Wednesday 14 December 2016
[Albert Owen in the Chair]
UK Sovereign Wealth Fund
I beg to move,
That this House has considered the UK Sovereign Wealth Fund.
It is good to have you looking after us this morning, Mr Owen. The title and subject of this debate come from a proposal I published recently, with help from the good people at the Social Market Foundation, called “The Great Rebalancing: A sovereign wealth fund to make the UK’s economy the strongest in the G20”. It is available in all good book stores; failing that, the Library refers to it in a good deal of detail in its excellent debate briefing note. For anyone who is sufficiently riveted to want more details, it is available on my website with a slightly pithier summary alongside it, written for The Times’s “Red Box” column.
The reason for writing the proposal was simple. This is a crucial moment for Britain. Brexit creates an inflection point—an opportunity to ask ourselves fundamental questions for the first time in many years about what kind of country we want to be once we leave the European Union. How can we best use the spur of our newly won freedoms to change the way our country works? What do we want our economy, our society, our cities and our countryside to look like? “The Great Rebalancing” is an attempt to answer at least some of those questions.
For years, economists of all kinds, of left and right, have said rightly that Britain is worse at long-term planning than other countries. We save less, invest less and build less economically vital growth-promoting infrastructure, such as roads, railways and ports, than they do. Other oil-rich countries such as Norway have built up large sovereign wealth funds, but we have not. We have a rock ’n’ roll economy that lives for today and depends too much on consumer demand, unlike more sobersided countries such as Germany, which are much better at investing for tomorrow.
The result is that we lag behind the United States, Germany, France and even Italy in productivity. It takes a German worker four days to produce what we Brits make in five, so we work longer hours for lower pay than other countries, and we will not be able to raise our living standards sustainably or to build an economy that works for everyone unless we fix that fundamental underlying issue.
Even worse, we have huge national debt, partly as a hangover from the 2008 financial crisis, but mainly because the promises we have made in our pay-as-you-go pensions and benefits system create long-term liabilities that are, financially, effectively the same as debt. That is not fair to our children and grandchildren, who will have to repay the money we have borrowed. We are handing them the bills for our lifestyle, rather than paying for it ourselves. These are long-term structural problems that are deeply ingrained in our economy and in our politics. They have taken decades to build up, and they will take just as long to solve.
Part of the answer is to invest more in crucial economic infrastructure such as roads, bridges, railways and ports, and to keep doing it consistently and predictably. To my mind, the most important and least noticed bit of the Chancellor’s autumn statement was not the £23 billion investment pledge for innovation and infrastructure, although that was certainly welcome and valuable. It was the instruction to the National Infrastructure Commission to plan for a future where, every year, we spend between 1% and 1.2% of GDP on this stuff, rather than 0.8%, as we do today. That is not a one-off; it is a permanent change that he proposes. It stops the infrastructure boom and bust that we have suffered for decades, in which Governments postpone critical growth-promoting projects whenever money gets tight. Making our investments boringly predictable really matters, because stop-start spending does not only delay growth; if there is not a smooth pipeline of projects, taxpayers get less value for money, and we cannot build as much with the money we have.
But what about that huge national debt? How do we make things fair for our children and grandchildren? First, we have to stop adding to the debt, which means stopping borrowing. The autumn statement said the deficit will be down to 2% by 2020, cyclically adjusted across the business cycle, which is a vital step in the right direction. My proposal goes one step further and asks for an annual public declaration by the independent Office for Budget Responsibility to ensure the Government’s budget stays balanced across the economic cycle in future. That is a small but crucial piece of fiscal rule making.
We gave the OBR responsibility for the financial forecasts to stop Chancellors using fairytale projections to cover up problems when they were under pressure. Once we have finally balanced the budget, sometime during the next Parliament, we should extend that same mechanism a little further, to shine a harsh and unforgiving spotlight on any future Chancellor who is not prepared to live within the country’s means. We have not, after all, endured years of austerity and belt-tightening just to have a future financially irresponsible Chancellor toss it all away.
Does the hon. Gentleman envisage a permanent budget surplus?
At this point in my remarks, I envisage a consistently balanced budget across the economic cycle. That would be a major step forward and, given this country’s history since the second world war, it would produce a welcome degree of certainty for businesses, Government and everyone else. I will come on to how we might then build up the sovereign wealth fund; the hon. Gentleman might like to come back at me at that point if he thinks I have not covered the issue properly.
Once we have stopped borrowing, we can start saving, which is the point the hon. Gentleman just made. That is where the sovereign wealth fund comes in. Most of that huge national debt comes from our pay-as-you-go state pension and benefits scheme, so paying off Government bonds—gilts—will not be enough on its own. Even worse, we cannot just grow our way out of trouble, because the pension and benefits scheme’s liabilities will just grow with us. Instead, we need a sovereign wealth fund to pay for what we owe in our pensions and benefits system.
As the hon. Gentleman is one of the more assiduous members of his party, he will have seen that the Co-operative party floated in September 2013 this very idea of a UK sovereign wealth fund. Does he see our proposal of turning the Crown Estate into that sovereign wealth fund as an attractive idea?
I have not included in my paper any proposal to take existing Government assets and pour them into the sovereign wealth fund, to give it a kick-start. It would be possible, and there are parallels. The previous Chancellor floated the idea of a regional shale gas sovereign wealth fund, based on the proceeds from fracking. A number of Government assets could be added to any sovereign wealth fund, though in my paper, I do not propose that they should be, but there are respectable parallels. For example, the Norwegian sovereign wealth fund is based on the proceeds of its North sea oil. That is certainly an option to consider. I am not proposing it here, but it is certainly not beyond the bounds of possibility. There are very respectable parallels and antecedents elsewhere in the world.
We need a sovereign wealth fund to pay for what we owe in our pensions and benefits system. It would give the scheme the same strong financial foundations as other occupational pension schemes in the UK for the first time in our country’s history. Like those other schemes, it should be managed through a fully independent board—in this case, a new stand-alone national insurance trust with a heavyweight board of trustees, like that of the Bank of England, to prevent political meddling.
Building the fund is rather like repaying a mortgage or saving for a pension: we have to put a little aside every month for a very long time. We would start by creating a new national debt charge, carved out of income tax, to pay the interest on the national debt, currently projected to be just over 2% of GDP by 2021. It would be set as a percentage of GDP and, as the economy grew, any surplus would be used to build up the fund. The process needs to take a long time—several generations—so that the costs do not all fall unfairly on current taxpayers. It is urgent too, because we need to start soon. There will be a brief moment, when the Government’s budget reaches balance in the next Parliament, when we could set the fund up, but old, bad habits die hard. As soon as there is a hint, a sniff, of a surplus, there will be dozens—hundreds—of proposals for tax cuts or extra spending from both sides of the House. Many of them will be excellent ideas, but we must ensure that we do not miss the golden opportunity to set the fund up at that moment, when we can, before it is too late and any surplus money is earmarked for other things.
We must ensure that all the effort and sacrifice of getting the budget in balance is not wasted. A balanced budget cannot be just a one-off episode of fiscal sobriety, in which our rock ’n’ roll economy detoxes for a few months before hitting the party scene again. We need a long-term commitment to clean living—to the fundamental rebalancing of our economy that the sovereign wealth fund would deliver.
Creating the fund would rebalance our economy; build stronger foundations, so that we invest more for the long term; deliver faster growth and extra jobs, so that we could afford stronger and better public services; insulate us against the next economic shock, such as the latest banking crisis; make us less dependent on foreign investors once Brexit is complete; build our international heft around the world; and answer some of those fundamental questions about the kind of country that we want to be after we leave the EU.
I congratulate the hon. Gentleman on his choice of debate. I agree with him about the long-term thinking that will be required to create a sovereign wealth fund. Does he agree with me that successive Governments need to commit to the promotion of a wealth fund? Then the beneficiaries throughout the United Kingdom will support it, because they will see tangible benefits accruing from it.
That is a crucial point. As I said, we need to start building the fund soon. It is an urgent priority that we should begin it when the budget hits balance, but once we have begun, we need to save a little for a very long time, and that needs to last over several generations, so that the burden of setting the thing up does not fall unfairly on the current generation of taxpayers. The hon. Gentleman is exactly right: for it to be stable over such a long time, it needs to be politically stable. That means two things. First, I hope that it has cross-party consensus behind it, so that it will have some degree of political longevity; secondly, it will need institutional bulwarks to prevent Chancellors of whichever party, when they are under pressure—facing a general election or a cyclical recession—from interfering, meddling or trying to get their sticky fingers on the money. The hon. Gentleman is absolutely right: the fund will need very strong institutional safeguards around it. Those are laid out in some detail in my paper. I did not plan to go into huge detail about that here. I am happy to, if anyone wants me to, but I thought that I would spare everyone the detail at this stage, simply because of pressure of time and because other hon. Members want to add their thoughts.
If we could do what I propose, we would be a fairer, more generationally just country, because we would not be saddling our children and grandchildren with the bills for our lifestyle. We would be more socially just, because low and high taxpayers would all own the same personal stake in the fund that underpins their state pension and benefit payments.
I hope that all of us in the debate, including my hon. Friend the Minister, will deal with three issues. First, can we all agree that rebalancing our economy is necessary and important? A number of Members have suggested in interventions that there may be consensus on that, but it would be good to get that on the record from hon. Members on both sides of the House if we can. Secondly, can we all acknowledge that once we have the budget in balance, reducing the bits of our national debt that we happen to have issued as Government bonds will not be enough to achieve rebalancing on its own? Thirdly, can we all accept that a sovereign wealth fund to underpin the state pension and benefit system is at least one valid way of solving the deeply ingrained imbalances and problems in our nation’s economy and finances, even if there may be other ways as well?
Think of it: if we can agree on some or all of those issues, cross-party, we could launch a new Britain—a socially just, generationally just, asset-owning democracy on a scale that no other developed nation could match. The post-war Governments created new institutions such as the NHS and the welfare state, which had little relevance to rebuilding homes and cities damaged in the war, but everything to do with forging a new society and nation. The post-Brexit Government is our generation’s chance to do the same—to leave a mark, to mould and weld our fractured society into a new and better shape. This will be a brief political moment in which, if we grasp it without fear, whether we are from the political left or right, we can create a legacy for our children and grandchildren to remember us by with pride, so let us think big and long term, and let us do this together.
There might be broad agreement on what we are discussing, but the hon. Gentleman has premised much of his case on a surplus being run. As I understand it, the three fiscal rules that the new Chancellor has introduced have moved away from the previous budget surplus rule, and nothing in the current fiscal rules says that we will run a permanent surplus.
What I propose would take effect once we had got the budget in balance. The Chancellor’s new set of fiscal rules is designed to take us through the next few years before we get the budget in balance, but once we do get it in balance, any Chancellor—as we are talking about the period after the next general election, I hope that it will be the current Chancellor, but I will not prejudge the results of that election—will need to rethink and reset fiscal rules. What I argue, as the hon. Gentleman will have heard, is that there should be a national debt charge, initially just to carve out what we are already committed to paying in terms of interest on the debt, but as the economy grows, that would slowly start to yield a very small surplus, which could be used to pay into the sovereign wealth fund. That is a very long-term process, but we need to start it soon.
It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate the hon. Member for Weston-super-Mare (John Penrose) on securing the debate and raising this most important topic. He asked whether there could be consensus across the House. There are those of us on this side who have been arguing for infrastructure investment for quite some time, for the simple reason that we need to build capacity in the economy—we need to create the circumstances for growth.
We all want a high-wage economy; we would absolutely welcome that. The debate is about the mechanisms that will create it. We make the point that if we want to deliver a balanced budget in this country, that has to come through the delivery of economic growth; it cannot come on the backs of the poor, as has been the case over the last few years because of austerity. The issue has to be about building capacity in the economy, creating the circumstances for growth, which perhaps can deliver the kind of outcomes that the hon. Gentleman talks about.
I am delighted that we are having this debate, but in some senses it is happening too late for us in Scotland. As the House of Commons Library briefing paper confirms, more than 30 countries have sovereign wealth funds, and it is estimated that funds based on oil and gas receipts are responsible for more than half the global total value of those funds. We in the Scottish National party have long argued that we should have established a wealth fund from our oil revenues to ensure that future generations could benefit from the proceeds of North sea oil. Not for the first time, and over a long time, Westminster was not listening.
The UK Government have taken a staggering £340 billion in tax receipts from North sea oil. Where has that gone? Why have we not seen a legacy from that bounty for all the people in this country? It was not invested to ensure that there was a legacy for future generations. Rather than North sea oil receipts being looked at as a bounty that could be invested to ensure that there was future growth, the proceeds of North sea oil were frittered away.
Let us contrast the UK’s lack of foresight with the foresight of our near neighbours in Norway. Norway’s wealth fund, to which the hon. Gentleman referred, now exceeds $905 billion; the value is $177,000 per capita—for each Norwegian citizen. That astonishing sum shows what can be done if people take the right approach to investing in their future. The Norwegians recognised that oil was a bonus. It will run out at some point, but they ensured that their country would have a lasting benefit. Let me quote what The Economist said in an article in September this year:
“Two decades after Norway’s government paid a first deposit into its sovereign-wealth fund, the country is learning how to manage a behemoth. The vehicle, which is used to invest abroad the proceeds of Norway’s oil and gas sales, has amassed a bigger fortune than anyone expected, thanks to bumper oil prices.”
The hon. Gentleman has talked about a wealth fund that may build up over generations, but Norway has achieved the largest wealth fund in the world after two decades because it was prepared to put something away for future generations. In that sense, I support the broad outline of what he says. The article goes on:
“As the direct benefits of oil decline—around 46% of Norway’s expected total haul of oil and gas is gone—the relative importance of the fund will grow. The annual revenues it generates now regularly exceed income from oil sales.”
Establishing a wealth fund from the benefits of North sea oil receipts is an effective means of protecting an economy from oil prices that can prove to be volatile. In that sense, the lucrative revenue generated by oil and gas is used to protect its own longevity as well as the overall prosperity and stability of an economy during price swings. We have known all that for decades.
The McCrone report, delivered to the UK Cabinet Office in 1974, claimed that North sea oil revenues could have made an independent Scotland as economically prosperous as Switzerland. The report was so alarming for the UK Government that it was buried as top secret for 30 years. That is, perhaps, of little wonder. Scotland’s bounty has kept the UK afloat; there is no lasting financial legacy for Scotland. The Norwegians have a foundation of financial security; we have a UK Government who would not come clean on the benefits of North sea oil and have denied us the opportunity to have our own legacy from that bounty. Yes, let us plan for a sovereign wealth fund, but that should have been delivered over the past few decades.
Denis Healey said the following about the saga:
“I think we did underplay the value of the oil to the country because of the threat of”
He said he thought that Westminster politicians
“are concerned about Scotland taking the oil, I think they are worried stiff about it.”
That is the reality, yet we are constantly told by Westminster politicians about the perils of Scottish independence and that we cannot afford to take responsibility for our own destiny. If we had this oil fund, that would give us the tools to manage any financial storms like those we have witnessed over the past few years.
Denis Healey let the cat out of the bag; it was a worry that the wealth of Scotland could create this oil fund and undermine the significance of Westminster. McCrone suggested way back in the 1970s that an oil fund should be set up, but here we are in 2016 asking why we have not done so.
There is an emerging consensus about the need to think long term in regard to the wealth fund. Does the hon. Gentleman agree that some people will listen to his comments about an oil fund, which would, by its nature, have a very limited lifespan—the oil is going to run out at some stage in the near future—and think we need to think beyond that lifespan? We need to be talking about a generational expectation rather than a general election expectation.
I agree, in so far as we have to establish the mechanisms to make sure that we have something left for future generations and the issue is not just about oil. What I want to do in this debate is talk about the missed opportunities and how we can learn from them.
I will come specifically to how we can deal with not only the financial crisis but the decline in oil prices over the past few years. We cannot run away from the fact. We know that oil prices are depressed at the moment and that revenues from North sea oil have declined alarmingly, and that that will remain the case for the next couple of years. However, there is still the value of 2 billion barrels of oil in the ground under the North sea, and at some point oil prices will recover: there will still be the opportunity to create that oil fund out of the North sea oil revenues.
