Corporate Governance

Jonathan Edwards Excerpts

1st reading: House of Commons
Tuesday 29th November 2016 Commons Chamber

[Greg Clark]

My right hon. Friend is right that good corporate governance can stop corporate failure and the effects of contamination that his commission was set up to investigate. The commission made some valuable recommendations, many of which have been enacted. When he comes to look at the Green Paper, he will see further proposals for how incentive schemes for executives can be better aligned with the long-term interests of the company and made more transparent.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

The statement represents a welcome step forward, but if the UK Government are serious about tackling income inequality in companies, they should go a step further and introduce fair pay structures whereby the remuneration of those at the top and bottom are linked. That would be a way of ensuring that the economy works for all.

[Greg Clark]

I do not agree with that approach. It is right to have transparency and right that companies engage with their employees and make the case both to shareholders and to the workforce for the choices that they make. However, given our diverse range of companies and industries, it would be a mistake that would be bound to hamper their success if we, in the Government or in this House, were to specify precisely what people should be paid.

Exiting the EU and Workers’ Rights

Jonathan Edwards Excerpts

Monday 7th November 2016 Commons Chamber

[Hilary Benn]

I have consistently made clear my personal view—the Select Committee has not yet considered this—that it is wise to separate out the issue of triggering article 50 and the Government publishing their negotiating objectives, for the reason the right hon. Lady gave in her speech. Those of us who campaigned for remain lost the referendum, and we have to uphold the result. I fear that bringing the two things together—conflating them—would inevitably turn any vote on the triggering of article 50, if it is allied with conditions, requirements or whatever, into what the public would see as a vote about whether we are going to uphold the outcome of the referendum. We should deal with the two things separately.

When the time comes, I shall, as I have already said, vote in favour of triggering article 50. The referendum decision having been made, the only way in which we can honour that—the only way for us to leave—is for the article 50 button to be pressed; there is no other mechanism. We are therefore bound to vote in that way. I know that not all Members will share that view, but I believe that the vast majority will accept the logic of the argument. We should keep separate our request to the Government, which we will hear increasingly in all parts of the House, to tell us what the plan is. I am sorry that earlier today we were still hearing the argument that in asking the Government to publish a plan we are somehow trying to undermine the outcome of the referendum. No we are not—we are accepting the outcome of the referendum. We are leaving, and it is therefore really important that the House and the public know what the plan is. This is a serious business with very important consequences for the nation.

The reason for announcing that transitional arrangements will be sought in the event that this cannot all be tied up within two years is that, in particular, it will offer some reassurance to industries that are thinking, “Crumbs, we might tumble out in as little as two years with no agreement.” We know what that would mean for trade under World Trade Organisation terms. Some businesses—one thinks of parts of the financial services industry—will say, “We can’t face that possibility because it creates huge uncertainty and might affect our ability to carry on doing our business.” They will therefore start working backwards and say, “We can’t possibly get into a situation where we tumble out and we can’t do the business we are doing at the moment so we need to make contingency plans now.” That may lead them to decide to do things that have consequences for jobs and employment here in the United Kingdom.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

I am grateful to my Committee Chair for giving way; he is making a sterling argument. Are not transitional arrangements so important because there are strong noises coming from Europe that it will not even begin discussing the new relationship until the exit procedures are completed?

[Hilary Benn]

The hon. Gentleman makes a powerful and important point. The question in these negotiations will be the extent to which the 27 are willing to talk informally about tying up these arrangements. If the argument in Europe is, “We should leave that until later”, the need for transitional arrangements becomes even more urgent because otherwise we are left with a cliff edge, as many people have described it. If one is going to fall off the edge of a cliff, which is not something I have ever done, it is probably wise to plan where it is one is eventually hoping to land. That is a very strong argument for this.

It is not seeking to undermine the referendum result, it is not unpatriotic, it is not demanding a running commentary, it is not trying to tie the Government’s hands, and it is not trying to box in the Prime Minister and the Ministers who are going to negotiate this to say to the Government, “Please share your plan with this House.” Parliament would like to be a participant in this process, which is the most important task that we have faced as a nation for decades. I sincerely hope that it will not be too long before we get a chance to see that plan.

--- Later in debate ---

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Every single MP I have spoken to since the referendum respects the result, but there is considerable disquiet about the Prime Minister’s hard Brexit rhetoric. She seems intent on severing not only all political ties but economic ones as well. Such a reckless Brexit would be disastrous for the economy, with a negative impact on the financial wellbeing of those we have been elected to serve.

