Tuesday 25 October 2016
[Mr Adrian Bailey in the Chair]
Leaving the EU: Wales
I beg to move,
That this House has considered the effect on funding for Wales of the UK leaving the EU.
It is a pleasure to serve under your chairmanship, Mr Bailey. The debate is technically about budget decisions but, as we all know, making such decisions is not simply about working out how one reallocates figures. At its fundamental essence, the debate is about the people and the constituencies we represent, and their future, and that is where I would like to begin.
At the core of my constituency is the town of Port Talbot, which is home to more than 37,000 people. Since 1902, the beating heart of Port Talbot has been its steelworks—the largest and, I confidently say, the best in the UK, producing a third of the UK’s steel. Many people do not give a second thought to steel, but when they are driving their cars, having a can of baked beans or putting in a load of washing there is a decent chance they are using a piece of steel produced in Port Talbot. Everyone here today knows that the future existence of the works, as we call them, currently hangs in the balance.
The story of Port Talbot over the past 50 years is the reason for the debate. It is a story shared by many towns and cities across the country, from Stoke-on-Trent and its potteries to Dagenham and its Ford factory or Merthyr and its coal mines. Like them, Port Talbot was truly built, and grew, on the foundation of one industry and one company. Half a century ago, the works employed nearly 20,000 people out of a population of 50,000. Every other shop and business in the town depended on the custom of those workers and did a thriving trade, especially on Thursdays, which was payday. Times were good; the town centre was bustling and huge crowds would enjoy their summer weekends on the sandy beaches of Aberavon. As the plant churned out steel faster and better than anywhere else, we also produced extraordinary talent, such as Richard Burton and Sir Anthony Hopkins and, more recently, Rob Brydon and Michael Sheen.
The decline of the steel industry in the UK over the past 50 years can be seen in the standard of living in Port Talbot. The enormous lay-off of 6,000 people in 1980 led to huge numbers signing on to benefits. Today, the works employs just 4,000 people. They are in highly coveted jobs that still provide a decent wage, but nothing has replaced the jobs that were lost or the energy and pride that the industry gave Port Talbot. Icons of our community, such as the Plaza cinema, are boarded up, and smaller shops that depended heavily on steelworkers struggle on. Unemployment is 10% higher than in the rest of the UK, with one in four people relying on benefits to make ends meet. The level of education in our community is proportionally much lower than in the rest of the country. The people of Port Talbot are as warm, tough, hard-working and talented as anyone we could ever wish to meet, but many are losing hope that their lives will give them the kind of security that we all want. They simply do not see that there are opportunities for them. They know that we cannot recreate the jobs and economy of half a century ago, but they are frustrated that there are not the jobs and the economy for the next half century in which they can play a role.
I have told the story of Port Talbot today because it is a town that, despite recent improvements, is in long-term crisis. The future of my constituents hangs in the balance, and unless we take concerted action their prospects will continue rapidly to decline. That is why the debate is so important. As much as iron needs oxygen to be transformed into steel, our area, and the whole of Wales, needs investment to transform its future into one where people have security and opportunity.
And we now come to the crux of the matter. For years, the EU, in various guises, has contributed an enormous amount of investment in Wales, working closely with the Labour Welsh Government. Due to the consequences of the history I have described, south Wales qualified for the highest level of European structural and regeneration funding. All in all, EU structural funds and the common agricultural policy deliver well over half a billion pounds a year, in addition to money from other key funding areas such as higher education, culture and urban development. Working with Government, charities and businesses, the investment has made an enormous difference.
European funding also provides leverage for getting matching funds from the UK and Welsh Governments, which makes it very valuable to our communities.
My hon. Friend makes a valid point. There is a clear multiplier effect with EU funding, because it provides the confidence that opens the door to all sorts of other sources and channels of investment. Although we are giving the raw data here, the multiplier effect is absolutely enormous.
Infrastructure built with EU funding is creating jobs and easier access for people and business, including through the Harbour Way road network, the new Port Talbot Parkway station and our town centre. That investment has helped to develop skills, funding 4,885 apprenticeships and 1,360 traineeships for young people, as well as programmes that have led to local people gaining 14,860 qualifications, which has prepared them for work. It has also been a catalyst for business, funding the Baglan energy park, upgrading our commercial centres and being a major investor in the SPECIFIC innovation centre. It has backed world-class industrial excellence in south Wales by being a principal backer of Swansea University’s bay campus, and has contributed to programmes—from historic gardens and activity centres to toddler play areas and community sports facilities— that have improved our family and community life, ensuring that one day Wales will once again dominate the Six Nations.
Does my hon. Friend agree that 16,000 farmers across Wales gain direct subsidies from the CAP? Without that funding, more than 90% of them would go bust. Will he join me in calling on the UK Government to commit to ensuing that the subsidies continue for all farmers?
I agree absolutely that the role the CAP has played in the agricultural industry in Wales and the UK, and indeed across the entire European Union, has been critical and has supported thousands of farmers and their livelihoods. I will talk a little later about how we need to see a clear commitment to long-term funding to replace every aspect of the European funding on a like-for-like basis, including the CAP.
I congratulate the hon. Gentleman on bringing this important debate to Westminster Hall. Does he agree that European funding has been used to great advantage, including in Northern Ireland, but that Brexit signals not an end to the funding of worthy schemes but rather a new way of distribution and the opportunity to ensure that the schemes that are funded are necessary and helpful to local communities? With that in mind, the Government have committed to helping to ensure that the farming grants and community schemes are retained within this Parliament, until 2020. Does the hon. Gentleman not accept that with Brexit, we have a new way of doing things?
There is an old phrase, “Never let a crisis go to waste”. Brexit has caused a crisis, and that opens up massive questions about where we go now as a country. A major part of that, of course, is what will happen in Northern Ireland. The Government have made commitments up to 2020, but 2020 is within the blink of an eye. We need a far more long-term plan and a strategy that goes way beyond that.
I congratulate the hon. Gentleman on obtaining the debate. Is it not the case that Welsh steel and other industries will benefit from Brexit with respect to the procurement rules? Indigenous businesses in the construction industry and so on may prosper.
The way in which the Government have interpreted EU procurement rules has been completely wrong-headed for many years. There are ways to build in local content clauses in procurement, to ensure that the use of British steel in British projects is maximised. Unfortunately, the Government, because of their laissez-faire attitude, have hidden behind EU state aid rules. As a result, they have failed to use those rules in a way that could have benefited the steel industry, which is one of the industry’s five major asks. We have seen some improvements, but we need a proper industrial strategy in this country that clearly sets out how procurement can be used to promote British industry.
I will give way once more, to my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), but then I must make some progress.
Does my hon. Friend agree that the real worry for steel outside the European Union is that the Government will simply put no trade defence mechanism in place?
That is a major concern. The British Government have been the ringleader of a set of countries trying to roll out the red carpet for China, to allow it to dump untold amounts of its unfairly subsidised steel on the EU and British markets. As we know, the Secretary of State for International Trade has said that he has no plans to support the steel industry with trade defence instruments. When combined with all the other uncertainty that Brexit has caused, that is a major concern for our industry.
Workways+ is a project that helps long-term unemployed people and people with complex needs to develop the skills and qualifications that will help them into paid positions. The Cynnydd Project works to help young people avoid the unemployment trap. BEACON is helping Swansea University to work with industry to pioneer renewable chemicals, fuels and other materials, bringing another key future industry to the area. Those are just three EU-funded projects already under way, and many others are in the pipeline. Each one makes the lives of our constituents better.
In reality, the situation in Port Talbot, Aberavon and across Wales calls for far more investment to accelerate our recovery from decades of under-investment in the face of the impact of globalisation and deindustrialisation. Yet all that funding and all that progress is at risk after the referendum vote to leave the European Union. While the leave campaign made promises that all EU funding would continue to flow to Wales at the same levels, I think we know that those promises are about as valid as what could be printed on the side of a bus.
My hon. Friend will be aware that the Chancellor of the Exchequer has made that promise, but he has also said that he wants to guarantee funding for projects that meet UK priorities. Does that not imply that the Government intend to use this opportunity to insist that money is spent on their priorities, rather than those agreed with partners and the European Union?
I thank my hon. Friend. One of the huge risks to Wales of Brexit is that we will see a power grab by the Westminster Government. We will start to see the Westminster Government using the opportunity to claw back funding. We know that the £350 million was a lie. The figure was far more like £190 million, but where will that money go? Will it just disappear into the black hole of the Treasury in Westminster, never to be seen again in Wales? That is a huge risk for Wales in light of Brexit.
Now that all the bluff and bluster of the referendum campaign is behind us, it is all about what the Prime Minister’s Government actually do. So far on that score, the signs have not been positive. Despite repeated requests from the First Minister for a commitment to full continued funding, so far the Government have pledged only to continue funding agreed EU-funded projects until 2020.
That is not as powerful a pledge as it may first seem, for a number of reasons. First, it is for only one additional year after we are scheduled to leave the European Union in March 2019. The Government have made zero assurances that funding will be retained after 2020. Secondly, the Chancellor made clear in his statement on 13 August that the pledge applied only to projects signed before this year’s autumn statement. Apparently, any projects signed after that will be assessed by a method that is yet to be revealed to us—a mystery method. Funding is therefore not guaranteed for multi-year projects signed after next month, even if they are in the current EU 2014 to 2020 funding round.
I congratulate my hon. Friend on securing this debate. He is making an excellent case. Does he agree that uncertainty is the enemy of business? The Government have made no commitment on funding post-2020, and that could have devastating consequences for attracting investment to Wales.
I absolutely agree. We have seen in all the feedback since the Brexit vote that businesses are in a holding pattern. Many companies, both outside and within the UK and the EU, are waiting to see how things develop in the wake of Brexit. We have no idea what the Government’s top-level negotiating position will be in terms of hard or soft Brexit, and we have no idea what the plan is on the budgetary side in terms of replacing EU funding. That double whammy causes massive uncertainty for business. It relates back to the point on the multiplier effect. EU funding opens the door for other businesses coming in, and that uncertainty is the enemy of business, as my hon. Friend says.
I call Byron Davies.
Almost, Mr Bailey. [Laughter.]
I thank the hon. Gentleman for securing this debate. On the multiplier effect—I know why he has not touched on this today—the Wales Audit Office produced the Wales transport projects report in 2010-11 about how the Welsh Government had spent EU funds. He mentioned half a billion pounds, but there was a huge concern that there had been wasted opportunity to the tune of £1 billion.
I call Stephen Kinnock. He is definitely Stephen Kinnock.
I am, Mr Bailey.
I thank the hon. Gentleman for his intervention. My sense is that we are moving firmly off topic with that intervention, but delivering value for taxpayers’ money is a top priority for all Governments, including the Welsh Assembly Government. In light of the unemployment figures coming out of Wales at the moment, which are certainly going in the right direction, along with a range of other economic indicators, I would argue that the Welsh Assembly Government are definitely providing value for money for Welsh taxpayers.
Does my hon. Friend agree that Wales faces a triple whammy? First, we start from a position of generating only 70% of average UK GDP per head. That is why, secondly, we get multimillion-pound investment that we are about to lose. Thirdly, given the advent of tariffs that we are so dependent on and the inward investment that has just been attracted, we will end up in a situation where we lose trade and grants and start from a weak position that will be catastrophic for the people of Wales.
I agree absolutely with my hon. Friend. In many ways, this debate is about resilience. The resilience of the Welsh economy in relative terms is weaker compared with that of many other parts of the United Kingdom. With the impact of Brexit, the loss of funding and inflation—the weakening of the pound will send inflation up, and we know that the poorest are always hardest hit by inflation—his reference to the triple whammy is an apt and correct way of describing what is happening.
The third reason why the pledge is not as powerful as it appears is that the Government have not yet agreed with other EU Governments that UK-based applications for EU funding will be in any way affected. The EU funding programmes for 2014 to 2020 are well under way—they have either already been launched or are in the advanced stage of planning. I fear that the Government’s antagonistic behaviour towards the EU and their lack of clarity over future funding will harm the prospects of Welsh applications.
Fourthly, the Government appear to have no plan for how the underwriting of funding will work at a small business or charity level, which is so important. Fifthly, even if Westminster does replace EU funding, there are serious considerations as to how that will be done and calculated. The Government will likely be tempted simply to increase the funds available on the basis of the Barnett formula. However, as the Welsh Labour Government have made abundantly clear, the Barnett formula has disadvantaged Wales for years, and we simply cannot afford or accept such chronic under-investment any longer.
At a minimum, the chosen approach to replacing EU funds must be ring-fenced—it must be in addition to the block grant. Beyond that, a revision of the Barnett formula is long overdue. In short, there is no clarity and no confidence for the people of Wales. The Government must urgently make it clear that they will underwrite all project funds agreed in the 2014 to 2020 mechanism. They must make it clear that they will maintain EU levels of annual funding to Wales for at least a decade post-Brexit, and they must set out how the replacement of funds will work in practice for the Welsh Government and local organisations in the spectrum of Brexit scenarios.
Also, the Government must commit to including Welsh voices in the negotiations, especially with regard to other themed EU funding programmes such as the Erasmus student exchange programme or the Horizon 2020 higher education innovation partnership. Of particular concern to south Wales is the future of the UK relationship with the European Investment Bank, whose loans have helped to build the Swansea bay campus; improved the Welsh Water and Severn Trent network in 2015; and upgraded the Great Western mainline. The last loan was worth £430 million. Such institutions matter greatly to us. The head of the bank, Werner Hoyer, has already publicly made it clear that current levels of lending to the UK cannot be maintained after Brexit. Welsh voices must be heard in the negotiations as our future so critically depends on those relationships with the continent. The Government must make clear whether they will seek associate status to the programmes and institutions. They must bring clarity quickly as the futures of people, communities and organisations across Wales hang in the balance.
Although it looks likely that the entirety of the UK will suffer economically in the coming years as a result of Brexit, it is in many parts of Wales where it will hit hardest, as our economic resilience is relatively low. That does not take into consideration the impact of Brexit on the steel industry, which would be hugely endangered if EU tariffs are imposed on it. If investment in Wales is not maintained, vital projects will go under, followed by businesses. People will lose jobs, and unemployment and welfare bills will shoot up. Communities will fracture. Port Talbot and its people have been through enough. That does not have to be our future.
In Port Talbot, Aberavon and across south Wales we are seeing the enormous potential to accelerate what we are doing. There is innovation. One company, SPECIFIC, has developed a steel-based paint that acts as a solar cell to generate power. It could turn every building in the country into a power station—except perhaps for Boris’s Foreign Office. The Swansea bay tidal lagoon is a world-leading project to capture wave energy. The Swansea bay city region proposal, Internet Coast, could transform south Wales into one of the best digitally connected places in the world. All that is being done without any sign of a proper industrial strategy. Imagine if we actually had one.
Alongside the Government’s Brexit negotiations, they must also present a modern industrial strategy, backing skill development, innovation, modern manufacturing, sustainability and the digital revolution. The strategy must focus on regions such as south Wales, where we have so much underdeveloped talent. When the Welsh Secretary declares that we should not simply replace EU money with Westminster money because we have to address underlying issues, we have to laugh. First, of course we need to address the underlying issues. Unlike him, I am unwilling to settle for basic skills. I am ambitious to ensure my constituents have the high skills needed for new industry to flourish in south Wales. Secondly, it seems blindingly obvious that financial support is a precondition for building such industries and developing skills. Finally, it was very nice of the Welsh Secretary to say that publicly, but it is his Government’s responsibility to come up with the solution, so he may wish to get on with it.
The Government must recognise with humility and sobriety rather than the gung-ho hubris they have shown so far that, if Wales does not continue to receive funding for crucial programmes, communities will be devastated for generations, with everything that that means for people’s lives. It will result in a lack of security, a lack of dignity and a lack of hope. I therefore hope that the Government will reassure the people of Wales quickly that they will ensure the floor is not ripped out from underneath them.
Parallel to the UK’s membership of the EU has been the rise of one of the most successful businesses in the world: Airbus. One of the real threats to business is the arrangement concerning communication between the multinational aspects of that business. It is essential that the Government work closely with business to preserve a premier economic powerhouse such as Airbus.
I agree absolutely with my hon. Friend. There is no better example than Airbus, which is an exemplar of a cross-country, cross-industry collaboration. Airbus has worked as a consortium that has developed through its supply chains a world market-leading capability. When people say the European Union is a sclerotic project that does not work anymore, there is one answer to that question: Airbus. It is a fantastic example, as my hon. Friend has described. We must now see a commitment from the Government to continue to support such projects moving forward. It will be more difficult in the wake of Brexit, but it is still possible. It is up to the Government to show leadership to ensure that that happens.
We need a comprehensive funding and industrial strategy that does not say our best days were in the coal and steel boom years of the 1960s. We need a strategy that says our best days are still ahead of us.
Order. There is great pressure on time. Nine Members indicated in advance that they wished to speak in this debate and I have had another three since. I want to call the Front-Bench speakers at around 10.30 am, so we will start with a time limit of four minutes, which I might reduce as time goes on. I also ask that Members recognise it will be necessary for speakers to take no interventions. If Members persist in intervening, they may lose their priority on the speakers list.
Also, the clock controlling the time limits is working here at the desk, but not up there on the wall, so the Clerk will hit the bell one minute prior to the end of the time limit. The bell is not a fire alarm; you do not need to vacate the building. It is simply an indication to the speaker.
I am delighted, as the real Byron Davies, to have the opportunity to contribute to this debate, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing this debate. I am pleased that we are all here contributing to what should be a wider and national conversation about what happens to Wales post-Brexit. I am sure that we here today recognise the importance of ensuring Wales gets the best possible deal from Brexit. The UK Treasury has of course guaranteed European structural and investment funds in Wales for projects signed before the UK leaves the EU. The Treasury has also guaranteed funding received directly from the European Commission: for example, the universities participating in Horizon 2020. The guarantee also includes pillar 1 of the common agricultural policy, so the agricultural sector in Wales will receive the same level of funding it was expecting under the 2014-2020 programme. The access of the UK, and consequently Wales, to the EU funding programmes will be subject to negotiations during the withdrawal process. Even once outside the EU, it is possible that the UK will receive funding from it.
Although it is essential that we support the Secretary of State for Wales and the Minister, who are ensuring we have funds for important infrastructure projects, as part of this process we must scrutinise how the money is spent. I must admit that I was shocked that Carwyn Jones did not have a plan for Wales after Brexit and failed to lobby the British Government prior to the referendum. Apparently, it was too political. That means he did not obtain any guarantees about having funding matched. That is staggering, given the importance of the current funding to Wales. The fact that the First Minister, of all people, did not think of that or secure it is beyond me. It could be argued, however, that it is part of a deeper undercurrent of thoughtlessness and evidence of the Welsh Government’s blasé attitude to the spending of public money. Unfortunately, Wales’ lack of scrutiny is part of the problem. It is due to myriad factors, including a lack of a competitive national media, which leaves the public with an information deficit, and the processes in the Assembly, which mean that many parts of Welsh policy and spending decisions have received a woeful lack of scrutiny. It is no longer good enough to say that the Assembly will get there or that things will change. It has been two decades, and in this place and the Assembly we must seriously start to look at and tackle the problems that the Assembly and Wales face post Brexit.
Wales has received three rounds of EU funding worth almost £4 billion in less than two decades. In the heady early days of devolution, the then First Minister, Rhodri Morgan, said that the first round of funding was a once-in-a-lifetime opportunity to shape a new Wales, shake off the shackles and take advantage of the myriad opportunities and the booming years of the early 2000s to create a hi-tech, trading nation that is proud of its industrial past. We were told that it would grow to become a confident, outward-looking nation once again. Two decades on, we are on our third round of funding.
The Welsh Government’s wasted spending includes a £7.5 million Government procurement card for luxury hotels, iTunes, Victoria’s Secret underwear, yacht wear and other vital uses of taxpayers’ funds for Welsh Government officials. Some £1.6 million was spent on a martial arts centre that never opened in north Wales. Tens of millions of pounds in business loans went from the former economy Minister to firms that went bankrupt, despite warnings about their viability. Some £1.8 million was spent on chauffeur-driven cars; £20 million was spent on properties on the M4 relief road, without a spade in the ground; £3.4 million was spent on a heritage centre that closed within three years; and hundreds of millions of pounds have been spent on major road projects that a 2010 Wales Audit Office report said cost 61% more than estimated and hampered wider transport objectives. My point is that, although it is of fundamental importance that we debate and discuss the future of funding for Wales and support the Wales Office in achieving that—
Order. I call Jonathan Edwards.
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing this debate. I agree with much of what he said in his excellent introduction.
As a democrat, I fully accept the referendum result, but that does not mean that the ideological Brexiteers in charge of Government policy at the moment can act with impunity. There is an ongoing fight for the type of Brexit we will have, and my priority is to campaign for the least damaging option for the Welsh economy and for Welsh funding and finances. That is why Plaid Cymru and I have been united in our campaign to maintain membership of the single market and the customs union from the very beginning. That would be by far the least damaging option for the Welsh economy, first, because there are wide-reaching benefits to being a single market and customs union member for trade in Wales; and, secondly, because it will enable Wales to qualify for certain cross-border and transnational programmes for research and innovation funding, which the hon. Gentleman mentioned in his opening remarks.
Wales is more exposed to a hard Brexit because we are an exporting economy. We have a trade surplus of £5 billion per annum, whereas the UK has a massive trade deficit. Wales’ great trade figures are aided by our membership of the single market—the world’s largest trading bloc—and the 53 international trade deals that we have by being a part of the customs union. The Centre for Economics and Business Research found that more than 4 million jobs directly and indirectly depend on exports to the EU. That is approximately 200,000 jobs in Wales—about 14% of our workforce. That should make our eyes water.
The hon. Gentleman talked in great detail about many of the different types of funding streams that we qualify for due to our membership of the European Union. The UK is the most unequal member of the European Union, in terms of the geographical gap in wealth. The richest region in northern Europe is London and the south-east. Nine of the poorest regions in northern Europe are also in the UK. Tragically, they include the communities that I and many colleagues here serve.
In contrast, the UK has no regional policy for moving wealth from richer to poorer parts of the state. The EU has a very successful regional strategy, and Wales has qualified for three rounds of the highest form of structural funding. Of all the funding streams that we receive from the European Union, the loss of that structural funding—we probably qualify for a fourth round, given the state of the Welsh economy at the moment—would be the biggest hit for us. We could also lose very cheap finance from the European Investment Bank, which has helped to deliver the excellent new campus at Swansea University, which the hon. Gentleman mentioned.
Wales has benefited from many other EU funding opportunities, including for agriculture, fishing and rural areas, education, training, and research and innovation. The education, training and research schemes will still be available to us if we remain a member of the single market and the customs union, but the huge support our rural economy receives in common agricultural policy payments will not. I believe that we received about €3 billion to support our rural economy between 2007 and 2013. Our economy depends on those streams. Even under my preferred deal, we would not qualify for CAP payments. Norway gets around that by paying the CAP payments and tariffs that it would receive if it were in receipt of CAP. Unless we have those guarantees from the UK Government, I fear dark days lie ahead for the rural economy and the Welsh economy as a whole. Diolch yn fawr iawn.
Britain has been terrorised by clowns, and we now know that their ringleader is a peroxide blonde with a German name and a red nose masquerading as the Foreign Secretary. He promised a mixture of lower costs, market access and lower migration, but we are obviously going to get higher costs, which is why the deficit reduction plan has been torn up, no market access—it sounds like it will be a hard Brexit—and increasing migration, as ever. Boris said that we could have our EU cake and eat it, but Donald Tusk has said that all we will get is salt and vinegar.
