Leaving the EU: Infrastructure in Wales

Paul Flynn Excerpts

Tuesday 17th January 2017 Westminster Hall

[Stephen Doughty]

My hon. Friend makes an important point. It is about long-term certainty for not only businesses but residents and local authorities. He mentioned McArthurGlen, which I am sure many of us have used. Many people do not know that the transport infrastructure and hub there were supported by European funding, which made a huge difference to access to the lower part of his constituency and, indeed, to the M4 corridor.

[Paul Flynn (Newport West) (Lab)]

Could we add to the comprehensive list of threatened infrastructure projects in Wales the Dŵr Uisce scheme—those are the Welsh and Irish words for water—between Ireland and Wales, which is very exciting? It uses water technology in a very effective, environmentally clean way. That will be in a special category, because if Brexit goes ahead, half of the scheme will be in the EU and half of it will be outside it. Does my hon. Friend foresee the chaos and the serious threat to that valuable scheme that would result?

[Stephen Doughty]

Indeed. It is about the detail of these types of project. I was not aware of that particular one, but it is a very good example. Many of us in Wales have personal family connections to Ireland. We certainly have connections in our constituencies. More importantly, there are crucial connections between our economies, services and infrastructure; my hon. Friend makes a valid point.

The EU’s structural funds over the past 30 years have been vital in supporting regional development and the growth of the Welsh economy. They have supported people into work and training, youth employment, research and innovation, business competitiveness, renewable energy and energy efficiency, connectivity and urban development. The central aim of the current structural funds programmes is to create an environment that will support economic growth and jobs. Obviously, there are huge implications if we are not part of that.

Under the current round of structural funds, which runs from 2014 to 2020, Wales has been allocated almost £2 billion, with £1.6 billion going to west Wales and the valleys and more than £325 million going to east Wales. In total, along with match funding, the current round of structural funds is expected to support total investment in Wales of approximately £3 billion. Indeed, research undertaken by Cardiff University’s Wales Governance Centre prior to the referendum concluded that the £658 million of EU funding for Wales from the common agricultural policy and the European structural funds made Wales a net beneficiary of EU funding. In 2014, the estimated net benefit from the EU for Wales was around £245 million. That is equal to about 0.4% of Welsh GDP—it equates to around £79 per head—in 2014.

I talked about the history of these investments. That is the third time that west Wales and the valleys have qualified for the highest level of structural fund support, which is available to regions in the EU that qualify with GDP per head that is less than 75% of the EU average. I have long supported that principle and am yet to be clear, in any way, what the UK Government’s plan is for replacing those structural funds to reduce some of the inequalities that are built into some of our post-industrial economies in particular and rural areas. The spending has been aimed at supporting projects intended to transform the prospects of the most marginalised and vulnerable, to lead to increases in productivity and growth and to invest in the future of our young people in Wales.

Following the vote to leave the European Union, investment in infrastructure in Wales has already experienced some setbacks, with postponements of some asset sales and a downsizing of some projects, according to ratings agency Standard & Poor’s. In a broader note to clients in September, Standard & Poor’s stated that the biggest risks for infrastructure companies could be a likely reduction in capital investment—both domestic and foreign direct investment.

I want to mention the South Wales metro again. It would be useful to know whether the Minister can add any clarity on this. The metro is crucial to my own constituency and the First Minister, Carwyn Jones, has described it as “a catalyst for transforming” the Welsh economy. He made that clear when he met the Commission in December to seek assurances that it will continue to support the project and that it will not be affected by the Brexit negotiations.

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[Paul Flynn (Newport West) (Lab)]

I am delighted to be called to speak so early in the debate, Mr Flello.

We listened to the dribble of nothing from the Prime Minister in one of her typical speeches, which are heroically adjectival but ultimately vacuous, and her love of soundbites and meaningless phrases is clear. She talked about having a red, white and blue Brexit, but in Wales we want a red, white and green Brexit. We want one that is tailor-made for Wales, because our situation is unique in almost every way in the British Isles.

We are talking about infrastructure today. Gerald Holtham—a very accurate observer of these matters—has pointed out that although the amounts of money we get from Europe are not a huge percentage of Welsh GDP, they are 20% of our infrastructure funding. A huge amount of money is being provided for all the schemes that my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) listed in introducing the debate. In my intervention I mentioned the Dŵr Uisce scheme, which is a unique example; it does not affect England in the same way. That exciting project is being run by Trinity College Dublin and Bangor University. It has cutting-edge technology, using small turbines in an ecologically sound way to produce energy. The scheme could have marvellous repercussions and pay huge dividends in future, but it will be in a very strange position, because half the scheme will be outside the European Union and half will be inside it. That is one of many complications that will arise from the hell of Brexit that we are facing.

