuesday 22nd June 2021 Westminster Hall

[The Parliamentary Under-Secretary of State for Wales (David T. C. Davies)]

It has been a pleasure to serve under your chairmanship for the first time, Mrs Cummins. Diolch yn fawr iawn i’r Aelod gwir anrhydeddus dros Dwyfor Meirionnydd. Although we obviously disagree and see things slightly differently politically, I acknowledge many of the issues raised by the right hon. Lady for Dwyfor Meirionnydd (Liz Saville Roberts) and their importance. I am pleased we are having this discussion on a subject that is of importance to all, regardless of our political persuasions.

I begin by assuring the right hon. Lady, and other Members, that the recovery and renewal of our rural economy is a central part of our strategy to build back better from the pandemic, but also to strengthen the Union—a matter for which the hon. Lady may not share my enthusiasm. The passion evident through all the contributions shows we can agree on other things. We agree that the countryside of Wales is close to the hearts of everyone who lives there, and because of the large proportion accounted for by land classified as rural, it is essential that local businesses in those areas are able to flourish, drive up the economy and create jobs for local people. From the mountains of Snowdonia to the beaches of Ceredigion in Pembrokeshire and the rolling hills of Montgomeryshire, Radnorshire and Monmouthshire, there is a special place in the national consciousness of Wales for its rural locations.

If Wales is to continue to thrive, it is essential that the local economies of rural Wales are able to create good, sustainable jobs—not just jobs, but careers to drive up growth, as I heard on a tour of north Wales. We are committed to levelling up in every part of the United Kingdom, and Wales is certainly no exception. My right hon. Friend the Secretary of State for Wales and I have undertaken visits, and my first visit after lockdown was to north Wales to discuss the growth deals and look at the issues the right hon. Lady for Dwyfor Meirionnydd has rightly raised today.

The importance of tourism to the area was underlined by the Tourism Network, which says that people do not want jobs; they want careers. The network tells young people to not go into a minimum wage job and stay there until they are sick of it and leave for England or elsewhere. They want people to be offered a career, so that they can go in doing a low-wage job, and at the same time undertake training for bookkeeping, personnel, or whatever, allowing them to become the leaders of tomorrow. That is something we would all want to support.

Before I go into the detail of the UK Government’s commitments to Wales, I will reflect on the unprecedented support they provided to businesses and individuals during the covid pandemic. More than 500,000 jobs were protected by the UK Government’s support schemes, such as the coronavirus job retention scheme. Billions were provided in Government loans to Welsh firms, and an extra £8.6 billion has provided to the Welsh Government through the Barnett formula since the start of the pandemic. I was left scratching my head when I heard the First Minister suggest that we had taken money away from the Welsh Government. I am surprised that when he suggested that in an interview he was not asked how much money he received two years ago—the difference is absolutely huge.

[Liz Saville Roberts]

The Minister mentioned the levelling-up fund and that the Welsh Government have said they now receive less than they previously did. What does he make of the Welsh Government’s estimation that they are set to receive as little as £50 million a year, instead of the £375 million they previously got from the EU, under levelling-up agreements?

[David T. C. Davies]

There is a very simple answer to the right hon. Lady on that point: £375 million a year is the average that the Welsh Government received in structural funds throughout the programme period, and £375 million is what they will continue to receive. In fact, I think it is slightly over that in the next year. That money will continue to come from the European Union over the next two or three financial years, so the extra money she refers to does not replace the structural funds; it is additional to the structural funds, which they will continue to receive. As for tail ends—to use a term that I hear a lot—and that EU money gradually dissipates, it will be replaced by the shared prosperity fund. We are absolutely standing by our manifesto commitment to ensure that Wales receives exactly the same amount after Brexit as it did before Brexit. I am delighted to make that clear.