The referendum took place immediately after the Welsh Assembly elections, so the Welsh people did not have time to contemplate all the ramifications of Brexit on their grants, and 16-year-olds and people living abroad were not allowed to vote. It is now coming home to us that we face the triple whammy that I mentioned earlier. Wales starts from a position of having something like 70% of UK GDP per head. As the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said, 200,000 people who rely on EU trade—25,000 of them are in Swansea bay—face tariffs.
There is enormous uncertainty. We hear today that the promised electrification to Swansea may not proceed, and we do not know what is happening about the lagoon or the Swansea city deal. Tariffs are going up, and companies such as Nissan want compensation. It is like someone going to a shop and buying a mobile phone that they are told has a colour picture, but when they get home they find it is black and white. In other words, if the promises that were made were not a reasonable representation of the future—the falling pound, the loss of investment and the loss of jobs—the British and Welsh people deserve a referendum on the exit package before we trigger article 50. Article 50 should not be triggered until something like next October.
Does the hon. Gentleman agree that the fall in the pound has been excellent for exporters?
I assume that the fall in the pound to a 30-year low was designed to make Polish workers better off when moving abroad. The weak pound is a nightmare that will generate huge inflation in Britain. People will not be able to go on holiday, except on the £14 visa. If the hon. Gentleman thinks that, he should have said before the referendum, “We are fighting for a lower pound and less investment, and we are ripping up our deficit strategy.” In fact, the hon. Member for Cardiff North (Craig Williams), who has now left the Chamber, seems to think that we should have £1 billion less, because we are wasting our money—so much for representing Wales. Last week when I asked the Minister in Question Time about the “body blow” of Brexit, he said simply that Swansea had voted for it, as if to say, “Well, it’s their own fault—like it or lump it.”
In reality, we need support where it is most necessary, and we need promises from the Minister to ensure that funding is sustained and that we still have the city deal, the lagoon and the electrification. We need a helping hand to succeed in difficult days. If possible, we should also have another crack at this with an exit package referendum, so that people can have a say on what they get and whether they want to go ahead. They have said that they want to go ahead in principle, but in practice is a hard Brexit what they wanted? No.
It is a pleasure to serve under your chairmanship, Mr Bailey, and I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this important debate.
In my home town of Blaenavon, in the northernmost part of my constituency, are the Blaenavon ironworks, with their iconic balance arch, which are a very good example of a successful regeneration project. The houses in the ironworks, including No. 2 Stack Square, where my father was born, are each set out in the style of a different era, giving a flavour of the industrial heritage of the Eastern valley. The project has been a great success and my local authority, Torfaen, deserves great credit for it, but if someone walks out of the Blaenavon ironworks they will see outside the European flag, indicating the European structural funding drawn upon by such regeneration projects.
I totally respect the result of the referendum of 23 June, but it does not mean that the leave campaign can escape from the promises that were made in the weeks and months leading up to it. What promises were made? I have with me the letter written on 14 June, released under the headline, “Leave Ministers commit to maintain EU funding”. What did they say exactly? The letter states:
“After protecting those now in receipt of EU funding, we will still have billions more to spend on our priorities. We propose that at least £5.5 billion of that be spent on the NHS by 2020, giving it a much-needed £100 million per week cash transfusion, and to use £1.7 billion to abolish VAT on household energy bills.”
That was a specific pledge made nine days before the referendum, not for some slipping date in the future, but by a specific date—precise figures, specific pledges.
Furthermore, there is no point in the Prime Minister trying to distance herself from the promises made. I know she virtually went into hibernation for the course of the referendum campaign, but none the less, of the signatories to that letter, one is now the International Development Secretary, another is the Transport Secretary and a third is the Foreign Secretary. They are now in government, and they should honour the pledges that they made. Unfortunately, however, as my hon. Friend the Member for Caerphilly (Wayne David) alluded to in his intervention, it already looks as if those promises are slipping.
We know about the pledge on projects started before the autumn statement, but we have no idea about what will happen after that, as my hon. Friend the Member for Aberavon said. Even worse, the Secretary of State for Exiting the European Union said at Question Time last Thursday—I listened very carefully:
“Most EU funds will be guaranteed post-departure by the Treasury, as we said in August.”—[Official Report, 20 October 2016; Vol. 615, c. 950.]
“Most” is simply not good enough—the pledge made on 14 June should be honoured. My constituents deserve not only a continuation of EU funding, but the extra funds promised as well. Any failure to deliver will be a gross betrayal.
Thank you, Mr Bailey, for the opportunity to say a few words in this important debate. I thank the hon. Member for Aberavon (Stephen Kinnock) for speaking for the heart of industrial south Wales on this important issue. If I can do half the job speaking for rural Wales that he did for that area, I will be doing a good thing, because it was an excellent speech.
Farming is crucial to our economy, directly employing 58,000 people and with an output of produce worth about £1.5 billion. Some 80% of Wales’s land area is farmed, so there is no doubt that farming contributes substantially to the landscape, which is a vital element of our tourism, and—this is key—to producing and selling food tariff-free in the EU. Any possible funding loss to our farmers, therefore, will inevitably have a wider impact on Wales’s economy. A survey taken before the vote on 23 June revealed that two out of five businesses in the countryside depend on farms, and each of those farms contributes £100,000 to the local rural economy.
We note that funding under pillar one of the common agricultural policy will be upheld until 2020 as part of a transitional arrangement, and there was thanks from the farming community for that, but we need further clarification on the situation post-2020. We need clarification on structural and investment fund projects and agri-environmental schemes, and we need more detail on environmental stewardship policies. Despite the red tape and many criticisms over the years, the CAP did and does ensure that family farms survive. Post-Brexit, there is a huge challenge that is fundamental to the whole rural economy, and the Department for Environment, Food and Rural Affairs, working with the Assembly Government, needs to have a holistic rural strategy that combines food, farming and biodiversity. To date, such a strategy has been lacking. We need an early and clear communication, post-Brexit vote, on the subsidy regime and the position of seasonal foreign labour.
The maintenance of a subsidy regime to 2020 was welcomed, but the sector has been encouraged to diversify and invest for its survival. Investment, however, not least in negotiation with banks, requires certainty over cash flows and a baseline on which to continue operations. In that context, a three-year window until 2020 for the farmers whom I represent is completely inadequate. Between 2014 and 2016, net farm incomes in Wales declined by about 25% to some £13,000 a year. There is also the impact on secondary businesses in the rural economy. EU support amounted to £250 million a year, together with an investment programme of some £500 million for 2014 to 2020. Such funding is vital.
The UK Government have been giving conflicting messages. The Secretary of State for Environment, Food and Rural Affairs has implied that funding will continue, but her junior Minister, the hon. Member for Camborne and Redruth (George Eustice), said at the Royal Welsh show this year that the Government cannot guarantee that future agricultural support will be as generous as the current subsidy regime. That is completely unacceptable to the rural community that I represent and would have a dreadful effect on the capacity of family farms to function in the future. The farmers and businesses of rural Wales need clarity and answers from the Government, which so far have been woefully lacking.
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing the debate.
As matters stand, the implications of the UK leaving the EU will be seen in each town, city and village in Wales. Although we can be blasé about EU funding, and it is often not obvious, it has contributed enormously to each of our communities. In my constituency, agricultural funds have had a tremendously positive impact on all the farms. The common agricultural policy provides funds for more than 16,000 farms in Wales, and the European structural fund has also made a considerable contribution to various projects throughout Ogmore. Farmers throughout Wales benefit hugely from such funds, and in the same way, people in other industries have benefited from other such projects and funding, as my hon. Friend said so eloquently.
According to the Welsh Government, EU funding and projects have supported more than 200,000 people to gain qualifications, helped more than 70,000 people into work and created close to 40,000 jobs. The effect on funding for Wales of the UK leaving the EU should not be understated, and unless we plan accordingly, that funding will be sorely missed.
Uncertainty clouds the future of every aspect of EU funding in Wales. As I mentioned, the EU makes a fantastic contribution to our farming industry, but although the CAP pillar one scheme will be upheld until 2020, we do not know any detail of the arrangements with which the UK will replace it. Our farmers are therefore left in the dark and cannot feasibly plan for the future—they have no idea what funding they will receive in only four years’ time.
Those set to benefit from the proposed south Wales metro have also been left in the dark, as that project was almost certainly going to receive EU funding, without which it has become far more ambitious and possibly harder to achieve.
In August, the Chancellor offered what he referred to as a funding guarantee, which in truth is nothing of the sort. According to First Minister Carwyn Jones, the funding that the Chancellor referred to covers only about half of Wales’s regional funding. The Treasury’s guarantee to back EU-funded projects signed before this year’s autumn statement should be applauded, but there remains uncertainty for many other projects. Uncertainty benefits no one, and I hope that the Government will recognise that and clarify their position. The Welsh Government have worked well to ensure that Wales is on the way up, and I am sure that we all hope things will stay that way.
The future of Wales is in the hands of those who are managing our departure from the EU, and I fear that they do not understand the scale of the EU’s contribution to Wales. If agriculture funding is not replaced pound for pound, farms will close and jobs will be lost. If the Government do not replace the funding that would have come from the European social fund, there will be a skills shortage. I am sure all Members can agree about the success of the Jobs Growth Wales scheme, which is partly funded by the EU and has been led by the Welsh Government for several years. Likewise, if funding from the European maritime and fisheries fund is not replaced, those industries will suffer. The effect of the UK leaving the EU on funding for Wales could spell the end of some of the greatest projects in Wales and Welsh prosperity, and I hope that the Government will work to ensure that that is not the case.
It is a pleasure to serve under your chairmanship, Mr Bailey. Like the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) and my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), I am a democrat and accept the result of the referendum. Indeed, my constituency and Wales mirror the United Kingdom in that roughly 52% voted to leave and 48% voted to remain. We are talking about the future, and although the Prime Minister has said that she has a mandate from the 52%, we must talk for 100% of the residents of Wales and 100% of our constituents. It is important to put that on the record.
I was shocked, as many people were, that the previous Prime Minister, David Cameron, did not have a contingency plan. There was a simple question—leave or remain—and I could not believe that the Government did not cover both those bases, and particularly a leave outcome. We are in a difficult position. The captain—the then Prime Minister—has abandoned ship and left us rudderless and clueless about how to move forward.
I am a strong advocate of the European Union. Indeed, I am a strong advocate of unions—the EU and the Union of Wales, Scotland, England and Northern Ireland. I do not like the word “Brexit”, because it excludes Northern Ireland. We must have a better, more positive word about the United Kingdom’s future outside the European Union.
I worked with the Minister on structural fund projects before he came to this place. He knows how important structural funds have been to the development of Ynys Môn and north-west Wales. It is wrong of Conservative Members to say that that was a waste of money. The social cohesion that those funds have brought to my area after decades of under-investment is a testament to the European vision and the vision of the Welsh Government, which worked with the UK Government and the European Union to develop those areas.
My constituency is the gateway to Wales. It contains the major port of Holyhead, which links Wales to the Irish Republic. The Dublin to Holyhead route has been called the new Dover to Calais route, yet because of our exit from the European Union, that link is now uncertain. We need to look at that, because it will impact hundreds of jobs in my constituency. I remember working with our then MEP—it just happens to be Glenys Kinnock, the mother of my hon. Friend the Member for Aberavon (Stephen Kinnock), who moved the motion—the Welsh Government Minister and the UK Government to get extra resources for that port. They understood the importance of linking Wales and the UK with the rest of Europe.
It is important that we have a vision for the future. Guaranteeing structural funds until 2020, as has already been committed to, is not good enough. We want a clear vision and a clear plan for the future. I want devolved Administrations, the farming unions and rural Wales to be part of that—I want them not on the fringes, but at the centre making decisions. Many of the issues that we are talking about are already devolved. I do not want them to be centralised here in the UK Parliament. I want devolved Administrations to have a direct voice in the future of Wales and the future of the United Kingdom.
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock), who spoke movingly about his constituency and his fears about our impending exit from the European Union.
I take issue with the hon. Member for Gower (Byron Davies), who said that Carwyn Jones did not have a contingency plan. I ask the hon. Gentleman to look at the Treasury’s recent evidence to the Public Accounts Committee, in which it said that it had no contingency plan because the referendum was not a general election and the Government’s official policy was to stay in the European Union. It therefore made no plans. How naive can it be?
Wales receives more EU funding than any other part of the UK. The Wales Governance Centre estimated in 2016 that Wales received a net £245 million from the European budget in 2014. That equates to £79 per person, yet Wales voted out, with 52.5% opting to leave. Like many others, I am at a loss to understand why the nation voted against the public interest. However, as a democrat, I accept the result. Unlike Members of some other parties in the House, I believe that we cannot continually have referendums until we get the answer we want from the people.
There is no future in debating our past; we should debate where we go from here. Let us begin by trusting the people of Wales. President Abraham Lincoln said:
“I am a firm believer in the people. If given the truth, they can be depended upon to meet any national crisis. The great point is to bring them the real facts”.
He went on to say “and beer.” As we know, we like some of that in Wales too. The UK Government here in London and the Welsh Assembly both have a role in ensuring that Wales continues to prosper even after exit from the European Union.
We must demand from the UK Government a new funding settlement for Wales. EU funding is critical to Wales’s development. We have heard from many hon. Members about the projects in their constituencies. Those must be funded beyond 2020. I find it embarrassing, frankly, when companies that are wondering what exit from the European Union will mean for them come to see me and want to be briefed. At the moment, I have no answers. I was extremely disappointed that when the leaders of the nations of this country met the Prime Minister yesterday, they too were told that the Government had no answers. It is no good for the Prime Minister to go on saying, “We’re not giving a running commentary on the exit from the European Union.” She needs to give facts, a rationale and a road map right now. [Interruption.] I have started, so I will finish.
However, Brexit must be seen as an opportunity. Wales cannot rely solely on EU funding or the public sector. Wales is an innovative country. In my constituency, General Dynamics UK in Oakdale and Axiom in Newbridge both stand up to that. The Welsh Assembly must create an entrepreneurial spirit. Wales is a trading nation. Our exports to EU countries in the year to the end of the second quarter of 2016 were worth £4.7 billion but, as a trading nation, Wales must have a dedicated trade ambassador who reaches out across the world and ensures that Wales is the place to do business. I have attempted to do that in Islwyn by encouraging businesses that I meet to come to Wales. It is time for the Welsh Assembly Government and the Government in London to step up to the plate. We need a trade deal. We need a strategy for Wales to prosper. Even though we are disappointed, exiting the EU provides a real opportunity for Wales.
Order. I now intend to call the Opposition spokespersons. It would be helpful if you could keep your remarks within 10 minutes to leave adequate time for the Minister to respond and Stephen Kinnock to summarise at the end.
Thank you, Mr Bailey. It is a pleasure to serve under your chairmanship. I will be well within 10 minutes. I thank the hon. Member for Aberavon (Stephen Kinnock) for bringing the debate before us.
As was said by numerous Members, for a number of reasons, Wales stands to lose a huge amount—more than many other areas in the United Kingdom—from the UK’s exit from the EU. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) talked about Wales’s trade surplus. Wales is a trading nation with a massive trading surplus, so it stands to lose out from the massive changes proposed to the way in which trade works.
The hon. Member for Ceredigion (Mr Williams) talked about the rural community and the common agricultural policy in particular. The Government have given certainty on that up until 2020, but farmers need certainty way longer out than that. They are planning 10 or 20 years ahead and thinking about how their land will be used well into the future. As he mentioned, 80% of Wales’s landmass is used for farming, so it is really important that the Government give certainty. That is a major area in which Wales stands to lose out.
The hon. Member for Aberavon talked about Wales’s industries and its post-industrial areas. One problem that Scotland and Wales have in addition to a democratic deficit—our voices are rarely heard because the UK Government is never made up from a majority of Scots—is that the UK Government often poorly understand some of the industries and things that are most prominent and prevalent in our local communities. The UK Government, made up mostly from the south-east and less from the north of England and from Wales, poorly understand what it is like to live in a post-industrial place. They poorly understand what it is like to live in a heavily industrialised area and how communities rely on those industries. As a result, when the UK Government negotiate with the EU, those areas will be forgotten. Those things are not high enough on the priority list.
We keep hearing about how the City will receive special deals, but what about industry? What about areas in Wales and Scotland that actually need that support and have received, for example, EU structural funding? They are really important. It is vital that the devolved Administrations have a major voice in the exit negotiations so that we can explain to the UK Government how the industries work and how our communities live so that they can ensure that they prioritise them and not just the views of the City of London.
In a huge number of cases, people voted in protest against Tory austerity. It would be shocking if the UK Government used that as an excuse to centralise power in Whitehall, as a Labour colleague said. In the exit negotiations there is a real risk to Wales, Scotland and the north of England that our voice will be too small, too quiet and not heard enough. Leanne Wood, the leader of Plaid Cymru, said:
“The Prime Minister’s commitment to “a country that works for all” will ring hollow if Brexit leaves Wales in a weaker position than before.”
The UK Government need to reflect on that.
It is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my hon. Friend the Member for Aberavon (Stephen Kinnock) on securing this important debate and on the powerful case he made. We have heard from an array of hon. Members from across Wales who have a variety of views on what leaving the EU will mean for their constituencies, for Wales and for the people of Wales. The one theme that has come through is that the next few years will be an uncertain period for all, and for our communities and businesses in particular, as highlighted by my hon. Friend the Member for Swansea East (Carolyn Harris).
The Government have a clear and pressing duty to reduce that uncertainty. We have all heard of investment decisions that have been delayed and of businesses that are genuinely worried for their futures. People voted to leave, but they did not vote to damage our economy, so the Government need to step up and set out their plans more clearly to deliver the clarity and business confidence we so badly need.
As my hon. Friend the Member for Islwyn (Chris Evans) highlighted, Wales currently receives a significant net gain from the European budget because west Wales and the valleys qualify for the highest level of EU regional development funding. The Welsh European Funding Office estimates that projects in the 2007-13 round of funding created 11,925 enterprises, supported nearly 40,000 jobs and helped more than 72,000 people into work and 56,000 people into further learning. As my hon. Friend the Member for Neath (Christina Rees) said, 16,000 farmers in Wales get direct subsidies from the common agricultural policy, without which 90% would be in financial difficulty. My hon. Friend the Member for Ogmore (Chris Elmore) highlighted the positive impact that that funding has on farmers and the risk posed by leaving the EU.
Wales is set to receive £2.7 billion in structural funds up to 2020. We have heard examples of local regeneration already delivered across Wales. Many communities have been transformed with the support of EU funding, including many in my constituency. We heard my hon. Friend the Member for Aberavon outline the iconic Swansea University campus and the Workways+ and BEACON schemes, which have been supported through the EU.
My hon. Friend the Member for Ynys Môn (Albert Owen) highlighted the important point of matched funding and what that means in supporting EU funding to go even further in regenerating Wales. My hon. Friend the Member for Swansea West (Geraint Davies) highlighted the regeneration projects in his area and the lack of reassurance coming from the Government.
Despite that, Wales voted in line with England to leave the European Union, and we respect that decision. However, Wales did not vote to become poorer or to damage its public services. That is why, as we begin the process of leaving the EU, we need to work together to ensure that Wales, its economy and its communities get the best deal.
Does my hon. Friend understand that many people who voted to leave were under the impression that some £350 million saved from Europe was going to be spent on the health service in the UK? Five percent under Barnett would give Wales about £17 million. Does he think that should be honoured by the Government, or at least debated?
My hon. Friend makes a correct point. During the referendum campaign lots of lies were told and comments made, and the people of Wales and the rest of the UK voted for a specific set of circumstances. They did not vote to make our services poorer. Indeed, the investment promised by the Brexiteers—as highlighted by my hon. Friend the Member for Torfaen (Nick Thomas-Symonds)—in the pledge signed on 14 June should be honoured.
Further to that, will my hon. Friend accept that the people of Wales and Britain voted in good faith in principle to leave and that that was subject to the exit package set out? There is a strong case for another vote not on the principle of whether to leave but on the exit package and whether it represents the reasonable expectations of voters, because already something like 7% of the people who voted to leave now say they do not want to leave. As this is a once-in-a-lifetime choice, surely they should look at the exit package in a referendum.
As I mentioned earlier, it is important that we respect the result, but it is also important that we ensure we get the best deal for Wales and for the UK in the coming negotiations. Despite the many challenges ahead, we must ensure that Wales has a positive voice throughout the negotiations to secure the best possible outcome. It is essential that the UK Government work closely with the Welsh Government and other devolved Administrations to ensure that their negotiating strategy works for the whole of the UK, not just for England.
The Joint Ministerial Committee met yesterday, although clarity was lacking on the current position and on what future discussions will look like. As we begin the process of exiting the EU, Wales has several priorities. We must prioritise the protection of jobs and ensure business confidence in the aftermath of the referendum. Full and unfettered access to the EU single market is crucial for Wales. Welsh businesses currently benefit from our trading relationship with the EU. If we were to leave the single market, and if tariffs were to be imposed on Welsh goods, that could have a crushing impact on our manufacturing and agricultural sectors. We need certainty about funding for current and future EU programmes.
The First Minister of Wales sought an urgent guarantee, immediately following the referendum, that Wales would not lose a single penny of EU funding up to the end of the EU financial perspective, running until 2020. This month the Treasury pledged to extend the guaranteed funding for all projects agreed before the UK leaves the EU. However, it has not given any commitment to replace the funding, further into the future, that we would reasonably have expected to receive if the UK were to remain in the EU. That is vital to our universities and agricultural businesses. Wales currently receives £650 million in EU funding, in particular through the common agricultural policy and structural funding. Campaigners for leave said that Wales would not lose a single penny in European funding, and we will hold them to that promise.
As my hon. Friend the Member for Aberavon outlined, the case for revision of the Barnett formula arrangements for Wales is now even stronger, to ensure fair funding for Wales during and after the current EU programmes. The Wales Bill provides an important opportunity to consider future funding arrangements for Wales. I urge the Government to reconsider their opposition to delivering a much needed fiscal framework to Wales as part of the Bill, and perhaps the Minister will comment on that.
It is my view, and the view of my party, that EU citizens working and living in Wales now should be able to remain here after the UK’s exit from the EU. EU citizens should not be used as bargaining chips in the negotiations, and we must stamp out the unacceptable abuse that has, sadly, risen since the referendum result.
Since the referendum the UK Government have said little more than “Brexit means Brexit,” but Ministers have alluded to a hard Brexit. Will my hon. Friend agree with the Welsh Labour MEP Derek Vaughan who has said that as a result of that stance the EU has withdrawn behind its lines, and we will end up with a hard Brexit?
I do indeed agree. As I said in my speech, the people of Wales and the UK voted to leave but not to reduce public services. They certainly did not vote for a hard Brexit. It is important to have the clarity that we need as we go forward. It is essential that we remain outward looking, internationalist and pro-business. We require that we remain committed to fairness and opportunity for all, and I look forward to some reassurances, perhaps, from the Minister this morning.
