Exiting the EU: Businesses in Wales

Chris Elmore Excerpts

Wednesday 14th December 2016 Westminster Hall

[Chris Elmore (Ogmore) (Lab/Co-op)]

I beg to move,

That this House has considered the effect of exiting the EU on businesses in Wales.

It is a pleasure to serve under your chairmanship, Mr McCabe. The effect that exiting the European Union will have on businesses in Wales is incredibly important, so I thank hon. Members for attending. This debate offers an opportunity to recognise the challenges ahead and gives the Government the chance to clarify their Brexit plan for Wales, on which I sincerely hope for some detail from the Minister.

Businesses in Wales have serious concerns that the Government do not have a plan for how Brexit will work for them. The success of our local small and medium-sized enterprises should be a concern for us all. When local businesses do well, they not only generate jobs and meet the needs of our communities, but fill up our high streets, liven up our towns and inspire the businesses of the future. Businesses throughout Wales are facing dangerous uncertainty and need the Government to publish their plan for Welsh Brexit.

One of the starkest consequences of exiting the EU for businesses in Wales could be a widening funding gap. Each year the EU contributes about £650 million in investment to Welsh social businesses and SMEs. Each pot of funding that has helped our businesses to thrive seems only to have been made possible by EU contributions. The social business growth fund, for example, contributes £4 million, but £2.3 million of that is from the EU. Similarly, the Wales business fund provides £136 million, but £76 million is from the EU. In addition, we have low-interest loans from the European Investment Bank, which have enabled companies and public bodies throughout Wales to thrive; the European regional development fund, which, among other projects, will provide £106 million for phase 2 of the south Wales metro; and Horizon 2020, which has been pivotal for Welsh universities. Without Government planning for Brexit, our Welsh businesses could see a serious dent in their funding.

To the Government’s credit, the Chancellor has announced that the Treasury will guarantee all multi-year EU business funding agreed before Brexit, but we need confirmation of the Government’s plan for EU funding that does not fit that criterion. The Government must also provide clarity about the status of the cumulative £2.7 billion post-2020 EU funding that has not yet been underwritten by the Treasury.

Our departure from the EU might also have an impact on the availability of training in Wales. Jobs Growth Wales, the Welsh Government scheme to get young people into work, will support the creation of 8,955 new job opportunities for 16 to 24-year-olds over the next three years, and has only been made possible by the European social fund. Similarly, the Workways Plus scheme was made possible by £7.5 million from the European social fund. The scheme offers one-to- one mentoring to help long-term unemployed people become ready for work, gives an opportunity for people to gain new qualifications and finds paid positions for some.

Thousands of apprenticeships throughout Wales also rely on the EU and could be affected by our exit. The European Alliance for Apprenticeships, launched in July 2013, works closely with the Welsh Government to strengthen the quality, supply and image of apprenticeships. The alliance has been pivotal in securing and promoting opportunities throughout Wales.

Other consequences could include Britain leaving the single market or ending freedom of movement, which could affect businesses in Wales. Welsh universities, and the businesses reliant on them, would be particularly impacted by the end of freedom of movement. Each year more than 7,000 EU students enrol at universities throughout Wales. Were the Government to clarify their desired future migration arrangements, universities and associated businesses could plan accordingly. As things stand, the Government have given no clear indication of whether restrictions will be applied and the enrolment of EU students will decrease once we have left the European Union.

When this House debates the effect of exiting the EU, we sometimes allow the discussion to slip away from the reality on the ground, but I want to focus on the real impact that exiting the EU will have on one business in my constituency. It is one of the UK’s leading manufacturers in its industry. It has asked to remain anonymous, but kindly told me its concerns about the future, which I will share with the House. Its business is already being impacted by a downturn in construction activity and sizeable currency fluctuations. It tells me that the scale of potential change is vast, and that if widespread change materialises, the implications for resources and productivity are significant. For that industry-leading business, the level of uncertainty is of serious concern and must be addressed urgently.

This business employs people throughout the UK, not only in my constituency. It needs clarity on the form of Brexit, and it needs a plan. Specifically, it needs to know whether the Government plan to stay in the single market and the customs union. It tells me that it needs a commitment to ensuring that Britain can secure the right skills in the workforce. It also needs assurances that other policy voids, such as the one on energy efficiency, will be filled.

