Leaving the EU: Infrastructure in Wales

Debate between Stephen Doughty and Gerald Jones

Tuesday 17th January 2017 Westminster Hall

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Flello. I congratulate my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) on securing this debate and on outlining a powerful case. He made the point that it is important that powers returning to the UK are devolved to Wales to help the Welsh Government to drive forward the regeneration of Wales. He also mentioned the current programme of EU funding, which involves some £3 billion in investment across Wales. In 2014 alone, the net benefit to Wales was £245 million, which demonstrates exactly how much benefit Wales gets from the European Union. He was right to point out that we heard vague commitments from the Prime Minister today, but nothing to give certainty on the regeneration infrastructure that Wales needs to continue. He was also right to point out that Wales did not vote for cuts to regeneration infrastructure projects. That is developing from the chaos unfolding before us.

Hon. Members have made significant points clarifying what risks our exit from the European Union will bring to infrastructure in their constituencies and across Wales. We heard from my hon. Friends the Members for Alyn and Deeside (Mark Tami), for Cardiff West (Kevin Brennan) and for Cardiff South and Penarth about Airbus, Ford, Celsa and many other firms that develop their products across Europe, and the major and problematic impact that a hard Brexit would have on those businesses and many others.

We heard from my hon. Friends the Members for Newport East (Jessica Morden), for Swansea East (Carolyn Harris) and for Blaenau Gwent (Nick Smith) about infrastructure projects such as the metro, electrification of the valley lines and the Swansea Bay tidal lagoon. My hon. Friend the Member for Newport West (Paul Flynn) outlined the unique issues facing Wales from our exit from the EU, and the need for a red, white and green project to develop policies that take account of our unique heritage. We also heard from my hon. Friend the Member for Ogmore (Chris Elmore), who discussed the impact that uncertainty will have on local government’s ability to deliver larger-scale projects. My hon. Friend the Member for Torfaen (Nick Thomas-Symonds) stated that, although he respects the result of the referendum, whether we are leave or remain, we need a clear vision. As he pointed out, that is sadly lacking in this Prime Minister, who seems fixated on internal factions within the Tory party.

My hon. Friend the Member for Bridgend (Mrs Moon) highlighted the impact that European funding has had on her constituency, including a total of £40 million within the Bridgend County Borough Council area since 2000 for educational and infrastructure projects. As in many constituencies across Wales, the strategic development sites have supported small and medium-sized enterprises. There have also been town centre enhancements, which again are common in lots of constituencies across south Wales. My hon. Friend the Member for Neath (Christina Rees) talked about the fact that Wales is affected by deindustrialisation and a lack of investment that dates back to the ’80s and ’90s. She said that Wales still has a significant need for structural funds and spoke about projects such as the integrated transport hubs, which again are regeneration projects that have happened in constituencies across south Wales.

In our last debate in this Chamber just before Christmas, I asked the Minister a number of questions, which unfortunately he did not answer. I say to him today that I approach this debate with a genuine desire to have a response from the Minister on the record. I expect him to tell me that he has already answered some of my questions, so, with the greatest of respect, I hope that he will have no problem repeating and clarifying that information and putting it on the record today.

I have no desire to use this debate for gamesmanship or to score cheap political points. The impact of the exit from the European Union on our constituencies and on Wales as a whole is far too important for that. But we need answers. Leaving the European Union will have a significant impact on the funding and development of infrastructure across Wales. That is in absolutely no doubt.

Wales has received more than £2 billion of capital investment in social housing, transport, energy, water and education through the European Investment Bank in the past decade. As my hon. Friend the Member for Cardiff South and Penarth outlined, between 2014 and 2020, £1.9 billion of European structural funds will have driven total investment of almost £3 billion across Wales.

The benefits of that European investment have been seen in major projects, such as the Cardiff University Brain Research Imaging Centre, the Menai Science Park, the Swansea University Bay Campus in the Neath-Port Talbot area, and the Deep Green marine energy technology. In my constituency, we have seen the dualling of the A465, the heads of the valleys road, which historically has had a poor safety record and links west Wales, across the top of the south Wales valleys, to the midlands, so it is a key route for business. We have also seen the investment in jobs created in our communities and various funding streams for social programmes to support the most marginalised and vulnerable in our society.

As those facts demonstrate and as we have heard from hon. Members today, Wales has done incredibly well from European funds and support. So there are now serious and vital questions that the Government need to answer about what will happen to infrastructure support for Wales post-2020 and about what will replace EU funding.

[Stephen Doughty]

My hon. Friend is making a strong speech and summarising many of the key challenges, specifically the challenges about infrastructure funding. However, does he share my worry that there is a wider challenge? In the Chancellor’s comments the other day, translated I believe from German, he said that

“we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.”