In the words of Oasis, the hon. Gentleman is looking back in anger. I understand, given his political perspective, why he is doing that. Might I encourage him to look forward and to think about how we might establish a sovereign wealth fund going forward? Has he had the chance—assiduous politician as he most definitely is—to reflect on the Co-op party proposal, which envisages turning the Crown Estate into the beginnings of a UK sovereign wealth fund?
I am grateful for the hon. Gentleman’s kind remarks. We need to make sure that people in this country can benefit from the wealth that is created. It is a reasonable contribution to the debate to consider what should happen with the Crown Estate.
I would actually take things a stage further because I want to see the benefits of the Crown Estate come down to our communities. There is considerable value generated by the Crown Estate in the highlands and islands of Scotland and we have seen none of the direct benefit of that. Of course some of that will be devolved to the Scottish Government over the coming years, but I do not want the assets of the Crown Estate to sit in a fund, whether that be in London or in Edinburgh; I want my communities in the highlands and islands to benefit directly from it.
There is a bounty that will no doubt come from offshore wind over the course of the next few generations, and I want to take that opportunity to make sure that its benefits and bounty are reinvested back into the highlands and islands, so that we can broaden the base of sustainable economic growth. I agree with the broad direction of travel that the hon. Gentleman has suggested, but I would do it in a slightly different way to make sure that our local communities get direct benefit from the bounty of the Crown Estates.
I know that many other Members want to speak, so I will move on quickly. We have long argued that to take account of the volatility of North sea oil, we have to establish not just one, but two, funds as and when circumstances permit: a stability fund and a savings fund. Why a stability fund? It is an implicit recognition of the volatility of commodity pricing and a desire to set a cautious budget that would allow excess tax receipts generated in periods of high oil prices to be released for current spending at a time of price weakness. That would create stability of revenue sources for Government spending and protect the economy from price shocks.
Secondly, a long-term savings fund would, as is the case in the 30 countries that have established such funds, have a long-term legacy for future generations. A lack of vision and a focus on only the short-term have seen the UK consistently refuse to do that. If we are now seeing an emerging consensus challenging that, I will be delighted.
Although I welcome this debate and the initiative of the hon. Member for Weston-super-Mare, what he argues for is simply not going to happen in the short term given the state of the UK’s finances today. We need to make sure that in Scotland, as circumstances dictate, we can return to this as a solution for us all.
In the short term, maximising the potential for the North sea and west of Shetland must be a priority. The fiscal and regulatory regime must therefore support ongoing investment, so that we can continue to benefit from the oil that is still there to sustain jobs and our future prosperity. We have taken a substantial bounty from the North sea. Now is not the right time to establish a wealth fund; now is the time to put in place mechanisms that will support the industry, development and the ability to extract longer-term value and, of course, taxation revenue.
Just as those in Westminster sat on their hands when an oil fund should have been established, they have now been slow to respond to the weakness in oil and gas prices. Inaction has impacted the ability to maximise recovery in the industry. Today, the priority is to support this industry with an eye on creating the circumstances that will allow us to return to the needs of establishing an oil fund. For us, recovery in the oil industry and in tax revenues goes hand in hand with a transition to a green economy. It is part of a holistic approach that recognises that we need to adapt to a new, low-carbon economy.
I say yes to a sovereign wealth fund, but as part of a wider strategy. It is just a pity that we have missed so many opportunities and that, in the meantime, Scotland has missed out.
It is always nice to be called to speak, Mr Owen. I congratulate the hon. Member for Weston-super-Mare (John Penrose) on setting the scene on a subject that has to be discussed and given some thought in this House. Those of us here, and those who unfortunately have not been able to make it, will have ideas about how to do this. This is the first stage of a discussion that we should, perhaps, have had many years ago. At least we are starting the process; let us start it with this discussion. I look forward to the shadow Minister’s contribution, other Members’ contributions and, in particular, the Minister’s response on how to take this forward.
We are considering the proposals put on paper by the hon. Member for Weston-super-Mare in his report, “The Great Rebalancing: A sovereign wealth fund to make the UK’s economy the strongest in the G20”. That is a very grand title, but it encapsulates his thoughts on the subject—and, perhaps, our thoughts as well. An enormous level of thought and groundwork went into these proposals. I congratulate the hon. Gentleman on the paper, which we read—not just the background notes—back home, and it gave us food for thought. I am astonished that he found the time to do so much work on it. Anyone who takes the time to read the background notes will understand the time that he has put into writing this paper, which is worthy of discussion in the House, and in Westminster Hall today.
I was raised to save for a rainy day, as many in my generation were—and that is not just because I am an Ulster Scot and we think that every pound is a prisoner. I was taught to save for a rainy day at an early age by my mother and father, and it has not done me any harm over the years. I am now married, of course, and the money is never my own anymore; it belongs to her, but that is by the bye. I do not wish to dumb down in any way the hard work of the hon. Gentleman, but to me this is like the Government saving for a rainy day, as I said to him when discussing the debate beforehand. The hon. Member for Ross, Skye and Lochaber (Ian Blackford), who spoke before me, is a strong advocate for the WASPI—Women Against State Pension Inequality—women and their pensions, and I am glad he is here. Before I came in, I thought, “What if we had had this fund 20 years ago? We would have been able to look after the WASPI women and make sure their pensions were covered.” We did not, but at least we have chance to look at this issue now.
As always, the hon. Gentleman makes a number of pertinent remarks. There is a view that we do not have the resources to pay the appropriate pensions to people, but we should keep an eye on the Government Actuary’s Department, which has argued—I am keen that people should not get away from this—that the national insurance fund will be in surplus to the tune of about £30 billion by 2016-17. The resources are there to give the women what they are due, and over the next 20 or 30 years, pensions will remain affordable.
I thank the hon. Gentleman for those figures. I was not aware of them, but if that money is available, perhaps we are in a position to start the fund today with some of those resources.
I am sure that, like me, many hon. Members, including the hon. Gentleman, will know of 63-year-old women in their constituency who still have to work as their pension is unavailable. Those women are wishing that in the 1980s, at the time of the North sea oil find, which we have heard many comments about, the Government had decided to invest in a rainy day fund, which could have helped the pension pot. For that reason, the sovereign wealth fund must be considered seriously by the Government. That is why this matter is worthy of debate.
This issue is not cut and dried, by any means. There is talk of the Government’s shale fund being similar to this plan, as the hon. Member for Weston-super-Mare mentioned, but this is not the day to debate the pluses and minuses of fracking. A lot of hard work would need to be carried out before the fund saw any profit, but many people are already making claims about the potential for shale oil, if that comes through—and I suspect that, at some time, it will. We must think about what can be done for the future benefit of all people in the UK. Today’s austerity is a reality for us all. We have to be honest in this House about moneys and finances.
I apologise for my late arrival, Mr Owen; I had another meeting. Does my hon. Friend agree that we have to look forward, when it comes to these funds? Oil prices, fracking and all the rest have been referred to, but we have to debate the issue as a whole, including wind turbines and all of that. Green energy could be as much as 40% more expensive, and we have to look at all of it. If we are going to put money in, we have to get the price correct.
I thank my hon. Friend and colleague for his intervention. As always, it is good to have his businesslike approach; he looks at the real issues critically and focuses on the situation that we are in. We need to look at the issue more widely and at some things that will cost more. That is part of the debate for the future.
We all know that the deficit needs to be cut, as the hon. Member for Weston-super-Mare openly acknowledged, yet it is incumbent on us all to look at the long term; in this House, we have to be visionary, and this debate gives us chance to do so, and to look at how we can secure a better future, using our resources for future generations.
I respectfully point out that, like many people, I have opposed the severity of Government cuts. I have met people in my office who have come for help and thought that they were deserving of benefits, but those have become harder and harder to get. I am sometimes overwhelmed by the cases I come across. It is very hard as an elected representative, no matter which party Members belong to and whatever their views, not to become perturbed and emotional about those cases. When I see people who should be on benefits, whose medical conditions are being made 10 times worse because there is no alternative than to work, I think, “No, we cannot sustain the cuts.” I stand by that belief. I stand by the fact that our front-line medical staff and emergency services need investment to sustain services. I stand by the belief that we need an Army that is capable of dealing with international commitments. All those things need to be in place.
Achieving all that and still cutting the deficit is incredibly hard to imagine, yet it can and must be done. Looking at the situation and saying that we need to invest in our future with a portion of the money is even more difficult, and that is why we are having this debate. Perhaps the national insurance contributions that the hon. Member for Ross, Skye and Lochaber referred to can kick-start the fund.
We expect people to budget with their money at home in exactly the same way. People must pay for a secure home with a mortgage, which should be paid off in some 30 years of work. People must pay their tax and national insurance to ensure healthcare and future security. On top of that, we ask people to pay into a compulsory private pension fund set up by their employer, and they must then live off the returns from that money. That is what we all must do in this place: we must keep all the balls in the air, as we expect our constituents to, while living a normal life. We must pay our mortgage—the deficit—at a rate that enables us to meet the rest of our obligations. Many young couples out there would love a 15-year mortgage, but it is not possible to pay that and live daily. As my mother says, “You cut your cloth to suit your needs.” We must pay off what we can afford to, and continue to spend money on what we must not neglect.
The hon. Member for Weston-super-Mare said in his paper on the sovereign wealth fund:
“We can and should start doing this immediately, because it is the only kind of Government spending which can justifiably be paid for with long term debt. It will inevitably mean a slightly longer wait to eliminate the Government deficit and achieve a balanced budget, but should earn a good financial return through higher economic growth nonetheless.”
I agree, and we should consider that. It is a difficult, but not impossible, task. We are elected to take difficult decisions in this House and to ensure that they are the right ones. That is why this debate is so helpful.
At the very least, the proposals merit full Government scrutiny and consideration. A committee should be set up to do this work and to see how the Government can invest now to help future generations. I think of Katie and Mia, my wee granddaughters—most of us probably have grandchildren—and I would give them the world, if only it were mine to give them. We would all do that for our children and grandchildren. We have an obligation to the generations ahead to do the right thing, to make the tough choices now and to secure a better future for them than seems to be on the horizon. The work needs to be done, and the hon. Gentleman has started it with this debate. We now need seriously to consider in this place how to do that. The Minister will lead on this issue, so there is no pressure on him whatever. We look to him genuinely and seriously for guidance on how best we can fulfil our obligations as MPs, and—I do not mean to sound like Trump—on how to make sure that we keep Great Britain great.
I apologise to the Front Benchers: because of other commitments, I will have to read their responses to my contribution and others in Hansard.
I want simply to re-emphasise the proposal that the Co-operative party floated some three years ago: that the Crown Estate, which holds some £8.6 billion of land and property, should have changes made to its regulations to allow it to invest overseas and so essentially become the beginning of a sovereign wealth fund. It is appropriate to have a degree of realism about the size of other sovereign wealth funds and, therefore, about the task for a future Government who want to set one up. As others have suggested, one has to start somewhere if one thinks a sovereign wealth fund is a good idea.
For all intents and purposes, the Crown Estate acts like a sovereign wealth fund by investing in property—usually retail centres—and paying the surplus it generates back to the Treasury to help offset the costs of our royal family. We should encourage the Crown Estate to be a little more ambitious by lifting the restriction that says it can invest only in UK assets and by allowing it to invest in assets overseas, as other sovereign wealth funds do. The Crown Estate clearly has a track record of expertise in the retail sector, and one might therefore expect it to continue with that approach. I see no reason for the Crown Estate not being allowed to contemplate, under the Treasury’s watchful eye, investment in similar ventures overseas. The Crown Estate could then hopefully generate sufficient surplus not only to pay for the royal family, but to invest in the types of infrastructure projects that all Members want to see.
The Crown Estate has a comparatively smaller asset base than the funds held by Norway and a number of middle eastern countries. Nevertheless, I see no reason for not advocating a more ambitious strategy, with the hope and aspiration that the Crown Estate might begin to become a sovereign wealth fund. I have had no clear explanation from the Treasury of why it opposes changing the law to lift the restrictions that limit the Crown Estate’s investments to the UK market. I hope that the Minister—if not in this debate, then perhaps by way of letter—will think about that, because if the restriction were lifted, the Crown Estate would begin to act like a sovereign wealth fund.
Does the hon. Gentleman accept that some of the Treasury’s reservations might be overcome if we followed the Norwegian example and had limits for classes of investment that a sovereign wealth fund could make? If we went down the route of investing in foreign equities or bonds, only a proportion of that investment would then qualify for the overall fund.
That is a helpful suggestion. If the Treasury could be persuaded to allow the Crown Estate to dip its toe in overseas markets, it might initially restrict how and where, and in what type of assets, the Crown Estate invests. The hon. Gentleman, cautious Scot as he clearly is, might wish to encourage the Treasury both to be open-minded about investment overseas and to carefully restrict such investment. I do not oppose such a restriction if it allows the Crown Estate to be a little more imaginative.
With that pithy contribution, I encourage the Minister and my Front-Bench colleague to embrace the Co-op idea with enthusiasm and consider how we might begin a UK sovereign wealth fund.
I begin in time-honoured fashion by thanking the hon. Member for Weston-super-Mare (John Penrose) for securing this debate. I say that genuinely because we do not get enough chance to think long term or to debate issues in detail, and this is a practical issue on which to do so.
This has been a limited debate, and I begin my summing up by agreeing with many of the hon. Gentleman’s reasons for having some kind of sovereign wealth fund. In the current context, the most important reason is that a sovereign wealth fund would provide inter-generational justice. There have been discussions about a UK sovereign wealth fund since the 1970s; the issue has come and gone. There have been many arguments for a sovereign wealth fund and, in the ’70s, the North sea oil money had arrived and we needed to do something sensible with it.
Such reasons are episodic. On both sides of the House, we have all come to understand that inter-generational fairness is an issue. Successive generations have repeatedly used up available funds, often making a mess of the economic situation, and left it to future generations to pick up the pieces, as the Women Against State Pension Inequality Campaign is at the moment.
In the absence of any inter-generational mechanism for creating such fairness, we have to consider some kind of sovereign wealth fund. The Government are on record as seeking some form of inter-generational justice, and this is the only mechanism currently under discussion that has any chance of success. Without prejudging how we do it, a sovereign wealth fund is worthy of discussion because it exactly fits the kind of programme that the Government have suggested.
The hon. Gentleman did not examine in any great detail the other argument for some kind of sovereign wealth fund. During a periodic economic crisis, a sovereign wealth fund, provided we do not touch the capital, would give us an emergency revenue stream that can be put to use without unbalancing the broader fiscal mix. Since 2008, at the same time as building up the equity base of their sovereign wealth fund, the Norwegians have been able to tap some of the income stream temporarily, to offset lower tax revenues as a result of the global economic crisis. Again, that would seem to recommend itself to the Treasury.
I applaud what Norway has done, but one of the weaknesses of the Norwegian model is that it invests primarily in equities and bonds. If we get this right, there is an opportunity to invest in infrastructure. My hon. Friend is right that we should draw down only on the income streams, but there is a real opportunity to invest in infrastructure to build capacity and growth opportunities, as well as investing in financial assets.
I could not agree more. I will come on to that, but the Norwegian example is slightly skewed by the fact that Norway is a relatively small country and, when its sovereign wealth fund was being built up, it had an excess of inward investment in the oil industry. Norway therefore did not need to tap the wealth fund for domestic infrastructure expenditure. Norway has also been canny in making significant investment in infrastructure anyway. There is a glaring gap in the UK’s infrastructure investment, and infrastructure would be one of the primary places to secure a positive income stream; it is therefore somewhere we would want to invest.