It is a pleasure to serve under your chairmanship this morning, Mr Bailey. I congratulate the hon. Member for Aberavon (Stephen Kinnock) on securing the debate, and the hon. Member for Merthyr Tydfil and Rhymney (Gerald Jones), who I think is appearing in Westminster Hall in his new capacity for the first time. I also congratulate him on being the only Member from the Opposition ranks who has understood the commitment given by the Treasury on EU funding in Wales. A number of Opposition Members have raised questions in relation to its running out at the autumn statement; but that is not the case. A further letter has been delivered to the Welsh Government, highlighting the fact that the Treasury would be willing to underwrite EU programmes in Wales up to the point of exit. That is a crucial and important Government commitment.
I respect what the Minister says about what the Treasury has said; but what about the letter of 14 June that I read? Is it now Government policy simply to ignore that?
The hon. Gentleman must understand that initially, in the immediate aftermath of the referendum, the Government gave a commitment to support EU funding up to the autumn statement; but a further Treasury commitment has been made since then. Those letters have been delivered to the Welsh Government. Indeed, I assure the hon. Gentleman that the First Minister of Wales has given a genuine welcome to the Treasury’s commitment to trying to ensure that there is a commitment to the 2020 programmes in a Welsh context. Opposition Members should be aware that in claiming, in contrast with the Labour spokesman, that there is no commitment up to the exit from the EU, they are doing the people of Wales and their constituents a disservice.
The Chancellor of the Exchequer said that there will be a guarantee, but only for those projects that “meet UK priorities”. That is a qualification, surely.
It is a terrible thing for hon. Members to speak from a position of lack of knowledge. The commitment that has been given is very clear. Where a project is considered to be a Welsh Government priority it will be accepted by the Treasury as a priority for the UK Government as well. I recommend that Opposition Members read the comments by the Treasury. Some of them have raised the issue of a south Wales metro, and I recommend that they read the comments about that made by the Under-Secretary of State for Transport, my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard), to the Select Committee on Welsh Affairs yesterday. It will be well worth their while. The Welsh Government need to get on with that project, because if the scheme is in place in good time the money will be forthcoming from the EU. If it is signed off before our exit from the EU, again, the Treasury will give a commitment. Opposition Members peddle scare stories about the commitments we have given. It is important for them to get their facts right.
It is not a scare story. I quoted precisely from the letter of 14 June, not just about guaranteeing EU funding but about additional funding for the NHS and a pledge on VAT, both by 2020. Is that the Government policy now or not?
I am unsure which letter of 14 June the hon. Gentleman is referring to. I am referring to the Treasury commitment of October this year. I think that a commitment made this October trumps a letter of 14 June. The hon. Gentleman has also raised a number of issues about promises made in the referendum campaign that imply a lack of understanding of how a referendum campaign works. It is not about electing a Government. In the referendum campaign there were members of the Labour party on either side of the argument, and the same was true of the Government. To claim that promises made by the referendum campaign are binding on the Government is nonsense, and I think that the hon. Gentleman knows it.
A few years ago the Minister would have been agreeing with us. It is the first time I have ever been accused of scaremongering for quoting the Chancellor of the Exchequer and Finance Ministers. As to the referendum campaign, we are not talking just about individuals making commitments. We are talking about the Foreign Secretary, the Secretary of State for International Trade and the Secretary of State for Exiting the EU. Those are three leading individuals. Will the Minister hold them to account, on behalf of the people of north Wales?
Again, I highlight the fact that comments made about the letter of 14 June do not reflect the Treasury’s position as it has developed. [Interruption.] Also, it is important to understand that those individuals from the leave campaign who joined the Government have done so with the intention—[Interruption.]
Order. Members have had the opportunity to intervene. They must not continue to harass the Minister from a sedentary position when he is trying to respond.
I thank you, Mr Bailey. I assure you I was not feeling harassed.
It is important to point out that the individuals from the leave campaign who joined the Government will serve in relation to the Government’s agenda, which, to a large extent, is still based on the manifesto commitment of the last election.
I need to move on to reflect on some of the comments of the hon. Member for Aberavon. He began with an important comment about the way a single-industry town is affected by the fact that that single industry has contracted. He highlighted the changes that have happened over a period of years. However, the debate is about European funding in Wales. That funding has been important, but there is no denying that we have qualified for three rounds of such intervention. I do not believe that there is fault with Brussels in the fact that we still qualify for the highest percentage of support from the European Union, but Opposition Members should reflect on the fact that time after time we have ended up still qualifying for the highest level of intervention.
As my hon. Friend the Member for Gower (Byron Davies) stated, when we qualified for the first round of intervention the expectation was that it would be a one-off opportunity, because eastern European countries were joining the European Union whose standard of living was significantly lower than that enjoyed in Wales at that time. However, we have qualified again and again, and it appears that Opposition Members here expect Wales to qualify again in 2020. That is an indication of the failure of the Welsh Government in Cardiff to make the best of the funding available.
I fully accept that some European schemes across Wales have been successful and have made a difference, but no Member can deny that other schemes in Wales have been wasteful and inefficient. The real issue Opposition Members should face is that Welsh GDP per head is continually falling, despite the intervention that has been described by Opposition Members as absolutely crucial to the future of Wales. I believe we need a funding stream in place to support Wales, and I will fight for that as part of the Wales Office, but the crucial point is that to claim the status quo is the way forward is to ignore the realities on the ground in Wales, which were reflected in the referendum. The only two parts of the west Wales and valleys region, which receives the highest level of European intervention, that voted to remain were Gwynedd and Ceredigion. Opposition Members should reflect on that.
If the Minister expects GDP per head to go up in Wales, does he accept that the Government should stick by the cast-iron promise from the previous Prime Minister to electrify the railway to Swansea? The Government could make Swansea bay part of the wider electrified European network and give us the tools to export, rather than cutting us off at the knees and laughing as they are now.
The hon. Gentleman has used intemperate language throughout the debate. It is important to point out that he argued that nothing is happening in relation to the Swansea city region, but we are expecting the proposals for the Swansea city region deal.
Where is the money?
The hon. Gentleman asks where the money is from a sedentary position. It would be a very irresponsible Government—perhaps like the one down the M4 in Cardiff—who would commit funding to a project without even having the costings. The hon. Gentleman should also be aware that we have a commitment to look carefully at the Swansea tidal lagoon. The Wales Office is working hard to ensure that that project has an opportunity to succeed, but it has to work for both the taxpayers and the people of south Wales.
I will take no lessons from the hon. Gentleman. He claims to be a democrat, but on several occasions in the debate he has called for another referendum. I think what we are seeing is an individual who perhaps did not fight as hard for his beliefs as he should have during the referendum and is now asking for a second chance. On the electrification of the south Wales main line, I will take no lessons from the Labour party, which did nothing to electrify the south Wales mainline, when the Government have just delivered improvements to the Severn tunnel and a new service from Swansea that started yesterday, and we will see fast trains getting to Cardiff and Swansea in due course. I expect the hon. Gentleman to welcome that. [Interruption.] The excitement of Opposition Members indicates to me that they are aware that some truths are being told.
I am not getting anywhere near as animated as the Minister suggests. Specifically on electrification, the chair of Network Rail yesterday said there is no money beyond 2019 to fund electrification to Swansea, which affects my constituency and affects the electrification of the valley lines. Will the Minister confirm whether the Swansea electrification will be completed by 2024, as previously committed to by the Welsh Secretary, the Transport Secretary and, I believe, the previous Prime Minister?
Electrification improvements on the south Wales main line will continue, and we look forward to delivering the promises that were made. We are looking at ensuring that the fast trains we need in south Wales will be delivered.
I assure the Minister that none of us in objective 1 structural fund areas wear it as a badge of pride. He and I were on the same side in the 1980s and 1990s fighting for such funds; the then Conservative Government refused even to apply for them, which is why we are now in a dire situation. Will he commit, post-Brexit, to fight for the assisted areas scheme in Wales, to help the areas that need the greatest help?
The hon. Gentleman makes a constructive point, which I welcome. We are discussing EU funding in Wales post-2020, which will not happen because the people of Wales, along with the people of the rest of the UK, made a decision to leave the European Union.
It is imperative that we highlight the need to continually support Wales, which is clear from the Government’s commitments to Wales that have been highlighted: we are increasing revenue funding to the Welsh Government to £370 million; we have provided a funding floor to the Welsh Government, which has never been provided previously by the Labour party; over £900 million in new capital funding has been made available to Wales; there is a commitment of £500 million for the south Wales metro; we are waiting for proposals on the Swansea city deal; and we are in the process of encouraging a growth deal for north Wales. It is clear that the Government are delivering on our commitment to a regional policy that works for the whole of the UK.
I think the hon. Member for Ynys Môn (Albert Owen), who is making signs from a sedentary position that are unworthy of him, if I may say so, should be aware that the failure of EU funds in Wales to help our GDP position was not the fault of the EU funding. There is no denying that the way in which that funding has been utilised on three successive opportunities is a reflection on the Labour Government in Cardiff.
I am glad to say that the relationship between the Wales Office and the Welsh Government is extremely good, and I am glad to say that we have an understanding of the historical failures of EU funding streams. We are getting a constructive approach from the Welsh Government—unlike their colleagues in Westminster—who want to see a way forward in giving stability in the short term so that people who are committed to European projects know that those funds will be in place until 2020, which is precisely what we are offering.
Beyond 2020, it is important that we develop a strategy for the whole of the UK, which is exactly what we will do, working hand in hand with colleagues in the Welsh Government. Opposition Members should not take to their high horses and claim that they have no responsibility for the situation we face in Wales; they do, and they should acknowledge that. The people who vote for them highlighted their concerns in the referendum, which was a reflection, in my view, on the mismanagement of Wales by the Welsh Government for a very long time.
I have not been in Westminster Hall for quite a while, but I did not expect that Opposition Members would ask important, constructive questions and that the Minister would stand up and throw out political points. Will he commit to actually replying to the wide range of issues raised by Members on this side of the House and to providing a comprehensive response?
To be frank, I am astounded to be accused of making political points by a Member from the Scottish National party; there are always firsts in life. In relation to the crucial question that was asked, which has been misunderstood by Opposition Members and which is the point I want to make sure that people in Wales hear, there is a commitment to EU funding in Wales up until the point that we exit the European Union. That was the misunderstanding that was highlighted in the speech of the hon. Member for Aberavon who secured the debate, and is the point that was misunderstood by many Opposition Members, although it was properly understood by the hon. Member for Merthyr Tydfil and Rhymney. It is important to highlight that.
I will finish on agriculture. Concerns have been expressed about the future of the agricultural sector. As with general EU funding for Wales, there is a commitment to agricultural funding up to the point of exit from the European Union. The hon. Member for Ceredigion (Mr Williams), who represents a rural constituency, will be as aware as any other hon. Member that there are complexities involved in ensuring that we develop a support structure for the agricultural sector moving forward. That work is in hand and information will be provided in due course. The hon. Gentleman will understand that the complexity in the change we are facing is something that will take time to resolve, but I assure him that the Government are committed to ensure that that issue is also reflected in our work.
I thank all of my hon. Friends and other hon. Members for making powerful and passionate speeches. We have seen how high passions are running on these vital issues, which is because the future of our communities is at stake. We will defend the fact that we need funding and resourcing until our dying day. The Government are teetering on the brink of a gross betrayal of our communities. The Minister made the point that, although we have had all those years of funding from the EU, the west Wales and valleys, for example, still qualifies for it as it is below 75% of EU GDP. That is not something we would ever wish to celebrate, but can we really argue that EU funding has been the cause of that difficulty? Surely to address that issue we need to continue the funding and support?
There are three questions. First, what happens after 2020? Secondly, what about the projects signed after the autumn statement and what is that secret method? Thirdly, what about Welsh applications that are suffering because of the antagonistic behaviour of the UK Government towards the rest of the EU? Those are the three questions that I asked in my opening remarks and that my hon. Friends have continued to ask. Unfortunately, we have not received answers today, but I assure the Minister and his colleagues that we will continue to press for those answers.
Question put and agreed to.
That this House has considered the effect on funding for Wales of the UK leaving the EU.
I beg to move,
That this House has considered the future of plumbers’ pensions.
It is a pleasure to serve under your chairmanship, Mr Bailey, for what will be a short but hopefully considered debate about the future of plumbers’ pensions. I want to bring the issue to the attention of the House to ensure that we acknowledge the complicated concerns that plumbers have right across the country. I plead with the Government and everybody involved that we all work together to try to resolve the difficult and technical issues that are having a quite grievous impact on plumbers not just in my constituency but throughout the whole of the United Kingdom.
I first became aware of the difficulties with plumbers’ pensions when I was invited to attend a meeting of Perthshire plumbers by a Conservative councillor colleague who was associated with the trade, so that I could listen to some of the concerns that were starting to emerge from plumbers right across Scotland. I was totally shocked when I heard the scale of the difficulties, the sheer numbers involved and the concerns and anxieties presented to me by plumbers that evening. Theirs are businesses that have been serving communities such as mine, the Minister’s and yours, Mr Bailey, for decades. They are family businesses, run by people we all know and are familiar with, that do a fantastic service on behalf of the people they look after.
Plumbers have been blissfully unaware of the ticking time bomb that has been waiting for them at the end of their careers and working lives, because they have been busy getting on with their work, developing their businesses and ensuring that our pipes are fixed and our washing machines are repaired. Now they find, at the end of their careers, that life savings and family homes are at risk. These people have done absolutely nothing wrong. They have conscientiously contributed to their pension pot and ensured they have done the right thing for all the people they have employed throughout the years.
This is a technical issue, so if Members will bear with me, I will try to explain and define it as simply as I can. It seems that many plumbers are caught up in a living nightmare of huge liabilities and potential debts upon retirement because of unintended consequences associated with section 75 of the Pensions Act 1995. I have had a good look at the Pensions Act and the provisions associated with section 75. It seems to me, on paper, a perfectly legitimate and reasonable inclusion in the Act, to ensure that pension scheme integrity is retained and pension benefits are protected. It is, though, that measure that has had unintended consequences for plumbers’ pension schemes.
The simple fact is that pension schemes for small, non-associated multi-employer businesses such as those designed by plumbers are a potential disaster, with huge consequences for plumbers simply wanting to retire or wind up their businesses. That is because under section 75, employers can become liable for what is known as a section 75 employer debt, which is triggered when plumbers seek to retire or wind up their business or if their business becomes insolvent. Section 75 employer debt is calculated on the departing employer’s share of the shortfall in the scheme on a buy-out basis, based on the hypothetical situation that the whole scheme is wound up and annuities are to be paid to all existing members.
That debt is also calculated on securing the scheme’s benefits with an insurance company, which will inevitably lead to a greater figure than if the scheme deficit was determined on the ongoing basis that would normally apply in such situations. The calculation produces a significantly higher scheme deficit than if it was calculated on an ongoing or technical provisions basis. It also ignores the fact that a scheme had no deficit on a technical provisions basis at its last actuarial valuation. That has led to some plumbers facing potential liabilities of millions of pounds.
The scheme that most Scottish plumbers buy into is run and administered by the Scottish and Northern Ireland Plumbing Employers Federation—SNIPEF. It is a fantastic scheme that plumbers have enjoyed, and it is actually more than fully funded. The last actuarial valuation was carried out in 2014, and the actuary found that the assets were enough to cover 101% of the scheme’s liability. That calculation was assumed on the ongoing basis, which assumes that the scheme would continue to pay out to members.
Probably the most invidious part of the calculation is the inclusion of what is called orphan liabilities—liabilities that cannot be identified from people who have already left the scheme. Those account for something like 60% of the liabilities included in the whole scheme, and a shortfall of £453 million. It is totally unfair and almost absurd that plumbers who have conscientiously paid into the scheme are exposed to such huge liabilities.
Eric Cuthill, who runs Hugh Stirling Ltd in my constituency, has raised concerns about this issue. He has been paying in for his employees for 34 years, meaning that his employer debt liability could run into the tens of thousands. Does my hon. Friend agree that that kind of liability is quite unfair when small businesses such as my constituent’s have done so much to support their employees through occupational schemes?
Absolutely. These people are not city spivs. They have not malevolently tried to get out of paying their contributions. They are people like my hon. Friend’s constituent, who have conscientiously paid into schemes and never knew they would face a potential issue at the end of their working careers. It is so unfair that they are being exposed to issues such as this. These are the people who fix our central heating, get the washing machine working again, fix our broken pipes and repair the boiler.
Is it not strange that last year in the Budget, the Government found £6 billion to make cuts in inheritance tax and capital gains tax? This issue is actually about inheritance. I have a constituent who is unwilling or unable to pass on his business to his son, because of its liabilities. My hon. Friend has touched on a very simple solution, which is a change in the method of valuation of the pension liabilities.
I want to come up with a few suggestions for the Government about how they can resolve some of these real and difficult situations. My hon. Friend is right; it is incumbent upon the Government to work with us. This is not about having a go at the Government. We were all unaware of these unintended consequences. My plea today is that the Government do two things: first, acknowledge that there is a serious difficulty here, and secondly, work with us and the sector to resolve it.
I want to give a couple of examples that show how invidious the situation is for many of our constituents right across the country. One is a guy called Mike. Mike’s business was established in 1985 by his father. He joined the business a few years later as an apprentice plumber. Mike and his dad built a business like so many family plumber businesses that we are familiar with, which provided a professional service to customers and tried to ensure that its employees were looked after. Their business grew, and by 1990 they had a pension scheme for their employees and were paying sick pay and holiday pay through a scheme operated by SNIPEF. Over the years they have had many apprentices, and they currently employ 14 staff. Their employees have all been trained to the highest possible standard.
Over the past 26 years, Mike has paid something approaching £400,000 in employer pension contributions to the scheme. Mike’s father is now retired and seriously ill, and Mike cannot bear to share his worries about the business with him, despite the fact that they have worked so closely together over the years. Mike, like so many employers including the plumbers I met in my constituency, has only just been able fully to understand the magnitude and significance of section 75 and cannot believe its implications for responsible employers. Mike’s business is unincorporated and he now realises that by triggering the debt he will lose his home, his life savings and other assets that he has spent all his working life securing. In his words, he is faced with continuing to work and accruing a section 75 debt until he dies, because he fears the effect of triggering the debt.
I have loads of example, which I might send to the Minister for his reflection and views, but I will give one more. Kyle’s business—another family business—was started by his father in 1982. Until recently he was a 50% shareholder, but in 2015 he bought out his partner for more than £100,000 and, at 52, he now owns 100% of the business. He currently has one plumber in the scheme and has contributed £242,000 to it over the past 37 years. Kyle has a young family and is worried sick about his potential liability. He has made all but one of his employees redundant and is now working for another company. He would like to close his business completely and sell off his business property, but he knows that doing so would trigger a huge debt. His time is now split between running his own company and working as an employee for another.
Kyle has contacted SNIPEF and has been told that his liability is an incredible £1.7 million. He is worried beyond belief, he cannot sleep at night and he feels totally destroyed and depressed. He says he just wants to curl up in a ball and die. Plumbers in our constituencies have done nothing wrong, but they are left in that condition. I have given real-life examples that we must address. I have many other examples, and I will pass them on to the Minister.
I want the Government to do a couple of things. I know the matter is difficult and technical—I have looked at it and understand the Minister’s difficulty in resolving it, but resolve it he must. First, let us agree today that the issue is huge and acknowledge that something must be done to resolve it. The Minister could make a start by considering the problem of the debt being triggered by the departure of the last active scheme member working in a business. The Pension and Lifetime Savings Association has said that employers are artificially retaining a single active member so as not to trigger the scheme.
The Government could also look at how the debt is calculated. It is based on an insurance assessment of the scheme’s value, which will obviously inflate its value. Surely it could be calculated by technical measures looking at the way the scheme operates and the actual membership. The phantom liabilities, or orphan liabilities, must be dealt with, because they inflate the scheme’s value. No one knows where the people to whom those liabilities relate are, and they no longer participate in the scheme, yet the valuation is kept artificially high. To enable us to move forward, there should be exceptions for small and micro non-associated family businesses. The Minister has an army of civil servants available to try to resolve the matter, and a pensions Bill is going to be introduced, which will allow him to look at it. I hope very much that he will do that.
I want to allow my hon. Friend the Member for Edinburgh North and Leith (Deidre Brock) a few minutes to speak, as she has been looking at the matter and SNIPEF is based in her constituency, but I have a plea for the Minister. We know that something is going on, and he has acknowledged that—I have seen some of his helpful responses to hon. Members who have raised these concerns. Will he please work with us? These people have done absolutely nothing wrong. They are the cornerstone of our community and provide a service to it. My appeal is that MPs, the Government and the sector work together to resolve some of these issues.
It is a pleasure to serve under your chairship, Mr Bailey. I congratulate my hon. Friend the Member for Perth and North Perthshire (Pete Wishart) on securing this extremely important debate. I should say at the outset that both the plumbing employers federation, SNIPEF, and the pension scheme for plumbers are headquartered in my constituency, and that both have made representations to me.
The essence of this debate is the treatment of small companies: the person round the corner who runs a business out of the back of a van and employs one or two people. Carrying the orphan liabilities of the pension scheme is utterly debilitating for such small businesses. It can leave them with unsustainable debts and therefore make their businesses unsustainable too.
As my hon. Friend outlined, orphan liabilities include liabilities incurred by companies that left the scheme before the legislation changed, so current employers who get to the end of their time in the scheme can be picking up the tab for employers who ceased to be scheme members years ago. Those former employers may have retired and have no interest in the industry now, but their business life continues to have an impact on people still working in the industry, and especially on people who are approaching retirement. If the current circumstances continue, those people will face the loss of their savings, their houses and their retirement. Having spent their working life in hard physical labour, they now face spending their retirement in penury. That simply cannot be right, especially when the cause of it is their desire to do right by their employees by ensuring a decent retirement for them.
I will be interested to hear what the Minister says on another point that we should have regard to: the effect on younger plumbers who may be sole traders at the moment, but who are thinking about taking on another member of staff. If they are discouraged from providing a workplace pension by seeing what it has done to previous generations of plumbing employers, will that not run counter to the current efforts to have everyone signed up to a pension? We must find a way to amend the section 75 regulations—my hon. Friend gave a couple of good examples of how that might be possible—and give employers a break. Certainly the pension scheme must be sure that it can meet its liabilities, but that must not be at the cost of people’s savings and investments being destroyed through no fault of their own.
It is a huge pleasure to serve under your chairmanship, Mr Bailey. I thank and commend the hon. Member for Perth and North Perthshire (Pete Wishart) for securing this debate. I am delighted that I can pronounce his constituency name without assistance. I also thank other hon. Members for their contributions.
This is a serious matter and not one the Government take lightly. I am quite new to this job, but it seems to me that the real lobbying from constituents through their Members of Parliament to the Government is an example of how things should work instead of teams of lobbyists coming to formal meetings. I commend hon. Members who are representing their constituents. They are not facing a heartless Government who treat the matter as a minor detail. The examples the hon. Gentleman gave of Mike and Kyle are typical and I would be pleased if he would send me details because I have seen similar examples and the question is how we deal with them.
I have listened carefully to what has been said about this worrying situation faced by small employers. As the hon. Gentleman said, they are fantastic people who have been going about their business for many years. The Government have received and listened to representations asserting that there is a simple solution. There is not. The issue is complex and, unfortunately because of the way government works, we cannot react quickly because the unintended consequences that have happened can lead to others. I hope hon. Members will not think this is just Government waffle.
Before I came into the Government I thought things were much simpler than they are and that is part of our democratic system, but it does not mean that we treat them lightly. I am well aware of the difficulties facing small employers in these schemes when managing their own pension commitments in the current economic climate and their responsibility for other people in the scheme.
