Exiting the EU: Businesses in Wales

Geraint Davies Excerpts

Wednesday 14th December 2016 Westminster Hall

[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.

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

It is a pleasure as always to serve under your chairmanship, Mr McCabe. As has already been said, there is great uncertainty about Brexit among the business fraternity across Wales. If article 50 is, in fact, triggered on 31 March 2017, the remaining EU27 countries will determine the deal that we have to live with, no matter what has been said in this Chamber and elsewhere. There is a natural concern that that deal will be in the interests of those 27 countries and others that are not leaving the EU.

There is the spectre of tariffs. Some people have said there will not be tariffs because we import more than we export. However, only Germany and the Netherlands have a net trade surplus with us, so other countries may have an incentive to impose tariffs. Indeed, German car makers may want to block, for example, Japanese car makers that use Britain as a platform to launch into Europe. Of course, that is why there has been an under-the-table deal with Nissan, which has been referred to, while several other large conglomerates have naturally come forward to ask for money to offset prospective tariffs.

As I said when I intervened, it is particularly important that Welsh businesses and all people relying on exports to the EU have a level playing field and subsidies and support, so that they can continue their terms of trade after Brexit—assuming that Brexit goes ahead. My constituency of Swansea West is part of the wider Swansea Bay city region, where 25,000 people’s jobs involve exporting to Europe. Alongside that, there is obviously a farming community that is helped by the common agricultural policy, which may be under threat, and we also benefit from billions of pounds of convergence funding. I am looking to the Minister to provide assurances on all those things—namely, the level playing field, the matched convergence funding and, indeed, what the farmers may need in CAP.

A big employer in my area is Swansea University, which is an engine and an asset for economic growth. It has now doubled in size with the new bay campus in the constituency of my hon. Friend the Member for Aberavon (Stephen Kinnock). It is a jewel in the crown of engineering research and development capability across Europe, and the problem is that we may not be able to maximise our opportunities of utilising that; it is not only an asset for young people to grow and learn, but for producing innovative products for export.

[Stephen Kinnock]

The European Investment Bank played a critical role in funding the bay campus, which is indeed one of the jewels in the crown of Welsh higher education. Does my hon. Friend agree that some assurance on how to deal with our exiting from the European Investment Bank is desperately needed from the Government?

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[Geraint Davies]

As my hon. Friend knows, the three primary sources of funding for the bay campus were the European Union, the European Investment Bank and the Welsh Government. We need clarity about those future relationships and future funding. Thank goodness it has actually been built. Clearly, if Brexit had occurred a couple of years ago, we would be in all sorts of problems. We are looking for assurances from the Minister on tie-ups with the network of universities across Europe in the future, on possible funding streams and on support for exports that are driven by innovation from that campus. My hon. Friend knows the campus is linked with Rolls-Royce, Tata and other big manufacturers. The idea was to have an integrated approach to export delivery, and we do not want to put that in jeopardy.

There is great concern among the business community across Wales about the prospective falling consumer demand following Brexit and in the light of the autumn statement, which showed that an extra year of austerity would be inflicted upon us and that Britain’s debt would grow to 90% of GDP. Incidentally, it was half that—45%—when the last Labour Government were in power in 2010. The debt is completely out of control. The Chancellor’s Brexit evaluation is that we will all have to pay an extra £1,000 in future taxes. On top of that, the inflation that has occurred owing to the falling value of the pound is equal to a 5% cut in everybody’s income, which they then cannot spend in local shops and on domestically grown products. There are concerns, and we want reassurance, and the business community wants those assurances without further ado.

Hon. Members may know that my position is that the triggering of article 50 should be delayed until next November, after the French elections in May and the German elections in October, to provide an opportunity for real negotiation up to that point. People should then have the final say on whether it is a good deal or not, with the default position of staying in the EU. As time moves on, not only the business community but everyone will see that the balance of costs and benefits is heavily weighted towards costs, and in my considered view, we are better off staying in. People should have the final say because, frankly, they were given false information when they voted in the first instance.

Assuming for a moment that we trigger article 50, we need those assurances from the Minister now. Businesses desperately want to plan for a prosperous future, rather than an uncertain future of fewer sales.

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[Stephen Doughty]

If the Minister checks the voting list, he will see which way I voted on that matter. I am speaking about my own views on this issue and I certainly have a great deal of concern about the lack of information.

[Geraint Davies]

Does my hon. Friend also accept that even if we did agree to this last minute plan, whatever it is, once article 50 is triggered the 27 EU countries will decide to give us what they want, not what is in the plan?

[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.

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[Kirsten Oswald (East Renfrewshire) (SNP)]

It is a pleasure to serve under your chairmanship, Mr McCabe. I thank the hon. Member for Ogmore (Chris Elmore) for obtaining the debate, which has been incredibly interesting. The speeches were all notable and it is a vital topic.

I was particularly interested in the speech of the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). It is an extraordinary fact that there is such a lack of strategy and clarity about the UK Government’s plans. Clearly, Scotland voted unequivocally to remain in the EU, and that is our focus, but for our friends in Wales I reflect on the wise words of the hon. Lady, who talked about a tempestuous period before us. Her focus, and that of other hon. Members who spoke, is rightly on securing the best possible outcomes for businesses in Wales. Instead of the clarity that we would want from the UK Government in this context, we continue to hear such phrases as “Brexit means Brexit”, “have your cake and eat it” and “red, white and blue Brexit”. It is like “The Great British Bake Off” or some kind of punchline. It is just not funny; in fact, it is highly irresponsible.