Just to finish on the Norwegian example, there is never a good time to start a sovereign wealth fund. It is interesting that the Norwegians did not start their wealth fund until the early 1990s, just as oil prices collapsed. They set up a spanking new sovereign wealth fund, and they chose to persevere after oil prices nosedived. Oil revenues built up again during the 1990s and the wealth fund powered away. On whether we should wait and whether there is a right time to start, there is never a right time. The Norwegians started their sovereign wealth fund at the worst possible time for the income streams that they were tapping, namely oil revenues, but they persevered. It is about perseverance and long-term thinking. The hon. Member for Weston-super-Mare made the key point that this works only if we think long term.
We must look at some of the counter-arguments, because as enthusiasts we tend to let our ideas run away with us. The fundamental argument that is always made, especially from the Conservative Benches, is “Why should the Government—or some Government agency, even at arm’s length—keep the revenues and invest them? Surely we should cut taxes and let people spend the money themselves, because they are better judges of how to invest for the long term.” It is a compelling argument, but the trouble is that historical experience does not bear it out: look what happened to North sea oil revenues back in the 1970s.
It has not yet been mentioned today that a prototype sovereign wealth fund, in the shape of the National Enterprise Board, was set up in 1975 by the then Labour Government to invest in domestic infrastructure. As I remember, it had £1 billion a year from North sea oil. It began by building up a portfolio of British industrial companies. There was a Scottish equivalent, the Scottish Development Agency. That was all abolished in 1979 when the Conservative Government came in under Margaret Thatcher. The argument was, “Individuals and private companies are better able to spend the money, so why not cut taxes?”
The 1980s were the decade of maximum inflow of funds from North sea oil. What happened to investment in that decade? Industrial investment fell—indeed, by the end of the 1980s, the UK turned out to be one of the lowest spenders on private industrial investment in the OECD. So it did not go into private sector investment; what about public sector investment? We started the 1980s with something like 2% of GDP being spent in net public investment in infrastructure, which is quite good by today’s standards. By the end of the decade, that had been reduced to something like 0.2% of GDP. There was a catastrophic fall in investment throughout the 1980s. Whatever the huge influx was of funds from North sea oil, it was not passed on in investments.
What about tax cuts? I always like to remind Conservative Members that during the 1980s the share of taxation in GDP did not fall. Yes, Mrs Thatcher cut income tax quite considerably, but she counterbalanced that by increasing VAT. The overall tax burden did not fall, so we have to ask where the North sea oil money—the excess revenue for the Treasury of more than £100 billion in that decade, in contemporary terms––went.
In the first half of the 1980s, there was a very serious recession, from which the economy took 18 quarters to recover and which reduced the Treasury’s overall tax income. Essentially, the Treasury made up the loss from that early-1980s Thatcherite recession by using the North sea oil money. In the end, in the 1980s—the peak years of income from North sea oil—the money was wasted. It did not go into private or public infrastructure investment and it was not used by private individuals to expand their savings; it simply went down the drain.
Does the hon. Gentleman agree that there is not necessarily a choice between tax cuts and a sovereign wealth fund? Potentially, depending on pacing, we could do both. In some cases, it might make sense to do both, if only because—as the Government have already said in answer to parliamentary questions—we will need to do something to reduce the country’s overall debt burden. All I am arguing is that we should not ignore the liabilities built up in our state pensions and benefit system as part of that burden. We need to address that and we may also want to make tax cuts, but for different reasons, to do with demand stimulation and so on.
In a spirit of compromise and reaching a consensus that might have an impact on the Treasury, I happily take the hon. Gentleman’s point.
All I am trying to say is that the crude default assumption that taking the money and giving it to individuals or companies will resolve the infrastructure investment problem has historically not proven correct. We come back to the need for some kind of overall public agency that saves and invests. The crude Thatcherite argument, if Members will forgive me for putting it that way, that says “Leave it to the public” is wrong. Short-term pressures on the public and on companies are just as great as those on Governments and Ministers. Somebody somewhere has to create an agency that thinks long term. That is what we are talking about.
The hon. Gentleman’s colleague was a bit sniffy about the idea of turning the Crown Estate into such an agency. Could the hon. Gentleman be persuaded to be more positive about the idea?
I am not sure that I recognise that characterisation of my good friend, my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford). In case it has never been said on the record before, I will say that he was once my student when I lectured in economics—he is younger than he looks—so everything he knows about economics probably came from me. Anyway, I will come on to the Crown Estate in a minute.
What should we spend the money on? I agree with the hon. Member for Harrow West (Mr Thomas) that the Norwegian example of simply investing in foreign equity is too narrow. Given the primary crisis here in the UK, we should impose an injunction on whatever form of wealth fund we create to invest primarily—not totally, because for safety and balance it should have a remit to spread its portfolio—in infrastructure. The OECD reckons that a baseline of something like 3.5% of GDP should be reinvested in public infrastructure every year to maintain and develop reasonable levels of productivity. In the UK, that investment has fallen to less than 2%. I fully recognise that significant funds for infrastructure investment over the forecast period were announced in the autumn statement, but even so the figure will rise only to about 2.3%, and we need to get up to at least 3.5%, so there is an infrastructure investment gap. The flow of funds could come from a sovereign wealth fund, because above all a sovereign wealth fund can think long term, whereas the City and the financial institutions are being forced to think more and more short term. Again, one of the crucial things we get from a sovereign wealth fund is the ability to think long term rather than just talk about thinking long term.
How would we fund it? I share some of the disquiet about simply linking it to running a budget surplus. Running a budget surplus is extraordinarily difficult; it has rarely been possible to run one over any length of time, in this country or in others. Gordon Brown ran one for a few years at the beginning of the millennium, but it was largely done through artifice because he sold off the gold reserves at rather a bad time. Roy Jenkins, who some Members may be old enough to remember, ran a budget surplus at the end of the 1960s, but only with a hugely draconian austerity programme that actually undercut investment in the long run.
From looking closely at the autumn statement, I do not believe that there is much chance of our running a budget surplus at the end of the forecast period. I certainly agree that we should seek to have a balanced current budget over the medium term, but artificial controls on investment and on borrowing for investment are the wrong way to go. There is no reason not to have quite a healthy borrowing for investment, provided that it is roughly in line with trend growth, because it will make a return. Simply linking the sovereign wealth fund to running a budget surplus is offering a hostage to fortune.
We should therefore look at other sources of funding. The Crown Estate is one—clearly we have assets there that could be deployed. I also remind hon. Members of something that has not yet been mentioned: in the last decade, most of the sovereign wealth funds that have been created, particularly in China, have come from recycling the foreign investment earnings from a trade surplus. It is a bit difficult for the UK, given that we have a trade deficit. Fortunately, in Scotland, where we still have a trade surplus, that surplus would underline the re-creation of our sovereign wealth fund.
Clearly, this is an idea whose time has come and about which there is broad consensus across the parties. It is also an idea that the Treasury has always been reluctant to think about, but that stems from the short-termism of the Treasury. The new Chancellor has suggested that he wants to think longer term. A sovereign wealth fund would be his chance to prove that that is what he is going to do.
Thank you very much, Mr Owen, for calling me to speak. It is a pleasure to take part in this debate.
I begin by thanking the hon. Member for Weston-super-Mare (John Penrose) for securing a debate on such a genuinely interesting issue: his proposition for a UK sovereign wealth fund. I have read with interest his recent paper for the Social Market Foundation, “The Great Rebalancing”; the ideas he presented there are very much the basis for his speech today. He was kind enough to advertise the paper’s availability for those seeking a late Christmas present for a loved one. However, I can genuinely say that I enjoyed his pamphlet and I enjoyed listening to his speech today.
I do not want to get the hon. Gentleman into any trouble, but I have to say that parts of his speech were very much on board with certain parts of current Labour party economic policy, even if we do not necessarily reach the same conclusion on this issue. However, on separating current and capital spending and balancing day-to-day spending while allowing for long-term investment, we are very much on the same page. I only hope that his Government will listen to him and implement such a sound economic policy, which is rapidly becoming a mainstream consensus position.
The Labour party has been calling for higher levels of Government investment, given that, as the hon. Gentleman and other hon. Members outlined, we are investing less as a percentage of GDP than any other comparable developed nation. As the hon. Gentleman writes in his pamphlet:
“The result is chronic under-investment relative to other developed nations, and creaking infrastructure which chokes and slows economic growth.”
Frankly, I could not agree more: we are committed to mobilising billions of pounds more for sustainable investment in the UK economy. We want to see £250 billion of direct Government expenditure in key infrastructure projects over the next 10 years and a further £250 billion mobilised through a national investment bank. Labour will deliver the long-term investment the UK economy needs, to boost growth and tax receipts, and to ensure that our welfare and public services can receive the funding they desperately need—today and in the future. In that way, the public finances will be better placed to respond to the demands of meeting pensions and benefits payments in the long term.
The hon. Gentleman’s idea is for a sovereign wealth fund that would be ring-fenced for pensions and benefits payments. I see some difficulties with that idea. Ring-fencing our pensions and benefits systems to a sovereign wealth fund means using a pot that would vary pro-cyclically to fund a social security system that functions counter-cyclically. In other words, benefits need to be paid out when the economy takes a downward turn, which is when the wealth fund would be at its weakest. Moreover, it seems risky to use a fluctuating fund as a ring-fenced source of public spending that needs to be fairly stable in the long term. What would happen if, at the moment people needed Government support, the wealth fund could not pay out?
The hon. Gentleman wrote in his paper that
“Clearly it wouldn’t be generationally fair or just to expect the same people who had just fought a war, or weathered the financial storm of a global financial crisis, to rebuild the financial cushion…within the next few years of a single economic cycle.”
However, I feel that an eventuality such as a war could cause exactly that type of situation. We have already seen that the Conservative Government consider it fair for the average UK citizen to pay the price of six years of austerity following a financial crash in which they played no real part, and I am not sure how a sovereign wealth fund would ensure that that could not happen again.
Of course, there are advantages to wealth funds if they are used, for example, to invest in infrastructure projects, which many Members have mentioned. However, countries with effective funds tend to run a budget surplus and, as we are all too aware, the UK does not—and has not done so for some time. Indeed, the last Chancellor missed out on all his deficit reduction targets and did not reach his arbitrary surplus goal, so it is no wonder the new Chancellor has abandoned that goal altogether. I struggle to see now how a fund could be built up, given the pressures on the public finances as they stand.
Overall, though, the concept of a sovereign wealth fund for the UK is definitely one that should be discussed. Other countries around the world have indeed benefited from establishing one, and Norway’s great success is often cited as an example. However, at this stage we do not have a workable proposal about how to build up the necessary reserves, and I would certainly not be happy with people becoming dependent on a fluctuating fund for state support and pensions, as has been advocated. Equally, we need to be realistic about how capable Britain is of building up such a vehicle at this time and about the difference between our circumstances and those in countries that have deployed sovereign wealth funds to their benefit.
However, I thank the hon. Gentleman for allowing us to debate this issue today. I look forward to hearing the Minister’s comments. I am sure that the idea of a sovereign wealth fund will be debated in more detail in the future.
It is a great pleasure to serve under your chairmanship, Mr Owen.
I start by thanking my hon. Friend the Member for Weston-super-Mare (John Penrose) for securing this debate today. The issues it raises go to the heart of the Government’s economic approach, which is to get our finances in order and to build for the long term-success of the country. I read with great interest my hon. Friend’s paper, produced with the Social Market Foundation; I might indeed consider purchasing it as a small Christmas gift. The objectives that informed his paper are all ones that I share, along with Members on both sides of the House, I am sure: to see the UK’s economy strengthen and grow sustainably in the future.
Let me start by addressing the idea of sovereign wealth funds more generally, because I agree that they can form an important part of any country’s strategy for investing in its future success. Often, they are a way for Governments to manage fiscal surpluses, foreign currency operations or balance of payments surpluses. They can indeed be an effective tool for both planning sustainable investment and managing volatility in receipts. We have seen how they can work well for countries that have large fiscal surpluses. Hon. Members have mentioned Norway’s Government pension fund; there is also Saudi Arabia’s Saudi Arabian Monetary Agency’s foreign holdings fund.
However, we are not debating today the valuable role that sovereign wealth funds play in other countries around the world; we are considering whether such a fund would be appropriate for the UK, and—importantly—appropriate at this time. As the House is fully aware, we are not in the same position as many other countries that have elected to set up such funds. The crucial point is that the UK has not run a surplus since the start of this century, although we are now committed to doing so.
We have chosen the path of a credible fiscal policy that will restore our economy for long-term health, and although we are no longer seeking to deliver that surplus in 2019-20, we remain resolved to do so, to bring our public finances into balance. That is why we have committed once again in the autumn statement to deliver the surplus: we set out our plan to make that happen as soon as possible in the next Parliament, while in the interim bringing cyclically adjusted borrowing below 2% by the end of this Parliament, and getting public sector net debt, as a share of GDP, to fall in this Parliament, too.
I share my hon. Friend’s conviction about the need for strong and sustainable public finances for the UK and I understand his interest in exploring the potential for a British sovereign wealth fund. I agree with the hon. Member for Strangford (Jim Shannon) that the country should be prepared for a rainy day—sensible advice that we should all listen to. However, given that UK debt will soon be at a 50-year high of 90.2% of GDP, our priority must be to return the public finances to balance and to get the debt falling before we can consider a sovereign wealth fund in more detail. However, although such a fund may not be an appropriate avenue for us to explore at this stage, I will touch on some of the issues that today’s consideration has raised.
One such issue has been our infrastructure. One of the key roles that a sovereign wealth fund can perform is to act as a vehicle to fund sustained investment in infrastructure. Although we may not have a sovereign wealth fund, or even a formal statutory target for the proportion of our GDP that we invest in infrastructure, the Government share my hon. Friend’s conviction about making the infrastructure investments we need that will boost our productivity and strengthen our economy. That is why we have asked the National Infrastructure Commission to make recommendations on the future infrastructure needs of the country.
Once again, I refer all Members to the commitment in the autumn statement, where we prioritised high-value investment in infrastructure and innovation. That included the new national productivity investment fund, with £23 billion of extra spending targeted at high-value projects that will deliver more opportunities and higher living standards for working people—whether that is more homes, better transport links or the 21st-century digital capacity we need.
The Minister is setting out why he thinks it is not relevant to set up a sovereign wealth fund today, but does he accept that there was a missed opportunity with the £340 billion bounty that came from North sea oil? That could have been used to establish an oil fund that would have delivered benefits for today and the future.
I often say as an MP—I suppose the same is true as a Minister—that it would be nice to have a crystal ball, a magic wand and a time machine. We are where we are, and we have to make the best decisions going forward—rather than looking back in anger, if I may quote the hon. Member for Harrow West (Mr Thomas).
The additional capital will take public sector net investment to over 4% of GDP for the rest of this Parliament, well above the average of the last 30 years; in real terms, it has been more than 50% higher on average this decade than it was under the whole period of the previous Government.
Another aspect of my hon. Friend’s excellent paper was the suggestion that a new national debt charge be carved out of income tax to help pay down the debt. He will know how much I share his conviction that we need to get debt falling, but I know he also shares the Government’s commitment to helping people who are just about managing. It is important that we build an economy that works for everyone. That is why we would not look to deliver a new income tax charge in our current position. Indeed, as part of the tax lock, we have legislated not to increase the main rates of income tax, national insurance contributions and VAT during this Parliament. Alongside that, we have prioritised an approach to taxation that supports working people, such as our increase in the tax-free personal allowance.
Just to ensure that we are all clear, I clarify that my paper supports what the Minister is describing. The proposal in my paper is that the national debt charge would not start until the budget was in balance and would only equal what we were already going to be paying in debt interest to begin with. I reassure him that I am not suggesting an undercutting or a swerving away from the fiscal rules announced in the autumn statement. Those are essential to get us to the point where the budget is in balance, as he is ably laying out at the moment.
I thank my hon. Friend for again demonstrating what a sensible person he is.