I appreciate what the Minister is saying about the matter being complicated for technical reasons and that the Government are sympathetic, but we need to know about the timescale. Some of these plumbers have already triggered section 75, so there is debt coming at them at a rate of knots. Timescales and assurances are required.
The hon. Gentleman has made a very reasonable point, which I hope to come to. By the way, my door is open to hon. Members and, if they feel it necessary, their constituents or representatives. This is not something that we are avoiding. I had better make progress now if the hon. Member for Kilmarnock and Loudoun will excuse me.
We have been talking to a lot of stakeholders about aspects of the operation of employer debt for some time. I have read the files. The hon. Gentleman asked for urgency, and he is right, but the matter is in hand. Last year, there was a call for evidence, which is an official mechanism for seeking views, on the operation of the current regime, the effectiveness of the current easements and the impacts of proposed changes. My officials are reviewing the responses that we received and exploring what further flexibility we could introduce to help employers to manage precisely the kind of debt that has been referred to, but as many respondents to the call for evidence highlighted, there is no easy or quick solution. Quite a few different ones have been mentioned.
My original thought was, as I said, that the issue was much simpler and that a change to the system of valuation could deal with it—the hon. Member for Perth and North Perthshire made a point about that in his opening speech. However, all of this has consequences. The reason why these laws were in existence in the first place was to protect the very people who otherwise could have found themselves retiring with no pension because of all the surrounding circumstances, but we are not saying that this is something that will just go on for years and years; we hope to do a formal consultation very soon.
I should like to state again on the record that the current employer debt legislation is there for a very good reason: to protect members of occupational pension schemes and ensure that, when they retire, they receive the pension that they have been promised. We cannot let that aim disappear. We have to find a way to ensure that the injustices mentioned by hon. Members contributing to the debate are dealt with, but at the same time we must not do anything to threaten the pensions of the other people.
The Government have made a significant number of changes to the legislation in response to representations made by employers. A number of mechanisms are in place whereby only part of the debt, or no debt at all, may be payable. The hon. Member for Perth and North Perthshire may be aware that there are currently eight such mechanisms in legislation, which reflects the wide variety of circumstances that can arise with diverse scheme structures and the equally diverse range of employer types. For example, the existing scheme and flexible apportionment arrangements permit an employer debt attributable to the departing employer to be shared among the remaining employers or taken over by them, so reducing the debt to nil or a nominal amount. Those can be useful provisions in cases in which an employer ceases to employ members or undertakes corporate restructuring.
For small employers, which we are talking about today, that are participating in a large non-associated multi-employer scheme such as the plumbers scheme, a period-of-grace arrangement provides for the situation in which an employer temporarily ceases to employ active members but intends to do so again in the future. The regulations provide for a period of grace of up to 36 months when no debt triggers, giving time for new employees to be recruited.
The high proportion of orphan members has been mentioned. The scheme would like the liabilities that relate to such members, whose employers no longer participate in the scheme, to be passed elsewhere rather than be shared among remaining employers. The requirement to meet a share of orphan liabilities is common to all schemes and an important part of member protection. Although it would be very difficult to make a special case for a particular scheme, we are looking more widely at the challenges faced by defined-benefit schemes and want to encourage a wide debate about the challenges facing those schemes and what the solutions might be, including that one. We are well aware that some parts of the pension sector are stressed, but the situation is very mixed and the problems are far from universal. We are trying to build a better understanding of those, using the call for evidence and all the meetings with stakeholders, to form an opinion on what the Government intervention should be.
I thank the Minister for giving way again. The topics that he is covering involve wider pension issues. Does that not underline yet again the fact that there should be an independent pensions regulator to help to address these matters?
That is a whole different argument, as the hon. Gentleman knows. I would be very happy if we could have another debate on that and I am happy to check with him informally about it because it is something that has been proposed, particularly by his party. Respectfully, however, as far as this issue is concerned, that is irrelevant. I am not saying that the argument has merits or does not, but as far as this issue is concerned, we do not have a standing commission. The Government are here to try to deal with the issue and it is our intention to do so. We will produce a Green Paper very soon. We have said that that will be in the winter, which will certainly be before the leaves reappear, even in Scotland. We will do it as quickly as we possibly can.
The Minister is very reassuring today, and I am grateful for the very generous responses given to the concerns. I get the sense that we are trying to resolve this, and the Green Paper is a great opportunity to do that. May I just make this plea to the Minister and seek clarity from him? Will there be retrospection to ensure that any plumber or anyone who is caught up in this situation before the change is enacted is not left out and left high and dry with the huge debts that may have accrued?
I cannot give the hon. Gentleman that undertaking, precisely because it is exactly the sort of thing that we will be discussing in the Green Paper, but I would like to state that there is not a plan to ensure that these people do not get what is very logical and right. I am very conscious of the fact that we are not dealing with some offshore hedge fund, but with people who did not really want to be in the pensions business and did not want the liability—they just wanted themselves or their employees to have an ordinary pension. There is a difference, and it is right that Members of Parliament represent their constituents in this way, although I will just say that as far as the pensions industry is concerned, some of the bodies, such as the Pensions and Lifetime Savings Association and others, are also very knowledgeable on these subjects.
My door is open. We want to get this right. I ask the hon. Member for Perth and North Perthshire and his colleagues, who have made such passionate and decent contributions, to be a little more patient, but I would be very happy to be summoned back here or to the Floor of the House if they feel progress is too slow.
Question put and agreed to.
British Indian Ocean Territory and the Chagos Islands
[Mr Clive Betts in the Chair]
I beg to move,
That this House has considered Government policy on the British Indian Ocean Territory and Chagos Islands.
It is a pleasure to serve under your chairmanship, Mr Betts. I rise to address the House as chairman of the Chagos Islands British Indian Ocean Territory all-party parliamentary group, a role I gladly accepted exactly one year ago when I took over from my predecessor, the right hon. Member for Islington North (Jeremy Corbyn), when he became Leader of Her Majesty’s Opposition. He founded the group back in 2008, having championed the cause of justice for the Chagossian people since his election to Parliament in 1983. Today I am proud to follow his good work at such a crucial point, with a decision being made on resettlement, so we understand, in the very near future.
I say to the Minister and to the whole House that, before the end of 2016, the United Kingdom has a duty to put right this great wrong. It is a wrong that has failed to be resolved by every UK Government for more than half a century. Now is the moment to end the years of shame and bring justice and dignity, which the Chagossian people so rightly deserve. Today, the Chagos BIOT all-party parliamentary group includes 47 Members representing all 10 political parties in Westminster, as well as House of Lords Cross Benchers. I speak on behalf of the broadest possible spectrum of politicians as well as many in the general public, media and international community, all of whom seek justice for the Chagossian people.
BIOT and Chagos islands policy has been debated in both Houses since the 1970s. The most recent debate was a year ago in this very Chamber, led by the hon. Member for Caithness, Sutherland and Easter Ross (Dr Monaghan), and there has been a steady flow of interventions and parliamentary questions from Members on both sides of the House. Fifty-one years after the creation of the British Indian Ocean Territory and 49 years since the expulsion of the Chagossians began, this must surely be one of the longest periods of exile in the history of the world.
I am grateful to my hon. Friend for giving way, and congratulate him on this important debate. He mentioned that it is a pivotal time in this saga. He may well come to this point, but does he agree that the Anglo-US agreement gives a big opportunity to secure some additional rights for the Chagossians—for example, perhaps more Chagossians can be employed on the US air base at Diego Garcia?
I thank my hon. Friend for his intervention, which was absolutely to the point. As a former Minister for the British overseas territories, my hon. Friend knows only too well that those possibilities exist. As he rightly said, I will come to those points later, but I thank him for his support over many years for the Chagossian cause.
The whole House will be grateful to my hon. Friend for raising this issue, and he has rightly pointed out the all-party support that there is. Given the enormous amount of money—millions of pounds—spent by the Government in resisting resettlement initiatives, does he agree that the only serious issues now are conservation and resettlement, where there does not seem to be a major problem, the Americans, where there does not seem to be a major problem, and economic existence? If some of the money spent on resisting their claims had been spent on resettlement, we would have had the pilot resettlement and would know how much further we can go.
My hon. Friend makes a superb point. He is completely right: had previous Governments addressed that long ago, we would not be in this very unfortunate position today. It only takes common sense to realise that this could have been resolved a long time ago, and that the money spent has been a huge waste. The appalling record that we have left in not dealing with this when it should have been dealt with has left many of us feeling very sad. That is why we hope that, today, we will get some indication of whether the Government will now resolve the matter once and for all.
Hope for a resolution came in November 2000 following the High Court judgment and the decision of the then Foreign Secretary, the late Robin Cook, who restored the right to return to the outer islands. That remained the case until that right was withdrawn in June 2004 by Order in Council—thus overturning the High Court and bypassing Parliament. Then, nearly four years ago, as Foreign Secretary, William Hague announced a review of the policy, the results of which are still awaited. The Government now state that they intend to make a decision on resettlement before the Christmas recess this year, so today I will focus on why the decision should be in favour of resettlement and on the consequences of not doing so.
The expulsion of the Chagossian people from their homeland remains a blot on the UK’s human rights record, and a breach of international human rights law and, many would argue, of Magna Carta itself, the very basis of our cherished liberties. As long as this situation prevails, I believe the United Kingdom remains guilty of double standards. How can Her Majesty’s Government argue that the people of the British overseas territories of Gibraltar or the Falkland Islands should have the right to remain living peacefully in their homelands and their right of self-determination, and be prepared to use the British armed forces to defend their rights, yet at the same time refuse to accept that the exact same principle applies to the Chagossian people of the British Indian Ocean Territory who, despite their forced removal from their island home, have remained loyal subjects of the Crown throughout and cherish the fact that they are British subjects?
If the UK refuses to allow the Chagossians the right of return to live in their homeland if they choose, will the Minister explain how that fits with Britain’s desire to be re-elected to the United Nations Human Rights Council next year? A decision to grant the right of return would surely demonstrate that, under the leadership of my right hon. Friend the Prime Minister, the United Kingdom is now taking its human rights responsibilities very seriously indeed.
I am sorry, Mr Betts, that I was a few seconds late. I ask my hon. Friend whether the right to return should also imply a right to a job. I really am concerned that when the Chagossians get home, there will not be a decent economy for them to function in, apart, perhaps, from working for Americans. We should try to build up some kind of support society, as it were.
My hon. Friend makes a valid point. We are talking about a community that has not lived there for more than 50 years, and just giving the right of return on its own is not good enough. We will need to ensure that there are adequate facilities for the people to live in an appropriate way and to work. There are many options, including working for the Americans on the base on Diego Garcia and possibly working in conservation in the marine protected area—I will come to those matters later. He is absolutely right: we cannot just say, “Go home if you wish”, but do nothing to support the community. It was our British Government who forcibly removed them in the first place, so if they go back, we have a duty to ensure that they have adequate resources to have a sustainable community.
This is surely an appropriate time for our new Prime Minister to end this shameful episode once and for all, and to make a right decision after so many years of procrastination by her predecessors. The recent report by the UN Committee on the Elimination of Racial Discrimination urged the UK to
“hold full and meaningful consultations with the Chagossians...to facilitate their return to their islands and to provide them with an effective remedy, including compensation.”
To argue, as sadly Her Majesty’s Government seem to, that the convention does not apply because the British Indian Ocean Territory has no population when the UK expelled those people in the first place must rank as the height of cynicism. The UN Human Rights Committee, which monitors observance of the UN human rights covenants, has on two occasions urged Her Majesty’s Government to rectify the situation and report on the measures they have taken to comply with the international covenant on civil and political rights. The committee’s last report said:
“The State party should ensure that the Chagos islanders can exercise their right to return to their territory and should indicate what measures have been taken in this regard. It should consider compensation for the denial of this right over an extended period. It should also include the Territory in its next periodic report.”
In June, the UK Supreme Court concluded that, in the light of the 2014 KPMG feasibility study that found no obstacle to settlement, maintaining the ban on a Chagossian return may no longer be lawful. The judgment noted that if the Government failed to restore the rights of abode, it would be open to Chagossians to mount a new challenge by way of judicial review on the grounds of irrationality, unreasonableness or disproportionality. After 17 years of litigation, is it not high time that our Government stopped incurring litigation costs that must now amount to several million pounds? Although there is one outstanding case relating to the marine protected area, which the Supreme Court will hear next year, surely the Minister must agree that the resumption of further litigation cannot be in our national interest.
The extension on 30 December this year of the 1966 UK-US agreement for the use of the island of Diego Garcia for a further 20 years provides an ideal peg for agreeing to resettlement. It is the unanimous view of the all-party parliamentary group that the extension should be conditional on both parties agreeing to support and facilitate resettlement. If the UK does not make the extension conditional, there is a danger of losing important leverage with the United States. A decision in favour of resettlement might then be postponed for many years to come. We simply cannot allow that to happen.
I am sorry for being a couple of minutes late to the debate. After the debate last year, I received a letter from one of my constituents who had watched, having previously known nothing about the situation. He said to me, “What is behind this? After all these years, what would make Her Majesty’s Government decide not to allow resettlement?” Can the hon. Gentleman tell us, from his long experience, what is behind the fact that the Government might not agree to what seems to be an absolutely just case for allowing the Chagossians to go back home?
As always, the hon. Lady makes an excellent point and gets to the heart of the issue. I only wish that I could give her an answer. Perhaps the Minister can. I certainly know that it is not down to the United States of America because, as a member of the Select Committee on Foreign Affairs, I have raised the matter every time I have been to Washington. When I ask why it is not possible for the Chagossian people to go back and why Washington blocks it, the Americans say, “We’re not blocking anything.”
I find it astonishing that the situation has gone on for 50 years—half a century—and that no one has got to the bottom of it. Of course there are financial implications. Any responsible Government cannot just agree to something without working out how things will be funded, but we have a moral responsibility. This has gone on for so long and it has been handled totally differently from all our other overseas territories, where self-determination has been paramount.
I hope to catch Mr Betts’ eye later and make a contribution, but I have visited the islands with the Americans. They were very clear when we were on the island and in subsequent discussions with me when I was a Minister and with the Government more generally that they unequivocally oppose resettlement. I am not sure exactly who my hon. Friend has spoken to but, as far as I am concerned, the Americans have always opposed resettlement.
I thank my hon. Friend, a former Minister, for his helpful intervention, but that is not what I have discovered when I have directly confronted the Americans. I would love to know which particular American said that they oppose resettlement because when I speak to senior level Americans in Washington, they are baffled and do not really understand.
The Leader of the Opposition has raised the matter with President Obama, and I understand that even he had no understanding of what objections there could possibly be. It is completely contrary to the attitude when Americans have air bases elsewhere, where the local community work on the bases. There is no sense and there is no moral justification.
We might as well have the full list of the former Ministers with responsibility for the matter. It may be that President Obama is not very well sighted on the precise situation of the Chagossians, but it is certainly true that every single American official that I had formal dealings with in relation to the British Indian Ocean Territory was absolutely clear that they wholeheartedly opposed any resettlement. That should not be the defining point for a British Government, but it is an important factor to bear in mind.
We will move on from this point because, even if it is correct—I do not believe it is—this line has been carried forward by every generation without anyone questioning its original purpose. The duty of Her Majesty’s Government is to defend the rights and freedoms of Her Majesty’s subjects. These people are Chagossians. They are British. They are of equal status to the people of the Falkland Islands or Gibraltar, and there is no way on this planet that we can justify treating them in an inferior way. Sadly, that is what successive Governments have done but, in this very year, we have a chance to rectify it. In my view, it has been clear for many years that there is no fundamental objection from the United States to resettlement, even if it is of the outer islands, rather than Diego Garcia.
My hon. Friend has come to an important point. I hope he will forgive me for not being able to stay for the rest of the debate. When I was a Minister, I put forward a good suggestion, and the officials said, “That’s against ministerial policy.” I asked the Secretary of State, “Is it against your policy?”, and he said, “No, it’s not against mine.” That is an example of the historical negative: one cannot do something in a new way because it has not been done that way before.
The Americans ought to be big enough to say which island they want protected and what will happen with all the rest. We are not talking about something as small as the Isle of Wight, close to the mainland. We are talking about the Indian Ocean Territory. There are plenty of opportunities. Any sensible American could say, “Yes, there’s no problem. Let’s argue about some margin, but there is no particular problem, and there is no particular reason for total exclusion.”
My hon. Friend is correct. We must fully accept the need to secure the base and its operations, but I believe that a resettlement, even on Diego Garcia, can be made compatible with that requirement, as is the case with other US bases around the world. Indeed, the US may find that a neighbouring community of Chagossians could provide a convenient source of workers and security personnel when they are trained for work on the base.
The all-party parliamentary group had expected the Government to make a decision on resettlement following the KPMG report in February last year. We were not convinced of the need for yet another consultation with Chagossians, this time on likely costs and the demand for resettlement. Although it is impossible to remove all uncertainty, the Foreign and Commonwealth Office consultation showed 98%—or 825 Chagossians—in favour of resettlement. In reality, fewer will take up that offer, but there will certainly be enough to make resettlement viable. Of course, all Chagossians rightly want the restoration of their basic right to visit their homeland at any time of their choosing.
Our all-party group believes that a pilot resettlement for 50 to 100 people on Diego Garcia is the best starting point, but we should consider the outer islands if the Americans have genuine security concerns. That would cost more and would not please some conservationists, although many think that conservation and resettlement can be compatible and are necessary for an effective marine protected area. Chagossians could fill a much-needed conservation protection role. Travel would then be via the Maldives. The APPG would not support any alternative options to resettlement unless they were the collective wish of the Chagossian groups in Mauritius, the Seychelles and here in the United Kingdom. We see the restoration of the right of return and abode, which was denied by Orders in Council in June 2004, as a basic requirement.
As the United States was complicit in the removal of the Chagossians from their homeland, it is perfectly reasonable to expect the US to contribute in kind and money to the resettlement. Also, we would expect the Department for International Development, which already finds it hard to spend its budget, to contribute as the British overseas territories are, I believe, supposed to have a first call on the aid budget. With further support from non-governmental organisations and private sector funding, the costs of resettlement need not be much of a burden on the UK taxpayer.
The Times published a letter from the APPG on 7 November 2015, which said:
“Discussions with the US, for the renewal next year of the 1966 agreement on the use of the Territory, provide a unique opportunity to resolve the future of the Chagossians and of the Chagos Islands. Fifty years on Britain should dispose of this albatross and rectify the injustices and human rights violations of the past.”
The continuing damage to the UK’s reputation for promoting human rights far outweighs the costs, liabilities and risks of trying out resettlement. There would be all-party support for resettlement, not least from the leader of the Labour party, who is now the honorary president of our APPG. There would be negative international repercussions if we did not restore the rights of return and abode to the Chagossian people. There would be damage to the UK’s reputation in Africa and wider afield, playing to those who accuse us of ongoing colonialism, with a knock-on effect for the Falkland Islands and Gibraltar and for the ongoing actions in the United Nations General Assembly, the United Nations Human Rights Council, the African Union and the Commonwealth.
Hopes having been raised more than four years ago, the Chagossian and Mauritian reactions will, inevitably, be greater than ever before. The national and international campaign is certain to continue, with ever more negative publicity for the United Kingdom Government. As a Government-supporting MP, that is something that I do not wish to see. It cannot be in the UK’s interests for that situation to continue for a further 20 years. Allowing resettlement will be welcomed by the United Nations, by Parliament, by the media and, I believe, by the vast majority of the British people.
There could be no better time than now to make this decision. As the all-party group said in its letter to The Times on 4 July 2016:
“It is time for a political decision which restores the rights of the Chagossians to return to Chagos and to put this shameful episode behind us.”
Order. The Minister asked at the beginning of the debate whether it would be appropriate for him to take off his jacket. In view of the temperature in the room, which seems to be trying to replicate the temperature of the area we are talking about, it is fine if anyone wants to follow suit and remove their jacket.
It is a pleasure to serve under your chairmanship again, Mr Betts. I congratulate the hon. Member for Romford (Andrew Rosindell), the chair of the all-party parliamentary group on the Chagos islands, on securing this timely debate.
As the hon. Gentleman said, we have had 50 years of denial, cover-up, obstruction and plotting against the rights of the Chagos islanders. This is a truly shameful episode that reflects a lot of what is wrong with UK foreign policy—it is truly a hangover of colonial thinking. Imagine if Vladimir Putin and his officials were discussing moving on some “Man Fridays” or “Tarzans” to clear room for a military base, and imagine if they then forcibly evicted those people, allowing them to take only a suitcase, before dumping them at docklands or holding them intermediately in police cells. We would be incandescent with rage, and we would say it is typical of such an authoritarian leader, yet that is what has happened in the UK’s name within the lifetime of many of us in this room.
Worse, as part of that operation, these people were used as bargaining chips for the Polaris nuclear missiles. Imagine the detachment and the uncaring attitude that saw the islanders cleared for a US naval base and an £11 million discount on the Polaris system. That trading of people’s homes, livelihoods and heritage has an equivalent value of £200 million today, which would more than pay for the return of the Chagos islanders.
Even since the true picture emerged after initial denials and cover-ups, the UK Government have spent approximately £3 million defending the indefensible in court. That sum was revealed to me yesterday in a written answer, and I am sure it will be a quantifiable lawyer cost that excludes civil servant and ministerial costs over a 17-year period. Will the Minister confirm that the true costs are greater than the £2.6 million mentioned in the written answer?
The costs become more pertinent when we consider that the Supreme Court judgment in June concluded that, in light of the KPMG study, maintaining the ban on Chagossians returning may no longer be lawful. It is also interesting that the Supreme Court castigated the Foreign and Commonwealth Office, noting that its conduct in withholding important documents has been “highly regrettable”. That sums up the denials and cover-ups over this 50-year period.
There have been plenty of other wrongs, too. One was the creation of the marine protected area, which has been deemed to breach international law and has been confirmed by WikiLeaks to be a ruse to prevent people from returning to the islands.
As the Minister who introduced the marine protected area, I should respond to that specific point, which has been raised several times in the press. When my hon. Friend the Member for Vauxhall (Kate Hoey) asked in the House of Commons whether the marine protected area was being advanced merely to prevent people from returning to the Chagos islands, I made it absolutely clear that that was not the case and that these were two completely separate matters. For that matter, the then Member for Crawley pointed out that the Chagossians in Crawley, who had been asked whether they were in favour of the zone, supported it by 90%. These two matters are completely separate.
I thank the ex-Minister for his intervention. It is clearly difficult for me to argue against him on one level, but a view has been taken that the zone breaches international law, so I stand by the spirit of my comments.
The Immigration Act 2016 denies British citizenship to Chagos islanders’ descendants, which creates an absurd position whereby the UK is refusing to cede sovereignty over the islands yet is denying British citizenship to descendants. That is a complete contradiction.
Another wrong that I would like the Minister to address is that Diego Garcia has reputedly been used for rendition flights. Will the UK ever give us the true picture on that? As the hon. Member for Romford said, another ongoing deception appears to be that the original clearance and the subsequent non-return is a security matter, yet we know that yachts continue to visit the Chagos islands, and people live near US bases all over the world. A base in itself should not be a barrier to return, especially in the outer islands. I have listened to interventions from two ex-Ministers, who said that the Americans oppose return. It is therefore incumbent on the Minister to make the true position clear. How much consultation have the Government really had on the return of Chagos islanders? Is that factored into the potential renewal of the agreement, which is due at the end of this year? What is the true American attitude?
