Freeports: Wales

Stephen Crabb Excerpts

Tuesday 21st February 2023 Westminster Hall

[Stephen Crabb (Preseli Pembrokeshire) (Con)]

It is a pleasure to serve under your chairmanship, Mr Vickers, and to follow the hon. Member for Aberavon (Stephen Kinnock). I agreed with pretty much everything he said; thankfully, there is no rule against repetition in this place, so I will proceed with my remarks.

First, I would like to put on record my respect and appreciation for my hon. Friend the Member for Ynys Môn (Virginia Crosbie) for securing this important and timely debate, and for the articulate and energetic way she has championed her constituency and a freeport for Wales. In all seriousness, I do not think Ynys Môn has had a stronger voice in the House of Commons in its history as a constituency. I encourage my hon. Friend in the work she does.

Welsh ports have a long history in helping to shape the economic, social and cultural fabric of Wales, as one would expect from a nation with a coastline in the north, west and south. It is three years since the Select Committee on Welsh Affairs examined the proposal for a freeport in Wales. In our report, we noted the positive response from ports around Wales in the written evidence they gave, often citing the potential role of a freeport in regeneration. However, we argued that to make a lasting contribution to the regeneration of the poorest regions and nations of the UK, including in Wales, freeports should be assessed on the economic and social gains they are forecast to bring to local communities. In our view, freeports could help to revitalise the Welsh economy only when they fit with other policies that help Welsh ports and their local communities to thrive.

We noted that many areas of port policy and supporting infrastructure are either devolved to the Welsh Government or are shared responsibilities between the Welsh and UK Governments. We urge the two Governments to work together constructively, especially if a freeport bid is successful in Wales. Crucially, in our report we urged the UK Government not to cap artificially the number of potential freeport sites in Wales, nor to create a Welsh freeport purely for optical or political purposes.

I am pleased we have got to this hopeful and expectant point to hear the outcome of the bidding process for a freeport in Wales. I congratulate the Wales Office on its role in working with the Welsh Government and Ministers across Whitehall to bring us to the point where there could be agreement. There were moments, certainly three years ago, when some of us on the Welsh Affairs Committee were concerned that we might not get to this point, and that the differences in opinion between Welsh and UK Governments would be so great that the freeport policy would not happen in Wales. I am pleased we are at this point; the role the Wales Office played in that was extremely important.

I obviously have a constituency interest. Pembrokeshire is home to the port of Milford Haven, which is one of the UK’s leading energy hubs, hosting a wide range of conventional energy companies such as the Valero oil refinery, the Dragon liquefied natural gas import terminal, South Hook LNG import terminal, the RWE gas-fired power station and the Puma fuel storage site, among others. Those are all located on the Haven waterway. The port of Milford Haven is strategically one of the most important energy hubs in the UK, and the infrastructure it hosts plays a critical role in our national life. Undoubtedly, that port has played an integral role in shaping Pembrokeshire’s local economy through the high-quality job opportunities that those energy companies have provided to local people for many generations.

Those industries are changing, and need to change. The hon. Member for Aberavon made the point that recent events have highlighted the need for our energy mix to diversify, and our demand for home-grown renewable energy has never been greater. Right now we have a unique opportunity to build on that heritage and the excellent skillset in Pembrokeshire to use vacant brownfield sites for the new and exciting energy revolution that is just in front of us.

The port of Milford Haven is in prime position to shift from being one of the UK’s leading conventional energy hubs to being one of the UK’s leading renewable energy hubs. The decarbonisation of Wales’s primary industrial cluster, which stretches from Milford Haven all the way to Port Talbot and further east across the south Wales coast, is the prize in front of us. That decarbonisation has already begun, as we have already heard this morning, and will make a significant contribution to helping the UK meet its net zero targets.

In 2019 the Conservative party stood on a manifesto to deliver at least one freeport in Wales. Fast-forward four years and the necessary steps have been taken to ensure that that ambition becomes a reality. The Welsh and the UK Governments will jointly evaluate bids and select a freeport for Wales in early spring. As we know, for politicians “early spring” can mean anything, but I hope that it means in the days and weeks ahead. We have a prime opportunity, if the Government want to take it with St David’s Day just around the corner, for a really significant announcement that would make a difference for people and communities across Wales. We therefore expect to receive confirmation of the winning bid imminently.

I want to briefly put on the record why I think the Celtic freeport bid should be the frontrunner in this race—it is a competitive process. The Celtic freeport bid is a private-public sector partnership led by Associated British Ports, Neath Port Talbot Council, Pembrokeshire County Council, and the port of Milford Haven. The bid has been backed by prominent businesses across Wales as well as numerous MPs from all parties and Members of the Senedd as well, demonstrating the evolution of a collective consensus that is necessary to drive forward the Celtic freeport vision. The bid goes far beyond party political lines, with a broad recognition of the wide-ranging benefits that the Celtic freeport will bring to Pembrokeshire, Port Talbot and the whole of south Wales. That is why I have been working so closely with the hon. Member for Aberavon to help build momentum behind that important bid.