The hon. Member for Ross, Skye and Lochaber (Ian Blackford) asked about North sea oil and why we did not create a fund in the past. He knows full well that successive Governments made use of the revenue from North sea oil to support public finances in the years when the revenues rose. I can tell him that going forward from April 2017, his Scottish Government will have the powers to contribute to their own reserve fund if they so wish. Perhaps that is something they might consider. We all agree that investment in infrastructure is key to growing the economy. That is why the extra £23.7 billion announced in the autumn statement is important; it takes the total we are spending to £170 billion during this Parliament. That will improve productivity, increase living standards and be an essential part of our plan going forward.
About half of the extra £23 billion that the autumn statement has put into infrastructure investment is going into housing. How does that raise productivity?
Housing does raise productivity. It is a much-needed part of our economy. People need affordable homes to rent or buy. The building process, as I am sure the hon. Gentleman is aware, creates jobs and increases prosperity and productivity.
The hon. Member for Strangford mentioned a shale fund—a suggestion that others have made, too. The UK does not currently meet the criteria of a country that would benefit from a shale wealth fund: we have a high debt and a large deficit, and we do not have extensive commodity or natural resource exports. The development of the shale industry would leave a positive legacy for local communities and regions where it is based. The Government’s policy is for those communities to be able to choose to invest the funds for the long term. I thank the hon. Gentleman, as ever, for making a very thoughtful contribution that added greatly to the debate. [Official Report, 19 December 2016, Vol. 618, c. 9-10MC.]
The hon. Member for Harrow West apologised for not being able to be present during my speech, and I appreciate that. He asked about lifting investment restrictions on the Crown Estate. That is an interesting idea; I will do as he asked and write back to him on that matter.
I thank the hon. Member for East Lothian (George Kerevan), as ever, for his thoughtful contribution. He mentioned inter-generational fairness. I agree that that is an important issue, but at 90% of GDP next year, our debt is just too high. That represents a burden on future generations, and it is important that we retain our focus on our priority of returning the public finances to balance and getting the debt falling. Therefore, it is not possible, and it would not currently be appropriate, for the UK to set up a sovereign wealth fund. He also mentioned taxation levels; I feel duty-bound to remind him that from tomorrow, for the first time, his party—the SNP—will be able to put up taxes in Scotland. The Scottish Government can put their money where their mouth is, if they choose to do so.
The Minister is being generous. I want to pick up on the point he has now made twice: about prioritising the reduction of the overall level of Government debt in the economy once we have eliminated the deficit. I completely applaud that, but does he accept in return that the debt denominated as gilts or as bonds is only part of the overall picture of liabilities that the Government and successive Government have loaded up? A large proportion of the total liabilities—a larger proportion than the actual debt denominated as bonds—is embedded in the state pensions and benefits system. It would be a mistake for any of us to ignore those liabilities. They are equivalent to debt, so at some point we need to face up to the costs that they include, as well as to the ones he is rightly pointing out with the bonds themselves.
I thank my hon. Friend for that point, and I accept that the debt is made up of a variety of different things.
I commend my hon. Friend once again for securing the debate, which has been interesting. We have discussed some significant issues for the British economy. There are many areas where he and I are in full agreement, but in closing, I would like to highlight three key aspects.
First, rebalancing our economy is necessary and important. Secondly, dealing with the deficit and getting debt falling is necessary but not sufficient to rebalance the economy. A dynamic and strong economy where growth is shared across all parts of the UK is what we need. Thirdly, on the effectiveness of sovereign wealth funds in various countries, I must repeat our conviction that setting one up is not appropriate for the UK at this point in time when our priority is to get debt falling.
Indeed, as my hon. Friend the Member for Weston-super-Mare notes in his paper, there is little point in attempting to build up such a fund when debt is at
“its current, historically high levels.”
I share my hon. Friend’s desire to live within our means —the hon. Member for Strangford used the expression “to cut our cloth accordingly”—and to secure our public finances, to get debt falling and to invest sensibly in our future success, which are all important areas that represent core priorities for the Government. Those priorities were reflected in the approach that we outlined in last month’s autumn statement: to build an economy that works for everyone.
What a splendid debate. There is a high degree of consensus among all parties, with a few isolated islands holding out against the principle. Much of the debate has been about how we might set up a fund, the competing mechanisms that we might use to build it up, and when we should have started, but there has been widespread agreement that, in principle, such a fund is desirable. Scottish National party Members say they are in favour of the principle of a sovereign wealth fund, but they argued that we should have started it earlier and built it up from oil. None the less, they were in favour.
The voice of Northern Ireland agreed. The hon. Member for Strangford (Jim Shannon) said he was brought up to save for a rainy day, as were we all, and he is absolutely right. The hon. Member for Harrow West (Mr Thomas) brought up the Co-op party’s suggestion—similar but not identical to mine—which was helpful.
Although the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) was kind about my paper, I am not sure that the Labour party and I are at the same point on generational justice; it puts less weight on it than I do, although I reassure him that the fluctuations in the fund that he is worried about need not be fatal, but that is for a longer conversation on another occasion.
The Minister was very helpful in accepting the three questions that I asked. On the need for rebalancing, he was clear about the desirability of making our economy more robust and more sustainable. Is debt repayment sufficient on its own, or do we have to take into account our broader liabilities, to rebalance the economy? The answer to the latter is yes, and the Minister was clear about that. He left the door temptingly open on whether this proposal is the right answer. He was generous in his acknowledgement of the strengths and benefits of sovereign wealth funds around the world. He rightly says, as my proposal acknowledges, that it would be wrong to start such a thing now. He leaves the door temptingly ajar, so that it might be something we should consider in future, but I understand that he cannot commit Her Majesty’s Government to this at this point. However, that gives us plenty of opportunity, on a cross-party basis, to come back to this and make sure that that chink of light is brought into full focus.
Question put and agreed to.
That this House has considered the UK Sovereign Wealth Fund .
I beg to move,
That this House has considered the future of A level archaeology.
First, I declare an interest, having studied archaeology at university. I have hacked through jungles in pursuit of Mayan pyramid sites and spent wet summers in duffel coats digging up Roman forts on Hadrian’s wall. I started such practices at the age of seven on a Saxon homestead on a windy hillside in Sussex. I am chairman of the all-party groups for archaeology and for the British Museum, and a fellow of the Society of Antiquaries. I want to put on record my thanks to Dr Mike Heyworth of the Council for British Archaeology, who provides the secretariat for the all-party group on archaeology and has provided very useful information for today’s debate.
The subject of the debate may seem somewhat niche, although I am sure it does not seem so to you, Mr Owen, but it is important. If nothing is done, the current cohort of students studying archaeology in our schools and colleges will be the last. We have already lost the GCSE in archaeology. I studied AO-level archaeology all those years ago. Those days are long since gone, because in October, the AQA examination board, the last board offering archaeology at A-level, announced that after a lot of consideration it had made the difficult decision to discontinue, from September 2017, its work creating new AS and A-level qualifications in archaeology, classical civilisation, history of art and statistics. That is despite the fact that in 2016 more than 600 candidates sat the AS exams in archaeology and 369 sat the A-level. The number has been fairly consistent over the past five years.
On its website, AQA describes archaeology as
“one of the most exciting subjects in the curriculum. It is the ultimate subject for an ‘all-round’ student, in that it combines elements of many other academic disciplines, such as Science, Art, Technology, Geography, History, Sociology and Religious Studies. The study of Archaeology challenges students to understand and use a range of evidence to draw substantiated conclusions and raises their awareness of the uncertainty of knowledge.”
Indeed, it is one of the most exciting, challenging and stretching subjects in the curriculum. Far from scrapping it, we should be promoting and expanding it to more schools and more students, particularly in the state sector.
Archaeology is not some dusty, crusty, outdated subject for eccentric fossils like me. It teaches us about who we are, where we come from, where we can go, and how we relate to those around us. As the great Roman republican senator, consul and historian, Cicero, said, to be ignorant of what happened before one was born is to remain always a child.
On that point, will my hon. Friend give way?
On the point of Cicero, I am delighted to have an intervention.
We will have some Ciceronian advocacy. Archaeology ought not to be seen as a poor cousin of history. All the reasons to study history apply in equal measure to archaeology.
My hon. Friend is absolutely right. Archaeology teaches us the disciplines of forensic analysis; how to peel back the layers of evidence, literally; how to contextualise and study the data in physical form—or often, as importantly, its absence in physical form—and to make assumptions based on scientific analysis. In a contemporary context, those same disciplines were brought to bear in the Shoreham air show tragedy in my constituency last year, when expert archaeologists were brought in to help in the grim but necessary job of identifying remains. There are many everyday applications for archaeologists in police, crime and detective work.
From archaeology, we learn a lot about our environment and the relationship between man and our landscape. We learn about why a bronze-age settlement was built on the side of the downs, for example, and about the relationship with sources of water and the preservation of scarce resources. How were the Romans able to keep food fresh and preserved without electricity and refrigeration? How did the Mayans build pyramids that mirrored the cosmos with the most accurate charts and calendars until the invention of the modern computer? How did the Greeks build such magnificent temples without JCBs and machines? They can all teach us a lot about recycling, respecting and conserving resources, and working in partnership with nature when food miles were scarce and expensive.
There are numerous examples of how archaeology has helped modern civilisation, such as the rediscovering of the Roman irrigation system in Libya to provide water for sustainable agriculture today. From archaeology we can learn about our society at a national and local level; what binds us together across generations; and where archaeological and heritage projects can be a major tool for regeneration and education, especially in deprived communities. Archaeology is a major driver of the economy, not only as a source of visitor attractions and because of its contribution to tourism, but as a serious employer in many sectors, too.
Heritage tourism in this country generated some £20.2 billion gross value added last year and is responsible for 386,000 jobs. The British Museum is the No. 1 visited attraction in the United Kingdom, with more than 7 million visitors. It is the world’s greatest museum—a museum of and for the world and the culture of mankind on this planet. There is a contribution, too, from marine archaeology, through famous wrecks such as the Mary Rose, which attracts hundreds of thousands of visitors to Portsmouth.
In the creative arts, the stories, films and programmes about the treasures of Tutankhamun and Howard Carter, the documentaries on Egypt and the more fanciful adventures of Indiana Jones, for example, are all linked to archaeology. In Syria, there are horrific scenes of man’s inhumanity to man, but more attention was given to the tragedy because of the destruction of archaeological treasures and UNESCO world heritage sites, such as the magnificent Palmyra, which I was privileged to visit when it was safe to do so.
My hon. Friend refers to the jobs created in the heritage sector. I am grateful to Dr John Davey, the lab manager for archaeology at the University of Exeter. He told me that 55.3% of those employed in this area are aged 45-55 years. Does my hon. Friend agree that that shows the importance of continuing A-level archaeology to recruit the people we will need in future to replace those retiring?
My hon. Friend is right. I am very grateful for the work that many academics in archaeology departments have done to communicate important facts to Members of Parliament about how archaeology applies across the generations and across social backgrounds.
Going back to Syria, a nation’s soul is its culture and heritage. That is why it is so important to preserve and protect important sites and the products of their civilisations. If war-torn countries such as Syria are to pull themselves up and recover, retrieving a sense of cultural identity will be a major part of that, but when misused, archaeology can be distorted by nation states to create slanted, propaganda-driven visions of the past.
There is also the practical application of archaeology and archaeologists in a developed industrial country such as the United Kingdom. If we are to build houses, develop communities and construct major infrastructure projects, we need archaeologists to recce and clear the ground first. If the northern powerhouse, High Speed 2, garden cities and the like are to happen, we need trained archaeologists in at the beginning. They are in short supply, as confirmed by the Chartered Institute of Archaeologists and the study carried out by the all-party parliamentary group on archaeology.
Historic England has said that it is
“concerned to hear that archaeology will no longer be an option at A-level. We anticipate growing demand for archaeologists trained to handle the large number of excavations likely to be needed in advance of housing development and major infrastructure projects. So we need to be encouraging the development of archaeological skills, and broadening the appeal of archaeology as a discipline. This move will close off a small but significant route into the profession. To address the situation we are working with universities and other organisations to promote archaeology apprenticeships and vocational training to offer potential new routes into the profession.”
Professor Carenza Lewis of the University of Lincoln and of “Time Team” fame notes that archaeology develops a range of transferable knowledge and skills, such as credible thinking, structured working, reflective learning, report writing, team working, verbal communication and citizenship, and that a lack of those skills often disadvantages students, particularly those from less affluent backgrounds, when they attempt to continue their education or enter the workplace. I say “hear, hear” to that. I could add a whole list of disciplines involving the environment, sustainability, culture, regeneration and heritage.
Archaeology is also a major source of volunteering. In 1985, the Council for British Archaeology calculated that there were something like 100,000 archaeological volunteers across the country, spread between about 450 societies. By 2010, that had grown to 215,000, across 2,030 organised archaeological groups and societies. Dr Daniel Boatright, who teaches archaeology A-level at Worcester Sixth Form College and started a petition that has so far attracted 13,261 signatures, says:
“Specialist A-levels like archaeology are vital tools in sparking students’ interest in learning and in preparing vital skills for use when they go onto university courses. AQA is extremely naïve if it believes UK students will benefit from a curriculum of only the major subjects. What we will be most sorry to lose is a subject capable of bringing out talent and potential in students that might have been left undiscovered.”
He is absolutely right.
Why is archaeology A-level so integrally important? Nearly three quarters of students who study A-level archaeology go on to study it at university, from where many of our archaeology professionals come. That route to jobs will now be cut off.
It is clear that this decision by AQA is hasty and ill-thought-through. It was announced without any discussion with anyone in archaeology or anyone associated with the delivery of the A-level or its redevelopment. It came out of the blue, apparently flying in the face of the archaeological community, which is and has been ready to offer additional support and publicity for the new qualification and has already undertaken research on what is needed. A lot of hard work has already taken place in expectation that the archaeology A-level would be revamped, reinvigorated, grown and promoted. As the Council for British Archaeology said, the archaeology profession has been developing Government-approved apprenticeships, which are due to be launched in 2017. Together with A-level archaeology, they would have offered an important alternative pathway into the profession at a time when there is a growth in demand for archaeologists linked with large infrastructure projects. I want to pay tribute to the good work done by the Department for Education in promoting the Heritage Schools project to bring archaeologists and other experts into schools.
AQA has given three main reasons for its decision to discontinue the qualification: the complexity of the syllabus means that there is a lack of specialists to act as markers; there are declining numbers coming forward to study the subject, although they have been fairly constant over five years; and there are difficulties in maintaining a comparative marking system with the degree of optionality available in the specification.
The archaeological community has queried all three points. Feedback from Ofqual had been very positive about the development of the new specification and the progression of the drafts. There is general consensus among examiners and teachers that the new syllabus would reduce complexity; there is a wealth of qualified examiners and teachers; and there are offers of increased support from higher education archaeology academics. People who have applied to become markers of the archaeology A-level are on a waiting list. The necessary specialisms are available in the existing examining group; there has been no attempt by AQA to discuss this with the group, which I think is a great shame. It makes no sense that AQA has dropped the subject at this time.
Does my hon. Friend agree that the criticisms or concerns raised by AQA apply just as much to history of art? It made a U-turn on history of art, and therefore it ought to make a U-turn on this as well.
It has not made a U-turn on those subjects; they have been taken on by another examination board—I will come to that in a minute—but my hon. Friend makes a valid point.
There has been a glimmer of hope: alternative examination boards have shown an interest, most notably Pearson UK, which has previously come to the rescue of under-appreciated subjects, and which announced earlier this month that it would be taking over the art history and statistics A-levels and GSCEs and A-levels in five minor languages. Yet the archaeology A-level is left to languish unloved. I am encouraged to hear that, after an initial rejection, Pearson UK is meeting a delegation from the CBA, the chair of University Archaeology UK and the chief examiner for AQA A-level archaeology next week.
The archaeological sector has been galvanised into offering considerable support for the development and delivery of the new archaeology A-level specification, with offers from employers, academics, archaeological contractors, teachers, Historic England and assorted professional bodies. The all-party parliamentary group stands ready. Sir Tony Robinson—I am delighted that he is not far from us today—who did so much to inspire a generation of children, including my son, to dig up their garden in the pursuit of the past, as well as all his work with “Time Team”, is also fully behind the campaign. He has described the loss of archaeology A-level as
“a barbaric act…It feels like the Visigoths at the gates of Rome.”