I believe that the exorbitant costs quoted in the KPMG report are also being used as a potential barrier to return to the islands. We must remember that, again, the UK benefited from an initial cash discount worth £200 million in today’s money and that, as the hon. Member for Romford said, the international development fund can easily accommodate those costs. I also remind the Minister that if the Government released some of the military spending that is double-counted as international aid, it could be put to much better use to support the return of the Chagos islanders. There is also the clear moral argument that the islanders should have the right to return, and that 98% of Chagossians surveyed want to return. I remind the Minister that time is running out for some of the original inhabitants who were cleared off 50 years ago.
This issue has been debated in both Houses for more than 50 years. As has been pointed out, members from all parties in the UK Parliament have joined the all-party group, which shows the will of the House of Commons. I also note that the Scottish National party passed a conference resolution calling for right of return for the Chagos islanders. Once again, I plead with the Government, after 50 years, to do the right thing.
Order. Three hon. Members want to speak. We have until half-past 4, so that gives Members no more than eight minutes each.
It is a pleasure to serve once again under your chairmanship, Mr Betts. As a vice-chair of the all-party parliamentary group on the Chagos islands, I thank and congratulate my hon. Friend the Member for Romford (Andrew Rosindell) on securing this important debate.
About three decades ago, I remember reading a book that outlined, chapter by chapter, all the remaining British overseas territories, many and varied as they were. When I came to the chapter on the Chagos islands, I could barely believe what I was reading. As recently as the late 1960s, through Orders in Council, the then Wilson Administration forcibly evicted the people of the Chagos islands from their homeland, and they were dispersed, mainly to Mauritius, but also to the Seychelles and other parts of the world. It was a story that I would have expected to have read from 150 or 200 years ago, a colonial account, but it was just within my lifetime.
Little did I think that 20 years later, I would be personally involved in the situation. I was leader of West Sussex County Council, an area that contained Gatwick airport, the main route from Port Louis in Mauritius, when many Chagos islanders who had been exiled to that country started arriving at Gatwick, and we needed to house them and support those British citizens coming to the UK mainland. Since then, I have had the privilege of representing, in my constituency of Crawley, the largest Chagos islander community in the UK, and possibly one of the largest populations anywhere in the world. There are many more Chagos islanders in Crawley than there are, sadly, on the Chagos islands themselves; I do not think that any indigenous islanders are permitted on the islands.
Over the years, we have heard excuse after excuse for why Chagos islanders cannot have right of return to the British Indian Ocean Territory. We have heard arguments that the US objects on military grounds to the islanders’ presence, yet there are US air bases in this country and around the world where civilians live in close proximity, and indeed, as we have heard, work there. Why should it be any different for the British Indian Ocean Territory?
Is the hon. Gentleman aware of any examples from his constituency of Chagossians who have applied for jobs on Diego Garcia, or any opportunities that the Americans have publicised and made available? Is there any appetite among the Chagossians in his constituency and elsewhere to secure some of those jobs?
I thank the former Minister for overseas territories for the attention that he has always given the issue. I can answer the last part first by saying that yes, the Chagos islanders would very much like to live and work in their homeland, but I am not aware of any employment opportunities being offered by the US authorities or the British authorities, who are also present on the island.
Other excuses have been used over the years, including environmental reasons such as sea level rise. There is some evidence to suggest that due to the uniqueness of the ocean topography there, in a rare exception, sea levels are falling slightly around the Chagos islands. During the devastating Indian ocean tsunami on Boxing day more than 10 years ago, the Chagos islands were not affected by the tsunami risk. Then, as we rehearsed a few moments ago, there are the arguments involving the marine protected area, but it does not extend right up to the shore—there is a limit, three miles out, I believe—and subsistence fishing is allowed, so it is not really a reason either.
I still want to nail down this particular issue. I have never thought that the marine protection zone played any role in whether people could or could not be resettled in the Chagos islands. The overwhelming view that I heard from Chagossians was that they wanted the marine protection zone to be put in place, for the protection of their own future livelihood.
I think that the marine protection zone is a distraction, and another reason why there should not be a bar to resettlement.
As my hon. Friend the Member for Romford mentioned in his opening remarks, we are now coming up to a break clause in what is essentially an agreement between the United Kingdom and the United States about the future use of Diego Garcia, which occupies a strategic location. It was strategic during the cold war and the various Iraq and Afghanistan conflicts, and given the ongoing turmoil in the middle east, it remains so. It is in Washington’s interest to continue to have an air base there. We have only until the end of the year, just over two months, to sort out the issue, which is why this debate is so important. We are in a strong position to set conditions for the United States. If it wants to renew its military presence on Diego Garcia for a further 20 years, the US should help us facilitate a right of return for the Chagos islanders.
How many people are we talking about when we talk about those who wish to return to the Chagos archipelago? How many people are there already—I think it is about 3,000 maximum, and they are transitory—and how many people from there want to go back?
I am grateful for the interest that my hon. Friend is showing in this debate. I have yet to meet a Chagos islander or somebody of Chagos descent who does not want the right of return. I think hundreds of people, or possibly a few thousand, want to return. However, the important thing is the principle of being allowed to return. As for the makeup of the current population on Diego Garcia, it is of course US and British military personnel, as well as a lot of Filipinos who work on the base in a service capacity.
Perhaps my hon. Friend can enlighten me because I am puzzled by this. The former Minister said the Americans absolutely object to Chagossians going there, but Filipinos go there. How can that be right? I do not understand what the problem is. As it is their homeland, the Chagossians are surely the right people to help on the airbase. This puzzles me.
I am as perplexed as my hon. Friend. It is one of those appalling ironies that appear time and again when we debate this sorry matter in British history. I am a patriotic person, but on this issue the British Governments of many persuasions over many decades should be ashamed.
I do congratulate the Government on convening an independent commission on the right of return, which has concluded that return is possible. Mention has been made of the international aid budget. The costs of return have been estimated at well below £100 million, which is a small fraction of the overseas aid budget. As my hon. Friend the Member for Romford says, the British overseas territories have first call on that budget.
In conclusion, there is no reason why Chagos islanders should not have the right of return. We cannot turn back time and we cannot undo the past four and a half decades, but we can put things right now. Time is running out with regard to the leverage that we have with the United States and their lease renewal, so I therefore implore the British Government to do the honourable, decent, British thing and allow these British citizens to return to the British Indian Ocean Territory.
Order. Will hon. Members who wish to speak please stand? There are people now standing who had not stood before. If each Member takes six minutes, we will get everybody in.
I had the privilege of travelling to the islands last November during a two-year stint as a Minister for various parts of the world, including the overseas territories. My views are personal and not those of Her Majesty’s Government, but they are based on two years of looking into the matter. I certainly read every word of the KPMG report and every piece of consultation that came across my desk very fully, and I have spoken to all the key people involved.
We cannot undo an historic wrong, but we can mitigate it. In all candour I must say to hon. Members that I do not believe it is right to repopulate the islands as part of that mitigation, but there are things we can do. I want to explain why. I visited Diego Garcia, the military base that formed a part of the main island, and I visited the part of the island that does not have a military base and the outer islands. During my five-day visit I slept in a bed for 15 minutes; the rest of the time I spent travelling. The time that I got to actually do any visiting was quite small.
I mention this because it was a very expensive trip to get there. This is the line of route that everyone will have to take, as will every block of cement, every video recorder or TV, or—in many cases—the foodstuffs we will have to take. I travelled via Singapore and Bahrain on a military flight. I then travelled on a rough fishing vessel for nearly 20 hours to get to the outer islands, where I got on to a military RIB that was able to conduct assaults on islands. We were unable to get on to the island and we had to jump into the water to wade to the outer islands that had coconut palms right up to the beach and there was foliage hanging off the beach area into the water. I am not saying one could not populate the islands, but the concept that the outer islands are an idyllic possibility is for the birds. They were difficult, overgrown, humid areas that were accessible only where the Marines had gone in and chopped down foliage.
I asked to look at a memorial that was put there and I asked whether we could cut through to the cemetery, which was a depressing place with lots of small graves of children and babies. When the outer islands were depopulated, they were very difficult places to live. Had it not been for the British Government depopulating those islands, I am not sure how viable they would have been within five years, given the only revenue stream was coconut oil, which was already declining. It was difficult to support life even at that time.
I will try to give way in a second if I can.
On the main island, the military element of the island is not just a runway. There is space for tens of thousands of troops to be potentially deployed on hard standing. In the conservation area going up into the old town, the houses are falling apart. There is no real infrastructure there at all. I met British and American military there. During the whole of my trip I was with Americans and Brits. I am unequivocal as to the American position on a political and diplomatic level.
The former Minister is painting a wonderful picture for someone like me who would love to undertake such a journey. When he was a minster, a consultation was undertaken with members of the Chagossian community. The then Minister said on 12 April:
“I recognise that Chagossians have urged us to announce a decision soon, and we very much hope to do so.”—[Official Report, 12 April 2016; Vol. 608, c. 171.]
Can he give us his recollection of that time and when he thought a decision would be made by the Foreign Office?
I think the hon. Gentleman is citing a debate in this room. It was certainly not my intention that things would be left quite so far. We have had a change of Prime Minister and the focus has been elsewhere, but at that time we were waiting for the full consultation to complete. I also met other hon. Members, so I extended the consultation. There is a broader process; it is not simply one Minister making a decision.
The islands have a great use for prepositioned ships. I went on board one of the five prepositioned ships. They have five or six storeys—like multi-storey car parks—with the smallest vehicles being almost the width of this room. Two Afghanistan and Iraq style wars could be conducted for a month using those ships. They are absolutely essential to American, British and global security. Many other nations use that area.
I also met the Filipinos who worked there. They lived in not great accommodation, in what I would describe as a prefabricated hut with rooms on either side and a shared bathroom in the middle. Those cost contractors about £1 million to put in place for accommodation for two, because of the costs of getting all the equipment on to the island. I do not think we can underestimate the costs.
I also visited a hospital that was used by the Americans, the Brits and the Filipinos. Provision was basic, so anyone giving birth or experiencing complications needed to be flown off the island, and it was very difficult to move around the island.
Is the former Minister suggesting that we go round the world and perhaps depopulate lots of other British overseas territories, such as Pitcairn, St Helena and Tristan da Cunha? Shall we just depopulate? Is that the right thing to do?
Certainly, if Tristan da Cunha or Pitcairn were unpopulated, I think it would be wrong to repopulate those islands. If the Americans were not on the island I am not sure it would be the right thing to repopulate Diego Garcia. We cannot provide the level of services that people demand. In the United Kingdom we are already providing benefit to people in Diego Garcia as members of the British public. After I stopped being a Minister, I visited Mauritius, where I saw the community—[Interruption.]
I apologise for taking longer than I might have over my speech and for not taking more interventions. I am happy to attend the all-party group—and, indeed, to join the group, if I would be accepted as a dissenting member—and to discuss my visit and experiences with parliamentarians in a bit more detail.
Order. Members now have only four minutes for speeches, because we must start the winding-up speeches at half-past.
I will make my comments very quick, but perhaps by saying less rather than speaking quickly.
I congratulate the hon. Member for Romford (Andrew Rosindell) on making, as always, a cohesive speech to set the scene. The issue is full of uncertainty. The three issues of resettlement, the marine protected area and sovereignty are weighty, and much thought needs to go into them. That is why it has taken so long to come to firm conclusions and why I join the all-party group in asking for the right decision to be made.
We all know the history of the islands and the reason why the British Government took the steps they did to secure defence for us and our allies. What was done was necessary at the time. The human aspect is that more than 1,000 islanders had to move from their home. My heart goes out to the people who had to settle elsewhere. We cannot ignore that, but we need to think about it in the context of that time in our history, when defence was at a premium. We are not at the same point, internationally, as we were. Perhaps we no longer need the use of the islands, but that decision cannot be taken without regard to the pressures put on us by the UN tribunal judgment. We cannot ignore it. Clearly, decisions were made by Britain as a colonial power and we still have the right to make those decisions.
I know that we do not have—indeed, we may not even want—the reputation of a colonial power, but we do have responsibilities that must be addressed, such as the legacy of colonial nations. Despite the legal steps that Mauritius has taken recently, it should be hoped that we can work together to determine what is best for all involved. We are the closest of allies with another former colony, although after Brexit I do not know if that is still the case, considering President Obama’s “back of the queue” remarks. It is to be hoped that relations with Mauritius can be rebuilt. I am certainly of the belief that those who were resettled must have the option to return home, and must be aided in doing so, should it be decided that the issues have progressed enough for our security in the area to be solid without having the territory.
We asked the islanders to leave, and we must be of a mind to help them to go back if that is what is needed. However, we should not bear the responsibility alone. Our American allies were instrumental in the decision-making process in the 1960s and they should now facilitate the resettlement of islanders as a matter of urgency. The American military base in Diego Garcia plays a large part in considerations, and there are certainly responsibilities on the part of the Americans. Will the Minister explain what discussions have taken place with our allies to see what role they will play in resettlement in the near future?
The marine protected area was legally established—that has been a big issue in the debate—and is a further decision for the Government. I would again urge caution. The fact is that we had the right to take the steps that were taken. Now is the time to reconsider what is needed and how we can help facilitate the return of those who want it. However, the issue is not one for emotions alone. It requires in-depth thought, and consideration of our global defence and security strategy. We cannot ignore the human aspect, but we must understand that there is a larger picture to be considered.
I will be quick, Mr Betts. Let us be quite clear. Diego Garcia is the largest US base outside continental America. Its strategic position is vital for the western world. It is clear that it has got to stay, because, in these troubled times, we should not give up such a positioning. Diego Garcia has a huge air base. It also has facilities for military ships and, clearly, it is a forward mounting base for a large number of troops—allied troops, not just Americans—if necessary.
We all understand the importance of the base’s strategic position in the middle of the Indian ocean. We understand why it was built there. We also probably understand why Chagossians were evicted between 1967 and 1973. I understand it, but it is wrong. It was wrong then and it is wrong now. A solution is required to this problem and compromise is necessary. The British Government—our Government—say they want to try to get people back. That is great, but it is clear that the base is going to have to stay there. It must stay there. It is too good a strategic military facility for us to give it up lightly. Well, I do not think we are going to give it up. It is not ours. It is America’s, but actually we own the territory—or do we? Actually the Chagossians own it. I am very much in favour of getting Chagossians back to their homeland.
My hon. Friend the Member for Romford (Andrew Rosindell) has suggested a way for that to happen. If there are about 3,000 Filipino people working there, and about 3,000 Chagossians want to return, how about slowly changing the mix, so that Chagossians can go back and have a job there if they wish? It is mad that Chagossians cannot work there but Filipinos can.
I will be very brief. I just wanted to comment on the remarks of my hon. Friend the Member for Beckenham (Bob Stewart). I do not think there is any question of the base being given up in our lifetimes because it is obviously of key strategic importance. We should follow the advice of my hon. Friend the Member for Romford (Andrew Rosindell), whose speech introducing the debate revealed great wisdom and huge experience on everything to do with the overseas territories. We need to draw a distinction between the different arguments.
The argument about resettlement is incredibly important. We have had a report and heard many speeches. I personally feel that there is a powerful case. I take on board entirely some of the obvious practical objections and difficulties. My hon. Friend the Member for Rochford and Southend East (James Duddridge), who was my successor as Minister with responsibility for Africa and the overseas territories, went to the British Indian Ocean Territory and the Chagos islands—I was removed from office before I had the chance to do so, unfortunately. The House appreciated his words of wisdom this afternoon. There are many practical difficulties, but with the help of DFID and with a great deal of imagination and innovation, the arguments are quite strong.
We need to separate that issue from jobs on the base. We need to be clear about the fact that the distances involved are huge. Diego Garcia is many miles from the outer islands. We are talking, therefore, on the one hand, about possible resettlement not on Diego Garcia as such but in the old villages and towns on the outer islands, and on the other about jobs on the base. We need to draw a distinction. There are a lot of jobs, provided mainly by the United States Air Force and the American military, but also by the smaller UK team there. It is a great pity that the old town is in a dreadful state, and that American corporate social responsibility has not put money into building up the old town and repairing some of the buildings and putting some of the Filipinos and other workers into them rather than Nissen huts or containers.
The logic behind my questioning of my hon. Friend the Member for Romford and my hon. Friend the Member for Crawley (Henry Smith) about what effort the Americans are making to employ more Chagossians in Diego Garcia is that there are many jobs available. I would like there to be some sort of outreach programme in Mauritius and the Seychelles, and in Crawley, to find out what the demand would be. That could be an important next step—it is absolutely doable and achievable now—and a key part in the negotiations about renewal of the agreement. There is a great opportunity to do that but, as my hon. Friend the Member for Romford pointed out, time is running out. The Foreign Office really needs to put a great deal of effort into seeing whether some form of scheme can be put in place immediately. I hope the Minister takes that on board.
It is a pleasure to serve under your chairmanship, Mr Betts, and to speak on this matter in Westminster Hall for the second time. The first was exactly a year ago, in the debate secured by my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Dr Monaghan), who sends his apologies that he cannot be here today. I congratulate the hon. Member for Romford (Andrew Rosindell) on securing the debate, on giving us a comprehensive introduction to the current situation and on replacing the right hon. Member for Islington North (Jeremy Corbyn)—I am sure some Labour Back Benchers wish that that was as easy in all circumstances as he appears to have found it.
This has been a comprehensive debate. To leave plenty of time for the Minister to respond, I will dwell briefly on just a few points: resettlement of the Chagos islanders as a human rights issue; the weakness of the various arguments that we have heard against resettlement; and a couple of broader questions about the sovereignty of the islands and their use as a US base.
As my hon. Friend the Member for Kilmarnock and Loudoun (Alan Brown) said, the Scottish National party clearly stands for the principle of self-determination. It is great to hear so many Conservative Members standing up for that principle today, and I hope they will want to endorse it again if the Scottish Parliament considers another referendum Bill. We have stood in solidarity with the Chagossians for a long time; indeed, in 2004 my right hon. Friend the Member for Gordon (Alex Salmond) said in this Chamber:
“The more we discover about the matter, the more disgraceful, underhand and thoroughly disreputable the long-term treatment of those few thousand people is shown to have been.”—[Official Report, 7 July 2004; Vol. 423, c. 277WH.]
That disgraceful treatment continues to this day, at the cost of the United Kingdom’s reputation as a defender of fundamental human rights. We remain guilty of double standards and hypocrisy; as was said earlier, if the eviction took place today, it would be considered a breach of fundamental human rights under international law.
In 2009, the right hon. Member for Broadland (Mr Simpson), who was then a shadow Foreign Office Minister, said in this Chamber:
“There is no doubt that there is a moral imperative.”
“what I suspect is the all-party view that the rights of the Chagossian people should be recognised, and that there should at the very least be a timetable for the return of those people at least to the outer islands”—[Official Report, 23 April 2009; Vol. 491, c. 176WH.]
That was the Conservative position in 2009; it would be interesting to hear whether it still is, now that the Conservative party is in actually a position to do something about it.
We have heard a number of objections about the feasibility of resettlement, not least from the former Minister, the hon. Member for Rochford and Southend East (James Duddridge). I say to him with the greatest respect that there may well be logistical challenges to resettling people on the islands, but—as the hon. Member for Crawley (Henry Smith) said—this is about their right to return almost as much as it is about whether they do return. As for logistics, there is a US naval base, which I presume has electricity and running water, on the island. If it is possible for the United States Government to build such a sophisticated base of operations in such a remote location, surely it is possible for people to choose to make their own lives on the island in the way that their ancestors did for generations.
I apologise for the fact that I could not be here for the start of the debate. Hon. Members will recall my position on the matter as the shadow Foreign Office Minister in the last debate: I am a strong supporter of righting this historical injustice. With respect to logistics, we have been able to move ahead with building an airport in St Helena, and we have done many other things in the overseas territories that have cost an awful lot and have been logistically difficult.
Absolutely. I do not think any of this is beyond the wit of man. The point has been made several times that if the Government diverted some of the money they spend on litigating the issue towards helping the people they forcibly removed to resettle in their own homes in their ancestral territory, the infrastructure issues could be overcome.
I am excited to hear what the Minister has to say about the US position, given the differing views we have heard on what that might be, but perhaps we should flip our perspective. Perhaps we should think about not whether resettlement is a barrier to US activity, but whether US activity has to get in the way of resettlement. Those things ought to be able to co-exist, although perhaps there are questions about the US use of the area as well. The former Assistant Secretary of Defence under Ronald Reagan, Lawrence Korb, has said that there is “no good…reason” to oppose the Chagossians’ return. As my hon. Friend the Member for Kilmarnock and Loudoun said, yachtists seem to visit the island pretty frequently, so there does not seem to be much of a security concern there.
Nor should conservation and the right to return be mutually exclusive. I imagine that people who want to live on remote islands want to live in harmony with nature, ensure that their lifestyles are as sustainable as possible and respect the sustainability of the environment, even if the marine protected area is on questionable legal ground—or in questionable waters.
There are general questions about the sovereignty of the islands. It is not just a question of the right to return. We are in a critical phase, with the roll-over of the 1966 agreement about to take place. I would be interested to hear whether the Minister believes that part 2 of the Constitutional Reform and Governance Act 2010 applies. That Act places treaty ratification into statute and requires parliamentary scrutiny of it. We may be faced with the roll-over of a treaty, but surely the particular circumstances of the 20-year extension mean that it should be subject to the affirmative procedure in Parliament, and surely the Government have nothing to hide or to be concerned about. If the Minister cannot answer that question today, I hope he will do so in the not-too-distant future. In any event, not only Parliament but the Government of Mauritius must be included in any future dialogue.
Finally, there are issues relating to the use of the naval base, as my hon. Friend the Member for Kilmarnock and Loudoun alluded to. It is important that we get assurances that the British Indian Ocean Territory has not been used for the illegal rendition or torture of detainees during the so-called war on terror. If it has, people should be brought to justice. We call on the Government to recognise that Diego Garcia is part of the internationally recognised African nuclear weapon-free zone and to give assurances that no nuclear weapons or other weapons of mass destruction have ever been placed there. They must also give assurances that military installations on Diego Garcia have not been used to store cluster bombs, in violation of their treaty obligations under the convention on cluster munitions.
The SNP stands fully behind the right of the Chagos islanders to return home. As recently as 16 September, we heard that the Government want to keep the matter under review, but we need an answer at long last. As several hon. Members have noted, it is not clear what makes the Chagos situation so unique. Why are the Government so insistent on standing in the way of the right of return? Is it cost, is it security, or do they simply not want to admit that successive Governments have got it wrong? Britannia has not ruled the waves for some considerable time; the sooner the UK Government realise that, the better.
It is an honour to serve under your chairmanship, Mr Betts. I congratulate the hon. Member for Romford (Andrew Rosindell) on securing this important debate and on the work of his all-party group, which has relentlessly promoted the issue in Parliament.
The Chagos islands attract cross-party consensus on the right thing to do. Today is the day to break through the institutional inertia, the sense of paralysis and the 17 years of expensive litigation that has amounted to millions of pounds of public funds wasted. This could all have been sorted if it had been looked at from the beginning as a fundamental human rights issue.
Many Members have made excellent contributions today. The hon. Member for Crawley (Henry Smith) described the appalling irony that Filipinos who work on the base in Diego Garcia are permitted to live there, but indigenous islanders cannot—a very important point. Mr Bryant, the Member for Rhondda, observed that while the US position should definitely be taken into consideration, it should not be the defining principle for this Parliament. Mr Duddridge described—
Order. It is not appropriate to address hon. Members by name; please refer to them by constituency.
