North Wales Economy

David Hanson Excerpts

Tuesday 1st April 2014 Westminster Hall

[Mr Philip Hollobone (in the Chair)]

I suspect that for many Members it is a bit like “Groundhog Day”, as everyone here was in the Chamber yesterday discussing the Wales Bill.

[Mr David Hanson (Delyn) (Lab)]

Good morning, Mr Hollobone, and welcome to the Chair. It is a great honour for you to be here to share our Welsh discussions. I am pleased both to have had the luck to secure this debate, and that we have a strong showing from Members representing north Wales constituencies. We also have my hon. Friend the Member for Caerphilly (Wayne David) and my hon. Friend the Member for Llanelli (Nia Griffith), who is on the Front Bench.

This debate offers us an important opportunity to discuss the north Wales economy, for my colleagues and me to promote what is good and strong about north Wales to the rest of the United Kingdom, and for us to look at some of the key issues that can help our economy grow even faster and stronger and improve the living standards of our north Wales constituents. It is also an opportunity for us to press the UK Government to be an active Government who are engaged in promoting the economy and are not standing back. They should work closely with our colleagues in the Welsh Assembly to achieve economic growth and be active as a part of a wider Europe. In the run-up to the European elections, we need to emphasise strongly how important Europe is to the north Wales economy. I will emphasise our economy’s cross-border nature. The Deeside hub is a key economic driver for north Wales and for north-west England, the Wirral, Liverpool and Cheshire. Many of my constituents work in England and many people in England work in north Wales, and that cross-border working is extremely important to our economy.

The economy of north Wales was worth a staggering £10.6 billion last year, which represents £15,500 per person. That is 72% of the UK average, but that is because constituencies such as that of the hon. Member for Aberconwy (Guto Bebb) have a high retirement population that drags down the figure. Our economy is still growing, leading the charge for the UK economy as a whole. In north Wales, we have a number of economic success stories in renewable energy, such as West Coast Energy in my constituency, Mostyn docks and the wind farms off the north Wales coast, such as Gwynt y Môr.

[Chris Ruane (Vale of Clwyd) (Lab)]

What does my right hon. Friend think of the Prime Minister’s comments when he visited Llandudno in 2006? He described the turbines off the north Wales coast that I switched on as “giant bird blenders”.

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[Mr Hanson]

I would rather see them as giant economic growth drivers. Only last week, we had a great announcement for Hull, with Siemens bringing manufacturing to the United Kingdom. In north Wales, we have a strong renewable energy offer and lots of expertise. We have wind farms and the potential for more wind farms offshore, and a good opportunity to build on our economic success in that area. We also have strong manufacturing in the paper sector, with Kimberly-Clark and SCA in my constituency. We still have, despite many years of contraction, a strong steel-making industry with Tata Steel in the constituency of my hon. Friend the Member for Alyn and Deeside (Mark Tami).

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

Would my right hon. Friend join me in welcoming the fact that Tata has taken on a number of apprentices this year? It is seeking to invest for the future, which is good news for the plant.

[Mr Hanson]

It is good news, and I welcome the investment in apprenticeships. Other companies, such as Airbus, do the same in our area. We also have a strong automotive industry, and this week Toyota made a strong case for engagement with Europe to ensure that we can export models from the United Kingdom to Europe.

North Wales has the strongest manufacturing base in the UK, and I shall focus on Airbus, which employs between 1,500 and 2,000 people in my constituency, with more employees coming from across north Wales. It is a vital manufacturing industry for UK economic growth. A potential 30,000 new aircraft will be built between now and 2032, representing a staggering $4.4 trillion-worth of business. Airbus has the opportunity, with active Government support, to secure a key part of that market. That is important, not just for the 7,000 people who work at Airbus, but also for many others, including those who are part of the UK supply chain. Airbus has spent £180 million on that supply chain in north Wales. The strong site at Broughton was developed with active support from the Labour Welsh Assembly and the previous Labour UK Government, and with the new wing development we have the potential to grow the site further.

We also have strong sectors in other areas. Tourism is a key activity for north Wales. We have a great tourist offer, which we can grow still further. Millions of people are within a two-hour drive or train journey of our tourism economy. We have a strong agricultural sector with sheep and cattle farming, as well as milk production. Food production and distribution are growing in importance. For example, we have food festivals in Mold in my constituency. That industry has a £3 billion value to Wales as a whole, according to a briefing I obtained yesterday from NFU Cymru. We have strong local and national Government, with many people putting their wage packets, through employment in the health service and the county council, into the economy. We have a particularly vibrant small business sector, which is extremely important in growing our economy. Many wage packets come into north Wales via the car manufacturers, such as Vauxhall at Ellesmere Port, the banking sector in Cheshire and the Deeside north Wales hub, which is one of the strongest areas in the United Kingdom.