So why is this down to the Government? What do I want the Minister to do? The situation comes about as a result of changes to A-levels under this Government. AQA has said that, prior to its decision, it was fully committed to offering a new A and AS-level in archaeology, accredited by Ofqual, using the subject criteria determined by the Department for Education. It had already put considerable resources into developing those new qualifications, fully intending to offer them from 2017. However, in the process of developing and obtaining accreditation for the new levels, it concluded that the new qualifications developed from the Government’s criteria would be extremely challenging to mark, as the large number and specialist nature of the options created major risk to safely awarding grades. It was in that context that AQA concluded that there were unacceptable awarding delivery risks for the new archaeology A-level.
AQA has signalled that, if it gives up the A-level, it is agreeable to handing over the majority of the specification material that has been developed for the planned archaeology A-level, together with initial comments from Ofqual. It also helpfully agreed to consider continuing to offer the existing specification for a further year to aid a transition to a new exam board and ensure that there is no gap. On 23 November, the Minister replied to me that he was in discussion with other examination boards on this issue. I would like to know what progress has been made. He praised Pearson UK for coming to the rescue of the other A-levels that had been dropped, but curiously not archaeology.
I know that the Minister is an accountant, but surely even he could not fail to be seized by the moment when Howard Carter glimpsed those treasures of Tutankhamun, hidden from human reach for 3,300 years; when Sir Leonard Woolley first came across the Sumerian treasures from the royal tombs at Ur; or when Hiram Bingham first glimpsed that fantastic Mayan city in the sky, Machu Picchu. Surely even the Minister, with his frenzied interest in spreadsheets and profit and loss balance paragraphs, could not have failed to be enthused and to grab for a four-inch pointing trowel to investigate what lay beneath his feet.
Parliament has a special relationship with archaeology. It was this House that, in 1753, in an Act of Parliament, established the British Museum as a universal museum; it now has 8 million items. Sir Austen Henry Layard, Liberal MP for Amersham from 1852, gave us invaluable archaeological records and some of the first sketches of the ruins at Nineveh, Nimrod and Babylon. Lord Avebury, MP for Maidstone from 1870, rescued Avebury—the largest stone-age site in Britain—invented the terms palaeolithic and neolithic, and drove the Ancient Monuments Protection Act 1882. We have a special relationship with, a special interest in, and a special duty to the archaeological treasures of this country and, indeed, the world.
This is an opportunity for the Minister to prove that he is not a Visigoth. All excavation archaeology is inevitably destructive, but has the legitimate and valuable purpose of adding to the knowledge of man.
Will the hon. Gentleman give way?
I am going to finish.
Destroying such a successful route to widening that knowledge is unforgiveable and illegitimate. I hope that the Minister will think again.
It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate my hon. Friend the Member for East Worthing and Shoreham (Tim Loughton) on securing this very important debate. I agree with him—I have never seen him as a dusty fossil, and I hope he does not see me as a Visigoth—about the importance of archaeology. It is an important discipline. It connects our present to our past and helps us understand what it means to be human. Anyone who has had the privilege to visit Pompeii or gaze in wonder at the treasures of Sutton Hoo—even an accountant—knows how far archaeology has enriched our cultural heritage and our understanding of the past. It would indeed be a tragedy if our young people were prevented from pursuing archaeology as a career in the future.
Securing a pipeline of students to study archaeology at university, as my hon. Friend did, is clearly very important, but it would be wrong to assume that only students who study the subject at A-level go on to degree-level study. As he knows, archaeology is a broad subject requiring critical analysis and research skills. It covers aspects of art, history, science, sociology and mathematics. Universities look for students who have a range of academic A-levels for entry to their archaeology courses.
For those reasons, and because the archaeology A-level is not widely available, universities do not require an A-level in the subject as a prerequisite for degree-level study. The number of students currently studying the subject at A-level is very low: there were just 340 entries in 2016, of which just 26 were from state-funded schools. Although the Council for British Archaeology has sought to encourage take-up of archaeology A-level, it also advises students who are contemplating a degree in archaeology to consider humanities A-levels, particularly history, geography or geology, and a science A-level where the course follows a science-based route. A knowledge of ancient languages can also be a useful route in many courses.
Those are the subjects that many universities are looking for. A greater focus on those facilitating subjects will ensure that a broad range of high-quality choices are available to A-level students and help them to choose the subject that will open the most doors to top university courses. We have worked with universities and exam boards to develop new A-levels that better prepare students for university study, including in each of those subjects.
In history A-level, students must study topics from a chronological range of at least 200 years, and might, for example, make use of archaeological sources to complete their compulsory, independently researched historical inquiry. In ancient history, students must develop a broad and extensive understanding of the ancient world. They must understand the nature and methods of the analysis and evaluation used to examine historical evidence. In geography and geology, students are now required to have extensive practical field work skills and the analytical knowledge to interpret their findings. Across a range of subjects, our reforms to A-levels will equip students with the knowledge that is essential for undergraduate study.
My hon. Friend raised concerns about AQA’s decision not to develop a new archaeology A-level for teaching from September 2017. I share his disappointment about its decision. I assure hon. Members that, contrary to some media reports, it was not a Government decision; it was taken by AQA itself. Our intention has always been that there should continue to be an A-level in archaeology, which is why we published subject content earlier this year. The way our exam system works is that individual exam boards decide which qualifications to develop once the Government have set the relevant framework. The Government can seek to persuade where necessary, but ultimately we cannot require the boards to develop particular qualifications. Their decisions on whether to do so depend on a range of factors, including the level of demand for a qualification and the extent to which they can offer a high-quality qualification and award grades to students fairly and consistently.
In this particular case, AQA initially intended to develop a new archaeology A-level, but, having submitted an initial specification to the regulator, Ofqual, for accreditation, it reviewed its position and concluded that it was not able to continue. It explained that the decision was due to concerns about challenges in ensuring that grades could be awarded in a safe and fair way, given the small number of students taking the subject and the wide range of options that the qualification would need to offer, which meant that ensuring comparability between students would be difficult.
The points that the Minister is making about archaeology apply also to statistics and history of art, which have been saved. I quoted the problems that AQA cited. Will the Minister acknowledge that there is a problem with AQA and that many people are moving away from it? It did not consult the archaeological community, which offered help on all those problems, so they could have been addressed. Because it is the only examining authority that still offers archaeology, the future of archaeology is now in peril.
I will come to the other A-levels that my hon. Friend refers to in a moment. AQA was also having difficulty recruiting suitable examiners for the qualification. Those challenges also apply to the existing A-level, which AQA offers. It tried for some time to find acceptable solutions, but unfortunately it has not been able to do so.
My hon. Friend asks what action the Government have taken to secure the future of the qualification. As soon as AQA notified us of its decision not to continue to develop A-level archaeology, in addition to, as my hon. Friend said, history of art, classical civilisation and statistics, we opened urgent discussions with the other exam boards to see whether they were willing to offer those subjects.
As my hon. Friend mentioned, discussions with the exam board Pearson were positive. On 1 December, in a written statement, I announced that Pearson is to develop A-levels in history of art and statistics. Classical civilisation has already been developed by another exam board, OCR, and the specification has been accredited, so the A-level is available for schools to teach from next September.
Unfortunately, no exam board has been willing to develop a new A-level in archaeology for teaching from 2017. Other boards felt unable to overcome the challenges identified by AQA in relation to that particular qualification. The A-level will therefore no longer be available for students starting courses from September 2017. The option for any exam board to develop an A-level in archaeology, however, will remain open. I reassure my hon. Friend that students studying archaeology A-level now, for examination in 2017 and 2018, are not affected by AQA’s decision. They may continue to study the subject and to take the qualification.
My hon. Friend also expressed the concern that, were students no longer able to study archaeology A-level, they would not have the opportunity to be introduced to archaeology as a discipline or be encouraged to take the subject further. I disagree with that analysis. Recent archaeological finds such as that of Richard III and the site at Must Farm, with the wide coverage they received, can only serve to engage and enthuse a new generation of potential archaeologists.
I am an historian, rather than an archaeologist, and I find myself in agreement with much of what the hon. Member for East Worthing and Shoreham (Tim Loughton) said. Does the Minister agree that initiatives such as Dig It! 2017 and the inaugural Scottish archaeology and heritage festival are important in encouraging people to take an interest in archaeology and perhaps pursuing it as a further course of study?
I could not agree more with the hon. Lady. Such activities, when they receive wide coverage in the media, enthuse people generally to be interested in the subject and young people to consider archaeology as a career.
I apologise for arriving late to the debate. The Minister is showing that of course he is not a Visigoth, or a Goth of any sort. If any Minister can be relied on to protect an important subject, albeit a minority one, it is he. Therefore, and in the light of concerns expressed by people such as the staff, parents and students of Brockenhurst College in my constituency, where archaeology is taught extremely well, will he do his very best to redouble his efforts to persuade another board to take up that important subject?
I am grateful for my right hon. Friend’s kind comments. I suspect that his school, Brockenhurst, must therefore be a major contributor to the 26 A-level archaeology entries of 2016, and I congratulate it on its wide-ranging curriculum. I assure him that I left no stone unturned in my encouragement of other exam boards to adopt the subject, as with the languages with small cohorts—we were successful in persuading Pearson to take up those subjects, too.
It remains open for any board to produce a specification or an offer to take forward archaeology. We published the content because we want the subject to continue. We remain open to any exam boards wanting to set an archaeology A-level.
The changes we have made to the national curriculum will help to provide students with a greater understanding of the subjects that they study, feeding their enthusiasm for further study. In history, students are now required to have greater chronological understanding through the study of a wider range of historical periods, including more than one ancient civilisation. Enrichment activities, such as battlefield tours of the western front, in which 1,400 schools have participated to date, have enabled students to gain a deeper understanding of, and develop an interest in, significant historical periods.
Many universities will expect students to arrive already having had work or volunteering experience in museums or heritage sites, or having had practical experience in the field, where possible. Organisations such as the Council for British Archaeology, which runs almost 70 Young Archaeologists’ Club branches all over the UK, and industry magazines such as Current Archaeology offer a wealth of volunteering opportunities around the country.
I hope that I have been able to reassure my hon. Friend the Member for East Worthing and Shoreham that the Government are fully committed—
The Minister and I have been in this place a long time. With great respect, if he says that he really has left no stone unturned in pursuit of an alternative, he would not make a good archaeologist. Can the Minister honestly say that he has gone to every examination board and made a case as strongly as has clearly been made for those other subjects rescued and saved by Pearson and that he really thinks nothing further can be done? If so, that will come as a huge blow to many people in the archaeology community in this country, and in years to come, his colleagues in the Department for Communities and Local Government will find their plans for infrastructure projects seriously thwarted because he has not been able to produce trained archaeologists to do that vital job.
I am grateful for my hon. Friend’s words, but with respect the absence of an A-level does not prevent students from taking the subject at university. As I explained earlier, universities are looking for a range of A-level subjects for entry into the degree subject. That is where his focus should be: on encouraging more young people to study archaeology at university.
We did leave no stone unturned. The exam boards have been facing financial issues to do with the cost of running examinations, and both OCR and AQA have dropped a range of subjects. Thanks to the work of Department for Education officials, we have managed to persuade Pearson to take on a number of subjects despite their small cohorts and the fact that they will not be lucrative for the exam board to pursue. We have to be realistic.
As I said, even now if an exam board came forward with an offer to continue to develop a new archaeology A-level, the Department would be responsive—our intention was not that the subject should be dropped at A-level. I am as disappointed as my hon. Friend about the decision, the root of which, however, is the low numbers who have been taking the subject in recent years: down to 26 in state-funded schools and 340 across the piece, compared with more than 80,000 taking the single most popular A-level, maths. That is the degree of difference between archaeology and the more popular subjects.
I hope that I have explained that the Government share the concerns about AQA’s decision to withdraw from archaeology, but I am confident that our wider A-level reforms will equip students with the knowledge, skills and drive that they need to succeed, whatever their chosen field.
Question put and agreed to.
That this House has considered the future of A level archaeology.
Exiting the EU: Businesses in Wales
[Steve McCabe in the Chair]
I beg to move,
That this House has considered the effect of exiting the EU on businesses in Wales.
It is a pleasure to serve under your chairmanship, Mr McCabe. The effect that exiting the European Union will have on businesses in Wales is incredibly important, so I thank hon. Members for attending. This debate offers an opportunity to recognise the challenges ahead and gives the Government the chance to clarify their Brexit plan for Wales, on which I sincerely hope for some detail from the Minister.
Businesses in Wales have serious concerns that the Government do not have a plan for how Brexit will work for them. The success of our local small and medium-sized enterprises should be a concern for us all. When local businesses do well, they not only generate jobs and meet the needs of our communities, but fill up our high streets, liven up our towns and inspire the businesses of the future. Businesses throughout Wales are facing dangerous uncertainty and need the Government to publish their plan for Welsh Brexit.
One of the starkest consequences of exiting the EU for businesses in Wales could be a widening funding gap. Each year the EU contributes about £650 million in investment to Welsh social businesses and SMEs. Each pot of funding that has helped our businesses to thrive seems only to have been made possible by EU contributions. The social business growth fund, for example, contributes £4 million, but £2.3 million of that is from the EU. Similarly, the Wales business fund provides £136 million, but £76 million is from the EU. In addition, we have low-interest loans from the European Investment Bank, which have enabled companies and public bodies throughout Wales to thrive; the European regional development fund, which, among other projects, will provide £106 million for phase 2 of the south Wales metro; and Horizon 2020, which has been pivotal for Welsh universities. Without Government planning for Brexit, our Welsh businesses could see a serious dent in their funding.
To the Government’s credit, the Chancellor has announced that the Treasury will guarantee all multi-year EU business funding agreed before Brexit, but we need confirmation of the Government’s plan for EU funding that does not fit that criterion. The Government must also provide clarity about the status of the cumulative £2.7 billion post-2020 EU funding that has not yet been underwritten by the Treasury.
Our departure from the EU might also have an impact on the availability of training in Wales. Jobs Growth Wales, the Welsh Government scheme to get young people into work, will support the creation of 8,955 new job opportunities for 16 to 24-year-olds over the next three years, and has only been made possible by the European social fund. Similarly, the Workways Plus scheme was made possible by £7.5 million from the European social fund. The scheme offers one-to- one mentoring to help long-term unemployed people become ready for work, gives an opportunity for people to gain new qualifications and finds paid positions for some.
Thousands of apprenticeships throughout Wales also rely on the EU and could be affected by our exit. The European Alliance for Apprenticeships, launched in July 2013, works closely with the Welsh Government to strengthen the quality, supply and image of apprenticeships. The alliance has been pivotal in securing and promoting opportunities throughout Wales.
Other consequences could include Britain leaving the single market or ending freedom of movement, which could affect businesses in Wales. Welsh universities, and the businesses reliant on them, would be particularly impacted by the end of freedom of movement. Each year more than 7,000 EU students enrol at universities throughout Wales. Were the Government to clarify their desired future migration arrangements, universities and associated businesses could plan accordingly. As things stand, the Government have given no clear indication of whether restrictions will be applied and the enrolment of EU students will decrease once we have left the European Union.
When this House debates the effect of exiting the EU, we sometimes allow the discussion to slip away from the reality on the ground, but I want to focus on the real impact that exiting the EU will have on one business in my constituency. It is one of the UK’s leading manufacturers in its industry. It has asked to remain anonymous, but kindly told me its concerns about the future, which I will share with the House. Its business is already being impacted by a downturn in construction activity and sizeable currency fluctuations. It tells me that the scale of potential change is vast, and that if widespread change materialises, the implications for resources and productivity are significant. For that industry-leading business, the level of uncertainty is of serious concern and must be addressed urgently.