Thank you for that timely reminder, Chair—Mr Betts. [Laughter.]
The hon. Member for Rochford and Southend East (James Duddridge) described vividly his journey to the British Indian Ocean Territory islands. He also described some of the difficulties of any resettlement package, which are of course understandable after 50 years. However, there remains a question simply of justice. It is some 51 years since the creation of the British Indian Ocean Territory and 49 years since the expulsions began—that must be one of the longest exiles in world history.
Nearly four years ago, on 20 December 2012, the then Foreign Secretary Lord Hague announced a review of policy, and in 2013 he commissioned the much mentioned KPMG study into the feasibility of a return for the islanders. That study was concluded in 2014 and published in February 2015. It found no insuperable obstacles to resettlement. In a further consultation with the Chagossians, the Foreign and Commonwealth Office found that 98% of the 825 who responded were in favour of resettlement.
With the extension of the 1966 UK-US agreement on the use of the British Indian Ocean Territory due by 30 December this year, now is the ideal time to allow Chagossians who want to do so to return to their homeland and rebuild their lives. In any case, all Chagossians want to be able to visit their islands at will. The all-party group believes that the extension should be conditional on both parties agreeing to support and facilitate resettlement, and that that should be reflected in a new side agreement.
It has been clear for some time from various discussions, including those between my right hon. Friend the Member for Islington North (Jeremy Corbyn) and President Obama last autumn, that although there are concerns that need to be addressed, the US has no strong objections to resettlement; otherwise, I am sure they would have come up at that meeting. We need to look carefully at the conservation issues, but we know that there are several miles around the islands in which fishing can be undertaken as a subsistence occupation.
The cost of resettlement could be reduced by simple infrastructure and the supply of goods and services from elsewhere in the region, such as Mauritius. We should look to the US, the European development fund and the DFID budget for that—after all, the Secretary of State for International Development said this morning that she was looking for some new projects to fund. I am sure that there are British companies that would be interested in infrastructure projects on the islands. Resettlement need not be much of a burden on the taxpayer, particularly compared with how much has so far been spent on expensive legal fees.
The continuing damage to the UK’s reputation for the promotion of human rights far outweighs the cost, liabilities and risks of trying out a resettlement. The UK’s reputation is tarnished by the ongoing violation of fundamental human rights. It is clear that this is not a one-party issue; it is cross-party, and we agree about it. As the hon. Member for Beckenham (Bob Stewart) said, it was wrong then and it is wrong now.
In June, the Supreme Court concluded that in the light of the KPMG study, maintaining the ban on the Chagossians’ return may no longer be lawful. The court noted that if the Government failed to restore the right of abode, it would be open to Chagossians to mount a new challenge by way of judicial review on grounds of irrationality, unreasonableness and disproportionality. The court castigated the FCO, noting that, in withholding important documents, its conduct had been “highly regrettable”. Surely, after all these years of expensive litigation, costing several million pounds, this should be the day on which we proclaim that we will do the right thing. If we do not rectify the situation, it will be for ever on our consciences. I note the presence of several former Ministers; I think that is because this issue must be resolved.
In 23 April 2009 the right hon. Member for Broadland (Mr Simpson), then a shadow Foreign Office Minister, said in this Chamber on behalf of the Conservatives something that the hon. Member for Glasgow North (Patrick Grady) quoted earlier. It is worth repeating:
“There is no doubt that there is a moral imperative…I suspect…the all-party view”
“that the rights of the Chagossian people should be recognised, and that there should at the very least be a timetable for the return of those people at least to the outer islands…The Foreign Office should recognise that the House of Commons feels very strongly on that.”—[Official Report, 23 April 2009; Vol. 491, c. 176WH.]
More than seven years later, can we now expect the Government to fulfil that commitment?
If the Minister could leave a couple of minutes at the end for the mover of the motion to wind up the debate, that would be appreciated.
It is a pleasure and an honour to respond to this very important debate, in which Members have eloquently summed up the wrongs and challenges facing the Chagossians, as well as the length of time it has taken for us to work towards a solution. Like the shadow Minister, the hon. Member for Hornsey and Wood Green (Catherine West), I am conscious that there are present many previous Ministers who covered the portfolio. At one point I thought I could just stand back and allow them to answer all the questions, such is their detailed knowledge, which I shall draw on as I develop my points.
I begin as others have by congratulating my hon. Friend the Member for Romford (Andrew Rosindell) not only on securing the debate and raising the issues, but on his work throughout the Commonwealth. He gives a sterling effort in ensuring that the voices from the British overseas territories are heard and that these matters are debated. The whole House pays tribute to him for that. I also congratulate him on his election to chair of the all-party group, which is important in promoting these debates and in ensuring that these matters are considered.
I apologise on behalf of my right hon. Friend the Minister for Europe and the Americas. Normally he would respond to the debate, but is currently travelling. We have been keeping notes on all the questions that were raised, and I will ensure that they are in his in-tray when he returns from his overseas visit.
I shall be up-front straightaway and, like successive Governments before this one, make it clear that we need to express our sincere regret about the manner in which the Chagossians were removed from the British Indian Ocean Territory in the late 1960s and early 1970s. We can all agree that what happened was wrong. That has been summed up by many of the voices we have heard during the debate, but most powerfully by my hon. Friend the Member for Crawley (Henry Smith), who made the case very clearly indeed. What happened in the ’60s and ’70s was unforgivable.
We are aware of the Chagossian community’s strong attachment to the islands and their long-stated wish to resettle. It is the job of the Government to examine the issue dispassionately. We must consider the interests of the Chagossian community as well as the wider UK interests, including our security and the interest of UK taxpayers, and we must be honest and realistic about the lifestyle that a resettled population might expect. That is why, as we have heard, in 2012 the Government launched a review of the resettlement policy to understand the demand, viability and cost. We have taken great care over that work, commissioning an independent feasibility study, consulting widely, including with our US allies, and visiting and listening to all those with expertise and interests.
I must be clear that, as has already been articulated, establishing a small and remote community on the territory would not be straightforward. The independent feasibility study published in 2015 found that resettlement could be viable, but also highlighted significant practical challenges, including the difficulty of establishing modern public services, healthcare, education and economic opportunities, particularly job prospects. The challenge that we face, even if we want to pursue this ambition, was best and vividly described by the former Minister, my hon. Friend the Member for Rochford and Southend East (James Duddridge)—he described the challenges we face on some of the outer islands that might be considered for resettlement. It would be a very difficult task indeed.
When the House last debated this issue almost a year ago, a 12-week public consultation had just concluded. The results of that consultation were published in January 2016. It found that, although resettlement was a key issue for the 832 Chagossians who responded, there were more nuanced views about the resettlement scenarios. Only a quarter of those who were in favour of resettlement were also content with the realistic scenarios of how it might work in practice. Our consultations highlighted that further work was needed to refine those policy options—what actually works in practice? That work is under way and when it is complete, the final policy decision will be taken and announced to Parliament and the public. As yet, there is no fixed date for that announcement, but I assure hon. Members that we expect it to be before the end of this year.
Will the Minister elaborate more fully on what exactly that additional work, which he says is ongoing, is in terms of policy, lifestyle and presumably the viability of a settlement?
As I touched on, the work is on some of the economic opportunities that exist, lifestyles and the ability to provide the necessary support. We need further work to ensure that the proposal is viable. I think that it was mentioned in one of the earlier contributions that it is simply not enough just to find a solution to return those who want to go back; there needs to be a viable and sustainable community. The options need to be examined in more detail.
I am very grateful to the Minister for setting out a time frame—he said he hoped to make an announcement by the end of the year. He will correct me if I am wrong, but did I understand that he just said that a quarter of the respondents to the consultation said that they did not want to go back? I ask because the House of Commons Library is under the impression that 89% of the 895 Chagossian respondents supported resettlement.
If I may, I will get a more detailed report on the analysis that came back from the consultation and write to my hon. Friend so that he is fully appraised of the response to the consultation. However, the bottom line is that the details about how a resettlement would work in practice need to be pursued. We hope to make sure that that happens, but I will articulate to the Minister responsible that we want an answer and a report back to Parliament within the year.
Many hon. Members have stressed the strategic importance of the military location. Anybody with a military background is soon made aware of the significance of Diego Garcia and its role internationally for our allies, for NATO, for the United States and for Britain. The joint UK and US military facility on Diego Garcia contributes significantly towards global security—I cannot stress it any more than that. It is central to our operations, and to those of the United States and our international partners, to counter threats in the region, including terrorism and piracy. The continuing operation of the base is a key factor that we must take into account in our considerations.
One hon. Member asked about dual accounting in official development assistance and defence spending. I will make it very clear that there are occasions when military activity comes under the Ministry of Defence budget and qualifies for ODA activity. I complained about that when I visited Afghanistan and found that Britain was doing work in military training, mine clearance and so on, which is “ODA-able” but we were not charging for it. We were doing things that did not go towards that figure. It is very important to put into context that this is not a competition as such. Those who make the ODA rules—it is not us—recognise that certain minimal activities to do with stabilisation, reconstruction and peacekeeping can be paid for by military personnel. There are not many activities, but there are some.
On that very point, would it be possible to use the Royal Air Force’s Voyager aircraft—the big ones—to take Chagossians back for a visit, and then bring them out again?
That is another point I will pass on to my right hon. Friend the Minister for Europe and the Americas to consider when he gets back.
The British Indian Ocean Territory marine protected area in the north, which the UK declared in 2010, is highly valued by scientists from many countries. They consider it to be a global reference site for marine conservation in an ocean that is heavily overfished. We are aware that some concerns have been raised about the motives for the creation of the MPA, but those concerns are unfounded and I was pleased that previous Ministers were able to clarify exactly how the MPA came about.
The UN convention on the law of the sea arbitral tribunal found no evidence of improper purpose in the creation of the MPA. This issue has been scrutinised by UK courts, which have consistently found, including as recently as May 2014, that there is no substance whatever to the allegations of improper use. The arbitral tribunal found that we should have consulted Mauritius about the establishment of the MPA, so as to give due regard to its rights, and we have started a series of bilateral meetings to implement the tribunal award. The most recent of those meetings took place in August.
I reassure the House that the Government are very aware of the views and concerns of the Chagossian people, and of all those who support them. Those views have been fully and passionately represented by hon. Members today. We want to make the right decision, based on all relevant factors, including what we have heard during the course of our consultations with Chagossians living here in the UK, and with Chagossians in Mauritius and the Seychelles. We have to balance the Chagossians’ views against the practical difficulties that our feasibility study has highlighted, the very real concerns about costs, and our need to operate a military facility that is vital to our security.
I thank my hon. Friend the Member for Romford for securing this important debate, and all hon. Members for their contributions. The Minister for the Commonwealth and the United Nations, Baroness Anelay of St Johns, is looking forward to meeting the all-party group in due course.
I thank hon. Members from all political parties who have contributed to this important debate today. However, we still do not know what will happen. We are still waiting anxiously to find out what Her Majesty’s Government’s decision will be. It is not only those of us here in Westminster Hall today who are waiting but the people of the Chagos islands, whose spirit has been broken these last 50 years.
We in this House have a duty, first and foremost, to stand up for the interests of the British people, and the Chagossians are British. They are as entitled to their human rights, their dignity and their right of self-determination just as much as we are in this Chamber and just as much as our constituents are. We defend our overseas territories and their rights to remain British and to self-determination, and yet we single out one of them and say, “Your rights are not at the same level as the others.” There is no moral justification for that.
I say to the Minister that my right hon. Friend the Member for Broadland (Mr Simpson) made it clear when he was shadow Foreign Minister that this issue had to be addressed when we were in government. Why after six years have we failed to do so?
I do not buy for one moment the idea that the islands cannot be inhabited. That is propaganda. Other remote islands around the world—the Maldives are not that far away from the Chagos islands—are fantastic tourist destinations. If they can be inhabited and used, whether for marine conservation or as a military base—we defend the importance of the military base on Diego Garcia—there is absolutely no reason why we cannot come up with a plan to put right this situation, which has gone on for far too long.
I know the Minister is a defender of the rights of British subjects to self-determination in the rest of the overseas territories. I ask him please to take this back to the Foreign Secretary and the Prime Minister. Please say to them that this is the last chance—the very last chance—that we are going to get, prior to the potential renewal of the agreement between the US and the UK, finally to resolve this injustice and to give the Chagossian people the same rights that we would always defend for our own constituents.
The British way is to stand up for human rights and self-determination, and to give people the right to determine their own destiny. As my hon. Friend the Member for Crawley (Henry Smith) said, let us do the British thing and give the people of the Chagos islands the right to continue to be British in their own homeland.
Question put and agreed to.
That this House has considered Government policy on the British Indian Ocean Territory and Chagos islands.
Child Sexual Exploitation: Telford
[Mr Philip Hollobone in the Chair]
I beg to move,
That this House has considered child sexual exploitation in Telford.
It is a great pleasure to serve under your chairmanship for the first time, Mr Hollobone. I take this opportunity to congratulate the Minister on her appointment. I know that she will be a great champion of the vulnerable.
Child sexual exploitation is a sensitive and difficult subject, and I am grateful for the opportunity to speak for the victims in my constituency. Telford has the highest recorded rate of child sex offences in the country, a rate that has continued to increase. House of Commons Library documentation shows that child sex offences in Telford are now at a rate of 18.4 per 10,000 heads of population. That rate is greater than in higher-profile places such as Rotherham, Rochdale and Middlesbrough, and compares with a national average of 7.9 cases per 10,000 heads of population. We know that the crime has gone on in Telford for more than 20 years and is still going on. I raise the matter today so that we can better understand the causes and break the silence that surrounds the issue, giving victims the chance to be heard. We need to find out what went wrong and what could have been done to prevent the exploitation, and ensure that we learn the lessons of the past.
In recent weeks, I have met with bright, articulate, young women who have come to tell me about their experiences, in some cases stretching back over many years. What has come across powerfully for me is that victims want to be reassured that they will not be brushed aside. They want recognition, and they want acceptance that something went wrong. We all want to have confidence in the authorities in Telford, which are tasked with the difficult responsibility of protecting our young people, and that is why I have asked for an independent review. We need to be sure that we have put mistakes right and that the culture has changed. It is not about blame, but about acknowledgement that victims were failed. Pretending otherwise intensifies the sense some victims and their families have that what happened to them was somehow their fault.
There needs to be a much better understanding of social and cultural attitudes towards women, because it was, in part, the attitudes to the victims that led to the crime being unidentified or unaddressed for so long. We must move away from victim blaming and shaming and recognise that these were children who were victims of a crime. We must change our perception of the victims. Too often, assumptions were made that the young girls were making choices to have regular underage sex. We see, for example, GPs handing out morning-after pills to the same young girls week after week, without asking questions, simply assuming that it is a choice the girls are making. It is wrong to blame children as young as 12 for “indulging in risky behaviour” or label them as sexually promiscuous. That is completely wrong.
In Telford we have seen the recent phenomenon of shaming videos, in which derogatory terms are used to describe young girls. The girls are “outed” for allegedly promiscuous behaviour. That attitude to women and girls promotes a culture in which it ultimately ends up being acceptable to trade women like commodities and then blame the women themselves. There has been an emphasis on educating girls and their families about the risks of grooming, but it is equally important that our boys are educated so they do not think it is normal to treat young girls in that way.
One particularly poignant aspect of child sexual exploitation is that the young victims often believe themselves to be in relationships with the men who groom them. I have had victims tell of their conflicting emotions of loyalty and attachment to men who befriended them and gained their trust but then went on to trade them for sex with other men and trap them in fear of being exposed or shamed, or of their friends and families finding out. It is essential, therefore, to do more to encourage victims and their families to come forward, and to ensure that they are properly supported and helped to overcome their experience. Too many of them fear being stigmatised and blamed, and for that reason keep quiet. In many cases, young women who are now adults are only just starting to make sense of what happened to them when they were as young as 12, and they may have parents, partners and children who know nothing about it. Shaming leads to a culture of silence around the issue, and we should therefore speak out so that victims feel more confident about telling their own stories themselves.
We have to be honest: this is a crime in which 95% of perpetrators are men and most victims are young girls. We do no one any favours to ignore that fact or to avoid the conclusion that historical child sexual exploitation, like many sex crimes, is a consequence of social and cultural attitudes towards women and negative gender stereotyping.
I commend the Government’s commitment to dealing with child sexual abuse. Their setting up of the independent inquiry led by Professor Jay is a testament to that commitment. Authorities in Telford have said that no independent review of what happened there is necessary, because the overarching national investigation into child sexual abuse will look at that. The Jay inquiry is tasked with investigating child sexual abuse in institutions, and in cases where abuse was reported but no action was taken, but for victims in Telford the abuse happened in cars, in the streets, in betting shops, in takeaways and in taxis, and we know that many of the victims not only did not report it but to this day remain afraid to tell anyone what happened. I have looked at the terms of the truth project, which is how the Jay inquiry will take evidence, and they clearly set out three different scenarios in which evidence will be taken from young people. They all relate to institutional settings or to institutions failing to act on reports of abuse.
On the face of it, it therefore appears that the Jay inquiry does not cover child exploitation, and I should be very grateful if the Minister could clarify that, either in her response today or after the debate. Can a victim of grooming and child sexual exploitation in Telford come forward and tell their story to the Jay inquiry, and have their experience inform the inquiry and its findings? Even if the Jay inquiry is to cover child sexual exploitation in Telford, we do not expect the report to be finalised until 2020, given the many competing strands and areasof investigation. How likely is it that we will get to understand fully the causes of what happened in Telford if we can rely only on the Jay investigation?
A Select Committee on Communities and Local Government report on lessons learned from Rotherham, produced in the 2014-15 parliamentary session, stated:
“We would be seriously concerned if other local authorities…were to hold off…investigations”
pending the outcome of the Jay inquiry. It also noted that “the stimulus for action” in getting the Rotherham inquiry to take place was the press and not any council processes or external inspections. It is important to challenge those in authority so as to avoid any complacency creeping in, and we should all, as Members of Parliament, challenge attitudes towards the powerless and the voiceless.
I know that good work is going on in Telford and that progress is being made. However, even if we accept that everything is as it should be—and that very well might be the case—there still needs to be recognition that this happened. There are those who would rather we did not talk about the issue. I understand that it is difficult, but we should not shy away from it just because it is difficult. If we brush it off and say, “It’s all okay now”, that is not much comfort to victims.
I invite those who would rather we did not speak about the issue to think about how that makes victims feel. I urge them to realise what a sensitive, complex issue it is. Not talking about it does not make it go away; it diminishes the experiences of victims. It is almost to dismiss the experience as though it never happened. When people in authority say, “Well, it’s all okay now”, it feels like no one is listening. We do not want any young woman feeling that there is no point in saying anything because nothing will be done or that she will be blamed, shamed or in some way made to feel culpable. In any event, there is a natural reluctance to go to social workers or the police, and we should do all we can to give the victims the confidence to come forward.
I want to say to those girls in Telford who have not yet spoken out that they are not to blame. This was a crime. It was something that happened to them that should never have happened. It takes huge courage for them to see their MP and talk about it, and I pay tribute to all the bright and articulate young women who have told me their stories.
I also want to touch on the distress caused to parents. There is a sense of self-blame, with parents asking, “Did I fail my child? I do not know how to make it better. How could I not have known this was happening?” Support for families is a vital part of the healing.
I pay tribute to the street pastors in Telford for their fantastic work. I have been out with them at night and seen the work they do with young people leaving clubs, sometimes the worse for wear. People in Telford feel a huge sense of trust and warmth towards them, and they must be congratulated for being such an important part of our community.
In conclusion, there needs to be more work on challenging cultural and social attitudes towards women and girls, or this crime will keep on happening. We need to recognise the social and cultural prejudice—albeit unconscious—that exists. Much can be done to focus on the perpetrators: the men who buy and sell young girls for sex. We should also be mindful of those who turn a blind eye or who see these girls through a negative gender stereotype. It is not the victims who are to blame.
I take this opportunity to thank the Home Secretary for a very full and thorough response to my recent correspondence on the issue. I am most grateful to her for taking these concerns so seriously and for making the issue a priority. I am pleased to learn that she is sending her officials to Telford to discuss the issue with the authorities. I know that the authorities in Telford are committed to getting it right. I know they want to build the confidence of the people they are there to protect and the public. An independent review will find out why this crime happened and will give reassurance to victims that they will be heard and will not be ignored, and it will ensure that all is being done to stop it happening in the future. I have been a councillor, and I know how difficult it is for even the best councils to find fault with themselves and to cast a critical eye. It is easy to drift into complacency or close down challenge by seeing complainants as a nuisance or those who speak out as somehow vexatious. Respectful challenge is to be encouraged and is part of a healthy transparent process that enables victims to come forward and get the help and support they need.
Finally, I pay a special tribute to one young woman who motivated me to ask for the review and this debate, and who is here today. She has been incredibly courageous and has fought hard to make things better for others. She has been willing to challenge the system, question authority and put forward solutions to ensure that this crime is tackled. She has already made a huge difference to the debate on this issue, and I thank her for that. She can be assured that as her MP, I will continue to speak for her and for others who have suffered, to ensure that their voices are always heard.
I warmly congratulate my hon. Friend the Member for Telford (Lucy Allan) on securing this vital debate, which is of huge importance to her constituents. She has shown herself to be a doughty champion of them. I am grateful to her constituent for being so brave. It could not have been easy for her to speak her MP, even though my hon. Friend is so lovely and so nice. Her constituent would not have known that. She had the courage to speak to a Member of Parliament and share intimate, personal and difficult issues in her life. She was so brave, and she motivated my hon. Friend to take up this cause. Whoever she is, I pay great tribute to her for doing that. I can absolutely assure her that her voice has been heard today, and I have no doubt that her Member of Parliament will continue to champion such causes to make things much better for everyone in Telford.
Rightly, we all understand that child sexual abuse and exploitation is a despicable crime, and we must do everything in our power to prevent it from happening. I am clear that where abuse has occurred, it must be thoroughly and properly investigated and those responsible brought to justice. Anyone who has suffered child sexual abuse, however long ago, should feel confident to report what has happened to them to the police in the knowledge that they will be supported and their abusers will be brought to justice. Abuse should be reported to the local police force, but if victims feel more comfortable telling someone they trust who can then support them to make the disclosure to the police when they are ready, that is also welcomed.
As a result of a lot of training, police attitudes have improved. My hon. Friend may have constituents who were frightened to go to the police, but they should have the confidence to go to the police now. Wherever and however long ago the incidents happened, they will be listened to carefully. I am sure they will find it is a different experience today than it perhaps was in the past. The police will gather evidence so that they can press charges and secure a conviction through the Crown Prosecution Service. If there are any remaining concerns that allegations are not being investigated thoroughly, that can be escalated, first through a complaint to the local force. Any complaint against the local police force on allegations of child sexual exploitation is automatically referred to the Independent Police Complaints Commission. There is a more rapid and serious escalation of those concerns.
As my hon. Friend mentioned, the Government are undertaking an ambitious programme of work to tackle child sexual abuse nationally, as we clearly set out in the “Tackling Child Sexual Exploitation” report. That report includes a lot of the issues that she raised, including education and challenging stereotypes about women, as well as looking at working with perpetrators and the attitudes of young people. We have urgently tackled the culture of denial within professions about the scale and nature of this crime, and we have strengthened local accountability. More victims and survivors of abuse are now being identified and are getting the protection and support they need.