The bottom line is that business in Wales is crying out for a Brexit plan for Wales. When the UK leaves the EU in March 2019, in all likelihood the engine of Welsh business will not break down, but if the Government do not plan, it will slowly lose fuel and industries will come to a halt. Wales needs not a red, white and blue Brexit, as the Prime Minister suggested, but a comprehensive strategy to deliver the most secure outcome. Vague platitudes from the Government mean nothing and serve only to distract from the fact that, as things stand, we are being led into the night without a torch.

[Wayne David (Caerphilly) (Lab)]

Does my hon. Friend agree that Norgine, a Dutch pharmaceutical company with a manufacturing facility in Hengoed, speaks for many businesses in Wales when it states that it wants a very soft Brexit?

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[Chris Elmore]

I completely agree with my hon. Friend. I am getting that constantly from businesses in my constituency. My hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), the shadow Secretary of State for Exiting the European Union, has asked the Government 170 questions on how the UK will be shaped after we have left. To minimise that, I will ask the Government only three simple questions about the effect of exiting the EU on businesses in Wales. Will the Government guarantee to replace post-2020 EU funding that has not yet been underwritten by the Treasury? What steps will be taken to ensure that there is not a training shortage in Wales once we have left the EU? How will the Government involve business in Wales in their EU negotiations, and in representations made by the Secretary of State for International Trade?

[Mr David Hanson (Delyn) (Lab)]

May I add a fourth question to my hon. Friend’s helpful list of three? Will the Government come clean on whether deals have been done with companies such as Nissan in the north-east? In my constituency and that of my hon. Friend the Member for Alyn and Deeside (Mark Tami), we have a large number of car manufacturers. For example, Vauxhall, although in England, and Toyota employ my constituents and those of my hon. Friend, and they depend on access to the single market.

[Chris Elmore]

I completely agree with my right hon. Friend. In addition, the constituency of my hon. Friend the Member for Bridgend (Mrs Moon), who could not attend today, includes the Ford plant that borders my constituency, and I would ask for similar guarantees on the automotive industry, because it has a direct effect in Ogmore.

I will be surprised if the Minister answers any of my questions, but I will conclude with a warning. Leaving the EU will inevitably have an effect on businesses in Wales, but the uncertainty that the Government have created is completely unnecessary. The Government need a plan for businesses in Wales, which they need to announce to the House for the attention of businesses in all our constituencies. The EU is embedded in businesses throughout Wales, and it contributes to funding, training and opportunity.

[Mark Tami (Alyn and Deeside) (Lab)]

The focus is often on the big primes—my constituency has Airbus and Toyota—but I am particularly worried about the supply chain, especially if it supplies other parts of a business in Europe. In that case, companies might think that they are better placed there and relocate there, which would cause massive harm to all our areas.

[Chris Elmore]

I entirely agree with my hon. Friend, and I echo his concern. I hear that constantly from small businesses, not only in my constituency but across the piece, living as I do in south Wales.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Do my hon. Friend and the Minister agree that there should be a level playing field? If certain motor companies are selected for special subsidies through under-the-table deals, that discriminates against other companies, whether they are big, like Airbus, or smaller suppliers. We need support for all exporters and subsidiary suppliers that will be confronted by tariffs, so that they can continue to compete effectively.

[Chris Elmore]

I thank my hon. Friend for that intervention, which the Minister heard. My hon. Friend is right to make the point that we need a fair playing field for all businesses across Wales and, indeed, the UK.

The opportunities that the EU offers will be sorely missed if the Government do not create better circumstances for businesses in a post-EU Wales. Businesses in Wales are clear that they are willing to adapt to a post-Brexit Britain, but they need certainty and assurances from the Government about what that will look like. As Members of Parliament, it is our duty to go back to our constituencies and tell businesses what they can anticipate from Parliament and the Government in the near future, but I cannot give them any assurances because this House has not been given any by the Government. I am not asking for a running commentary—I leave that privilege to the Foreign Secretary—and I am not hoping for a line-by-line strategy; I am asking only for a few select assurances, so that business in Wales can begin to plan.

I ask again: will the Government guarantee to replace the cumulative £2.7 billion post-2020 EU funding that has not been underwritten by the Treasury? What steps will be taken to ensure that there is not a training shortage in Wales? How will the Government involve businesses in Wales in their EU negotiations and representations made by the Secretary of State for International Trade? I suspect that the Government are unable to provide any answers, and I can only assume that is because they do not have any.