Remember the reason why Brexit is happening and why the Prime Minister made that speech today: it is all about solving internal problems in the Conservative party. That explains how we got into it and how we are now proceeding. At the moment, the Conservative party is a pressure cooker likely to explode in three directions—there are the hard Brexiteers, the soft Brexiteers and the anti-Brexiteers—and all that we have heard today from the Prime Minister is an attempt to soothe future problems with a honeycomb of sweet words that ultimately mean little.

The Chancellor of the Exchequer has talked about bumps in the road, but I fear that there will be a giant sinkhole in the road into which the economy could slip in freefall. Very dangerous years could be ahead of us economically. There was talk today of us turning into some kind of banana republic on the world stage, and not being one of the great economies. Standards are going to fall down to the bottom. They will not be brought up to the top, and we will not continue down the stable path that we were on in the past. Brexit is a great gamble, and it is right to look at it from a Welsh point of view.

Important issues in Wales come up again and again, as they did when the Select Committee on Welsh Affairs went out of Parliament to meet the people, having asked for their response. I took part in two such events. Someone who came to Aberystwyth said that he worked for a company that was about to expand in Ceredigion. However, post-Brexit, the company has taken the decision to expand in Ireland. Someone else came to the meeting in Prestatyn to talk about the tidal scheme off Anglesey. That interesting scheme uses tidal flow and is very different from what is happening in Swansea. We know that hydropower and tidal power are Wales’s North sea oil. They are a huge resource and their prospects for the future are marvellous, because of the nature of the tidal flows that go around our coast. A huge cliff of water moves around the coasts of Wales, providing great pulses of electricity throughout the 24-hour cycle. All the calculations are based on using tidal power alone, and they have not taken into account the ideal solution, which would be combining tidal power with pumped storage schemes such as the Dinorwig power station. That would make tidal power entirely demand-responsive. The pulses of electricity that arrive in the early hours of the morning could be used to pump the water up the hills, and then the value of the electricity could be multiplied threefold or fourfold by pumping it down when electricity is in high demand. That will be the future of clean, renewable electricity for Wales.

Another issue that comes up at all these sessions, because farmers are a very well-organised group, is farming in Wales, which is again unique in the British Isles. We have a cultural imperative for supporting the farming industry, because it is the last redoubt of Welsh language and culture. It is at its finest and purest in the farming communities and has gone, sadly, from the anthracite coal areas where it used to be. If we want to invest in the culture in Wales and in our precious, unique heritage, we have to invest in it as a cultural treasure that we all feel is of immense value.

However, the main reason for supporting the farming industry is what it does in Wales as a resource and a source of occupations. It is very different from England. If we are going to have our red, white and green solution, we need an entirely new policy on farming.

[Chris Davies (Brecon and Radnorshire) (Con)]

As usual we have heard the platitudes—the Brexit-denial language—that we are used to from the hon. Gentleman, but to get back to the subject of the debate, does he not agree that many parts of Wales have not benefited from European funding? In fact, the European funding source has been very unfair to certain parts of Wales, and a new post-Brexit scheme may be much fairer for the whole of Wales.

[Paul Flynn]

The hon. Gentleman has not said which parts of Wales he has in mind, but it was noticeable that the parts of Wales that had the greatest amount of infrastructure investment were the least enthusiastic, sadly, for staying in the European Union. If we are looking for a policy, it must be a new one. If Brexit goes ahead, we must take advantage of it to get a Welsh solution for Welsh problems. Take agriculture, for instance: we do not have farmers getting subsidies of £2.5 million. They do not get £750,000—not that I know of anyway—but the Mormon Church gets that. The royal family get subsidies of £500,000, but in Wales the average subsidy is about £13,000, and we have a preponderance of small farmers.

