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Volume 611: debated on Wednesday 25 May 2016

The Secretary of State was asked—

Rail Electrification

1. What recent discussions he has had with the Secretary of State for Transport on rail electrification in Wales. (905012)

This Government’s rail investment strategy is historic in its scale and ambition, and will benefit passengers in both north and south Wales. We are electrifying the Great Western main line all the way to Swansea, and we are developing the north Wales main line through a £43 million programme of modernisation and investment.

The Department for Transport seems to be making precious little progress on the Crewe to Chester-north Wales coast electrification, so will the Minister get together with his DFT colleagues and perhaps the Welsh Assembly Government, and I will even come along myself, to get a full engineering survey to find out the costs and the timescale for the electrification process, which is so important to the growth of the area?

I understand the importance of the north Wales main line to the hon. Gentleman’s constituency and the whole of north Wales. We are engaged in a £43 million programme of investment and modernisation and we are seeing the benefits of that investment. For example, there has already been vast improvement in services from Chester to Euston, which also benefits north Wales. I would thoroughly welcome the opportunity to discuss this further with the hon. Gentleman as part of our strategy for a north Wales growth deal.

Will the Minister join me in welcoming the recent decision by the Office of Rail and Road to permit regular new direct rail services from north Wales and Chester to Manchester airport? Does he agree that journey times remain too lengthy? With that in mind, will he encourage Network Rail to increase line speeds and pave the way for electrification by prioritising the replacement of Victorian signalling systems—works that had been due for completion last year?

My hon. Friend touches on the crucial point. I pay tribute to his work since he came into the House. I remember his first Adjournment debate on north Wales transport links, in which he talked about the importance of the north Wales rail line and the A55. He is right to highlight the fantastic investment from Arriva Trains, which will see a tripling of the services from Llandudno in my constituency to Manchester airport. That development is most welcome to people in north Wales. I thoroughly accept that we need to modernise the signalling system, which is why we have a £47 million programme of investment during control period 5 and control period 6. That has slipped somewhat, which is a shame, but it is interesting to note that it did not preclude the decision by Arriva Trains to increase its services dramatically.

When the Secretary of State was serving as the Under-Secretary, he met my predecessor to discuss the Pencoed level crossing, which causes a significant amount of chaos in the town and the Ogmore constituency. Will he agree to meet me and constituents from Pencoed to carry on those positive discussions about improving the Pencoed crossing?

I welcome the hon. Gentleman to his place. I am aware that the Wales Office has been working with local government and the Welsh Government in relation to the Pencoed issue. I would be delighted to meet the hon. Gentleman—after all, my first by-election was in Ogmore. It was a very wet by-election. I would be delighted to meet residents of Pencoed once again.

There is great momentum in north Wales and north-west England to improve transport links. This is a time for the Welsh Government and the UK Government to work together to improve those links. May we therefore have candour? The £43 million that the Minister referred to was actually investment by the Welsh Government, so will the UK Government step up to the plate and invest a penny piece in infrastructure in north Wales? That would be very welcome.

It is important and imperative that we work together—the Welsh Government, local authorities and the UK Government—in developing transport links throughout north Wales. That is why we have opened the door for a north Wales growth deal, on which we are working in partnership with the Mersey Dee Alliance and the North Wales Economic Ambition Board. The hon. Gentleman is right to say that a real, effective change in north Wales will depend upon co-operation between Westminster and the Welsh Government.

The new Welsh Government are ready; cross-party and cross-border, Members of Parliament and local authorities are ready; and most important of the lot, we north Walians are very ready. May we have a commitment for proper electrification so that we end up with a growth deal that is worth the name?

It is imperative that we look carefully at the best value for money from investment in our transport infrastructure. I accept that there is a need to work together, but I also highlight the fact that the CBI and the Federation of Small Businesses this morning called for more action from the Welsh Government. We hear that £200 million has been allocated for the A55, for example, but we have yet to see any action. We do need to work together; finger-pointing does not help.

Steel Industry

With your permission, Mr Speaker, may I pay tribute to my predecessor, my right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), who is now the Secretary of State for Work and Pensions, for the work he did when he was Secretary of State for Wales in all matters supporting Wales, but particularly in relation to the steel industry?