The issues that my hon. Friend raised relating to historical failings in Telford are of great concern to me and to the Secretary of State. That is why we asked officials, ahead of this debate and their visit, to speak with us. We spoke to police leaders, the director of children’s services and the Local Government Association. Likewise, council leaders have written to the Home Secretary to provide reassurances that they are taking action to address past failures and are better able to protect children from abuse. Service leaders have separately told my officials that they acknowledge the scale of the problem and the past failures in Telford, as well as the remaining problems. They are prioritising tackling child sexual exploitation and are working together to address the issues.
I know that my hon. Friend recognises that steps have been taken in this area. Although overall children’s services were judged still to require improvement in Ofsted’s July report, it found that:
“Work with children and young people at risk of sexual exploitation is very strong. The local authority has been a champion for tackling this issue. It provides leadership to partner agencies, with who this work is well-coordinated.”
Her Majesty’s inspectorate of constabulary’s 2015 vulnerability inspection said that the police are
“demonstrating a strong desire to improve outcomes for children who are at risk of harm.”
The council and others must now focus on implementing the recommendations made by Ofsted, the council’s scrutiny committee and HMIC, so they can continue to improve their response to young people in Telford. A wide range of support is available to services in Telford and elsewhere through both the Local Government Association and the recently launched child sexual exploitation response unit, which is backed by £1.24 million of Government funding. The unit operates independently of the Government and will ensure specialist support is made available to people working in children’s safeguarding across the country, enabling them to develop and deliver a strong and robust first response to children and families who are the victims of child sexual exploitation.
It is for the authorities in Telford to decide whether they want to access that additional support, and whether they think an independent inquiry would help them make the further improvements they clearly need. I suggest that, if my hon. Friend has not already done so, she should encourage them to take up those offers of help, to look at the resources available in the child sexual exploitation response unit and to ensure they are doing absolutely everything to address her constituents’ legitimate concerns and to give the whole community of Telford the confidence and assurances that she seeks. She is absolutely right that the victims in Telford, to whom dreadful things have happened, must feel, first, that they have been listened to and, secondly, that those in power and with responsibility have learned lessons from the past. I hope she and the council can agree on the mechanisms by which that can be addressed locally.
My hon. Friend rightly commented on the national Independent Inquiry into Child Sexual Abuse, which has announced 13 strands of work. It is possible for her constituents to share their experiences with the inquiry. One of the strands of work allows people who have been affected to come to the inquiry independently and have their concerns listened to—they do not have to do so via an institution. Part of the inquiry’s work is to look at what more the BBC and other institutions could have done, but individuals can come forward with their experiences to shape our understanding and lead to better services in the future. I assure my hon. Friend that we are not waiting for the end of the inquiry. It is a huge inquiry, and it will take many years to hear all the evidence. It will report at least annually on lessons it has learned so people in the Home Office, the health service, local government and the police—the whole of society—can take on board that learning and start to change their actions. Again, I encourage her constituents to talk to the inquiry.
Ultimately, if my hon. Friend is not satisfied that the council and its leadership are really listening to the victims and the community at large, she has the opportunity to give evidence to the Secretary of State for Communities and Local Government. If there is good evidence that the council is failing, section 15 of the Local Government Act 1999 enables the Secretary of States to intervene directly but, as I am sure my hon. Friend understands, that is very much an action of last resort. We respect local government, but we expect them to conduct themselves in an open, transparent and good way, and they should be wholly accountable to the local people they represent. We will intervene, but it has to be based on a lot of hard evidence. From the independent inspections of Ofsted and the constabulary, we have not seen enough evidence to warrant intervention, but if my hon. Friend or councillors have evidence of a systematic failure of leadership, and if they feel they are not making progress, they should share that information with me and we will take it up.
I hope I have reassured my hon. Friend, her constituents who are here today and the wider community that we take this issue extremely seriously. My hon. Friend has done a very good job in raising those concerns. She should use some of the tools I highlighted, and she should not hesitate to meet with me and officials if she feels there is anything more we can do collectively or individually. We want to leave no stone unturned in stamping out the vile and despicable crime of child sexual exploitation.
Question put and agreed to.
Leaving the EU: North-East Exports
I beg to move,
That this House has considered the effect on exports from the North East of the UK leaving the EU.
It is a pleasure to serve under your chairmanship, Mr Hollobone.
We all agree that the British people’s decision on 23 June to leave the EU was the most profound decision to affect this country since the second world war. I, like many in the House, very much wanted the UK to stay part of the EU, but the country, including the north-east of England, voted otherwise. That decision must be implemented, but as my hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) has pointed out, the country voted on the principle of leaving, not on the terms. The detail is therefore important.
The referendum result has created much uncertainty about the UK economy’s long-term prospects, not just internationally but in many boardrooms around the country. I wonder how soon it will be before that uncertainty is felt in households in communities from south-east England to Scotland, from County Durham to Northern Ireland, and from Wales to East Anglia, and how soon it will be before that uncertainty spreads from the boardroom to the shop floor.
I want to use this debate to explain the importance of the European single market to the north-east of England, to raise several issues and to probe the Minister on what he and the Government think is the best option for the north-east of England in a post-Brexit Britain. I know the Minister shares the view that remain was the best option for the British people, but in our own ways we have both taken on responsibility for delivering the best deal for the UK under the circumstances, unlike the former—or perhaps the current—leader of the UK Independence party, Nigel Farage, who abandoned the field of play once he got the referendum outcome he wanted. Like all populists, he was ready to pick up the megaphone to let us know what he thought to be wrong, but when the argument went in his favour he was not prepared to hang around and take responsibility for putting right those perceived wrongs.
The Minister has the unenviable task of securing the best deal for Britain. Since he wanted to remain in the EU and the single market, how is he going to convince his colleagues that maintaining access to the single market is the best option? Furthermore, how are the Government going to implement all the promises made by the leave campaign, of which he now has ownership?
“Let’s give our NHS the £350 million the EU takes every week”—
so said Vote Leave’s website. That slogan was emblazoned on the side of the campaign’s battle bus. Vote Leave committed to “hundreds of new schools” in a campaign video on YouTube, and to the abolition of prescription charges. According to a Vote Leave press release from 14 June:
“There is more than enough money to ensure that those who now get funding from the EU...will continue to do so”.
There was a promise of new roads and the expansion of regional airports, and the right hon. Member for Surrey Heath (Michael Gove) even said in a Vote Leave press release from 19 April that there would be enough money for 14 Astute-class submarines. There was to be money for pothole repairs and tax cuts, and wages would be higher and fuel bills cheaper—no doubt, Brexit would be a land of milk and honey, where the sun shines and everyone lives happily ever after. The Minister is on record, in his blog, as saying:
“There was no manifesto for ‘out’”—
but yes, there was, and the people voted for it.
For the people of north-east England, we must get Brexit right, because although my constituents may have voted to leave the EU, I do not believe that they voted to be poorer, to put their jobs at risk or to see their region fall further behind. If I were them, I can imagine how disappointed and betrayed I would feel if, on top of all the uncertainty, which was not there before, all the promises made by those who supported the leave campaign were not met. That disappointment would be deepened by the fact that so many of those who made the pledges not only now sit on the Front Bench, but will sit around the negotiating table to negotiate our exit. The Minister and the Government have a duty to inform the British people of how those promises are to be fulfilled—the Minister might make a start today. If they cannot be fulfilled, perhaps the Minister will be straight with the British people and say so.
The EU single market is essential to the north-east of England: 58% of the region’s trade is with the EU, which is a full 10% higher than the national average; it is the only region that exports more than it imports; more than 100,000 jobs in the region rely on trade with the continent; and, over the past five years, almost 90 European investment projects have created or safeguarded more than 6,000 jobs, and £1.1 billion in inward foreign investment has come to the north-east from EU members.
According to the North East England chamber of commerce and a report by Ernst and Young, the north-east has seen the second highest increase in foreign direct investment—sitting just behind the north-west—with a substantial 83% increase on last year in FDI projects. An EY survey of investors about the link between the EU referendum and FDI asked how important access to the single market was, and 79% of investors cited access to the single market as a key feature of the UK’s attractiveness, a higher figure than last year’s. The same survey found that 52% of investors thought that a “slight change” in access to the single market would affect the attractiveness of the UK as a destination for business; in the event of a “significantly less favourable” change, the figure rose to 55%.
The North East England chamber of commerce has major concerns about future trade deals. Membership of the single market has brought significant benefits to the north-east of England, attracting business and creating jobs. The chamber stated in its EU referendum briefing paper of July 2016:
“There are also major implications for relationships with overseas markets where existing trade deals have been negotiated by the EU and for the future of trade documentation needed by businesses. Due to the complexities of these issues, there is significant concern among businesses about the UK Government’s capacity to address these issues in the required timescale before Britain exits the EU. Many of our members are also concerned about the effective flow of information so businesses are aware of any changes they need to make to their practices. Assurances about this are vital.”
What assurances about that will the Minister give to companies in the north-east?
In the same briefing paper, the chamber also stated:
“There is also....the hope and expectation that the anticipated benefits of Brexit in being able to conclude trade deals more quickly around the world will be realised. The new department headed by the International Trade Secretary...should aim to quickly set out its plans in this regard so businesses can see that Government is seeking to get beyond a damage limitation exercise to exploit new opportunities.”
I offer this opportunity to the Minister to lay out those plans. Business needs certainty, and that would seem to be the one thing in short supply at present.
As I am sure the Minister is aware, Japanese investment is key to the north-east of England. There are about 50 Japanese companies in the region, including Hitachi in my constituency. It provides almost 1,000 direct jobs, with many more in a growing supply chain. Nissan provides 7,000 direct jobs and 30,000 in the supply chain. With 300 automotive companies in the region, the car industry in the north-east produces £11 billion in sales and is responsible for more than £5 billion in exports.
Nissan is the UK steel industry’s largest customer in the automotive trade, purchasing most of its steel from Tata in the UK, largely from Port Talbot and the strip-producing sites. What does my hon. Friend think about the potential barriers to trade if energy imported from the European Union via interconnectors were to carry a World Trade Organisation tariff for the United Kingdom in future? What will happen to large manufacturing plants and energy-intensive industries when they face larger tariffs on energy imports?
My hon. Friend makes an important point. So much of Brexit has to be sorted out, and I do not know the answers, but I hope that the Minister will enlighten us. There will, however, be major consequences for industry in this country, but especially in the north-east, where a lot of our manufacturing industry is. It employs a lot of people there and provides skills that we need to revitalise the economy in the region.
Throughout the referendum campaign, I was clear about saying that if Britain voted to leave, companies such as Hitachi and Nissan would not immediately cease production, close their factory doors and ship out to the EU. I still believe, though, that if we are not part of the EU single market, the potential for long-term growth must be called into question. Furthermore, what growth there might be could come at a cost to the Exchequer.
Following Britain’s decision to withdraw from the EU, Nissan’s chief executive, Carlos Ghosn, indicated that the company might halt further investment in its Sunderland plant unless the Government agreed to compensate it for any adverse financial impact of Brexit. At the Paris motor show in August, Ghosn warned that
“important investment decisions will not be made in the dark…If I need to make an investment in the next few months and I can’t wait until the end of Brexit, then I have to make a deal with the UK Government”,
and he suggested:
“You can have commitments of compensation in case you have something negative. If there are tax barriers being established on cars, you have to have a commitment for car-makers who export to Europe that there is some kind of compensation.”
Earlier this month, the Prime Minister met with Mr Ghosn to explore what assurances Nissan was seeking. The Financial Times reported that the meeting came ahead of Nissan’s decision on whether to build its new Qashqai SUV in Sunderland, a decision that might be taken as early as November. After the meeting, Mr Ghosn said:
“Since Mrs May’s appointment, we have maintained a clear dialogue with the UK Government during this challenging time”,
and he stressed:
“We want to ensure that this high-performing, high-employment factory remains competitive globally and continues to deliver for our business and for Britain.”
“Following our productive meeting, I am confident the government will continue to ensure the UK remains a competitive place to do business. I look forward to continued positive collaboration between Nissan and the UK Government.”
On the face of it, those are nothing more than warm words, but last weekend The Sun newspaper reported that Nissan is to announce that it will build the Qashqai SUV at its Sunderland plant—I hope so—and that an announcement is imminent. If the new Qashqai model is to be built in the north-east, however, what kind of compensation is Mr Ghosn anticipating? To keep Nissan in Sunderland, what price will Britain need to pay that we did not need to pay before? Don’t get me wrong, I want Nissan to stay, but I believe that it is incumbent on the Government to tell us what the cost is. It seems to me that the much vaunted windfall to the Exchequer from not being in the EU will not be available to spend on the NHS—if ever it was—because it will be needed to subsidise industry in a way we have not needed to before.
The Japanese Government are so concerned about Brexit that they published a 15-page document at the time of the G20 summit in China, pointing out:
“In light of the fact that a number of Japanese businesses, invited by the Government in some cases, have invested actively to the UK, which was seen to be a gateway to Europe, and have established value-chains across Europe, we strongly request that the UK will consider this fact seriously and respond in a responsible manner to minimise any harmful effects on these businesses.”
The document also laid out several requests, such as maintenance of
“the current tariff rates and customs clearance procedures”
and the introduction of
“provisions for cumulative rules of origin”.
The Japanese Government gave those two key reasons, and others, for the UK remaining part of the single market and the customs union. I fear the consequences of all this uncertainty for the continued growth of existing foreign direct investment in the north-east of England and the region’s ability to attract FDI in the future. The Japanese, like many businesses in the north-east, have asked for transparency in the Brexit negotiations. It is not only Westminster politicians who are asking for transparency; business and the wider world are too.
The Minister wrote in a blog post on his website on 25 October 2011:
“A vote to come out of the EU would be to try to reverse nearly four decades of economic development…I am convinced that the advantages of membership outweigh the disadvantages.”
I agree. He said to the BBC just last month that
“we must…try to achieve…zero-tariff access to this market of 500 million people in the EU”.
Again, I agree, but it seems to me that in so doing, the Government are setting out in a direction that the Conservative party accused the Labour Government of taking back in the 1970s and upon which it frowned at the time.
The Prime Minister said in her closing speech at the Conservative party conference:
“It’s not about picking winners, propping up failing industries, or bringing old companies back from the dead. It’s about identifying the industries that are of strategic value to our economy and supporting and promoting them”.
That sounds very much like picking winners to me. We should support our industry and develop an innovative industrial strategy, but don’t let’s write off whole industries. Millions of people may have voted for Brexit, but let us not forget the millions who did not. I am of the view that the Brexit negotiations will be complicated and uncertainty will reign for some time to come.
We know that the Minister’s preferred option is access to the single market—if not membership—but in what form? The existing model? The Swiss model? Will we stay part of the customs union? Does he agree with the report by his own Government that said that leaving the customs union could cause a 4.5% fall in British GDP and a reduction in foreign direct investment of as much as £9 billion, with trading falling by as much as 15.6%?
Brexit is the defining issue of our time, and it is more than apparent that the Government did not have any contingency planning in place to deal with the immensity of the task ahead, so I doubt very much that this will be the last Westminster Hall debate on how the issue affects the north-east of England, let alone the rest of the country. The future prosperity of the north-east of England, and indeed our nation, depends on getting this right. In answering the questions that I have asked today, the Minister will have the opportunity to start to allay fears, provide certainty, promote confidence and offer optimism, and to show vision and belief in our country. We must have the right to stand tall in the world while acknowledging our responsibility to others. I look forward to his response.
Order. The debate runs until 5.30 pm. The guidelines for speeches by Front Benchers are five minutes for the Scottish National party spokesman, five minutes for Her Majesty’s Opposition’s spokesman and 10 minutes for the Minister. There will then be three minutes at the end for Phil Wilson to sum up. I therefore need to start calling the Front Benchers no later than 5.07 pm. Between now and then, the debate is open to Back Benchers. Three Members have stood to catch my eye. There is a galaxy of parliamentary talent before me, and it will be led by Hannah Bardell.
I am delighted to head up that galaxy of parliamentary talent, as you so eloquently put it, Mr Hollobone. I congratulate the hon. Member for Sedgefield (Phil Wilson) on securing the debate. As he says, I am sure there will be many more such debates and opportunities to drill down and have an ongoing conversation. If the Government are not going to have an ongoing commentary on the EU, we Back Benchers certainly will.
As the hon. Gentleman said, the UK’s relationship with the EU is significant for the north-east, which in 2015 exported £7 billion of goods to the EU—58% of its total, which is well above the UK average of 48%. This debate is about the north-east, but I hope he and you, Mr Hollobone, will indulge me if I touch a little on the impact on Scotland and the rest of the UK.
The value of the pound has dropped significantly since the announcement of the referendum result. Although that offers a short-term gain for some, such as those looking to buy property in the UK, increasingly expensive imports and exports will hurt the UK and all the countries in it in the long term. I noted with interest the Financial Times article yesterday that stated that the percentage of foreign buyers in London’s property market had increased from 23% to 29%. It seems obvious to me that that creates further problems for local people, who were already struggling to get on the property ladder. Not only are their savings being devalued by the falling pound, but they will be up against an increasing number of foreign buyers and investors. The weakening of the pound since the Brexit vote has helped Tata Steel’s profits, but as we well know, such companies rely on imported iron ore and coking coal, so they will be negatively affected if tariffs increase in the longer term.
The hon. Gentleman mentioned the impact on Nissan’s Sunderland factory, which ships nearly 75% of its cars to the EU and relies on parts from outside the UK. The north-east economy cannot flourish without the automotive industry, or even with a damaged one. Failing to negotiate trade deals quickly will cause repercussions years down the line. I suggest that the Tory Government’s much-vaunted northern powerhouse is fast becoming more of a northern power cut.
Scotland will feel the impact of the UK leaving the customs union just as the north-east will. In 2014, 42% of Scotland’s international exports were to the EU, and 58% of Scottish exports to the EU are in the food, tobacco and beverage manufacturing industries. I have spoken to several companies in those industries and will address some of their concerns shortly. Last year in Scotland alone, there were more than 2,300 foreign owned companies, employing nearly 314,000 people and turning over £90 billion. When the Government create uncertainty for those companies—I know there will be others in the north-east—hundreds of thousands of workers are uncertain about their futures.
With such uncertainty, it is not unreasonable to ask for a clear plan and an open debate. At the moment, we are expected simply to have faith in the Government—a Government who promised to double exports to £1 trillion by the end of the decade but saw them fall to £511 billion just last year. If those numbers are moving in the wrong direction, how are we to believe that the EU trade negotiations will move in the right direction for the UK economy and its workers, especially given that at a recent European Council meeting, the Prime Minister was given just five minutes—at 1 am, after the dinner plates had been cleared—to set out her view on Britain’s exit from the EU?
We had a debate on the Government’s industrial strategy just last week. The conclusions could not have been clearer. It is nearly impossible to debate industry, trade and the economy when the Government have neither the outline nor an inkling of a plan. There is a lot that we need to debate about the impact on the north-east and Scotland, and I hope we will have many more such debates and the opportunity properly to scrutinise the plans when they come forward.
Let us take the UK’s membership of the EU customs union and common tariff. Beyond the party political and theoretical points are some gritty IT issues that need to be looked at more closely—we know about the UK Government’s track record on IT. If Britain leaves the EU customs union, it will have to go through its own system of customs declarations and security checks whenever trading with the EU. After the Brexit vote, the EU began looking at increasing its capacity for customs declarations from 50 million to 350 million a year to account for future customs forms from the UK. Changing that system will take time, and before it is finalised we will not know how delays will be managed. I recently met the Scotch Whisky Association, which emphasised the importance of the excise movement and control system, a trading system by which all exports are tracked and managed. Staying part of that is key, but we have had no answers about it. Perhaps the Minister can enlighten us.
On the other side, the UK’s current system for importing and exporting non-EU products, which following Brexit will have to be used for all products, is about 25 years old and due to be replaced. However, its replacement, the customs declaration services system, is expected to be functioning by December 2018, just before the UK is expected officially to leave the EU. The CDS system is designed for managing about 100 million declarations a year, rather than the now expected 350 million that will be required once the UK leaves the European Union. That puts us two years behind already.
Desmond Hiscock, who runs the UK Association for International Trade, said that the system
“will not be able to cope and there is not much confidence that the untested and still incomplete replacement…will fare much better.”
Order. I am listening to the hon. Lady’s remarks with great interest. She will be aware that two Members of the House who represent constituencies in the north-east also want to contribute and that, within 30 seconds, she is coming up to having used a third of the allocated Back-Bench time. She might, out of politeness, want to think about drawing her remarks to a close.
Thank you, Mr Hollobone. I will wrap up my comments, because of course I want to let colleagues in. If the Prime Minister truly wants to find the best trade deal for the north-east and for the rest of the UK, she would do well to engage actively across all parties and all countries within the UK.
I thank my hon. Friend the Member for Sedgefield (Phil Wilson) for gaining this important, if not crucial, debate for the region of the country that I come from. I was a passionate supporter of the remain campaign—I thought it was in the best interests of my city, my region and my country to remain a member of the EU—but I absolutely respect the decision taken and totally accept that we are leaving the EU. It is important to put that on the record.
There has been much mention in the debate of the automotive sector and the fantastic Nissan plant—it is not in my constituency but in the city where I live. The issues surrounding that plant bring together all the problems faced by the wider manufacturing industry in the north-east in one place. I welcomed the Prime Minister’s statement after she met Mr Ghosn a week ago in which she said she was committed to
“supporting the right conditions for the automotive industry to go from strength to strength in the UK, now and into the future”.
That was important. However, the automotive industry is not the sum total of the problem we face in the north-east from Brexit. In fact, it is a very small part of it.
Even if some sort of agreement is made for the automotive industry, it would not necessarily include all the companies in Nissan’s supply chain. Those companies produce many parts for cars built in Sunderland and in other parts of the country but, because they also produce parts for other companies’ manufacturing, they may not be entirely protected by a special arrangement for the automotive industry. We have to bear that in mind when we look at the Prime Minister’s comments. I wrote to her a few weeks ago asking her to address the problems facing Nissan and the wider automotive industry and manufacturing quickly. I have not yet received a response, but I am sure I will in due course.
I want to talk about wider manufacturing not just because it does an amazing job in trade for our region—we have a positive balance of trade and there are fantastic examples of business doing well—but because of the impact down the line on our skills shortage. Those big manufacturing companies in the north-east train lots of high-skilled, high-end apprentices not on two-year courses but on four or five-year apprenticeships. The best go on to do degree-level qualifications. There would be a major impact on that if any of those companies started downscaling—goodness only knows what would happen if they disappeared.
We have to think about the long term, training and the future skills supply. We know that, in engineering, a bubble is coming when there will be a shortage of good, trained young people to replace the people heading towards retirement, but in the short time I have I want to talk about the tariffs problem. The investment uncertainty that the debacle since the referendum is causing is enormous. We know of examples of investment on hold for the north-east and of examples where investment has stopped. Those are the soft things. Let us think of the tariff situation not necessarily for the car industry but for wider manufacturing. Many of the companies involved in manufacturing in the north-east import parts and raw supplies for the things they make, so they will be hit by tariffs. They export right around the world, but in the main they export to the EU.