It is quite extraordinary and very disappointing that before negotiations have even begun, the UK Government appear to have given up on retaining membership of the single market. I understand well the concerns that hon. Members have expressed. Small and medium-sized businesses, which the hon. Member for Ogmore talked about, are watching this kind of debate carefully because they are looking and hoping for clarity and reassurance. Although I have the greatest respect for the Minister, I fear he cannot possibly deliver that because essentially there is no plan.

For all the devolved Governments, it is vital that there is real and proper engagement on the EU, for business reasons, social reasons and other reasons across our society. The hon. Member for Ogmore highlighted a business that had already raised concerns about negative impacts and rightly warned that platitudes are simply no substitute for plans. The hon. Member for Cardiff South and Penarth (Stephen Doughty) spoke of uncertainty among businesses of all sizes about the implications of Brexit. We also heard a sensible question from the hon. Member for Ogmore about whether Welsh businesses will be involved in negotiations. I will wait with bated breath to hear the Minister’s response on that.

There is a significant issue with the involvement of the Scottish Government, demonstrated by our long, unanswered call to the telephone hotline. There is a dearth of real dialogue and opportunity to input. For Wales and Welsh businesses, that attitude—which is in stark contrast with the clear and planned proactive engagement of Scotland’s First Minister—rightly rings alarm bells, as the Brexit vacuum continues. That cannot be more starkly illustrated than by the hon. Member for Cardiff South and Penarth’s helpful comment that it is likely to be February before the UK Government publish any plan.

The hon. Member for Wrexham (Ian C. Lucas) spoke of the need for certainty, which keeps coming up. Businesses are the backbone of the Welsh economy and can be resilient, with the right support. They undeniably require certainty and clarity, which are simply missing. The UK Government must come clean. We want to hear something from the Minister on the Government’s strategy for exiting the EU. The Welsh Government need to put into place a framework of support to ensure they are doing everything possible to help business weather the storm. It seems that the ideological Brexiteers who are sitting right at the heart of power are preventing us from seeing this plan from the UK Government. All we hear are bull-headed assurances that a land of milk and honey awaits—it does not, and businesses can see that.

The hon. Member for Wrexham described what his Brexit negotiating position would be. His particular focus was on migration. The hon. Member for Caerphilly (Wayne David) spoke about skilled migration. I was pleased to hear a mention of universities from the hon. Members for Cardiff South and Penarth and for Croydon Central. Universities have significant concerns. I have had several meetings with representatives of higher education institutions.

[Geraint Davies]

Although I did have an association with Croydon Central, I am the MP for Swansea West.

[Kirsten Oswald]

I thank the hon. Gentleman for that important intervention.

I have met several university representatives, both before and after 23 June. They express particular concerns about the sustainability of courses and the finance of universities. Those issues would be hugely compounded by the reported UK Government plans in respect of overseas students. That is a huge issue economically, socially and in educational terms, and the UK Government need to get a grip on that.

More generally, all of us here need to be clear on what we mean when we talk about migrants and migration. It is vital that, as politicians, we never leave any doubt in people’s minds about the value we place on people from elsewhere who have chosen to make their homes alongside us. The First Minister of Scotland made that very clear when she spoke about the EU nationals who have chosen to make Scotland their home. She said:

“You remain welcome here. Scotland is your home and your contribution is valued.”

It is undoubtedly the case in Wales, as it is elsewhere in these nations, that people who have come here more recently, as well as longer ago, have made a significant contribution to our society and continue to do so. Specifically, they have contributed to business, including universities, social care, healthcare, small and medium-sized enterprises and big business. All those things are vital to the Welsh economy.

The hon. Member for Dwyfor Meirionnydd expressed a concern that the UK Government need to act in the best interests of Wales. She emphasised the importance for Wales of single market membership and customs union membership. She also mentioned that the business confidence figure for Wales has fallen, despite the great ambitions of the business community. Business is concerned. She gave a striking example of the potential significant impact on important companies such as South Caernarfon Creameries.

It has been quite challenging for me to sit here today and hear hon. Members trying desperately to look on the bright side. There really is not much to look forward to, should we leave the EU. It is no wonder that hon. Members such as the hon. Member for Swansea West seek reassurance. It seems clear to me, as someone who represents a constituency where 74% of people voted to remain, that there are vital benefits to remaining in the EU, as the hon. Member for Neath (Christina Rees) said. She spoke of workers’ rights, which are very important, as well as economic benefits and social protections. I echo those sentiments.

I also highlight the importance of cultural and business benefits, which we could lose if we leave the EU. Some 99% of Welsh businesses are SMEs. The hon. Member for Dwyfor Meirionnydd emphasised the need to adopt or adapt systems similar to those favoured in Germany to ensure the potential of those businesses is achieved. She is focused on achieving the best deal for Wales, for her constituents and for Welsh business.

My focus is on protecting Scotland’s interests. Of course, our aim to remain in the EU is strong and unequivocal. The UK vote means that Scotland faces being taken out of the EU against our will. That would be unacceptable and democratically unsustainable. Just as the hon. Member for Dwyfor Meirionnydd focuses on protecting Wales, it is right that my focus and that of my party is on considering and pursuing all possible steps to ensure Scotland’s continuing relationship with the EU.

To conclude, it is essential that we get far more from the UK Government than the limbo, woolly words and clunky slogans we have had so far. For all our businesses, all our communities and all the people living in them, it is essential that the UK Government start to have real, meaningful discussions with the devolved Governments and much more constructive discussions with our friends in Europe.