We are doing everything we can to support the sale of Tata Steel UK, including offering support to potential buyers worth hundreds of millions of pounds. Our discussions with buyers, the Welsh Government and the unions continue, and we stand ready to negotiate with the preferred bidder to ensure the future of steelmaking in Wales and across the UK.

As we know, a critical meeting is taking place in Mumbai later today, and the future of the industry is hanging in the balance. What measures have the Secretary of State and his colleagues in the Cabinet taken to ensure that a viable and sustainable pension scheme is developed as a result of the sale of the business? Can he assure the House that it will be sustainable for the 130,000 members of the scheme?

I have spoken to the Secretary of State for Business since his meetings with Tata in Mumbai. Pensions are rightly one of the issues under consideration, and the hon. Gentleman will be aware that my right hon. Friend highlighted them at the outset, when he said that pensions, plant and power were three of the issues that needed to be addressed. Pensions are an extremely complex issue and cross a number of Departments, but we are determined to find a way through in the interests of the members, the trustees and the company.

8. The sale of the steelworks is at a critical stage. It is crucial to the survival of the plant that both Governments act with purpose to support a successful buyer. Has my right hon. Friend agreed a way forward with the First Minister and the Welsh Government in Cardiff Bay to ensure that that is the case? (905020)

I pay tribute to my hon. Friend for the work he is doing in his constituency, where a number of steelworkers reside, and for the responsible way in which he has pressed issues that are fundamental to a successful steel sale. I met the First Minister earlier this week, and we absolutely agreed that this issue is our priority. We are determined to continue in close dialogue and to work closely together to secure the sale.

We on the Opposition Benches are solidly with the steelworkers who will be marching through Westminster today. The European Parliament has voted against giving China market economy status. Will the Secretary of State press his colleagues in the Cabinet to agree to higher tariffs on Chinese steel?

I look forward, like the hon. Gentleman, to meeting the unions that are marching through Westminster later today. Of course, we are determined to work with the unions and with Tata. However, market economy status for China is separate from the capacity of the European Commission to introduce tariffs. Where tariffs have been introduced, they absolutely work. There are 37 trade defence measures in place at the moment. On wire rod, for example, imports are down by 99%, and I could highlight a range of other speciality steels. So let us not confuse market economy status and the capacity to introduce trade defence measures.

Steel was a significant element in Wales’s £5 billion-worth of exports to the EU in 2015—that is in fact a third of the whole Welsh Government budget. Will the Secretary of State now make the positive case for the advantages to Wales’s businesses, jobs and profitability of remaining in the European single market and the European Union?

The hon. Gentleman is absolutely right: 69% of steel produced in the UK is exported to the European Union. Access to that single European market is fundamental to the steel industry, but it is also fundamental to attracting a buyer. That was the very point I was seeking to highlight to business leaders in Swansea last week.

The steel produced at Port Talbot is transported to Corby and used to produce steel tubes. What steps are Ministers taking to make the case that it is vital to keep that supply chain together as one?

I also pay tribute to my hon. Friend for the way in which he represents the interests of his constituents. He recognises the interdependency of all these plants—the site in Corby, the site in Port Talbot and other sites across the UK. We talk to suppliers regularly because we need to maintain confidence that they will be able to continue to buy steel. We are determined to find a buyer that is in the interests of workers and the economy.

Is the right hon. Gentleman inspired by the minor miracle that has taken place in Newport, where Mr Sanjeev Gupta and his enterprising workforce have brought the dead Alphasteel company back to productive life? Is not this spirit of entrepreneurship, co-operation among the workforce, hope and confidence the way to stage a renaissance of the entire British steel industry?

The hon. Gentleman is right that the interest of Sanjeev Gupta in Liberty Steel demonstrates the dynamism in the industry and the great opportunity that is out there. Liberty Steel has reopened a plant that closed some time ago, and it sees that there is a future in British steelmaking. I hope that we will continue to use that momentum to secure steel for the whole of the Tata operations across the UK.