It was encouraging to see so many MP colleagues from across different parties attend our recent drop-in event to hear more about the exciting potential of the bid. I was delighted that so many of my colleagues put pen to paper that day to confirm their backing for it. If we are awarded freeport status, more than £5 billion of new investment will be unlocked, potentially creating more than 16,000 new high-quality green jobs across the south and west Wales economy. Furthermore, securing freeport status across the key sites of Milford Haven and Port Talbot will enable them to begin their journey towards energy diversification through, as we have already heard, the emergence of the new floating offshore wind technology.

As I explained in my debate on floating offshore wind in this Chamber last October, offshore floating wind represents a major, exciting new opportunity for the UK to tackle pressing issues: jobs and skills regeneration, wholesale energy prices, energy security, levelling up and, as I have said, net zero targets. The UK Government have set ambitious targets to deliver floating offshore wind in the years ahead, and both Milford Haven and Port Talbot have already been identified by leading developers as key locations for the early development of this new industry for Wales. Hopefully Milford Haven will be a hub for operations and maintenance, with Port Talbot at the forefront of assembly and manufacture.

The potential to unlock a UK market in the construction, maintenance and operations of floating offshore wind projects could be worth more than £54 billion in the decades ahead. That is the prize in front of us. It is clear that the establishment of a freeport across the sites at Milford Haven and Port Talbot will enable this exciting renewable vision to flourish. The war in Ukraine, coupled with rising energy prices, has underlined the urgent need for the UK to become less energy dependent. The need to diversify our energy mix has never been more apparent as the dial shifts to the development of green, sustainable energy. Floating offshore wind represents the next big renewable opportunity for Wales. With the expertise and heritage in the Milford Haven waterway, and the skillset and industry in Port Talbot, these two locations at the heart of the Celtic freeport bid are ideally suited to supporting the industrial-scale deployment of floating offshore wind.

Freeport status would be hugely advantageous in that process as it would allow this new green vision to flourish, with the tax breaks, simplified customs procedures and streamlined planning processes helping to ease the transition from conventional to renewable energy. In turn, there is a potentially enormous investment to be unlocked in the supply chain, and that is the prize here. The UK has made enormous progress in the fixed-bottom offshore wind industry and has taken strides in expanding that deployment, but the one thing that did not happen in was we did not create strong domestic content for the UK. We did not capture a bigger share of the full economic value of offshore wind as we should have done. We now have the opportunity with floating offshore wind to get it right and to deploy these structures to give us clean energy in a way that creates long-term jobs and training opportunities in our communities.

[Stephen Kinnock]

The right hon. Member is making an excellent speech. Does he agree that it is vital that the Crown Estate sets up a licensing process that guarantees localised supply chains and that there should be penalty clauses in the process, so that developers will be held to account?

[Stephen Crabb]

The hon. Gentleman makes a crucial point. He is absolutely right that the Crown Estate must ensure those contracts have teeth. That will be crucial to ensuring that developers deliver on their commitments because, as he knows, it is one thing for them to speak to us politicians and tell us about all the good things they will do in our communities, but actually making sure they do them when push comes to shove is another.

The other part of the equation is ensuring that we get the contracts for difference right and ensuring that the financial architecture around floating offshore wind is the right one to enable that investment in the UK and Welsh economies. Of course, there is a potential first-mover advantage waiting for the nation that makes the biggest and earliest strides to deploy floating offshore wind at an industrial scale. The Welsh Affairs Committee was recently in the US and met with a floating offshore wind developer there who was also looking to develop in the Celtic sea. They have secured seabed leases off the coast of New York and in California. There is a global race to be the first nation to see serious industrial-scale deployment of offshore wind, and I believe it should be Wales and the UK that does that.

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

Wales, indeed. Does the right hon. Gentleman join me in wondering whether Wales would be able to put better procurement requirements in place and ensure that the benefits are accrued more effectively to Wales if the Crown Estate, as in Scotland, was devolved to Wales?

[Stephen Crabb]

It pains me to disagree with the right hon. Lady, but the debate about devolving the Crown Estate is a red herring. It is a question that I have explored with potential developers and something I have discussed with the Crown Estate and other potential players in this field. That will not be the critical intervention to ensuring this vision is realised in the way that we all hope. I appreciate some of the arguments she is making about the devolution of the Crown Estate, and she has made them articulately before in this Chamber, but, as I say, it is something of a red herring.