Does my hon. Friend worry that we may be moving away from a programme of investment to reduce inequality and to focus on jobs, to one of a race to the bottom on tax, regulation and all those issues, which would damage the prospects for Welsh workers and businesses?

[Gerald Jones]

I do indeed; that is a very real concern. My hon. Friend highlights some of the chaos in the Government’s thinking on this matter. I hope that we will hear more from the Government in the near future to end the uncertainty and to provide some clarity about exactly what they intend to do.

During the referendum, we were assured by leave campaigners, including a number of senior Tory Ministers, that the UK and Wales would not lose out as a result of our exiting the EU. It is now time for the Government to deliver on the assurances that were given. Businesses and investors need certainty about the infrastructure and environment that will support their long-term decisions, so it is vital that the Government now make it clear how they will offset the negative consequences of EU exit for infrastructure in Wales. I hope that the Minister can give some clarity on what funding streams he envisages will replace EU funding post-2020, and outline his Department’s assessment of how much funding there will be.

Furthermore, even before we reach 2020, we need clarity on the guarantee made by the Chancellor, which was mentioned by the Minister and the Secretary of State for Wales in the media. To be fair, the Chancellor has announced that the Treasury will guarantee all multi-year EU business funding agreed before our exit. However, the detail appears to be a little more complex. For what it is worth, the Treasury said that it will

“put in place arrangements for assessing whether to guarantee funding for specific structural and investment fund projects that might be signed after the [2016] Autumn Statement but while we remain a member of the EU. Further details will be provided ahead of the Autumn Statement.”

However, as my hon. Friend the Member for Neath commented, the specific assessment criteria mentioned in the Treasury’s statement were not provided ahead of the autumn statement and they have not been formally put on the record or disclosed in specific terms.

The Minister and the Secretary of State for Wales have repeated the claim that all projects before we leave the EU are secure, but can the Minister now say—purely for clarity and to have it on the record—what the assessment criteria will be to guarantee funding for specific projects that are signed between now and when we leave the EU? Can he also be clear exactly what will be used to assess that and which projects, if any, he expects not to pass that assessment?

Can the Minister also pledge today to guarantee loans made by the EIB to projects in Wales before we leave the EU? When my hon. Friend the Member for Cardiff Central (Jo Stevens), who is the shadow Secretary of State for Wales, raised that issue at the last Welsh questions, the Secretary of State for Wales said only:

“Our negotiations with the EIB will run in parallel with our negotiations with the European Commission. The hon. Lady has a responsibility to try to instil confidence in investment in Wales, not to undermine it.”—[Official Report, 30 November 2016; Vol. 617, c. 1505.]

To accuse the Opposition of undermining investor confidence in Wales simply by scrutinising the Government and asking them to reveal to Members, investors and the Welsh public what their plans are is, clearly, remarkable.

Consequently, in a spirit of openness and constructive dialogue on this most crucial of issues, will the Minister tell us whether the Government plan to guarantee loans made by the EIB to projects in Wales before we leave the EU? If not, what assessment has been made of the projects that will not be underwritten, the potential cost of that to the Welsh economy and what jobs may be at risk as a result?

Time is marching on and the longer the uncertainty goes on, the more detriment will be caused to projects, businesses and communities across Wales. I hope that the Minister will provide some answers this afternoon to allay the genuine and growing fears that we now hear almost daily. Will he also take this opportunity specifically to address the issue of the funding received from the European Territorial Cooperation programmes, which provide opportunities for regions in the EU to work together to address common social, economic and environmental challenges? Wales has benefited hugely from that. Examples of other such projects include the Ireland Wales programme, the Atlantic Area programme, the North West Europe programme, Interreg Europe, the European Spatial Planning Observation Network and Interact, which are worth billions of pounds to Wales. Will the Minister clarify what discussions the Government have had about whether the UK, outside the EU, would be eligible for any of those programmes? If it is not eligible and if Wales is no longer able to secure funding through those EU initiatives, what plans do the Government have to replace the funding?

Long-term infrastructure investment in Wales is vital for the future of our economy, jobs, investment and growth. The Government have a responsibility to ensure that we get the best possible deal from Brexit. It is not good enough just to say that we will get the best deal, whatever that means. Our constituents, businesses and investors need details of what funding will be available, what infrastructure projects will go ahead and what criteria other projects will have to meet before they can go ahead.

The Minister needs to get away from the rhetoric of our previous debates and earnestly give some answers today. I hope that he will take this opportunity to provide us with some answers. I hope that he appreciates how important these decisions and this debate is.