Exiting the EU: Businesses in Wales

Debate between Stephen Doughty and Wayne David

Wednesday 14th December 2016 Westminster Hall

[Stephen Doughty]

I have a great many concerns about the negotiating process, but I want to turn to three areas of particular concern that businesses have raised with me: regional funding, the single market and the situation for universities.

It is worth reflecting, as some colleagues have, on the importance of the scale on which businesses engage in the single market. There are 191,000 jobs dependent on EU trade, and that affects everything from steel to the high-tech products in my constituency; 500 firms in Wales export more than £5 billion annually to other EU member states and 450 firms from other EU member states, located in Wales, employ more than 50,000 people.

Several hon. Members have spoken about funding and I will come on to that, but, without referencing specific names, the sorts of things I have been told about include workers’ rights to travel to engage in cross-European projects; contracts, which I mentioned in an intervention; and concerns about research collaboration and major long-term projects being put at risk. The message is very clear that businesses do not want a hard Brexit, if there is to be a Brexit. They want it to be as soft as possible and are particularly concerned about tariffs and access to the single market. Those concerns are constantly raised with me.

Businesses were positive with me about the work that the Welsh Labour Government are doing to try to provide some certainty and optimism in the economy in uncertain times. There is particular praise for the work of the First Minister and Economy Secretary, who went to the United States and Japan to stand up for Welsh businesses and the links that we have with those two markets. Whether it is a case of fighting for funding for the south Wales metro or for other projects, the Welsh Assembly Government are trying to ensure that some positive things happen during the uncertainty.

There is also continued investment in infrastructure projects and building, including a lot going on in Cardiff at the moment. There is the city centre redevelopment; we have plans for new stations; we have an enterprise zone, where there is a lot of investment; and—to give credit—there is some degree of cross-party agreement on a city deal. It is vital that such investment in infrastructure and business should continue, particularly now while there is a lot of uncertainty.

[Wayne David]

We understand that the Government have given some assurances about the continuation of what would have been European funding. Does my hon. Friend share my concern about the fact that the Government are also talking about changing expenditure priorities?

[Stephen Doughty]

I do. I have yet to be convinced about the certainty on levels of funding, let alone the sectors. That will be greatly worrying to many in my constituency. It is worth reflecting on what the Office for Budget Responsibility said in the economic and fiscal outlook published in November: that as a result of the referendum decision, the potential output growth will be 2.4 percentage points lower than it would have otherwise been in 2021 without the referendum. As to the impact on Wales, the House of Commons Library briefing mentions that there could be

“lower business investment…the impact of a less open economy on productivity…a reduction in investment in research and development”

and

“costs associated with adjustments to new regulations or new markets”.

There will obviously be costs and changes: how are they to be minimised?

On regional funding, €5 billion for Wales is planned for 2014 to 2020, and potentially £2.7 billion post-2020. I still do not feel that we have had the guarantees from the Treasury. Why does that matter? It matters for specific projects such as the south Wales metro, which is vital for people’s ability to get around, do business, get to work and take advantage of opportunities in my constituency and the whole south Wales area.

We might be able to achieve those things in part outside the south Wales metro project. I have supported, for example, the proposals for a St Mellons parkway station, which could be funded by other means. There is a good degree of cross-party agreement about the importance of Network Rail and Department for Transport funding for it. However, fundamentally, the south Wales metro has the potential to be a transformative scheme for the south Wales economy. I am pleased that the First Minister was in Brussels arguing for the £110 million-worth of funding. The European Commission was very clear in saying that it could not comment about what would happen after the UK leaves. Such uncertainty is causing concern, so perhaps the Minister will provide some assurances—particularly about that project, which is so crucial to the economy of south Wales.

I have mentioned concerns about access to the single market, which will affect all businesses. I should be particularly worried if we were to consider putting tariffs on goods produced in Wales. The First Minister has made it clear that that is a red line for him. It would affect industries such as the steel industry in my constituency.

I have spoken many times in this Chamber about companies such as Celsa, based on my patch. It does significant amounts of exporting. It is a European company from Catalonia in Spain and works across the European Union. Forty per cent. of direct sales of British and Welsh steel go to the EU. That is similar to the overall total—41% of total goods exports from Wales go to the EU. What assurances can the Minister give to companies such as Celsa that export so much to the EU, let alone other places? What tariffs might they face in the future? What additional trade restrictions might they face?

We have heard a lot of talk about Airbus, which also has a major facility, Airbus Defence and Space, in a neighbouring constituency to mine, Newport West, where a number of my constituents work. Concerns are being expressed about European collaboration on space projects. High tech is an important growth industry in which the UK has been investing more. I should hate such jobs to be lost from our communities—let alone the wider aerospace industry in south Wales.