Let us start again and have a scheme with a cap on it so that we do not give huge subsidies to billionaire and millionaire farmers. We must concentrate subsidies on what are necessary in Wales: the small farmers. We should look at Brexit as an opportunity to have a scheme that is fairer and will help the environment. There should be a strongly environmental imperative in all the subsidies that are given, and we should put a cap on them, as we put a cap on other things such as welfare payments. I cannot see why anyone should have a subsidy of £94,000, as one farmer in Wales gets regularly, even though he does not appear to be in need of subsidies. We should look at how income support is paid out. To make the farm industry stand on its own feet and be self-supporting, as happened in 1985 in New Zealand, we have to change the pattern of subsidies, and Brexit is the opportunity to do so.

Many of us bitterly regret what happened in the referendum. During the campaign, I said the victors would be the ones who told the most convincing lies, which turned out to be right. Both sides presented a case that was false. We are certainly not going to get our £350 million for the health service every week, as was written on the side of the red bus, and we did not have the economic collapse that was threatened by the other side. The votes that were taken—a snapshot on one single day—were based very much on public relations spin. The same people who directed the leave campaign are the same people who directed the entirely dishonest alternative vote campaign a few years ago and who ran the campaign about devolution in the north of England. We are handing over the power of decision to the PR specialists and snake oil salesmen, and public opinion is manipulated and persuaded by the PR industry and the tabloid press.

[Chris Davies]

Without question I respect the hon. Gentleman’s years in this House, but do you honestly believe you are helping the Brexit cause by using such language and continuing the route you are now on? Looking at your hon. Friends’ faces as you speak, it does not look to me as though you are helping them in this debate, never mind the cause that you are trying to put forward. We are all Brexiteers now and we need to move forward, not backward.

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[Robert Flello (in the Chair)]

I think the hon. Gentleman was referring to the hon. Member for Newport West. Mr Flynn, may I suggest we come back to the subject of the debate and not make it too wide-ranging?

[Paul Flynn]

We face the inevitability of Brexit. The House will almost certainly agree to go ahead with article 50, and perhaps in two years’ time, when the breach has to be made, an informed view will be taken of what has resulted from that decision. We are the elected representatives of public opinion in Wales. We were not elected on one day. Many of us have been elected on many days. My first election was in 1973—it is not a single decision that is taken on a single day. We have a duty in this House. When it comes to finally deciding whether we break away, we must remind ourselves that we will then know the economic consequences, and we should remember that second thoughts are always better than first thoughts.

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[Guto Bebb]

I sincerely hope it would not be a like-it-or-lump-it strategy, because that would not be proper engagement. Proper engagement means listening to the arguments being made by the devolved authorities and taking their views into account. It is clear that a decision will have to be made on a UK basis. I suspect that the hon. Gentleman is not arguing that we should have different settlements for different parts of the UK in relation to exiting the European Union.

We entered the European Union as a United Kingdom and I suspect we will leave as a United Kingdom, but it is imperative in that debate that we take on board the arguments being made by the devolved Administrations. It is important to highlight that we, as a Government, have set up Joint Ministerial Committees to ensure that those discussions happen on a Minister-to-Minister basis. I have been part of those discussions, as a representative of the Wales Office. So this is not a case of attempting a Westminster fix that ignores the views of the devolved Administrations; it is a genuine attempt to take on board the concerns of those Administrations, to ensure that we come up with an approach that reflects the complexities of the United Kingdom.

[Paul Flynn]

Does the Minister seriously believe that the problems post-Brexit in the home countries will be the same as the problems in England? A red, white and blue Brexit is an England-centric one. The problems in Wales and Scotland, and certainly in Northern Ireland, are unique to those countries and we need Brexit solutions that are tailor-made for the four home countries.

[Guto Bebb]

I am somewhat surprised by the hon. Gentleman’s comments, because I do not think he would argue that every single part of England has the same issues. The issues in Cornwall are very different to those in London; indeed, there is a devolved administration in London. Also, we are seeing a devolution process in the north of England and the issues facing the north of England will be very different from those in the midlands. I suspect that the Government have a responsibility to listen to arguments being made by all parts of the country. We are a Government who are listening on this issue.

I go back to the structures that have been put in place. Those structures are working. I have attended meetings with Ministers from Wales, Scotland and Northern Ireland. Unfortunately, such meetings are not currently possible, and that is a regret, but they have been constructive and for a purpose. I can assure hon. Members that views about the priorities are expressed very strongly in all parts of the United Kingdom.

The hon. Member for Cardiff South and Penarth asked whether the engagement is serious, and I argue that it is. Certainly the meetings I have attended have been robust but very worth while.