We also have major international companies in the north-east—names we all know—whose cost centres are in central Europe, which creates a knock-on effect. A rejigging of their business models is going on. I do not want to highlight any one in particular because they are general problems that all manufacturers say they are facing, with an impact across the piece. All the parent companies and boards and most of the manufacturing companies in the north-east are not British businesses dealing with British supply chains that provide all the supplies they need to produce products from the UK, and they are certainly not selling everything into the UK. For them, tariffs are crucial.
If we do not get the situation resolved—at this stage we are talking not about the detail but about the broad parameters of where the Government are going to stop the uncertainty and create certainty in the marketplace—the potential threat down the line is that British manufacturing will become more and more uncompetitive, which means we will lose jobs, the training I talked about, and revenues from taxes. There will be a massive impact on the economy of the north-east and the UK in general.
My preference would be to remain part of the single market. The Prime Minister needs to look at that as a matter of urgency and make a decision. If that is not what she and her Government are going to do, we need to know what is on the agenda. We need to be working on a cross-party basis to get the best deal for businesses in my constituency, the wider north-east and the country as a whole.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to my hon. Friend the Member for Sedgefield (Phil Wilson) for securing this important debate about the future of our region.
Like many here, I made no secret of my preference for the UK to remain a member of the European Union, but a majority of people in my city and in the region voted a different way. Many people who voted to leave did so in the belief that a brighter economic future lay ahead for the UK and for the north-east. If their optimism is to be fulfilled, it is vital that exports from the north-east to the European Union are protected.
Export trade with the EU is critical to the north-east’s economy. The region is unique in England in being the only one to consistently maintain a balance of trade surplus. Last year, more than half our goods exports were to the EU, and the most recent figures from Her Majesty’s Revenue and Customs indicate that four of the five top export partners for the region are EU countries. Given that the proportion of exports destined for the single market from the north-east is relatively high compared with other regions of the country, those of us who represent north-east constituencies have a particular responsibility to raise concerns about the impact Brexit will have on the region’s economic interests, especially if the Government decide to take the UK out of the single market as well as the European Union.
As has been said, the automotive sector is central to Sunderland’s and the region’s economy and to the future success that lies ahead. A recent report by IPPR North found that the export of road vehicles, parts and accessories accounts for more than 40% of north-east goods exports to the EU and that the value of those exports grew by 118% in the past decade. Much of that trade depends on the continued success of Nissan in Sunderland and it is clear that future investment decisions by Nissan will play a major role in driving long-term economic growth in the north-east. Let us not forget that membership of the single market has been central to that success. The renaissance in car building in this country also demonstrates what can be achieved when Government pursues a focused, sector-led industrial strategy.
I sincerely hope that the decision on where to build the next Qashqai is a positive one for Sunderland. I will welcome any steps Ministers can take to assuage the company’s fears. What will require greater clarity from Ministers is the degree to which small and medium-sized businesses in my constituency and in the supply chain will be protected. Those businesses are already suffering from the collapse of sterling and the uncertainty that has dogged the economy since June. If Ministers intend to offer the automotive sector special protection from the impact of Brexit, presumably on the basis that they intend to take our country out of the single market, it must have wider coverage and not ignore SMEs in the north-east and beyond.
How do Ministers intend to act to safeguard the interests of the rest of the manufacturing sector in the north-east? What of the growing and thriving tech and software start-ups in my constituency, in Rainton Bridge and elsewhere? The region’s current strong track record on exports is a source of pride, but we still face the highest level of unemployment in the UK and a skills gap that holds back our young people as well as our economy. We can ill afford to see a decline in jobs, wages and living standards. As the North East local enterprise partnership has pointed out, we are a region that needs EU funding more than most—and we have a track record of investing it well. I note the guarantee offered by the Chancellor, but the north-east was originally allocated £437 million in EU structural funds up to 2020. Of that central pot, at present more than £198 million remains unallocated. There is clearly room for improvement.
In the north-east we have long needed Ministers to add some substance to the so-called northern powerhouse—a concept that appears to have fallen out of favour with the new Government. Now more than ever we need the Government to use all of the powers and levers available to them to support our region and its people to fulfil our economic potential in these difficult times.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Sedgefield (Phil Wilson) on securing the debate. We have heard from the Secretary of State for Exiting the European Union on the Floor of the House on many an occasion, given how much he is before the House to answer questions. We continue to have these debates because, unfortunately, no answers are forthcoming. In fact, the most interesting piece of information we have heard today is the determination that Brexit is in the masculine form—“le Brexit”—unless, of course, spoken in Italian. That is the latest up-to-date revelation in relation to the debate.
The hon. Member for Sedgefield correctly spoke about the uncertainty that surrounds the Brexit debate and the importance of the European single market, and said that people did not vote to be poorer or for jobs to be put at risk, so assurances are absolutely essential. That was followed up by my hon. Friend the Member for Livingston (Hannah Bardell), who also correctly said that even if the Government will not have debates in Government time—although I should say that the Prime Minister said at the Dispatch Box yesterday that there will be debates in Government time, which is very welcome—Back Benchers will continue to discuss matters that are hugely important to our constituents and businesses in our constituencies.
Hundreds of thousands of workers are concerned about what Brexit means for their future. As my hon. Friend said, if the Prime Minister wants the best trade deal she should interact with all parties and all nations across the whole of the UK. The hon. Member for Sunderland Central (Julie Elliott) spoke of respecting the decision of the referendum, but also of concerns that most major manufacturing companies in her constituency—which also have bases in the EU—have about what it will mean for them. That is an important matter and needs to be addressed. Finally, we heard from the hon. Member for Houghton and Sunderland South (Bridget Phillipson), who spoke of the responsibility to raise concerns about how Brexit will affect constituencies and wider regions.
I know the debate is about the north-east, but it would be remiss not to mention that the people of Scotland have been subjected to a Tory Government they did not vote for, a referendum they did not want and a result they did not vote for. Some 62% of the people of Scotland voted to remain in the European Union, and with that in mind, and in relation to the north-east, we want to work with all parts of the UK that want to retain single market status. To be clear, the Prime Minister and her Conservative Government stood on a manifesto that said:
“yes to the Single Market”.
That is the one definitive piece of information upon which we should be able to rely to hold the Government to account. The Scottish National party intends to take all possible steps to explore all options to give effect to how the people of Scotland voted, and indeed for other parts of the United Kingdom that voted in a similar manner.
Key industries in the north-east could be seriously compromised as a result of the uncertainty of a post-Brexit economy. As we have heard so eloquently from all of the speakers in the debate, the UK Government must provide a clear and comprehensive economic strategy that will allow investment to flourish and jobs to be created, and will attract skilled labour. Prior to Brexit, the UK Government were already failing on key economic indicators and have missed the targets they set for themselves as a result of the failing austerity agenda.
The Prime Minister’s inability to answer the simple question of whether she supports continued membership of the EU single market is damaging business prospects and job certainty throughout the UK. Businesses need to know what is happening next for them. We have heard in the course of debates from many Secretaries of State, not least the Secretary of State for International Trade, whose comments have had to be clarified or amended. I wonder if the Minister can demonstrate that he has achieved “head boy” status and will not get into trouble for giving us the facts for which we have been asking for so long.
It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my hon. Friend the Member for Sedgefield (Phil Wilson) on securing this vital debate. Had he not, I know that my formidable colleagues, my hon. Friends the Members for Sunderland Central (Julie Elliott) and for Houghton and Sunderland South (Bridget Phillipson), who both spoke with such clarity, would certainly have initiated the debate otherwise. It is good to see a strong contingent from the north-east here in defence of their region.
The north-east is the major goods-exporting region of this country, with more than £12 billion of goods exported last year. It is therefore a powerful indicator to the rest of the country about the impact that the Government’s approach to Brexit will have. Let us be clear: 58% of voters in the region voted to leave, and all of us who have spoken from the Labour benches have said that we respect that—and we do. We must now all rise to the challenge of delivering that departure from the EU, but that departure must not undercut our industry, our labour rights or our prosperity. That is our clear message to the Government today. We have heard from several hon. Members about the destabilising effect on industry in the north-east of a divided Cabinet and a Secretary of State for International Trade who is pushing his own ideological agenda that will disrupt investment and threaten jobs in the north-east.
Of the £12 billion-worth of goods exported last year from the north-east, £7 billion were exported to the EU. That is 50% of the region’s total exports, making the region one of the most highly exposed to the uncertainty arising from the Government’s refusal to set out a clear plan and approach to the negotiations with the EU Parliament, or indeed to make that clear to the public. The value of north-east exports to the EU grew 30% from 2005 to 2015, yet in July, after the vote to leave, companies across the north-east suffered the sharpest rate of decline in business activity in four years, leading to scaled-down activity and jobs being laid off. Lloyds bank attributed that downturn to
“post-referendum vote market uncertainty”,
which caused the number of new incoming orders to the region to fall at the fastest pace in almost seven and a half years.
We know the Government will not provide a running commentary, and we do not ask for that, but perhaps they will provide some much-needed clarity to business about their futures. That is what I think all Members here are really asking of the Minister. What guarantees will the Government provide to businesses in the north-east about access to those markets in the future, and how similar will those terms be to the current ones? James Ramsbotham, chief executive of the North East England chamber of commerce, said:
“With the automotive sector being such a major part of the business community in the North East the future of the car-making is of crucial importance to our economy and employment prospects.”
What assurances will the Minister provide to car manufacturers about continued access to import parts from the EU to their supply chains, and to export cars, tariff-free, into mainland Europe?
My hon. Friend the Member for Sunderland Central raised that issue, but there is also a need for the Minister to answer the question about non-tariff barriers. Country of origin rules may well mean that, in the future, if we are outside the EU we cannot provide goods from this country—indeed, from many of the smaller companies in the north-east that my hon. Friend spoke of—that feed into supply chains in Europe for products that are then sold into third countries. They will not be admitted into the supply chain in the first place. The Minister knows that those supply chains are 18 months’ long, which means that decisions will be taken in Europe within the next six months on whether to source items for the supply chain from the UK. This is of vital and urgent importance, and it is critical that the Minister provides some answers on it for business.
What assessment have the Government made of the contribution that skilled workers coming into the UK make to the north-east export industries? Skilled workers in these industries are vital. Have the Government conducted a survey to find out what the skills base is in the north-east and to determine how they will continue to ensure that skills supply in the future?
While the weakened pound has given a short-term boost to certain exports, the steel industry is not benefiting from a low pound. The deal to buy the Tata pipe mill in Hartlepool is clouded with uncertainty, and the suggestion is that it would have been completed by now if it were not for the referendum result. That puts hundreds of jobs at risk. We have heard from my hon. Friends about the household brands that are facing difficulties, but we must not forget the small and medium-sized enterprises and the family businesses that are finding it impossible to invest in their own future in the region until the Government provide a clear plan. Ministers continue to drop heavy hints about their preferred—often contradictory—directions of travel. That is causing these businesses absolute turmoil with their investment profiles.
The priorities of manufacturing bodies are clear. The Society of Motor Manufacturers and Traders, EEF, the Chemical Industries Association, the British Ceramic Confederation and the UK Petroleum Industry Association—all representing phenomenal industries based in the north-east—are demanding guaranteed access to the single market to continue exporting without the extra costs that will make it harder to keep doing business there. Almost two thirds of the north-east’s exports to the EU are reliant on road vehicles, medical and pharmaceutical products and organic chemicals.
It is not just the goods exporters calling for this. A fast-growing marketing and PR agency based in Newcastle told my colleague, the MEP for the region, Jude Kirton-Darling,
“Creative and digital service industries like ours don’t export in the traditional way that goods companies do—but we benefit just as much from...membership and could be impacted badly by exit”
from the single market. Service industries are asking the same questions of Government. What analysis has the Department conducted of the impact on the trading balance in the north-east of different post-Brexit trading arrangements with the EU? Have the Government quantified the impact of losing access to the single market on the north-east economy? Will they do so before making a firm decision on their negotiating priorities? If we default to WTO tariffs post-Brexit, what impact will that have on exporters in the north-east? Bearing in mind the strong dependence on the single market of north-east exports and the regional trade surplus, what special measures will the Government consider to diversify export options for the region and avoid negative employment impacts that might arise?
The Government must clarify what will happen to the UK’s European Investment Bank status. Will we continue to be a shareholder and have unrestricted access to funding, or will we be considered a third country and thus only be eligible for the 10% of the fund made available for third countries? The Government’s webpage entitled “UKTI North East: helping companies export and grow overseas” was last updated in May this year. It reads:
“We’ve helped…create 346.5 new jobs through the European Regional Development Fund (ERDF) project”
“secure a further 1,014 jobs with our trade support activities for the ERDF project”.
That fund was actually proposed by the United Kingdom in 1972, but it is available only to European member states. We need to know what access we will have to those funds in future, because they are vital for industries in the north-east.
The Government might want to update their website, but it might also help if they provided their new strategy. The Government’s strategy has relied on EU funds to boost exports to BRICs markets and create jobs in the north-east. They must now provide answers about how they will ensure jobs and exports are maintained in the future through support for new projects once we have left the EU. The Chancellor’s guarantee of funding while we remain a member state, and for projects agreed before this year’s autumn statement, does not go far enough in giving answers to families, businesses and investors in the north-east. Can the Government commit to continued investment in trade promotion measures for the region post-2020?
Order. I am enjoying the hon. Gentleman’s speech hugely, but he is almost twice over the guideline limit. If he carries on much longer, he will speak for longer than the Minister. He may, out of politeness, want to draw his remarks to a close.
I would not wish to leave the Minister too little time to answer all the questions that my hon. Friends and I have asked this afternoon.
I will simply conclude by saying this. The danger is that the favoured trade model will not give control back to voters who told us that that was what they wanted. If the Government wanted to make the UK a great trading nation, they would not be putting forward options that would decisively cut ties with the world’s largest free trade area. The Government are not pursuing a free trade agenda. It would appear that they are using the vote to leave to embark on a ruthless deregulatory agenda, which will threaten jobs, public services, labour standards and environmental protections in the north-east and the rest of this country. The Minister must provide answers and clarity for business and the public.
If the Minister could conclude his remarks at no later than 5.27 pm, Phil Wilson will have time to sum up.
Thank you, Mr Hollobone. May I start by congratulating the hon. Member for Sedgefield (Phil Wilson) on securing the debate? He has worked extraordinarily hard for his constituency. He did not mention in his speech that he was instrumental in securing the investment from Hitachi in his constituency, which we should all recognise.
It is interesting to speak in a debate such as this. I have to say that I agree with many of the points raised about the debate we had several months ago in the lead-up to the referendum. I think that everybody in this room—with the possible exception of you, Mr Hollobone—was on the same side of the debate on how we should vote in the referendum. It was 58% to leave in the north-east. In my constituency of Wyre Forest, it was 63%, so I sadly failed even more than Opposition Members to secure a remain vote.
I think we are all in agreement that the success of the north-east is entirely relevant to the success of the whole of the UK. We need to work extraordinarily hard to ensure that we get through this process over the next few years and that we are a resilient and strong economic nation afterwards. I will endeavour to address the points raised by hon. Members throughout the course of my speech, but I would like to open by saying a little about the Department for International Trade, in which I am now a Minister, and how we are trying to work with the whole of the UK.
This debate focuses on just one region, but we are representing the whole of the UK, which also involves the devolved Assemblies, so we represent Scotland, Northern Ireland and Wales as well. Irrespective of local votes, we are all Brexiteers together. Our aim is for the UK to be a beacon of open trade for the entire world, with the benefits of that trade to be felt from Bournemouth to Belfast and from Aberystwyth to Aberdeen. That means working with our dedicated regional teams, the devolved Administrations, devolution partners, regional chambers of commerce and local enterprise partnerships to ensure that together we build a strong and resilient economy from the bottom up.
It has been mentioned on a couple of occasions that the Secretary of State was an enthusiastic leaver, but it is worth bearing in mind not only that are we all leavers now, but that Ministers in the Department are balanced. The four Ministers—three in the House of Commons and one in the House of Lords—were on both sides of the debate, and all of us bring a lot of experience and views, giving a balanced view. That is important to remember.
Given the establishment of the Department for International Trade and the importance of our region to trade performance, what additional capacity will the Minister put into the north-east to ensure that we can boost exports further?
I hope to be able to answer the hon. Gentleman in the course of my speech, but he can by all means intervene again if I miss his point.
The performance of the north-east is nothing short of exceptional. It is worth bearing in mind that 30 years ago last month, Margaret Thatcher persuaded Nissan that it should come along and assemble the Bluebird kits. That started off as a relatively small investment and has now turned into a phenomenal manufacturing plant. It is one of the premier auto factories not just in the UK but in the world. The region exported approximately £12 billion-worth of goods in the past year, racking up a positive goods trade balance of nearly £3 billion. That is incredibly important for our current account deficit. The region sold more than £1 billion-worth of cars between April and June alone, as well as nearly half a billion pounds of pharmaceutical and medical goods over the same period. Trade with the EU is important for the north-east—no one is questioning that. The single market is a destination for more than 61% of the region’s exports.
We have heard a lot about Nissan in particular. The Secretary of State for Business, Energy and Industrial Strategy has met Nissan and will be meeting Hitachi to try to make sure that the investment that the hon. Member for Sedgefield secured remains in the UK. We are having ongoing dialogue with those large automotive manufacturers. I have met Nissan twice, and my colleagues in BEIS have also met it. We are continuing to make sure we offer it as much assurance about the future as possible.
The Minister is being generous with his time. One of the crucial points in my hon. Friends’ speeches was the emphasis on small and medium-sized business and their supply chains. What efforts is his Department making to engage with them?
We are certainly engaging with them through the local delivery networks of the Department for International Trade, formerly known as UKTI, and through the local chambers of commerce. That is an ongoing process that will continue. The economy of the north-east is so dominated by big manufacturers that if we get that part right, that should encourage a huge number of small manufacturers.
The hon. Lady raises the right point, which is that we cannot simply look at the big manufacturers. We have a very diverse economy and there are around 5 million businesses in the UK, the vast majority of which employ fewer than 10 members of staff, so we do not forget SMEs.
The automotive industry and the train manufacturing sector are crucial to the north-east’s economy, but what other sectors has the Minister identified that really make a difference? I am thinking particularly of the steel, chemical and processing industries, but what other sectors has he identified that should be prioritised?
The steel industry is in a special position at the moment, as we have discussed in the House over the past few months, for obvious and tragic reasons with the closing down of plants. All sectors are important to the UK economy. We need a diverse economy manufacturing a wide range of products—not just steel but graphene and carbon fibre. Those specialist material industries are also very important.
It is important that over the past 12 months the north-east has sold £4.5 billion of goods to non-EU countries, so it is a region that takes opportunities from the rest of the world. America is behind the Netherlands as the region’s second biggest export destination, not to mention continued significant sales to China and Turkey. There are fantastic local examples of north-east companies finding success beyond the EU. Small companies such as Annie Barr International are delivering vital training courses in China and Hong Kong. Newcastle-based mobile app developers Hedgehog Lab celebrated an amazing 2015, achieving $500,000 of sales in the USA. Those are examples of small businesses that are doing very well.
Our future trading relationship with the EU has yet to be determined, as hon. Members have said, but I will be as clear as possible. When the formal process of exiting the EU has been completed, the sky will not fall on our head. We will continue to trade with the EU. It is our friend, our ally and our trading partner. That will not change. We want to build the strongest possible trading links with our partners on the mainland, which throughout history have brought prosperity to Europe and raised living standards for all Europeans. Trade has always brought us closer together as a continent, fostering a common identity that will never diminish, regardless of whether the UK is in or out of the EU. We want the EU to succeed. It is really important to our country that our nearest neighbours are a success story.
A UK outside the EU can now reset and enhance its trading ties with the rest of the world, which already recognises that products made on these shores are synonymous with heritage, quality and innovation. DIT Ministers are travelling the world, and the extraordinary demand for British brands in places like the far east and America, and across the whole world, is truly remarkable. Let us take the example of cars. Today, a car manufactured in the UK and sold to India would face tariffs of up to 100%. The tariff for selling the same car to Brazil is less at 35% and for China it is 25%. We can do deals with those markets and find opportunities for cheaper tariffs there. A UK in full control of its trading arrangements can start to address the barriers that exist. There is untapped potential in the global economy that the UK is primed to take advantage of.
One or two points were made about delivering a manifesto for leaving. The hon. Member for Sedgefield said that there had been a promise of £350 million a week. He and I remember that that was checked by the UK statistical authority and there were questions about it ever being delivered. Dare I say, Mr Hollobone—I would not want to upset your sensibilities—there was a lot of hype that might be difficult to deliver on, but the Government must deliver the right outcome.
The shadow Minister talked about tariff and non-tariff barriers. Tariffs are probably relatively easy and straightforward to negotiate, because the outcome is numerical. We must be careful about non-tariff barriers, but we are all working extraordinarily carefully in trying to get to the right answer.
We talk about what sort of model we want. One of our problems in this debate is that people try to force the argument into a pre-determined shape: will it be a Swiss model, a Norwegian model or a Turkish model? The answer is that we will try to achieve a British model, which will achieve the best possible outcome that we can imagine. We will not try to do a deal that looks like someone else’s, because we can do our own deal. That is our starting point.
When it comes to the issue of a running commentary, I take a slightly different view. We are all aware of the argument that no one lays all their cards on the table when playing poker—why would they do that? The important point is that we must be extraordinarily careful. We have heard from many people about the importance of businesses not misunderstanding what is going on. They want clarity, but I think it would be more dangerous were we to give the wrong idea about what is happening than no idea. If businesses start chasing false hares, they could head off in the wrong direction, and that would be dangerous, so we must be very careful.
I want to reassure businesses in the north-east and investors around the world that in our future trade negotiations, we will fight to ensure that the UK’s sector strengths, be they automotive, aerospace, professional or financial services, remain as competitive as possible. We will achieve the best deal for the UK. I and my colleagues will continue to speak to businesses and investors, and the Secretary of State will meet big investors in the UK on more occasions.
A thriving north-east is vital to the long-term economic health of the whole country. It is a timely reminder that Britain still makes things the world wants to buy. The British people’s decision to leave the EU does not mean that we will abandon or neglect our manufacturing prowess. We have opportunities. I was on the wrong side of the argument a few months ago, as was everyone else in the Chamber with the exception of you, Mr Hollobone, but that does not stop me being optimistic about the future for Britain. We are a great nation, and we are very enterprising and innovative. A big, economically disruptive event is happening, but I believe that with the Government’s help, when we can provide it, businesses will take advantage of the opportunities.
I thank all hon. Members who have contributed to the debate, especially my colleagues from the north-east of England. I want to make one or two points. The Office for National Statistics may have said the £350 million figure was wrong, but people believed it. They did not consult the ONS’s website to see whether it was accurate, they just accepted it.
I picked Nissan as an example of the issues that will arise. As my hon. Friend the Member for Hartlepool (Mr Wright) said, the north-east is about the automotive sector, steel, chemicals, pharmaceuticals, and research and development. It is on the coast, and we have two ports facing Europe. Europe is important, because 80% of the raw materials and parts we need for industry comes from there. Brexit is a big issue, and I worked tirelessly to try to ensure that we stayed in Europe. This is bigger than party—it is about more than just the Conservative party and the Labour party. It is about the future of the country.
My hon. Friend the Member for Sunderland Central (Julie Elliott) said that the issue is partly a cross-party one. We must hold the Government to account, but we must also work together when necessary, because this issue is for all people whether they voted to remain or to leave.
Question put and agreed to.
That this House has considered the effect on exports from the North East of the UK leaving the EU.