As right hon. and hon. Members will undoubtedly be aware, the Secretary of State for Wales launched “The UK Government’s Plan for Wales” on 20 May. It sets out how we intend to build back from the pandemic by investing in digital and transport infrastructure, providing the right financial backing for green industry, and supporting jobs and growth right across Wales in the coming months and years. As one would expect, the plan had a thread of ambitious projects and initiatives for rural Wales, and I will turn to some of those commitments.

The hon. Member for Ceredigion (Ben Lake) rightly raised the issue of broadband, as did the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones) and many others. Yes, it is a traditional bugbear for our rural communities and, as the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) rightly said, we have realised just how important it is during the pandemic. I entirely agree with most of what has been said in this Chamber. Members are right to hold the Government to account for not quite reaching the speeds in rural areas that we would like, including in my Monmouthshire constituency. I welcome that Ministers are being held to account and being put under pressure on this issue.

However, we have invested £5 billion to support the deployment of gigabit-capable broadband in the hardest-to-reach areas of the United Kingdom, including in Wales. We will be investing £1.2 billion over the next four years. BT Openreach recently announced plans to deliver full-fibre broadband to about 415,000 homes and businesses across Wales over a five-year period. The shared rural network programme, of which the hon. Member for Ceredigion was a bit critical, will deliver 33 new masts, which will hopefully mean that 95% of Wales is covered by 4G by 2026. I make one genuine suggestion to the hon. Gentleman in particular, whom I met recently to discuss the growth deals in mid and west Wales, and the potential projects that may come forward. On a recent visit to Swansea, I saw that connectivity has been made one of the major project areas of the Swansea city deal, as the hon. Member for Carmarthen East and Dinefwr will be aware. When we return shortly, we will look at how the Swansea digital village is developing. My suggestion to the hon. Member for Ceredigion is very simple: encourage the local authorities in the area to make connectivity one of the planks of their growth deals.

[Liz Saville Roberts]

In my constituency, we are waiting for the Home Office to switch on 10 masts for the emergency services network. That is something the Government could do immediately in the here and now. I urge the Minister to use his good office to good effect, and ensure that we get improved connectivity along those lines.

[David T. C. Davies]

My officials are following that specific issue with interest at the moment. I suggest that they may wish to draft the right hon. Lady a response, because it seems a perfectly reasonable point to be making.

The hon. Member for Carmarthen East and Dinefwr also mentioned the importance of physical fitness during the pandemic. He is a fine exemplar of that, given that the last time I met him he was just coming out of the gym in the hotel that I had also been in. He practises what he preaches, which is very good.

I shall move on to the support the Government have given to farmers—the bedrock of our rural community. Various Members raised the Australian trade deal, so I will come on to that in a second. I believe that some misinformation has been put out about agricultural funding. Like EU structural funding, it will of course continue to come from the EU for the next couple of years. The UK Government have rightly made the commitment to match the agricultural funding we received before we left the European Union and to ensure that the same amount is received going forward.

The hon. Members for North East Fife (Wendy Chamberlain) and for Angus (Dave Doogan) raised the Australian trade deal, along with various other Members, and I have written down a couple of notes about it. Of course, we received beef imports from Australia as members of the European Union and the total amount that came in last year was about 560 tonnes. According to the AHDB, the amount that we imported in total was around 238,000 tonnes—about 400 times the amount that was coming from Australia. Most of that came from the Republic of Ireland. So if anyone is starting to get a little bit worried about an Australian trade deal, it should be the Irish Government, not British beef farmers. I think the hon. Member for Angus suggested that it could go up six times if we sign the trade deal. Well, we will sign the trade deal, and even if it did go up six times—even if it went up 10 times—it would still be an absolutely tiny fraction of the total amount of beef that we import from Ireland each year.

[Dave Doogan]

Does the Minister accept that the detail and nuance of this crisis is what it displaces? The volume in itself is one element of the factor, but it is what it displaces because our production costs are far higher than Australia’s.