The lesson that we must learn is that we need active Government engaged in all those issues, particularly the Deeside enterprise zone in the constituency of my hon. Friend the Member for Alyn and Deeside, which has the active support of the Welsh Assembly and has invested through a capital programme in schools and colleges in our constituencies. In my own county, £64.2 million of that programme is going into four facilities in my county of Flintshire, one of which is the community learning campus at Holywell high school. The theme I am developing is active Government. That investment is finding its way into construction and supply in the private sector, which is building and developing those facilities.

North Wales continues to benefit from EU funds. It is important, in the run-up to the European elections, that we do not allow people to take the stance that the EU is bad for Wales, because more than 8,000 new businesses have been created, and £665 million of contracts have been won. Some 13,000 businesses are supported in Wales, and north Wales has a considerable number of those businesses.

We face some key challenges, however. In Flintshire, wages have fallen in real terms by £3,000 per family on average since the economic crisis in 2007. A TUC study has shown that north Wales has suffered the biggest wage cut in Wales, with an average drop of £57 a week. The latest figures show that the number of unemployed people in my constituency has increased in the past year and that the number of unemployed young people is still rising. In my county, 1,567 people are each losing £880 because of the changes to the Government’s spare room subsidy—the so-called bedroom tax.

The cost of energy bills is also hitting the north Wales economy hard, with the cost of energy rising by some £300 over the past three years, meaning that money is taken out of the economy instead of being spent on creating jobs and services for the future. Although we do have strong sectors, such is the lack of recovery in the area that only yesterday Creative Foods, which is operated by Brakes, announced that it would consult on the loss of some 150 jobs and the closure of its food manufacturing plant in Flint. The consultation will end in late May. Will the Minister contact the Welsh Assembly and the company to see whether the factory can remain viable or whether an alternative buyer can be found? Brakes has operated in Flint for the 20 years in which I have been a Member of Parliament, and it is a vibrant factory. Aaron Shotton, leader of Flintshire county council, has arranged for the council’s enterprise department to meet Brakes to examine the situation.

In addition, this week I received a notification from Aviva as part of the Budget submissions. The letter states:

“Wales had one of the lowest levels of confidence in general economic conditions over 2013”.

Although our manufacturing, tourism, renewables, businesses and agriculture are strong, both the Welsh Assembly and the UK Government should use business policy to develop our offer and improve and grow our economy still further.

[Chris Ruane]

I thank my right hon. Friend for giving way a second time. Does he agree that the lack of business confidence may be due to the Conservative coalition Government always running down Wales, the Welsh economy, the Welsh health service and Welsh education, using that as a political tool for their election strategy?

[Mr Hanson]

It does not help. I hope that the Minister will not only focus on the positives but listen to the Members here today who represent north Wales. Every Labour Member from north Wales is present, along with the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) and the hon. Member for Aberconwy—the hon. Member for Arfon (Hywel Williams) is not present—so we have a strong cross-party group that is trying to back north Wales.

I want to discuss four or five areas where the Government can help to grow the economy. We have discussed transport infrastructure with the Minister before, but real opportunities exist for us to improve connectivity between north-west England and north Wales and between north Wales and the economic driver that is London. I want to put on the record my support for High Speed 2 and for Sir David Higgins’s decision to draw the Government’s attention to fast development at Crewe. I also support attempts by the Government and the Assembly to develop electrification between Crewe and the north Wales coast. I do so not for the sake of speed—an extra 10 or 15 minutes off journey times would be nice—but for the sake of capacity, which is crucial to our economy. HS2 will bring vital extra capacity to the area for tourists, for freight and for businesses.

[Albert Owen (Ynys Môn) (Lab)]

My right hon. Friend highlights the importance of the European Union and of transport infrastructure, but the two are combined. North Wales lies on the trans-European network as a link between Dublin and London, so there is a strong business case for Ireland, Britain and the rest of Europe to work together to ensure that north Wales gets the best connectivity.

[Mr Hanson]

That is an extremely valid point. The link from Holyhead in my hon. Friend’s constituency along the north Wales coast and down through my constituency into north-west England, and even the links across to Humberside, down to London and to mainland Europe, are extremely valuable. I know that the Minister supports that, but I think that he wants to be sure that he has the support of Opposition Members who represent north Wales to go forward with HS2 and to try to make those links in a positive way.

This is not only about electrification and links to HS2 and the south, but about the links between north Wales and Merseyside and Manchester. My hon. Friend the Member for Halton (Derek Twigg) and I are meeting the Secretary of State for Transport regarding the Halton curve, which is a link to Merseyside and Liverpool airport that will provide access for business. A direct link to Manchester airport should also be considered. Two great airports lie within 40 miles of my part of Wales and while Assembly investment at Cardiff is fine, it does not serve the needs of the north. I hope that the Minister will be able to liaise with others on that.