This business employs people throughout the UK, not only in my constituency. It needs clarity on the form of Brexit, and it needs a plan. Specifically, it needs to know whether the Government plan to stay in the single market and the customs union. It tells me that it needs a commitment to ensuring that Britain can secure the right skills in the workforce. It also needs assurances that other policy voids, such as the one on energy efficiency, will be filled.
The bottom line is that business in Wales is crying out for a Brexit plan for Wales. When the UK leaves the EU in March 2019, in all likelihood the engine of Welsh business will not break down, but if the Government do not plan, it will slowly lose fuel and industries will come to a halt. Wales needs not a red, white and blue Brexit, as the Prime Minister suggested, but a comprehensive strategy to deliver the most secure outcome. Vague platitudes from the Government mean nothing and serve only to distract from the fact that, as things stand, we are being led into the night without a torch.
Does my hon. Friend agree that Norgine, a Dutch pharmaceutical company with a manufacturing facility in Hengoed, speaks for many businesses in Wales when it states that it wants a very soft Brexit?
I completely agree with my hon. Friend. I am getting that constantly from businesses in my constituency. My hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), the shadow Secretary of State for Exiting the European Union, has asked the Government 170 questions on how the UK will be shaped after we have left. To minimise that, I will ask the Government only three simple questions about the effect of exiting the EU on businesses in Wales. Will the Government guarantee to replace post-2020 EU funding that has not yet been underwritten by the Treasury? What steps will be taken to ensure that there is not a training shortage in Wales once we have left the EU? How will the Government involve business in Wales in their EU negotiations, and in representations made by the Secretary of State for International Trade?
May I add a fourth question to my hon. Friend’s helpful list of three? Will the Government come clean on whether deals have been done with companies such as Nissan in the north-east? In my constituency and that of my hon. Friend the Member for Alyn and Deeside (Mark Tami), we have a large number of car manufacturers. For example, Vauxhall, although in England, and Toyota employ my constituents and those of my hon. Friend, and they depend on access to the single market.
I completely agree with my right hon. Friend. In addition, the constituency of my hon. Friend the Member for Bridgend (Mrs Moon), who could not attend today, includes the Ford plant that borders my constituency, and I would ask for similar guarantees on the automotive industry, because it has a direct effect in Ogmore.
I will be surprised if the Minister answers any of my questions, but I will conclude with a warning. Leaving the EU will inevitably have an effect on businesses in Wales, but the uncertainty that the Government have created is completely unnecessary. The Government need a plan for businesses in Wales, which they need to announce to the House for the attention of businesses in all our constituencies. The EU is embedded in businesses throughout Wales, and it contributes to funding, training and opportunity.
The focus is often on the big primes—my constituency has Airbus and Toyota—but I am particularly worried about the supply chain, especially if it supplies other parts of a business in Europe. In that case, companies might think that they are better placed there and relocate there, which would cause massive harm to all our areas.
I entirely agree with my hon. Friend, and I echo his concern. I hear that constantly from small businesses, not only in my constituency but across the piece, living as I do in south Wales.
Do my hon. Friend and the Minister agree that there should be a level playing field? If certain motor companies are selected for special subsidies through under-the-table deals, that discriminates against other companies, whether they are big, like Airbus, or smaller suppliers. We need support for all exporters and subsidiary suppliers that will be confronted by tariffs, so that they can continue to compete effectively.
I thank my hon. Friend for that intervention, which the Minister heard. My hon. Friend is right to make the point that we need a fair playing field for all businesses across Wales and, indeed, the UK.
The opportunities that the EU offers will be sorely missed if the Government do not create better circumstances for businesses in a post-EU Wales. Businesses in Wales are clear that they are willing to adapt to a post-Brexit Britain, but they need certainty and assurances from the Government about what that will look like. As Members of Parliament, it is our duty to go back to our constituencies and tell businesses what they can anticipate from Parliament and the Government in the near future, but I cannot give them any assurances because this House has not been given any by the Government. I am not asking for a running commentary—I leave that privilege to the Foreign Secretary—and I am not hoping for a line-by-line strategy; I am asking only for a few select assurances, so that business in Wales can begin to plan.
I ask again: will the Government guarantee to replace the cumulative £2.7 billion post-2020 EU funding that has not been underwritten by the Treasury? What steps will be taken to ensure that there is not a training shortage in Wales? How will the Government involve businesses in Wales in their EU negotiations and representations made by the Secretary of State for International Trade? I suspect that the Government are unable to provide any answers, and I can only assume that is because they do not have any.
It is a great pleasure to be here today with you in the Chair, Mr McCabe. I represent a successful manufacturing and exporting constituency with many businesses that export both to and outside the European Union. The terms of trade that apply when those businesses deal with customers from outside the UK are extremely important for their day-to-day planning. As anyone who has run a business knows, certainty is precious and fundamental to the ease of running any business, but the one thing that we lack as far as terms of trade are concerned is certainty. That is a fundamental barrier to running a business in the UK with ease. The Opposition will therefore continue to press the Government to provide more certainty for businesses, so they can start to plan for an imminent massive change.
That change is not just about terms of trade; the regulatory mechanisms that apply to any modern business and its area of operation are also vital. The automotive sector has already been referred to. When I was the automotive Minister, it was important that we had clear environmental regulatory standards that were agreed internationally, because the automotive sector operates internationally. Some people talk about “quickie divorces,” but those will not help businesses that need to plan ahead—to develop new cars to new environmental standards, for example. The international environmental standards that will apply need to be made clear to businesses, but at the moment we have no idea what the mechanism for establishing such standards will be in a post-EU world.
Does that not mean that certainty for businesses in Wales and across the United Kingdom will be conditional on a commitment to a transitional arrangement? We must not have a situation where the article 50 negotiations come to an end in 2019 and we fall off a cliff edge, because that would cause so much uncertainty, not just about tariffs but about the regulatory environment to which my hon. Friend refers.
Indeed. It seems increasingly likely that there will be some kind of transitional phase. I have talked about one set of standards—the environmental standards in the automotive sector—but different regulatory regimes will apply to all sorts of businesses right across the piece. Constructing the mechanisms that will apply to businesses and our relationship with the European Union after we leave will involve a huge amount of work. Regimes will have to be defined for areas such as financial services, broadcasting and pharmaceuticals, and those will have to apply very soon. If those systems are going to be in place within the next two years, we need to provide clarity to businesses that are making investment decisions now. Businesses in Wrexham that I represent, such as Wockhardt and Ipsen Biopharm, which are both exporting pharmaceutical companies, need to know what our relationships will be. If they do not, they may begin to reflect on whether the business environment in this country will be as effective, successful and supportive for them in the future.
My objective for post-Brexit Britain and Wales is for the UK to be as close as possible to membership of the single market, while retaining the right to devise and implement immigration policy. If I were negotiating, that is what I would want. I would love the Government to provide that sort of clarity about its negotiating position. It is really important that we have access to the single market. Membership of the EU and the single market has benefited the Wrexham economy hugely—it has become very much an exporting economy—but the lesson of the referendum is that we have failed to manage migration to the UK. I am clear that we must apply a managed migration policy for EU citizens.
Does my hon. Friend accept that there is a need to differentiate between skilled and unskilled labour?
Absolutely. One of my questions for the Minister is: what migration system will apply to EU citizens? We already have a system in place for citizens from outside the EU, and I imagine that if we jump off the cliff that my hon. Friend the Member for Aberavon (Stephen Kinnock) referred to, EU citizens will, by default, be put in the same position as people who come to the UK from outside the EU. However, I have seen reports in the press that the Prime Minister thinks that the points-based immigration system for people from outside the EU that the Labour party introduced when it was in power is not restrictive enough. I would really like clarity on that question from the Government, because we need to have a system in place. In my constituency, we have really important multinational manufacturing businesses such as Kellogg’s and Solvay, whose members of staff travel regularly from mainland Europe to the UK. Those businesses need to know what system will be put in place for them to manage that.
My hon. Friend makes an important point. For Airbus, for example, if a wing is not fully finished in Broughton but needs to be fitted in Toulouse or Bremen, they will send workers, chase the wing and carry on the work that needs to be done. We clearly must not be in a position where they will have to apply for some sort of work permit to do that—that would be ludicrous—but we just do not know what is going to happen.
As my hon. Friend makes clear, there will be a system in due course and the issue will be managed, but we have no idea what the system will be. More importantly, the businesses that will be required to operate it have no idea. This is a massive task. If we are to have a new system—not the points-based immigration system that applies to citizens from outside the EU—the Government must tell business what that will look like, what requirements and burdens they will impose on employers and where responsibility lies.
My hon. Friend is making a strong speech.
Individuals are also incredibly affected, including constituents of mine who have found that contracts they were meant to be working on in other EU member states in collaborations, and vice versa, have been cancelled because of the precautionary principle, given the uncertainty about what will happen and the risk of not being able to work on the projects in the next five or six years.
My hon. Friend makes an excellent point. The clock is ticking on all these issues—I will sit down shortly because several of my hon. Friends want to make speeches—but what is really ticking is the clock for the Government. It is their responsibility to implement the policy they wish to see on these important matters, which could ultimately undermine confidence in business in our communities and affect the prosperity of our constituents.
We need a bit of straightforward clarity from the Government about the mechanics of what the new systems will look like, and we need engagement from the Government. That is not just about listening but about beginning to tell business what its responsibilities will be and what post-Brexit Wales will look like. That responsibility rests firmly with the Government, who have brought the situation about, and that must be made clear to our constituents. We need to have that clarity as soon as possible.
Diolch yn fawr. I thank the hon. Member for Ogmore (Chris Elmore) for securing this important debate. It is a pleasure to serve under your chairmanship, Mr McCabe. We find ourselves in a situation whereby there is a real risk that the UK Government will set sail on a course that is counter to the interests of Wales. The way in which we exit the EU is clearly still an ongoing fight. My priority is to argue for the least damaging option for the Welsh economy, which includes campaigning for the best possible outcomes for businesses across Wales and in my constituency.
Plaid Cymru has been united and consistent in its campaign to maintain membership of the single market and customs union from the very beginning. That is by far the least damaging option for the Welsh economy, first because of the wide-reaching benefits that being a single market and customs union member has for trade in Wales as an exporting economy. Of course, Wales has an annual goods trade surplus of £5 million whereas the UK has a deficit. Secondly, continued membership would enable Wales to qualify for certain cross-border and transnational programmes that promote research and innovation, both of which are integral to a dynamic and entrepreneurial business community.
The last report of the Federation of Small Businesses’ UK small business index showed that, for the first time in four years, more businesses were pessimistic than positive about the future. That was the third quarter in a row in which there had been a downturn in confidence. A glimmer of hope is that 55% of the businesses stated they wanted to grow in the coming year, which shows that ambition is still strong. Businesses want to prosper and, of course, they will do that only if they have the nurture they require, which only Government can provide.
Having spoken to various stakeholders in my constituency, it is clear that the certainty and stability of the UK market has taken a hit. They are very much alert to the fact that the forthcoming negotiations will have long-term implications across the country. The Federation of German Industry in the UK, which represents German companies in the UK, has representatives in my constituency who are particularly concerned about the loss of confidence in the UK market. Among those companies, CeKa, long-established in Pwllheli, has expressed clear apprehension about the volatile exchange rate. It is also concerned about cost increases from possible new tariff and non-tariff barriers. The Government should be doing all they can to mitigate those uncertainties now. We could achieve that by remaining part of the single market and customs union.
SMEs are the backbone of the Welsh economy and, with the right support, they can be adaptable, responsive and resilient. When handled well, they have every potential to flourish as one of our most important assets in Wales. We need to put a support framework in place now and do everything we can to help them weather the storm.
Continuing with the German theme, Plaid Cymru has long emphasised the need for a Welsh “Mittelstand”—that is the term used to describe indigenous medium-sized firms in German-speaking countries. Such companies are locally grounded but successful exporters, with strong brands in specialised niches and with long-term growth potential. They characterise one of the strongest and most resilient global economies.
Another area of concern for a company in my constituency, which is of substantial significance to the local economy, is the uncertainty surrounding that which will replace the rural development programme and, for that matter, the common agricultural policy. South Caernarfon Creameries employs 130 staff and also has 130 suppliers selling Welsh milk from Welsh farms. I emphasise that it collects milk from farms across Wales. As a result, the creamery generates at least £30 million a year for the local economy. It has recently expanded as a result of moneys provided by the EU and is planning on doing so once more. Since the vote to leave the European Union, however, the Government have failed to shed any light on how they intend to compensate for the millions of pounds lost.
It is interesting to hear how South Caernarfon Creameries, which is of great significance to the rural economy in the hon. Lady’s constituency, has relied on money generated by the EU for expansion. Will she join me in expressing concern about the way in which the common agricultural policy is repatriated and implemented in the eventuality of the UK leaving the EU?
I share the hon. Lady’s concern, not least because the National Farmers Union has presented evidence to the Welsh Assembly that indicates that if the money that reaches Wales from the common agricultural policy were to be Barnettised—to go through the Barnett formula—that would result in a 40% decrease in the money reaching Wales.
To return to the creamery issue, we have yet to see any real clarity on how that will be addressed, and that is of considerable importance to anyone involved in agriculture and the rural economy. As we know, Wales is a net beneficiary from the EU to the tune of £79 per individual a year. Businesses must not be left second-guessing where their future lies and how they can plan ahead.
I will refer specifically to business rates. Businesses in Gwynedd have experienced an average increase of 8.9%, which I believe is the second highest after the county of the Under-Secretary of State for Wales, the hon. Member for Aberconwy (Guto Bebb), who will address us anon. I join my Assembly colleagues in pressing Labour’s Welsh Government to investigate all available powers to ensure that business rates do not penalise businesses. For example, they could use index business rate multipliers to the consumer prices index rather than the retail prices index; variable multipliers, so that small businesses are not disproportionately taxed; three-yearly revaluations, because Gwynedd waited eight years for its most recent revaluation, which had a considerable impact on the increase; and an equitable valuations appeals process. In addition, I strongly urge the Welsh Labour Government to consider adopting Plaid Cymru’s business rates support scheme, which would be likely to benefit tens of thousands of businesses across Wales.
I want to make the point that the delay in the revaluation was because of a decision by the UK Conservative Government. It was nothing to do with the Welsh Labour Government.
I emphasise that business rates are devolved and that there is great potential for the Welsh Government to use that as a means to support business. Businesses are seeing 100% increases in their business rates valuations under the present arrangements, and that is extremely difficult for them. Plaid Cymru’s scheme would mean that all businesses valued at £15,000 or less would benefit, and those valued at under £10,000 would not pay anything at all. That would be likely to affect 80% of businesses in Wales, and I think some 70,000 would end up paying no business rates at all, which, knowing my local businesses, I am sure would be greatly welcomed.
Businesses are the backbone of the Welsh economy, and with the right support they can be resilient. To enable that, the UK Government need to come clean on their strategy and Labour’s Welsh Government need to use their devolved powers creatively and boldly to do everything to enable Welsh businesses to weather the storm. Every possible safety net must be put in place to mitigate the potentially tempestuous period in front of us, and both the UK Government and the Welsh Government should have a plan to ensure the long-term resilience of Wales.
It is a pleasure as always to serve under your chairmanship, Mr McCabe. As has already been said, there is great uncertainty about Brexit among the business fraternity across Wales. If article 50 is, in fact, triggered on 31 March 2017, the remaining EU27 countries will determine the deal that we have to live with, no matter what has been said in this Chamber and elsewhere. There is a natural concern that that deal will be in the interests of those 27 countries and others that are not leaving the EU.
There is the spectre of tariffs. Some people have said there will not be tariffs because we import more than we export. However, only Germany and the Netherlands have a net trade surplus with us, so other countries may have an incentive to impose tariffs. Indeed, German car makers may want to block, for example, Japanese car makers that use Britain as a platform to launch into Europe. Of course, that is why there has been an under-the-table deal with Nissan, which has been referred to, while several other large conglomerates have naturally come forward to ask for money to offset prospective tariffs.