[David T. C. Davies]

The hon. Gentleman says that, and I have also heard it, but I am not sure I entirely accept it. He appears to have a smartphone in front of him, and I suggest he has a look at the prices for cuts of beef in Coles or Woolworths, which are the two major supermarkets in Australia, and compare them with Tesco. To be honest, by and large the same cuts of beef cost more in Australia. Australian beef costs more on the shelves of Australian supermarkets than British beef does on the shelves of British supermarkets. The idea that Australian beef is ridiculously cheap does not really stand up to much scrutiny.

[Liz Saville Roberts]

I anticipated that the Minister would make this argument on the price. Will he recognise that Australia has suffered two droughts in recent years? Previously Australian lamb was extremely cheap, at 300 cents per kilo. With the markets in China being as fragile as they are, and Australia perhaps seeking alternative markets, the prices may not remain as high as they are at present. Looking into the future and in the long term, that is perhaps a disingenuous argument.

[David T. C. Davies]

Looking into the future and the long term, of course that is the case. The level of sterling or the Australian dollar could vary or the markets in China may not be the same, but there is generally seen to be a drive towards greater wealth, not just in China but across the whole of the Asia-Pacific rim, which is driving an increase in the demand for beef and sheep meat. I cannot pretend to look into the future and guess what currency and stock prices might do—if I was any good at that, I probably would not be an MP, as I would be making millions in the City. Based on 560 tonnes coming in at the moment, I do not see that there is anything very much for anyone to worry about, even the Irish farmers, and especially not considering the very high-quality beef that we produce in Wales, and in Scotland, if I may say so to the hon. Member for Angus.

The danger of ad-libbing means that I have probably used half my speech on that issue, so I will now turn to tourism. It is another area that is of great interest and importance to us in Wales—I think it was mentioned by the right hon. Member for Dwyfor Meirionnydd. I was absolutely delighted when I was in north Wales to be able to sample the first-class tourism that north Wales has to offer. I did so by staying at the brand-spanking-new Hilton Garden Inn, the first Hilton in north Wales, and visiting Surf Snowdonia, which certainly was no hardship for me. I also looked at some of the other tourism projects that are taking place in north Wales, which are all coming about as a result of the growth deals that have been funded jointly by the UK Government and the Welsh Government. We have put £120 million into the north Wales growth deal. We will support the mid-Wales growth deal with £55 million across the region, and I hope tourism will play a part in that and in the other regions of Wales.

We are also very, very ambitious as to what the growth deals can do in helping to support our efforts to become net zero by 2050. The hon. Member for Angus mentioned floating offshore wind. I suspect I know which company he met with and I know it is very enthusiastic about getting floating offshore wind into Scotland and off the coast of Wales. I do not know what is going on in Scotland, but I can tell the hon. Gentleman that I personally signed off a cheque for some of the money for the Swansea Bay city deal, which will help build infrastructure at Pembroke Dock to enable floating offshore wind companies to trial their products there.

I believe I know which company it is, and I fully support its enthusiasm for dealing with BEIS. However, BEIS is already saying that it will ensure, when the new contract for difference auctions come forward, that offshore wind is part of that mix, so it may be reluctant to talk to specific companies. I can understand why that might be, because BEIS will not want to be seen to be lobbied by or to give preference to any single company, but it has made it very clear that floating offshore wind will be supported through a strike price. That should enable those industries to thrive, which is a very good thing.