I want finally to discuss universities. The total value of future research income to Cardiff University, from the seventh framework programme and Horizon 2020 up to July 2016, was £23.5 million, with further applications in the pipeline of up to £15.7 million; work from the European structural fund was worth £23.6 million, plus a potential £35.2 million of projects in development. Those are significant sums.

To give an idea of the sorts of projects involved, I should say that they include the Cardiff University brain research imaging centre, which is doing pioneering work on dementia, multiple sclerosis and other neurological conditions. We should be proud that that work is going on in our capital city. Many researchers from my constituency work in and around the university. What if such things are to be put at risk? I am hearing a lot of concern from the university sector in my area, from individual workers and universities. What assurances can the Minister give?

Wales Bill

Debate between Stephen Doughty and Wayne David

Monday 12th September 2016 Commons Chamber

[Wayne David]

I want to say a few words about new clause 11 and whether the devolution of policing is to be kept under review. I begin with a non-partisan point. When I was a Wales Office Minister for some 18 months, it struck me during meetings at the Home Office to consider policing in England and Wales how it became matter of fact simply to talk about England. That changed when I banged the table a few times, but it was interesting, going back several years now, that there was already a mindset that policing had been devolved to Wales—so they thought—and that it need not be considered by the Home Office. One of the unintended consequences of devolution is the assumption, certainly made by senior civil servants at that time—I suggest that it is still made—that policing has been devolved and that it should be considered on an England-only basis. It is not enough for us to keep on reminding people that it is not devolved; we have to realise why that assumption has been made and work out what is the logical direction of travel. A fair point made frequently by our colleagues in the Welsh Assembly is that policing is the only non-devolved emergency service in Wales.

Over the past few years, we have seen a movement towards the practical involvement of the Welsh Assembly in the day-to-day development of policing strategies, particularly on community safety. They fund a large number of police community support officers—I think they call them community support officers—and there are initiatives on counter-terrorism and how to get effective policies to tackle the threat. The Tarian unit is looking at organised drugs crime in Wales and how to combat it. Also, as has been mentioned, Wales has four police and crime commissioners who argue strongly and logically that the time has come for the devolution of policing to be seriously considered. The four police authorities in Wales have created a police liaison team that involves senior officers regularly meeting the Welsh Government. In a sense, a dovetailing is already taking place before our eyes on day-to-day policing.

I am not suggesting that this is an easy matter to be considered and then easily devolved, as it is not; it is complex and difficult. For example, the funding arrangements for policing in Wales are the most complicated of those of all the public services. More than a third of all police funding in Wales comes from the Home Office —that is more than £250 million a year, so we are talking about a heck of a lot of money. Before any devolution occurs, we want to be sure that we have funding arrangements commensurate with the powers that are devolved. That important issue must be central to any discussions and future negotiations.

We will also have to be mindful of the need for effective cross-border co-operation in any devolution of policing. As we all know, crime does not recognise any international boundaries these days, and it certainly does not recognise Offa’s Dyke, so we need strong, automatic mechanisms of co-operation in place as part of any devolution strategy. On co-operation, it is also particularly important that we examine the issue of police training and recognise that no matter what the devolution package is, it is extremely unlikely that Wales would develop its own training strategy for police officers. We would have to buy in, if necessary, from the national College of Policing, which is based in Berkshire and does an excellent job on police training. We also need to continue our involvement with the National Policing Improvement Agency. Policing must not be separated; we need to make sure that a close partnership is developed and put in place, taking into account the current funding arrangements, which are no longer suitable for the situation in which we find ourselves.

This issue will not go away, because of political imperatives and because the practicalities of tackling crime efficiently necessitate more devolution and greater partnership with the institutions of government that exist in Wales and are developing—this Bill helps in their development. We do not need a knee-jerk reaction, simply saying that the devolution of policing can be done easily and quickly, as it cannot. However, this needs to be kept under review, as this sensible and moderate new clause suggests. I heard the Minister’s negative comments, but I hope that he will recognise reality and keep this issue full square on the table, so that we have an active and positive consideration, and that when the time is right and there is a political consensus for it, we devolve policing powers for Wales.

[Stephen Doughty]

I wish to speak briefly about two areas: the amendments on energy generation and new clause 6 on air passenger duty.