Given the Secretary of State’s previous answer on the effectiveness of tariffs, why do the UK Government keep being at the head of a blocking minority for reform of the lesser duty rule? Is it not the case that they simply have not done enough to save the British steel industry?

The hon. Gentleman is confused about the impact of the lesser duty rule, which relates to the framework. There are currently 37 trade defence measures in place. Where the European Commission has acted within the lesser duty rule, it has had a significant effect, be it in rebar, wire rod, seamless pipes or cold-rolled flat products. I could highlight a whole range of speciality steels where the tariffs are working within the lesser duty rule, because otherwise there would be an impact on other manufacturers and other costs. We need to work within the rule because it currently operates effectively.

Financial Accountability

In order to become truly accountable, the Welsh Government need to take responsibility for raising more of the money that they spend. That is why, as part of the Wales Bill, we will devolve income tax powers to the Welsh Assembly. I look forward to continuing to work alongside the Welsh Government to implement those powers.

I hope my right hon. Friend agrees that while the Welsh Government are profligate in many ways, the reinstatement of the Aberystwyth to Carmarthen railway via Llanbedr Pont Steffan will be helpful to the entire Welsh economy. Such spending would be welcomed by all the citizens of Wales, who realise that investment in transport infrastructure is a precursor to economic prosperity.

My hon. Friend is absolutely right that there are several examples of the strange priorities shown by the Welsh Government. Investment in railways is a priority of the UK Government, as shown by the electrification of the line from Swansea through to Paddington. That in itself will provide greater opportunities for rail travel, such as the upgrade of the valleys lines, which, in turn, provides a knock-on, positive effect on more rural communities.

Air passenger duty has already been devolved to the Northern Ireland Assembly and is shortly to be devolved to the Scottish Parliament, but despite this, the Budget did not propose that it be devolved to the Welsh Assembly. Will the Secretary of State support the devolution of air passenger duty, and if not, why not?

Rates of taxation, including air passenger duties, are a matter for my right hon. Friend the Chancellor, who always keeps levels of taxes under review. The hon. Lady will be well aware that the Treasury is looking at this matter and will report in due course.

13. A few years ago in Boston, Massachusetts, a few revolutionaries said, “No taxation without representation”, so does my right hon. Friend agree that it is very important that the Welsh Assembly takes advantage of the Wales Bill and applies its own income tax? (905025)

I am grateful to my hon. Friend for the continued interest that he shows in Wales. I want the Welsh Assembly to be a mature legislator taking more responsibility for the money that it spends by raising money itself. On that basis, it will become truly accountable to the people of Wales, and will have to look differently at the sorts of spending priorities it has and the commitments it makes.

Small Business Support

4. What assessment he has made of the effect in Wales of the Government’s measures to support small businesses. (905015)

Small businesses are leading the economic recovery in Wales. There are now 30,000 more small and medium-sized enterprises in Wales, employing 65,000 more people than in 2010. With SMEs accounting for over 99% of all businesses in Wales, the UK Government fully recognise their important contribution to the growth of the Welsh economy.

The Chancellor’s recent Budget announcement that business rates for the smallest businesses will be either greatly reduced or removed has gone down very well. It will have huge advantages for small shops in particular. What steps are the Minister and the Secretary of State taking to make sure that businesses in Wales will also benefit?

My hon. Friend is perfectly right to say that the business rates announcement was welcomed by small businesses in England. The Wales Office is calling on the Welsh Government to replicate the steps taken in England, in order to ensure that small businesses in towns and cities across Wales benefit in the same way from the changes that are being implemented in England, which will allow them to grow and to employ more people in Wales.

The Welsh Government have done well in attracting inward investment, but in terms of business confidence and Brexit, what will the UK Government do to shore up certainties about the Swansea bay lagoon, electrification and supporting Swansea with a city deal?

The hon. Gentleman should be aware that the Wales Office is working very closely with the Treasury to develop a Swansea city deal, which will include the electrification of the main line to Swansea. We are also proposing a review of the Swansea bay tidal lagoon in order to look at its viability and to ensure that it will provide value to the taxpayer if it is developed.