Following the referendum, there is a clear ideological divide in this House between those who favour a hard Brexit and those who prefer a soft Brexit. I do not find the sort of rhetoric we heard following the High Court judgment—that we who prefer a soft Brexit are backsliders—particularly helpful. Since the High Court’s decision, the UK Government have been briefing heavily that if the House of Commons tries in any way to undermine the chosen path of the UK Government, they will hold a snap election. A general election could be triggered by a simple majority of MPs if the Government decide to bring forward a no confidence motion in themselves. As parliamentarians, our foremost duty is to look after the interests of our constituents. It is clear that, following the referendum, a softer Brexit is the best outcome we can hope for. A hard Brexit, whereby the UK leaves both the single market and the customs union, would be fraught with economic danger, even if the UK Government were miraculously able to negotiate a comprehensive new bilateral trade deal before the completion of exit procedures.

In the event of the UK Government cynically engineering a vote of no confidence in themselves, under the terms of the Fixed-term Parliaments Act 2011, an election will be held unless an alternative Government with the confidence of the House of Commons can be formed within 14 days. The Prime Minister could risk being challenged by an alliance of MPs from all political parties who oppose her hard Brexit trajectory. At such a pivotal moment in the UK’s constitutional history, pragmatic MPs should come together, rise above party politics and negotiate a soft Brexit for the UK.

The UK Government find themselves in this position because there was no plan for Brexit if the leave side won the referendum. By contrast, during the Scottish independence referendum, the Scottish Government published a 300-page White Paper on what independence meant. The UK Government effectively have a blank canvas, which is why we find ourselves having such debates and trying to work out the Government’s intentions on vital issues such as workers’ rights.

Following the result, the absence of a clear plan has meant that irresponsible politicians have been interpreting the result to fit their own ideological priorities. There is now apparently a mandate to leave the single market, despite the clear pledge in the Tory general election manifesto to protect our membership, to introduce draconian immigration targets, and to force companies to produce official lists of foreign employees. There is no mandate, however, to destroy the economy, which would cost jobs and affect people’s financial wellbeing. The overriding priority for all decisions should be to choose the Brexit option that minimises that impact.

Wales is, alas, more exposed because it has an exporting economy. Wales turns out a £5 billion annual surplus. Some 200,000 jobs in Wales are sustained by membership of the single market. Our great trading success is driven by our relationship with the European Union, not least the 53 deals we have with countries across the world as a result of the customs union. In answer to my parliamentary question, the UK Government disclosed that 15% of UK exports are dependent on those 53 international trade deals. The key question, therefore, is this: how long will it take to renegotiate all those international trade deals if we choose a path outside the customs union?

A trade deal with the EU might not even solve the wider issues around trade barriers, as they often just focus just on tariffs. Tariffs are, of course, a concern, but a blinkered focus on these obvious obstacles to trade detracts from the greater impediment of non-tariff barriers. On average, non-tariff barriers are over six times more costly than tariffs in the EU, and there is only one way to ensure that these non-tariff barriers are kept to a minimum—full single market membership.

Very simply, the terms of debate around Brexit are being driven by what is most important—economic concerns or concerns over immigration—and it appears that public opinion is already shifting. A poll earlier this month said that the economy was far more important than controls on immigration as people began to focus on the impact of Brexit on their jobs and wages. Perhaps the big driver has been the fall in the pound. I am someone who is normally seduced by arguments around devaluation, but the 20% fall that we have seen has been driven not by deliberate central bank policy, but by currency markets that are now betting heavily against sterling, affecting future confidence in the economy of the UK. That means that the sterling zone is now up there with the Nigerian naira, the Azerbaijani manat and the Malawian kwacha as one of the worst-performing currencies in the world. The impact of devaluation on people’s lives is, of course, that disposable income gets compressed as prices for food and fuel increase.

We should also be concerned about the extra costs that the UK Government will face if they want to borrow. We urgently need direct capital investment in infrastructure to drive economic growth, but the cost of putting that in place will be far dearer because of the fall in the pound. That is not to mention the £66 billion deduction in revenues that has been leaked by the Treasury. As the hon. Member for Swansea West (Geraint Davies) mentioned earlier, supply-side reforms in the economy could endanger workers’ privileges, protections and rights. The end result of these reduced revenues will be to smash the Treasury’s deficit targets, so we await the autumn statement, and not least the Office for Budget Responsibility report, with great interest.

The Prime Minister has triumphantly proclaimed that existing workers’ rights will continue to be guaranteed in law as long as she is in office. However, as the House of Commons Library and other legal experts have pointed out, many workers’ rights stem directly from EU treaties—the right to equal pay between genders, for example—and once we leave the EU, those rights would cease to exist, so new primary legislation would be needed to reinstate them. Do the UK Government intend to bring forward primary legislation to ensure that all rights currently enshrined at EU level are secured in domestic legislation? Rather than bringing in a repeal Bill, should we not be bringing forward a continuity Bill? As events proceed, people will become increasingly angry about the way things are going.