As I said when I intervened, it is particularly important that Welsh businesses and all people relying on exports to the EU have a level playing field and subsidies and support, so that they can continue their terms of trade after Brexit—assuming that Brexit goes ahead. My constituency of Swansea West is part of the wider Swansea Bay city region, where 25,000 people’s jobs involve exporting to Europe. Alongside that, there is obviously a farming community that is helped by the common agricultural policy, which may be under threat, and we also benefit from billions of pounds of convergence funding. I am looking to the Minister to provide assurances on all those things—namely, the level playing field, the matched convergence funding and, indeed, what the farmers may need in CAP.
A big employer in my area is Swansea University, which is an engine and an asset for economic growth. It has now doubled in size with the new bay campus in the constituency of my hon. Friend the Member for Aberavon (Stephen Kinnock). It is a jewel in the crown of engineering research and development capability across Europe, and the problem is that we may not be able to maximise our opportunities of utilising that; it is not only an asset for young people to grow and learn, but for producing innovative products for export.
The European Investment Bank played a critical role in funding the bay campus, which is indeed one of the jewels in the crown of Welsh higher education. Does my hon. Friend agree that some assurance on how to deal with our exiting from the European Investment Bank is desperately needed from the Government?
As my hon. Friend knows, the three primary sources of funding for the bay campus were the European Union, the European Investment Bank and the Welsh Government. We need clarity about those future relationships and future funding. Thank goodness it has actually been built. Clearly, if Brexit had occurred a couple of years ago, we would be in all sorts of problems. We are looking for assurances from the Minister on tie-ups with the network of universities across Europe in the future, on possible funding streams and on support for exports that are driven by innovation from that campus. My hon. Friend knows the campus is linked with Rolls-Royce, Tata and other big manufacturers. The idea was to have an integrated approach to export delivery, and we do not want to put that in jeopardy.
There is great concern among the business community across Wales about the prospective falling consumer demand following Brexit and in the light of the autumn statement, which showed that an extra year of austerity would be inflicted upon us and that Britain’s debt would grow to 90% of GDP. Incidentally, it was half that—45%—when the last Labour Government were in power in 2010. The debt is completely out of control. The Chancellor’s Brexit evaluation is that we will all have to pay an extra £1,000 in future taxes. On top of that, the inflation that has occurred owing to the falling value of the pound is equal to a 5% cut in everybody’s income, which they then cannot spend in local shops and on domestically grown products. There are concerns, and we want reassurance, and the business community wants those assurances without further ado.
Hon. Members may know that my position is that the triggering of article 50 should be delayed until next November, after the French elections in May and the German elections in October, to provide an opportunity for real negotiation up to that point. People should then have the final say on whether it is a good deal or not, with the default position of staying in the EU. As time moves on, not only the business community but everyone will see that the balance of costs and benefits is heavily weighted towards costs, and in my considered view, we are better off staying in. People should have the final say because, frankly, they were given false information when they voted in the first instance.
Assuming for a moment that we trigger article 50, we need those assurances from the Minister now. Businesses desperately want to plan for a prosperous future, rather than an uncertain future of fewer sales.
It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate my hon. Friend the Member for Ogmore (Chris Elmore) on securing this important debate.
The uncertainties of leaving the European Union are hazardous and wide ranging. Structural funding, environmental protections and workers’ rights, trade with the EU and the impact on the economy and growth are all areas of concern for the businesses and people of Wales. The lack of clarity is both frustrating and worrying, as the absence of a plan creates an inertia that stalls economic growth and investment. Businesses in Wales have already suffered from the impact of austerity and poor economic UK growth since 2010.
The Office for Budget Responsibility has estimated that cumulative potential output growth will be 2.4 per- centage points lower than it would otherwise have been in 2021 had the referendum not happened. Growth forecasts from the consultancy company Oxford Economics have been downgraded in all regions, with growth in Wales expected to be about 0.25 percentage points lower than the pre-referendum forecast.
Structural funding has played an important role in the regeneration of a post-industrial Wales. The statistics may suggest that it has struggled to achieve its aim of increasing GDP and wealth, but that is not the whole story. When I visit communities across my constituency and the wider region, I find vibrancy, tenacity and life, despite hardship and economic decline. In the last round of funding, projects financed through our membership of the European Union across Neath Port Talbot have helped to launch 485 businesses, support 7,300 people into work, create 1,355 jobs, provide 14,870 qualifications and enable close to 5,000 people to complete an EU-funded apprenticeship—all in that county borough alone.
Projects such as the £22 million valleys regional park have built the tourism infrastructure of my constituency, and more and more visitors are coming to enjoy the beautiful scenery of Gnoll country park and the industrial heritage of Aberdulais Falls. The regional essential skills scheme has helped thousands of people to acquire the competencies necessary to return to work. Neath Port Talbot has also been a lead partner on the pioneering transitional employment initiative, Workways.
I must pay tribute at this point to the leader of Neath Port Talbot Council, Ali Thomas, who last night announced that he will be standing down after many years of service. In fact, he took over from the previous leader, Derek Vaughan, who went on to become our Labour MEP. They are two great men of Neath.
Does my hon. Friend agree that, even with the prospect of the European Parliament seats for Wales being abolished, Derek Vaughan continues to fight for Wales and for all of us to secure the best deals on European funding for our constituencies?
I absolutely agree that Degsy, as he is known in Neath, is continuing to fight Wales’s corner. He is vice-chair of the European Parliament’s budgetary control committee, so he has great influence in Europe.
Neath Port Talbot has been the lead partner on the pioneering transitional employment initiative, Workways, which has helped to tackle barriers that prevent individuals from finding or returning to employment by supporting the job search, CV writing and interview skills, and access to training. The Workways project would never have happened without EU structural funds. It received a contribution of £16.7 million towards its overall costs. The scheme is held in such high regard that a second phase has been funded—Workways Plus—which began in April this year and will support at least a further 1,000 people into employment.
Swansea University’s science and innovation campus, the Bay campus, which has had a substantial impact on Neath and the region, simply would not have happened without the £95 million of funding received from the European Union. Derek Vaughan’s legacy before he left as leader of Neath Port Talbot County Borough Council was to make sure that the campus was just inside the council area.
And the Aberavon constituency.
And inside the Aberavon constituency, as my hon. Friend points out. Neath Port Talbot is also home to a company called SPECIFIC, which uses coated steel to make world-leading, innovative technologies that produce, store and release energy. SPECIFIC is hugely concerned about leaving Europe, not least because of the essential funding it has received, without which it probably would not exist.
My hon. Friend is making a powerful speech. On the issue of steel, which is at the heart of the SPECIFIC project, the Welsh Government have taken action to deliver £8 million that will be spent on reducing energy costs at the Port Talbot plant, and £4 million for skills and training. That is precisely the sort of industrial strategy that we need. By contrast, the UK Government continue to be completely asleep at the wheel.
My hon. Friend makes a very powerful point, with which I agree wholeheartedly. Not only will SPECIFIC lose its funding, but it will lose its potential market: it could sell its innovative products to Europe. Also, 16,000 farmers gain direct subsidies from the common agricultural policy. More than 90% would go bust without continuing subsidies from the UK Government via Europe.
Those examples illustrate direct investment across the public and voluntary sectors, but we must note the derived benefits to the private sector and all forms of business. Projects such as Swansea University’s Bay campus have supported hundreds of local businesses—contractors, subcontractors, cafés, shops, fuel stations and bus companies; the list goes on. Those who have been on an EU-funded training scheme have taken up employment with local businesses, which in turn have benefited from a revitalised, skilled workforce. The businesses that make up our tourism industry have been safeguarded and developed through additional investment in projects that have encouraged visitors to the area, who have been renting accommodation, eating out in restaurants and pubs, and enjoying the activities and facilities run by local businesses.
The triggering of article 50 is a leap into the unknown. Any process or deal on exiting the EU needs full scrutiny. The Government need to be held to account for their decision, whether it is for a hard Brexit or a red, white and blue Brexit. Whichever Brexit we end up with, we need fully to consider the implications of a Britain outside the single market or the customs union. The British Retail Consortium has already suggested that if we rely on World Trade Organisation rules and tariffs, the price of meat will rise by 27%, and of clothing and footwear by 16%. Those are costs that my constituents can ill afford during the good times, without the loss of funding and the threat of unemployment on top of that. What will the Government do to protect the 100,000 jobs in Wales that depend on our trade with Europe?
Beyond the fear of losing structural funding and trade with the EU, my constituents have concerns about the protection of workers’ rights. We have already seen this Tory Government going at it hammer and tongs over assent to the nasty and pernicious Trade Union Bill. How can we trust them on workers’ rights? I am simply not convinced that the Prime Minister and her Government will be committed to protecting workers’ rights after Brexit and the repeal of EU employment laws. As to whether EU regulations on businesses bring costs or benefits, I appreciate that there are arguments on both sides, and only time will reveal which of those opinions is true.
All in all, this is a troubling time for the people of Wales, and our businesses are no different. Some 95% of businesses in Wales employ fewer than 10 people, and it is those micro and part-time businesses that will suffer the most from poor UK growth, the absence of structural funds, the lack of a single market and the disappearance of EU regulations.
My hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), our shadow Secretary of State for Exiting the EU, has said that we need to see the Government’s plan before article 50 is triggered. We need sufficient detail of the plan, so that the Exiting the European Union Committee and other parliamentary Committees can scrutinise it. We need enough detail so that the Office for Budget Responsibility can cost the plan. We need the devolved nations, such as Wales, to have input, and we need consensus, so that the plan will work for 100% of people, not just 52% or 48%. I look forward to the Minister’s comments on the plan.
It is a pleasure to serve under your chairmanship, Mr McCabe, and to follow the excellent speeches by colleagues from Wales. I congratulate my hon. Friend the Member for Ogmore (Chris Elmore) on securing this debate. We have all been listening to and hearing the concerns of businesses in our constituencies, which is why we are here today. I hope the Minister will have some helpful responses to the concerns that we have raised.
I have been listening to businesses in my constituency of Cardiff South and Penarth. I have spoken to small, large and medium-sized businesses and to individuals who have raised concerns with me at surgeries, on the doorstep and on many other occasions. There is a lot of concern. The issue is not minor; it comes up again and again. There is a willingness to get on and make things work, but there are a lot of questions and a lot of uncertainty.
Having listened to all those concerns, I am not prepared to support a blank cheque for the Government in activating article 50, particularly when there is so little information available about the plan. Members may be interested to know that the Brexit Secretary has been speaking to the Brexit Committee while we have been sitting; he has confirmed that no plan will be published until February at the latest, because, apparently, a lot of research and policy work needs to be done. He says there will be a transitional deal only if necessary. That is concerning. When in February? How late? If we are talking about activating article 50 on 31 March, we will not get any clarity on the Government’s plans until very late in February.
I do not think there is anything new in what the Secretary of State has said. Did not the Opposition accept the argument that article 50 will be triggered by the end of March on production of a plan before that?
If the Minister checks the voting list, he will see which way I voted on that matter. I am speaking about my own views on this issue and I certainly have a great deal of concern about the lack of information.
Does my hon. Friend also accept that even if we did agree to this last minute plan, whatever it is, once article 50 is triggered the 27 EU countries will decide to give us what they want, not what is in the plan?
I have a great many concerns about the negotiating process, but I want to turn to three areas of particular concern that businesses have raised with me: regional funding, the single market and the situation for universities.
It is worth reflecting, as some colleagues have, on the importance of the scale on which businesses engage in the single market. There are 191,000 jobs dependent on EU trade, and that affects everything from steel to the high-tech products in my constituency; 500 firms in Wales export more than £5 billion annually to other EU member states and 450 firms from other EU member states, located in Wales, employ more than 50,000 people.
Several hon. Members have spoken about funding and I will come on to that, but, without referencing specific names, the sorts of things I have been told about include workers’ rights to travel to engage in cross-European projects; contracts, which I mentioned in an intervention; and concerns about research collaboration and major long-term projects being put at risk. The message is very clear that businesses do not want a hard Brexit, if there is to be a Brexit. They want it to be as soft as possible and are particularly concerned about tariffs and access to the single market. Those concerns are constantly raised with me.
Businesses were positive with me about the work that the Welsh Labour Government are doing to try to provide some certainty and optimism in the economy in uncertain times. There is particular praise for the work of the First Minister and Economy Secretary, who went to the United States and Japan to stand up for Welsh businesses and the links that we have with those two markets. Whether it is a case of fighting for funding for the south Wales metro or for other projects, the Welsh Assembly Government are trying to ensure that some positive things happen during the uncertainty.
There is also continued investment in infrastructure projects and building, including a lot going on in Cardiff at the moment. There is the city centre redevelopment; we have plans for new stations; we have an enterprise zone, where there is a lot of investment; and—to give credit—there is some degree of cross-party agreement on a city deal. It is vital that such investment in infrastructure and business should continue, particularly now while there is a lot of uncertainty.
We understand that the Government have given some assurances about the continuation of what would have been European funding. Does my hon. Friend share my concern about the fact that the Government are also talking about changing expenditure priorities?
I do. I have yet to be convinced about the certainty on levels of funding, let alone the sectors. That will be greatly worrying to many in my constituency. It is worth reflecting on what the Office for Budget Responsibility said in the economic and fiscal outlook published in November: that as a result of the referendum decision, the potential output growth will be 2.4 percentage points lower than it would have otherwise been in 2021 without the referendum. As to the impact on Wales, the House of Commons Library briefing mentions that there could be
“lower business investment…the impact of a less open economy on productivity…a reduction in investment in research and development”
“costs associated with adjustments to new regulations or new markets”.
There will obviously be costs and changes: how are they to be minimised?
On regional funding, €5 billion for Wales is planned for 2014 to 2020, and potentially £2.7 billion post-2020. I still do not feel that we have had the guarantees from the Treasury. Why does that matter? It matters for specific projects such as the south Wales metro, which is vital for people’s ability to get around, do business, get to work and take advantage of opportunities in my constituency and the whole south Wales area.
We might be able to achieve those things in part outside the south Wales metro project. I have supported, for example, the proposals for a St Mellons parkway station, which could be funded by other means. There is a good degree of cross-party agreement about the importance of Network Rail and Department for Transport funding for it. However, fundamentally, the south Wales metro has the potential to be a transformative scheme for the south Wales economy. I am pleased that the First Minister was in Brussels arguing for the £110 million-worth of funding. The European Commission was very clear in saying that it could not comment about what would happen after the UK leaves. Such uncertainty is causing concern, so perhaps the Minister will provide some assurances—particularly about that project, which is so crucial to the economy of south Wales.
I have mentioned concerns about access to the single market, which will affect all businesses. I should be particularly worried if we were to consider putting tariffs on goods produced in Wales. The First Minister has made it clear that that is a red line for him. It would affect industries such as the steel industry in my constituency.
I have spoken many times in this Chamber about companies such as Celsa, based on my patch. It does significant amounts of exporting. It is a European company from Catalonia in Spain and works across the European Union. Forty per cent. of direct sales of British and Welsh steel go to the EU. That is similar to the overall total—41% of total goods exports from Wales go to the EU. What assurances can the Minister give to companies such as Celsa that export so much to the EU, let alone other places? What tariffs might they face in the future? What additional trade restrictions might they face?
We have heard a lot of talk about Airbus, which also has a major facility, Airbus Defence and Space, in a neighbouring constituency to mine, Newport West, where a number of my constituents work. Concerns are being expressed about European collaboration on space projects. High tech is an important growth industry in which the UK has been investing more. I should hate such jobs to be lost from our communities—let alone the wider aerospace industry in south Wales.
I want finally to discuss universities. The total value of future research income to Cardiff University, from the seventh framework programme and Horizon 2020 up to July 2016, was £23.5 million, with further applications in the pipeline of up to £15.7 million; work from the European structural fund was worth £23.6 million, plus a potential £35.2 million of projects in development. Those are significant sums.