Some 242,000 jobs are directly or indirectly dependent on a successful tourism industry. Will the Minister concede that we could boost those small businesses either by reducing VAT on hospitality and tourism or by raising the threshold on which they pay VAT?

The hon. Gentleman is a champion of this issue and has been ever since I have been in this place. I share his view of the tourism industry in Wales: it is a success story of which we should be justly proud. It is important that the case is made to the Treasury, but I stress that the tourism industry in my constituency and in that of the hon. Gentleman is doing extremely well at present, regardless of any changes to VAT.

As the Minister well knows, many small businesses in Wales are highly dependent on the steel industry and will have been anxiously awaiting the outcome of today’s meeting in Mumbai. The terms of the package that his Government propose will be crucial to any potential deal, so will he confirm that they will do everything it takes to secure a successful future for our steel industry?

The hon. Lady is absolutely right to highlight the importance of the steel industry not just to direct employment but to the supply chains in both north and south Wales. I assure her that the Wales Office and the UK Government are doing everything in their power to ensure that the steel industry and its skilled supply chain are protected in the future.

Many of our small businesses will also be concerned about the EU referendum, not least those in the Welsh agricultural sector, which received some £350 million a year from the common agricultural policy. The Minister has previously confirmed that, in the event of a Brexit vote, there is absolutely no certainty that his Government would replace those EU funds, so does he agree that it is in the very best interests of Welsh farming and the broader Welsh economy that we vote to remain in the EU on 23 June?

The hon. Lady is absolutely right to highlight the importance of the agricultural industry to Wales. Almost 60,000 people are directly employed within the sector, and more than 95% of all Welsh agricultural exports go to the European Union, so I fully subscribe to her view that the Welsh agricultural sector will be protected if we vote to remain in the EU.


The labour market in Wales is going from strength to strength. Last week’s figures delivered a hat-trick of good news for the Welsh economy: employment is up to a new record high, unemployment is down to its lowest level since 2008, and the number of people on the claimant count continues to fall.

Do not the Minister’s figures show that the Government’s welfare reforms are working in Wales and helping employment for ordinary people?

My hon. Friend is absolutely right. I recently visited Cardiff with the Minister for Employment and it was truly inspiring to hear the team at the Cardiff jobcentre highlight how universal credit and the flexibility it offers is encouraging people back to work.

The Minister will have seen this week’s Treasury assessment of the impact of withdrawal from the European Union on the UK economy. Could he give us his view of the impact of withdrawal on the Welsh economy?

The right hon. Gentleman is well aware of my position on this issue. I believe quite passionately that the Welsh economy is stronger for being part of the European Union. Whether for our manufacturing industry, our agriculture industry or our small businesses, I think the stability and certainty of being part of the European Union are good for Wales.

The unemployment level in Cardiff North is at a record low of 1.7%. Does the Minister agree that to support this trend and keep unemployment down, the new Welsh Government have to deliver on infrastructure promises such as the M4 relief road and the south Wales Metro, towards which this Government have given hundreds of millions of pounds?

My hon. Friend has been a great champion for the capital city of Wales since he was elected to this place. The £500 million contribution of the UK Government to the city deal in Cardiff will be essential for employment, growth and the continued success of Cardiff, but we need to keep up the pressure. The question marks over the M4 relief road are a barrier to growth in south Wales, and my hon. Friend is absolutely right to raise his concerns about those delays. [Interruption.]

Order. A great many people in Wales will be attending to our proceedings, and I must also inform the House that today we are visited by the eminent figure Cardinal Charles Bo from Rangoon in Burma. We want to impress him not only with the quality of our interrogation but with the decency of our behaviour, so a little less noise would be helpful.


I was delighted to visit S4C last week to see at first hand the exciting developments at the channel, including the launch of its HD service in time for the European championship. I am sure we all wish Chris Coleman and the boys well.

What assurances can the Secretary of State give us that the UK Government’s review of S4C will not be compromised, as it will be conducted after the BBC’s charter review? Can he confirm that all options will be on the table, including securing an independent financial stream for S4C funded from revenues raised for public service broadcasting, and from direct Government support?