We have heard good points from SDLP Members about devolved competencies, but I do not think we had a clear answer to how the great repeal Bill envisaged by the UK Government will work with the devolved nations. As we know, there is a hugely diverging agenda between the Welsh Government and the UK Government when it comes to workers’ rights, as was evidenced by the recent court case over the agricultural workers dispute.

Returning to trade, we have heard a duality of messages from Brexiters since the referendum. There was supposed to be a protectionist paradise. Such arguments held considerable sway in the steel industry in south Wales in the face of Chinese dumping. Of course, dairy farmers face competition from Ireland and hill farmers in Wales are challenged by lamb coming from New Zealand. Yet the rhetoric that we currently get from the UK Government is that Brexit will lead to a free trade bonanza.

Given the time constraints, I shall finish now. If there is to be a future outside the customs union—as envisaged, I fear, by the UK Government—it is vital that the devolved nations have a veto and a direct say in discussions about international trade deals.

Steel Industry

Jonathan Edwards Excerpts

Thursday 3rd November 2016 Westminster Hall

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

It is a pleasure to serve under your chairmanship, Mr Davies. I will endeavour to follow your instruction.

I congratulate the hon. Members for Middlesbrough South and East Cleveland (Tom Blenkinsop) and for Redcar (Anna Turley) on securing the debate. I commend the hon. Gentleman on his opening remarks, in which he showed a deep understanding of the industry. It was a genuine pleasure to listen to him. I thank the Backbench Business Committee for allocating time for this important debate.

I speak on behalf of the steel industry in Wales, which is arguably the most important component of the Welsh economy. Tata Steel Port Talbot employs about 4,000 people directly, and its supply chain is reported to sustain 20,000 jobs in Wales and to contribute £3.2 billion per annum to the economy of my country. We talk about things having national economic strategic importance, and steelmaking in Port Talbot is one of the most important components in a Welsh context.

It is almost impossible to talk about anything these days without mentioning Brexit, so I will get this point out of the way right at the start. Recent revelations about the back-room deal that the UK Government cut with Nissan highlights the Tories’ strategy to pick winners when it comes to Brexit. I will of course back any incentives that support important industries such as the automotive sector, both in their own right and as customers of the steel industry, but as other hon. Members have said, guarantees of that nature must also be extended to the steel industry, which is the backbone of the Welsh economy. My answer to the Government’s Brexit conundrum when it comes to steel is to stay in the single market and the customs union.

It is fair to say that that last time we had a debate of this nature, the mood was dark and there were genuine fears about the future of steelmaking in Wales and the UK. The reasons behind the pressures on the industry are well documented and have been restated today. Instead of repeating them, I will highlight some points made in an excellent report by Swansea University that was published in September. The report, “The sun has risen over steel town: Developing a sustainable steel industry in the UK”, was written by some of the most eminent steel experts in the UK: Professor Sridhar Seetharaman, Professor Dave Worsley, Dr Cameron Pleydell-Pearce and Mr Brian Edy. I commend them for their work.

The report puts forward a very positive prognosis for the steel industry, if supported with swift strategic Government action. The Tata Steel strip business in Port Talbot is today making a profit, performing above the ambitious levels targeted in the local transformation plan put forward at the height of the crisis last year—a plan that had been rejected as over-ambitious by the Tata board in Mumbai. That is quite an incredible achievement. However, in a session held a few weeks ago by the Economy, Infrastructure and Skills Committee of the National Assembly for Wales, evidence from steel producers and manufacturers indicated that order books, although buoyant at present, could take a turn for the worse in the second quarter of next year, demonstrating once again the huge volatility of the industry and that the next crisis could come sooner than anyone would hope. In other words, this is no time for Governments in London and Cardiff to take their eye off the ball. Therefore, the issues surrounding high electricity prices, whereby domestic steelmakers face a £17 per megawatt disadvantage compared with competitors in Germany, continue to be ones that should be urgently addressed.

The UK and Welsh Governments need to look at business rates and at what can be done to remove plant and machinery investments from rateable calculations. We need firmer protocols on procurement. As the Swansea University report highlights, only 40% of domestic demand is supplied by domestic producers. I point the finger at the Welsh Government as well in that regard. The report also highlights that a main consideration for the profitability of plants such as Port Talbot are prices of raw materials and sales prices. In 2014-15 the global weighted sales price fell by 26% due to much-documented Chinese dumping; at the same time the price of iron ore fell by 60%, which is hugely significant given that Port Talbot’s annual spend on raw materials is $1 billion.