The freeport intervention would be a critical intervention in helping to unleash and launch this new, exciting industry for Wales. I hope that when the UK Government and the Welsh Government sit down together to assess the bids, they will look at the strength of the industrial proposition behind the Celtic freeport bid. I grew up in Wales and have been a politician in Wales long enough to have seen a lot of failures of economic development around Wales. So much public money has been thrown at different schemes and interventions over the years—so often they seem to have the word “park” in them: food park, science park, tech park and so on—that never really achieve the vision and potential that politicians hoped for when they were spending taxpayers’ money because very often there is no real substance behind them.

I hope that in making this freeport intervention, the Government recognise that they need to work with the grain of the private sector and industry and recognise where real, substantial projects are already starting to happen—in Port Talbot, the port of Pembroke and Milford Haven—and capture that and work with it. That is what will deliver real economic and social benefits for our communities in the way that freeports are intended to do. If the UK Government want to improve our energy security, help us to take a big step towards meeting our net zero ambitions and invest in creating good-quality jobs and training opportunities in our constituencies—that is the essence of levelling up and rebalancing the economy, as it would mean that young people do not have to leave their communities in Wales to work elsewhere, allowing them to stay and be part of those communities, to build and to raise their children there—they will recognise the strength of the Celtic freeport bid and what it proposes. I really hope that the Government take this opportunity and give us the freeport status that we are looking for to help to create this new industrial revolution.

--- Later in debate ---

[Stephen Crabb]

Just to clarify, that remark about “optical or political purposes” was a quote from the Welsh Affairs Committee report. It was not just a personal opinion.

[Liz Saville Roberts]

I stand corrected and welcome that, but I think there is a really important question here for the Minister, and I press him for a response. My understanding is that for Wales to have two freeports, two exceptional cases have to be made. Now that we appear to be approaching the time when announcements are going to be made, it is important to know what constitutes an exceptional case, because we have two communities—three if we include Port Talbot—that have great expectations. Can the Minister clarify whether the bids are being assessed by both the Welsh and UK Governments? Will the Welsh Government have a meaningful say on whether the two bids meet the requirements? I would appreciate a response on that. Given the initial revelation that a lower level of funding was being allocated for a freeport in Wales, if both freeport applications are successful, will they both receive £26 million in initial funding?

--- Later in debate ---

[Dr Davies]

The right hon. Member makes a good point. Clearly, the Welsh Affairs Committee has considered these issues in detail. They are important to me, and the role of the Wales Office is to liaise with the Department for Energy Security and Net Zero, as it is now called, to ensure that grid capacity meets aspirations. I assure her that I hope to have that influence.

[Stephen Crabb]

I reiterate the point that the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) made about grid capacity. If we read in detail the evidence received by the Welsh Affairs Committee, we see that it is very clear that when it comes to investment in the grid, business as usual is simply not going to cut it. I appreciate that the Government are making efforts to secure more timely investment, but if we are to meet the targets and aspirations we have been talking about, we need to see a sea change.

[Dr Davies]

I take that point on very much board and thank my right hon. Friend for all his efforts in that regard.

Let me take the opportunity to outline other core elements of the Government’s levelling-up agenda. Wales is front and centre of our plans to level up the whole of the UK, and areas across Wales are already benefiting from more than £1.7 billion of local growth funding. From large-scale transport improvements to regenerating town centres and refurbishing cultural assets, the levelling-up fund will deliver lasting improvements in local communities across Wales, giving people renewed pride in their local areas. Ynys Môn alone is receiving £17 million from the levelling-up fund for the cultural regeneration of Holyhead town centre. I was pleased to visit a few weeks ago and see the efforts being made to ensure that people who use the port see all that Holyhead has to offer.

In total, the Government are investing more than £208 million in 11 projects across Wales through the second round of the LUF. That is almost 10% of the total UK allocation and builds on the £120 million that the Government invested in Wales in the first round of the fund. It is far more than Wales would have received through a Barnettised formula and is testament to the dedicated work of local authorities across Wales, which developed high-quality applications. The Government are also investing more than £790 million in Wales’s four city and regional growth deals. The deals are starting to deliver real change on the ground, from the Swansea Arena to investment in the digital signalling processing centre at Bangor University.

Furthermore, £2.6 billion has been allocated to places across the UK through the UK shared prosperity fund. Of that, £585 million has been allocated to Wales, including more than £126 million for north Wales. This trailblazing new approach to investment and the empowerment of local communities to level up and build pride in place will see direct investment in three local priorities: communities and place; support for local businesses; and people and skills. The funding is now in the hands of Wales’s four regional partnerships, through which local leaders are empowered to decide how best to invest the funding to better promote local growth, help to regenerate local economies and build a better future.