On energy, I have already indicated my support for many of the comments that were made by our Front-Bench spokesman and indeed that were coming from those on the Government Benches, too. I believe the Welsh Government should be having more say on this issue because the Welsh Government and the Welsh Assembly have set a very different direction on sustainability and energy production right from the outset. We saw the principle of sustainable development and sustainability embedded in the first Wales Act, and the sustainable futures Act and other legislation passed in the Assembly have also shown a different direction. I trust people there to make a better choice about the energy mix and energy production matrix in Wales than we are seeing coming from the UK Government, particularly when they abolish the Department of Energy and Climate Change and downgrade sustainability and climate change in their overall agenda. We have a different approach in Wales. The megawatt limits that are set at the moment are arbitrary, and we ought to be giving as much encouragement as possible to local decision making on this, for many reasons. In particular, I would like the removal of some of the impediments to local energy generation by community energy schemes, as so much damage has been done to these schemes.

At the Co-operative party conference this weekend—I am a proud Co-operative party MP as well—I heard about the damage that has been done to community and co-operative energy across the UK by the rapid changes, for example, to feed-in tariffs, and the bureaucracy surrounding such schemes. It has been a huge mistake and has caused great damage to the industry. We have a thriving community energy sector in Wales that I want to see grow and expand. Given the framework that the Welsh Government and the Welsh Assembly have set from the beginning and which is very much embedded in their structures, it makes clear sense to devolve and expand the powers in this area.

It may seem odd for me to talk next about air travel and new clause 6. I believe that the expansion of air travel must be in balance with other forms of transport and within the framework of the Climate Change Act 2008, Welsh domestic legislation on sustainability and the Paris agreement. I am not convinced by the case that the Minister outlined today about air passenger duty. I find it particularly curious that the Secretary of State, who has Cardiff airport in his constituency, just 15 minutes away from the boundaries of my own, is willing to oppose this idea. Expanding provision at Cardiff airport will lead to shorter journey times, less congestion, less traffic and less cost for consumers in Wales. It will generate jobs and opportunities for the Secretary of State’s constituents and mine, many of whom work in the airport and in the aerospace industry and supply industry locally.

On the idea that it takes just 60 minutes to get across to Bristol, I have travelled to and from Bristol airport on a number of occasions. I have travelled there by all the different modes of transport—I have driven in my car, I have taken the train to Bristol Temple Meads and caught the connecting bus, and I have taken the coach directly to the airport. Bristol airport is a very nice place and I had a very nice experience there. I have nothing bad to say about Bristol airport itself, but it is complicated to get there. It takes a long time. With Cardiff airport just 15 minutes down the road from my constituency and from our capital city, it seems odd that a Wales Office Minister—indeed, the Secretary of State—rather than getting the best deal for Wales, should stand up for an airport on the other side of the Severn bridge and encourage passengers to go over there.

There is a further issue. Ministers have talked about the opportunities for Welsh passengers to travel from Bristol airport. Those will remain, but we do not benefit as much from passengers coming from the south-west, for one very good reason: the Severn bridge tolls. Why would passengers choose to come across to Cardiff airport, which entails crossing a toll bridge, when they have an airport on their own doorstep? We need to think carefully about what is the right decision.

I was not an absolute believer in the original Welsh Government decision to get involved in running the airport. I admit I was a sceptic, but they did the right thing and their decision has borne fruit, as we heard. Passenger numbers are up 29%, as my hon. Friend the Member for Llanelli (Nia Griffith) said. A service has been launched to London to allow a connection to many of the international business flights from London City airport. Companies such as FlyBe are expanding their opportunities. It was good enough for the Welsh football team to travel in and out of Cardiff airport. I find it odd that the Minister and the Secretary of State appear to be more interested in protecting the position of Bristol, rather than doing what is right for Wales and especially for consumers in south Wales, who want to be able to travel from Cardiff airport and to connect.

That is particularly pertinent in light of the result of the EU referendum. If we want Wales to be able to take advantage of the global trade agreements that the Government are supposedly going to magic up for us in the next couple of years, we must enable businesses, especially larger ones, to connect to flights to the City of London and elsewhere quickly and efficiently, and not have to take two or three modes of transport to get to an airport quite far south of Bristol. We ought to make the most of our own airport on our own doorstep, which is at the hub of a thriving aerospace industry.

Let us not forget that we have the British Airways Maintenance Cardiff centre. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), I think, mentioned the length of the runway and the airport’s ability to handle the world’s largest aircraft. That is crucial. Could we not make more of those synergies with 777s and, we hope, with A380s and 747s, which are already maintained there and perhaps in future could fly from there as well?

I will support new clause 6 because it would benefit Wales, my constituency, Cardiff South and Penarth, and constituents in the Vale of Glamorgan, and it makes sense in terms of the efficiency and sustainability of air travel from Wales in the future.