A core aim in creating a sustainable industry, therefore, is to build resilience to fluctuations. The report clearly states that it would be logical to use a period in which conditions are favourable, like now, to make the necessary technological innovations needed to make the sector more resilient. The report makes the case that Port Talbot could evolve into a leading-edge, zero-carbon steelmaker with carbon-positive products that utilise locally generated by-products as a chemical and raw materials feedstock. It also argues that Port Talbot would have a viable future once in the hands of an owner with a long-term vision that will commit to and invest in transformational change.

Tata’s ability to deliver that much needed transformational change has arguably been hindered by its decision to vastly reduce research and development investment in its UK plants and to centralise activity at IJmuiden in Holland. That brings me to the current state of play in Port Talbot, where Tata is in advanced discussions with ThyssenKrupp about a merger of their European operations. If the Minister takes one thing from today, let him be in no doubt that the proposed merger is a real threat to the future of Port Talbot. As the Swansea University report states:

“TKS believe that capacity reduction is necessary in Europe, and Port Talbot could become a convenient sacrifice for them.”

Those are not new concerns and have previously been expressed by others and by me in this place. Unite the union made the point strongly in evidence to the National Assembly only a few weeks ago.

My constituency colleague in the National Assembly and predecessor in this place, Adam Price AM, has argued on behalf of my party that the UK Government should intervene if the proposed merger goes ahead unless there are specific guarantees about the long-term future of Port Talbot. His reasoning is perfectly valid when considering the record of ThyssenKrupp. In August 2016 Reuters reported that Andreas Goss, chief executive of ThyssenKrupp Steel Europe, had announced a new aggressive cost-cutting plan for its operations based on plant closures. It is worrying that the voice of the UK Government in Wales, the Secretary of State for Wales, is on record as saying that the proposed merger is “encouraging”.

My last point is that there is an alternative option on the table that seems to be far more encouraging in terms of achieving the long-term sustainable future we all desire. The recent news that two former rivals, Excalibur Steel and Liberty Steel, have joined forces is welcome. Significantly, the bid has Welsh Government support. This rival bid would lead to the creation of a new domestic company, probably the largest Welsh company in terms of turnover.

Liberty, of course, made its name in taking over steel operations in the UK and converting them by installing furnaces capable of recycling scrap steel. The process obviously helps to remove fluctuations from the business model, helping to create a more sustainable business. The Swansea University report indicates that 60% of steel in the United States is now produced from scrap steel by re-melting it in electric arc furnaces. The Excalibur-Liberty deal therefore offers the exciting prospect of green steel and primary steel being produced side by side, thereby helping to meet the transformative challenge set by the Swansea University report.

[Tom Blenkinsop]

Every option has to be considered in terms of Port Talbot’s future. I remember talking in a debate about whether Tata was going to retain Port Talbot, as we foresaw that changes in prices of strip and the potential profit from Port Talbot. I reiterate that Liberty is a good company that has come in, but without the production of primary virgin steel, there is no scrap steel to recycle. My concerns are about any mill rolling slab or rebar, where that steel is coming from. That goes back to the questions about Chinese imports. We need guarantees on the primary source of slab, rebar and billet.

[Jonathan Edwards]

I am grateful for the hon. Gentleman’s intervention. I was endeavouring to make the point that the Liberty-Excalibur deal potentially offers a future in which green steel, as it is called, and primary steel are produced side by side in the two blast furnaces at Port Talbot. Keeping those two blast furnaces open is vital for the viability of Port Talbot. He is completely correct.

I have a simple message for the Minister: this could be a huge success story for Wales and the UK as a whole. My last ask today is for him to agree at least to meet the leaders of the Excalibur-Liberty deal to see whether there is an option for the UK Government and the Welsh Government to put their weight behind a bid that seems to have unanimous support in Wales. Diolch yn fawr iawn.

[Geraint Davies (in the Chair)]

I call Anna Turley. We have all been waiting for her speech.

Nissan: Sunderland

Jonathan Edwards Excerpts

Monday 31st October 2016 Commons Chamber

[Greg Clark]

I am not sure I would describe the dialogue as intimate, but it was constructive at any rate. Of course I make that commitment to the hon. Gentleman.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Around 200,000 jobs in Wales are reportedly sustained by single market membership. With the UK Government so far picking the automotive and the financial sectors as their Brexit winners, how many of the aforementioned 200,000 Welsh jobs does the Secretary of State think will ultimately be safe after Brexit?

[Greg Clark]

We are at a point where we have not begun the negotiations with the European Union, much less concluded them, but the demeanour I think we should take is one of looking positively to find common ground and interests. That, always and everywhere, is the basis of a good deal—identifying that common ground and, through civility and patience, establishing relationships that can lead people to conclude something that is in their mutual interest. That seems to be a good way to approach these discussions.