Transport and rail infrastructure are key, but I also want to stress the importance of Europe. My part of north Wales does not benefit from European structural funds, but much of north Wales does. My hon. Friend the Member for Vale of Clwyd (Chris Ruane) played an active role over many years in developing that funding with two former Secretaries of State for Wales, my right hon. Friends the Members for Torfaen (Paul Murphy) and for Neath (Mr Hain).

[Mark Tami]

Even though we do not get that level of funding, we gain through what Europe gives us, which allows big companies such as Airbus and smaller ones to invest, because they know that the market is important.

[Mr Hanson]

My hon. Friend predicts my thoughts, because I was going to say that although my constituency does not depend on European objective 1 funding, the fact that many businesses in Flintshire such as Toyota and Airbus, and Vauxhall, which is nearby, are able to sell goods to the European market without tariffs is vital to the area’s economic growth. I want the Minister to commit to supporting a strong European Union.

[Ian Lucas (Wrexham) (Lab)]

Does my right hon. Friend agree that uncertainty is the enemy of investment? Even now, the Conservative party’s commitment, for internal party political reasons, to a referendum on EU membership in 2017 is negatively impacting on investment in our communities.

[Mr Hanson]

I absolutely agree with my hon. Friend. We may plan for five-year electoral cycles, but businesses plan investment over longer periods of time. Important business decisions on increasing investment will depend on whether companies see the UK, and north Wales in particular, as part of a vibrant wider Europe. I hope that the Minister can comment on that.

I have mentioned transport and Europe, and I want to touch on the cross-border nature of investment. I sadly could not participate in the Wales Bill’s Second Reading debate yesterday, but I hope that in taking forward the Bill’s proposals, the Minister is cognisant of the fact that the economy of my part of north-east Wales is linked directly to that of north-west England. Development agencies, infrastructure stakeholders, businesses and local councils on the English side of the border should be consulted on the Bill’s measures just as much as those on the Welsh side. The Welsh Assembly and the UK Government should work in tandem to develop both sides of the border. Some 400 of my constituents work for Vauxhall at Ellesmere Port, and it is sometimes quicker to get there than it is to get to places on the Welsh side of the border. We must accept and understand how integrated the United Kingdom is, and its cross-border issues.

The active issue for the Government relates to construction. My hon. Friend the Member for Wrexham (Ian Lucas) will talk about investment in the prison shortly, but there are a couple of other key issues that we should examine. We need a regional plan for north Wales and north-west England, with connectivity across the board; but we also need to think about three other issues that are particularly important. To raise the level of investment and economic activity in north Wales, we should seriously consider working towards a living wage. Local authorities should be involved in that, and we need an active Government to promote it. Money spent locally by people who earn a living wage will help to regenerate high street small businesses in places such as Holywell, Flint and Mold in my constituency. The money will not be lost to north-east Wales but reinvested in local small businesses and shops, and the community. I should welcome a commitment to a living wage; I know that my hon. Friends would give that commitment.

There is also a need for apprenticeships and training. Airbus in north Wales is key to that issue. Tomorrow other hon. Members and I will meet Airbus apprentices in the House of Commons. Capital-led investment by an active Government in colleges, schools and infrastructure will generate business in the economy. That is why I particularly welcome the Labour commitment to invest in new homes and try to build 200,000 of them by 2020. I hope that a future Labour Government will keep to that pledge and invest in public sector homes, and consequentially enable the Welsh Assembly Government to do so too. That will kick-start the construction industry and help people who are not now on the housing ladder.

Labour’s commitment to cut business rates for small firms, for the first two years of a Labour Government if we are elected in May 2015, is also welcome. That would also kick-start the local economy. The Labour party leader, my right hon. Friend the Member for Doncaster North (Edward Miliband), has taken key action on energy prices, which are vital to the cost base of many industries, particularly paper, steel and renewables. The ability to reduce and freeze energy bills will be a great help to the economy of north Wales.

I am pleased to have started the debate. I have tried to talk about some of the many positive aspects of our economy, but we must never be complacent. There are challenges, even with respect to big companies such as Airbus. There is a world out there trying to steal our markets and take our customers. Other parts of the world want to grow their economies, and we must be ever vigilant. There are things that the Government can do—I hope that a future Labour Government will do them—to strengthen transport links, improve infrastructure investment, provide a living wage, and help to secure the continual growth of an economy that is strong and diverse in several key sectors. That economy is of central importance not just to north Wales and the north-west, but to the whole UK.

[Several hon. Members]

rose—