The hon. Gentleman will recognise that a fundamental principle is operational and editorial independence. The BBC White Paper offers protection and support for S4C, but, of course, there is a review ongoing that will look at all these matters, such as governance and financing, in order to secure a long-term future for the channel. [Interruption.]

S4C is crucial to Wales, and particularly to the Welsh language. Does my right hon. Friend the Secretary of State agree that the Welsh language is too often seen as the secondary language in Wales? It is not a secondary language; it is at least equal first.

This Government have a strong record of supporting S4C, and previous Conservative Governments have a strong record of establishing S4C, introducing the Welsh Language Act 1993 and turning around the decline in the Welsh language that we saw previously. We should be rightly proud of the language of our culture and our heritage—a true Conservative policy.

EU Membership

At the February European Council, the Government negotiated a new settlement, giving the United Kingdom a special status in a reformed European Union. As I said in my speech in Swansea last week, I believe that Wales and the UK will be stronger, safer and better off remaining in a reformed European Union.

Eighty per cent. of Welsh farmers depend on common agricultural policy payments from the European Union, and the vast majority export their goods to the European Union. Given that Wales receives £245 million more from the European Union than it puts in, what assurances can the Secretary of State give us that the loss to those farmers will be plugged by the UK Government in the event of Brexit?

The Welsh economy is showing some spectacular employment figures at the moment, with more people in work than ever before, the claimant count falling and an unemployment rate well below the UK average. This economic success is based on a stable economic policy, and all the independent forecasts from the OECD, the IMF, the Governor of the Bank of England and my right hon. Friend the Chancellor show that there would be a negative impact should we leave the single European market.

EU programmes such as Erasmus bring enormous benefits to young people in Wales, broadening their experience and strengthening their employability. Does the Secretary of State agree that ensuring Welsh students can continue to benefit from such programmes is just one of the many good reasons to vote remain?

I would like to advise the House and the hon. Gentleman that the Erasmus programme was developed by a Port Talbot man some years ago. It has provided fantastic opportunities for students across Europe to share best practice and broaden the base of their knowledge. Of course, the European Investment Bank has also invested hugely in higher education and the new campus at Swansea University, worth more than £450 million, has benefited from such diversification.

The Secretary of State will surely have seen yesterday’s Cardiff University report showing that Britain pays nearly £10 billion a year net to be part of the European Union. Does he agree that, under the Barnett formula, that money could leave Wales £500 million better off if we vote leave on 23 June?

My hon. Friend is of course failing to recognise that independent forecasters—whether the IMF, the OECD or the Governor of the Bank of England—have talked about the negative impact Brexit would have on the Welsh economy. A £2 billion reduction in the scale of the economy, costing 24,000 jobs, is a step we cannot afford to take.

Is it the case that Wales Office special advisers recently had a meeting with representatives of the Britain Stronger in Europe campaign, and if so, what did they discuss?

We of course discuss a range of issues that affect the Welsh economy. A Brexit vote would of course affect the Welsh economy in a negative way, with a £2 billion cost to the Welsh economy, costing 24,000 jobs. As we speak, we are seeing some spectacular employment data, but they are based on strong economic foundations and access to 500 million customers across Europe.

11. Given that Wales is already underfunded by the Barnett formula and the UK Government, what detailed guarantees can the Secretary of State give that the £245 million actually reaches Wales? (905023)

I do not necessarily recognise the basis of the question. The hon. Lady forgets the historic funding floor, which my right hon. Friend the Chancellor introduced at 115%. That demonstrates the strength of the commitment that this Government are showing to Wales.

Will the Secretary of State join me in welcoming the fact that Toyota has made it clear it will continue to manufacture in the United Kingdom, including at its engine plant in Wales, regardless of whether the British people vote to leave the EU on 23 June?

I certainly recognise the comments made by Toyota. It has specifically said that

“British membership of the EU is best for our operations and their long term competitiveness.”

Of course, it is not only Toyota; 150 component industries in the automotive sector depend on companies such as Toyota and Ford which all want us to remain part of the single European market.

Order. The right hon. Gentleman is a bit ahead of himself. There is a process to be followed. He can wait his turn.