Notwithstanding the enthusiasm of the hon. Member for Angus for Scotland, I would like to say that there is indeed huge potential in the coastal areas of Wales. We are absolutely blessed with marine energy potential and we are seeing a number of early-stage schemes looking into that. As well as Pembrokeshire, I should mention the Morlais project in north Wales, which is more about hydro energy than floating offshore energy. I believe that might be one of the first projects that comes forward in the North Wales growth deal—I very much hope so. It is one that I was certainly enthused by, and I know that my hon. Friend the Member for Ynys Môn has done a great deal to lobby me and BEIS Ministers to ensure that that project goes ahead

Finally, I shall turn to transport, which has also been mentioned by various Members present. I would never underestimate its importance to the rural economy. It is only fitting that the global centre of rail excellence will be on the site of the Nant Helen opencast mine in Onllwyn; that facility will support innovation in the UK rail industry, including the testing of cutting-edge green technology. That is a real vote of confidence in rural Wales, and one that the Secretary of State for Wales was absolutely instrumental in making a reality. I know how many meetings he personally held with various officials and other Ministers to make sure that that happened.

In addition the UK Government are developing numerous other rail schemes, such as the £2.7 million Cambrian line signalling upgrade, which is due to be delivered by May 2022. The upgrade will enable the introduction of new trains and allow interoperability with other digital signalling schemes. There are also the investments that have been made in new stations, such as Bow Street in Ceredigion; I think the hon. Member for Ceredigion and I were there at the virtual opening of that in February 2021.

There is the £17 million being spent on the Conwy Valley line between Llandudno Junction and Blaenau Ffestiniog to repair and restore it after multiple flood events in the past five years. We are also going through the outline business cases to develop the freight lines on the South Wales relief line, which will mean more trains going between Cardiff and Bristol and will have a beneficial impact on constituents of the hon. Member for Merthyr Tydfil and Rhymney, I am sure. In north Wales, we are beginning the process of the outline business case to improve the North Wales Coast line. So there is a great deal going on to improve transport in Wales.

I take slight issue with the mention by the hon. Member for Carmarthen East and Dinefwr of the much-quoted figure of 11% of the railways and 1% of the funding, because that was simply looking at enhancements. I believe that page 20 of the same report—I may be wrong about that, but it is certainly in there somewhere—makes it clear that, actually, if you look at maintenance operations, renewals and enhancements, the overall figure is closer to around 4%, so it is not quite the headline that the hon. Gentleman states.

[Jonathan Edwards]

The Minister may not accept my argument on that point, but has he read the statement of funding policy that accompanied the last comprehensive spending review? It indicated that the Barnett consequential share for Wales is plummeting as a result of the Department for Transport spending on HS2, and showed the inequity that Wales faces compared with Scotland and Northern Ireland because of that.

[David T. C. Davies]

I think the hon. Gentleman is right that HS2 was not Barnettised, and I would be heading off down a branch line myself in terms of this debate if I go into it. Very briefly, virtually everyone here has signed up to the view that we need to become carbon-neutral by 2050. If we are to do that, one of the things that we must do is get people out of their cars and on to trains. If we are to do that successfully, we need to build lines where they will get the maximum number of people out of cars and on to trains, and that happens to be along the HS2 route.

Some expert in the field said to me the other day that it was a pity it was called High Speed 2, because that gives the impression that it is all about delivering a high-speed train. But he said it is not at all; it is about delivering a huge amount of extra rail capacity that will get vast numbers of people out of their cars, off the roads and on to a train, which will be powered by electricity that should come from green sources. Possibly the name could have been slightly better chosen.

I may have exhausted your patience, Mrs Cummins, so if there are no further interventions, let me thank all hon. Members for an interesting, perceptive debate. If I have not responded to every question, I should be more than delighted to do so if I am reminded of what they are.

The UK Government’s commitment to the Welsh rural economy is not in any doubt. It is integral to building back better from the pandemic, as well as strengthening the Union. Our support for the Welsh rural economy is unwavering and I am sure will go from strength to strength in the coming months and years, driving local growth and creating jobs. As we come out of this pandemic as a result of the wonderful vaccine, that it was possible to deliver so quickly as a result of Brexit, the Secretary of State for Wales and I look forward to visiting Wales on many occasions over the coming months and hopefully even years—who knows—in order to see those growth deals in action and to watch levelling up happen before our eyes. Diolch yn fawr iawn.