To give an idea of the sorts of projects involved, I should say that they include the Cardiff University brain research imaging centre, which is doing pioneering work on dementia, multiple sclerosis and other neurological conditions. We should be proud that that work is going on in our capital city. Many researchers from my constituency work in and around the university. What if such things are to be put at risk? I am hearing a lot of concern from the university sector in my area, from individual workers and universities. What assurances can the Minister give?
There is uncertainty about whether the excellent Erasmus programme in which students from Wales can study in Europe will continue. It has benefited many students from my constituency, and, I am sure, from across Wales.
My hon. Friend makes an excellent point: 18% of Cardiff University’s home undergraduates are defined as internationally mobile—so they have taken part in Erasmus or one of the other types of exchange schemes, often with other European countries. That adds to their value—their opportunities to contribute to the global economy in the future and bring value to the economy in Wales. That is even before we get on to considering the contribution of international students, researchers and experts to our university sector in Wales. What assurances can the Minister give that those opportunities will not be lost in future for the Welsh university sector?
I have outlined three key areas about which concerns have been raised with me. I hope that the Minister will provide some reassurances and guidance for those who have expressed them. It is clear that this is an uncertain time for all involved. I am not happy for the Government to be given a blank cheque over the negotiations. I want to secure the best deal for businesses, individuals and the academic sector in my constituency and Wales.
It is a pleasure to serve under your chairmanship, Mr McCabe. I thank the hon. Member for Ogmore (Chris Elmore) for obtaining the debate, which has been incredibly interesting. The speeches were all notable and it is a vital topic.
I was particularly interested in the speech of the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). It is an extraordinary fact that there is such a lack of strategy and clarity about the UK Government’s plans. Clearly, Scotland voted unequivocally to remain in the EU, and that is our focus, but for our friends in Wales I reflect on the wise words of the hon. Lady, who talked about a tempestuous period before us. Her focus, and that of other hon. Members who spoke, is rightly on securing the best possible outcomes for businesses in Wales. Instead of the clarity that we would want from the UK Government in this context, we continue to hear such phrases as “Brexit means Brexit”, “have your cake and eat it” and “red, white and blue Brexit”. It is like “The Great British Bake Off” or some kind of punchline. It is just not funny; in fact, it is highly irresponsible.
It is quite extraordinary and very disappointing that before negotiations have even begun, the UK Government appear to have given up on retaining membership of the single market. I understand well the concerns that hon. Members have expressed. Small and medium-sized businesses, which the hon. Member for Ogmore talked about, are watching this kind of debate carefully because they are looking and hoping for clarity and reassurance. Although I have the greatest respect for the Minister, I fear he cannot possibly deliver that because essentially there is no plan.
For all the devolved Governments, it is vital that there is real and proper engagement on the EU, for business reasons, social reasons and other reasons across our society. The hon. Member for Ogmore highlighted a business that had already raised concerns about negative impacts and rightly warned that platitudes are simply no substitute for plans. The hon. Member for Cardiff South and Penarth (Stephen Doughty) spoke of uncertainty among businesses of all sizes about the implications of Brexit. We also heard a sensible question from the hon. Member for Ogmore about whether Welsh businesses will be involved in negotiations. I will wait with bated breath to hear the Minister’s response on that.
There is a significant issue with the involvement of the Scottish Government, demonstrated by our long, unanswered call to the telephone hotline. There is a dearth of real dialogue and opportunity to input. For Wales and Welsh businesses, that attitude—which is in stark contrast with the clear and planned proactive engagement of Scotland’s First Minister—rightly rings alarm bells, as the Brexit vacuum continues. That cannot be more starkly illustrated than by the hon. Member for Cardiff South and Penarth’s helpful comment that it is likely to be February before the UK Government publish any plan.
The hon. Member for Wrexham (Ian C. Lucas) spoke of the need for certainty, which keeps coming up. Businesses are the backbone of the Welsh economy and can be resilient, with the right support. They undeniably require certainty and clarity, which are simply missing. The UK Government must come clean. We want to hear something from the Minister on the Government’s strategy for exiting the EU. The Welsh Government need to put into place a framework of support to ensure they are doing everything possible to help business weather the storm. It seems that the ideological Brexiteers who are sitting right at the heart of power are preventing us from seeing this plan from the UK Government. All we hear are bull-headed assurances that a land of milk and honey awaits—it does not, and businesses can see that.
The hon. Member for Wrexham described what his Brexit negotiating position would be. His particular focus was on migration. The hon. Member for Caerphilly (Wayne David) spoke about skilled migration. I was pleased to hear a mention of universities from the hon. Members for Cardiff South and Penarth and for Croydon Central. Universities have significant concerns. I have had several meetings with representatives of higher education institutions.
Although I did have an association with Croydon Central, I am the MP for Swansea West.
I thank the hon. Gentleman for that important intervention.
I have met several university representatives, both before and after 23 June. They express particular concerns about the sustainability of courses and the finance of universities. Those issues would be hugely compounded by the reported UK Government plans in respect of overseas students. That is a huge issue economically, socially and in educational terms, and the UK Government need to get a grip on that.
More generally, all of us here need to be clear on what we mean when we talk about migrants and migration. It is vital that, as politicians, we never leave any doubt in people’s minds about the value we place on people from elsewhere who have chosen to make their homes alongside us. The First Minister of Scotland made that very clear when she spoke about the EU nationals who have chosen to make Scotland their home. She said:
“You remain welcome here. Scotland is your home and your contribution is valued.”
It is undoubtedly the case in Wales, as it is elsewhere in these nations, that people who have come here more recently, as well as longer ago, have made a significant contribution to our society and continue to do so. Specifically, they have contributed to business, including universities, social care, healthcare, small and medium-sized enterprises and big business. All those things are vital to the Welsh economy.
The hon. Member for Dwyfor Meirionnydd expressed a concern that the UK Government need to act in the best interests of Wales. She emphasised the importance for Wales of single market membership and customs union membership. She also mentioned that the business confidence figure for Wales has fallen, despite the great ambitions of the business community. Business is concerned. She gave a striking example of the potential significant impact on important companies such as South Caernarfon Creameries.
It has been quite challenging for me to sit here today and hear hon. Members trying desperately to look on the bright side. There really is not much to look forward to, should we leave the EU. It is no wonder that hon. Members such as the hon. Member for Swansea West seek reassurance. It seems clear to me, as someone who represents a constituency where 74% of people voted to remain, that there are vital benefits to remaining in the EU, as the hon. Member for Neath (Christina Rees) said. She spoke of workers’ rights, which are very important, as well as economic benefits and social protections. I echo those sentiments.
I also highlight the importance of cultural and business benefits, which we could lose if we leave the EU. Some 99% of Welsh businesses are SMEs. The hon. Member for Dwyfor Meirionnydd emphasised the need to adopt or adapt systems similar to those favoured in Germany to ensure the potential of those businesses is achieved. She is focused on achieving the best deal for Wales, for her constituents and for Welsh business.
My focus is on protecting Scotland’s interests. Of course, our aim to remain in the EU is strong and unequivocal. The UK vote means that Scotland faces being taken out of the EU against our will. That would be unacceptable and democratically unsustainable. Just as the hon. Member for Dwyfor Meirionnydd focuses on protecting Wales, it is right that my focus and that of my party is on considering and pursuing all possible steps to ensure Scotland’s continuing relationship with the EU.
To conclude, it is essential that we get far more from the UK Government than the limbo, woolly words and clunky slogans we have had so far. For all our businesses, all our communities and all the people living in them, it is essential that the UK Government start to have real, meaningful discussions with the devolved Governments and much more constructive discussions with our friends in Europe.
It is a pleasure to serve under your chairmanship, Mr McCabe. I congratulate my hon. Friend the Member for Ogmore (Chris Elmore) on securing his first Westminster Hall debate on this important subject and on the powerful case he made. He was right to underline the huge uncertainty for businesses in Wales at the moment and the role that the Welsh Government have played in utilising EU funds to support jobs in Wales through initiatives such as Jobs Growth Wales, which, as he outlined, will lead to 8,955 new job opportunities. He also highlighted the work to support initiatives such as the south Wales metro, Horizon 2020 and the support the Welsh Government have given to universities.
We have heard from a number of hon. Members from across Wales, who have made clear the risks of our departure from the EU for businesses in their constituencies. It is really positive to see the number of constituencies represented by Opposition Members—my hon. Friends the Members for Ogmore, for Wrexham (Ian C. Lucas), for Swansea West (Geraint Davies), for Caerphilly (Wayne David), for Neath (Christina Rees), for Aberavon (Stephen Kinnock), for Alyn and Deeside (Mark Tami) and for Cardiff South and Penarth (Stephen Doughty), as well as my right hon. Friend the Member for Delyn (Mr Hanson) and the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts). That is in complete contrast with the lack of Members on the Government Benches, which I hope is not an indication of their view on businesses in Wales.
It is important that we highlight the risk of the Government’s lack of certainty and clarity about their post-exit plans and the huge uncertainty that is causing businesses. As my hon. Friend the Member for Wrexham underlined, businesses and investors hate uncertainty, yet at the moment that is all we have from this Government. That reflects the views expressed in discussions that I have had with businesses in my constituency of Merthyr Tydfil and Rhymney.
My hon. Friend the Member for Caerphilly highlighted the view of Norgine in Hengoed in his constituency and its hope for a soft Brexit. That message is repeated by businesses across Wales.
My hon. Friend the Member for Alyn and Deeside highlighted the work that Airbus does, the various plants that it has across Europe and the need for flexibility to travel. When I met Airbus representatives some weeks ago, they talked about workers who may go to European plants for two hours, two days or even two weeks—it is very uncertain, so there is a need for flexibility.
My hon. Friends the Members for Swansea West and for Aberavon highlighted the role that universities play and particularly research and development, the risk to future funding and the uncertainty that that is causing at the moment. My hon. Friend the Member for Neath highlighted the absence of a plan for exiting the EU and the uncertainty that that is causing for business.
Does my hon. Friend agree that once article 50 is triggered, all the MEPs will be involved in the negotiations because they will have to have a vote at the end of the negotiations to ratify the proposal before it goes to the European Council to be ratified, so it would be fair for all Members of this House to be involved in the negotiations as well?
My hon. Friend makes a very important point. It underlines the position that we are in: we have no direction from the Government. They say that Brexit means Brexit and they are not willing to give a running commentary on what is happening. We understand that up to a point, but we are not asking for a running commentary. As hon. Members know, we are asking for the UK Government’s direction of travel, but unfortunately that has not been forthcoming.
I pay tribute to the comments of my hon. Friend the Member for Cardiff South and Penarth on the work of the Wales MEP Derek Vaughan, who continues to stand up and speak out for Wales. I also agree with my hon. Friend’s comments on the Welsh Government continuing to promote Wales and secure funding for infrastructure projects. We heard just today the announcement about a range of large-scale infrastructure projects taking place across Wales.
The last time that I spoke in a Westminster Hall debate from the Front Bench, I said:
“The Government have a clear and pressing duty to reduce…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.”—[Official Report, 25 October 2016; Vol. 616, c. 40WH.]
I still stand by every word of that today. Despite the time that has passed, neither the Minister nor the Government have done anything to give businesses any clarity or certainty, leaving people, as my hon. Friend the Member for Ogmore so clearly pointed out, in the dark about their futures, their careers and their businesses.
At the recent Welsh questions, my hon. Friend the Member for Clwyd South (Susan Elan Jones) quite reasonably asked the Minister:
“Can he tell us whether his officials have made any estimate of how many jobs in Wales will be lost if the UK leaves the single market and what he and his Government are planning to do about it?”
We are elected to Parliament to represent our constituencies and their interests. As the Opposition, it is our democratic duty to scrutinise and challenge the Government. That was not an unfair, partisan or trick question from my hon. Friend. It was asking what assessment the Minister’s Department has made of the biggest issue facing our country since the second world war and what plans the Government have to help mitigate the negative effects. However, the Minister replied:
“I am somewhat disturbed by the hon. Lady’s comments. Time and again, I hear Opposition parties talking down the Welsh economy.”—[Official Report, 30 November 2016; Vol. 617, c. 1509-1510.]
That was not an appropriate response. In fact, it was quite shameful, and it does a disservice to the office that the Minister holds not to engage with that as a genuine question.
If the Government are planning to offer support to protect jobs, businesses in Wales need to know what that package will look like and when it will come. So far, this has been a Government of smoke and mirrors, confusion and obstinacy. Whether through ignorance or incompetence, they will not give a straight answer to the simplest of questions.
Furthermore, in a written question, the shadow Secretary of State, my hon. Friend the Member for Cardiff Central (Jo Stevens), asked what estimate the Secretary of State has made of the economic value to Wales of the UK’s membership of the single market. However, again, rather than answering the question, which might help to highlight what the impact of a hard Brexit could be on Wales, he said:
“I recognise many businesses in Wales trade with the single market”.
Given the significant impact that the EU exit could have on Wales and, more importantly, the impact that the wrong deal could have on our country, that excuse for an answer is completely unacceptable. Is it asking so much for the Minister to share with us the assessment that he has made of the biggest challenge facing our country? Will he today put on the record the Government’s assessment of the economic value to Wales of the UK’s membership of the single market?
My hon. Friend the Member for Cardiff Central also asked at the last Welsh questions whether Ministers would commit to supporting jobs at the Ford plant in Bridgend post 2020 by offering Ford the same post-Brexit guarantee as the Government recently gave its competitor, Nissan. It is vital for the future of that site and the jobs that are linked to it through the supply chain, as we have heard this afternoon, that post Brexit, it is able to operate on the same terms as competitors such as Nissan. In refusing to give guarantees to Ford, the Secretary of State is offering businesses in Wales a worse deal than those in Scotland or Northern Ireland. We know that because his Cabinet colleagues, the Secretaries of State for Scotland and for Northern Ireland, committed at the Dispatch Box to offering the same protections for businesses in their respective countries as those offered to businesses in England. Is Wales getting a worse deal than Northern Ireland and Scotland? If so, can the Minister tell us why? If not, why will he not guarantee Ford the same deal as its competitors? It looks like a game of playing favourites. My right hon. Friend the Member for Delyn highlighted the support needed for industries such as the automotive industry.
Labour Members believe that a modern industrial strategy for Wales should be more than just picking winners from Whitehall. Companies in Wales should get at least the same deal from the Westminster Government as companies in England. If the Minister will not give that commitment to Ford, perhaps he will consider another major company in Wales, one of the biggest employers and investors—Airbus. It, too, needs to know what the future looks like. We need a straight answer from the Minister. Will Airbus get the same deal from the Government as Nissan? Airbus spends £4 billion with suppliers, supporting approximately 110,000 jobs. Millions of pounds and hundreds of thousands of jobs are on the line, so we need answers from the Minister. Will he offer a deal and protect the future of 100,000 jobs in Wales?
I have said this previously, but for the avoidance of doubt I will repeat it. Labour respects the result of the referendum, but we must get the best deal for people and businesses in Wales from the coming negotiations, and we will get that only if the Government provide some clarity on what their strategy is and what businesses can expect. It is essential that the UK Government work closely with the Welsh Government and the other devolved Administrations in preparing for the EU exit. They owe that to the businesses and people of Wales. I look forward to some clarity from the Minister on what he and the Government are doing to provide any reassurance to the people and businesses of Wales.
It is a pleasure to serve under your chairmanship, Mr McCabe. I, too, extend congratulations to the hon. Member for Ogmore (Chris Elmore) on securing the debate, and on winning a by-election in Ogmore —a task that was beyond my capacity back in 2002.
This has been a good, detailed debate, but it has been lacking in constructiveness. Its title on the Order Paper is “Effect of exiting the EU on businesses in Wales”, but throughout the debate, an acknowledgement of Wales’s strong position has been sorely lacking. There has been no mention of the fact that, in the past year, Wales has performed extremely well on jobs. On every single measurement of employment, the Welsh performance has been positive, and it has been in the top three of the 12 UK regions and nations. As we debate our exit from the European Union, we are in a strong position, both as regards employment levels and how businesses are performing in Wales. It is a shame that those comments have not been made in this debate.
There has been acknowledgment of the strength of various parts of Welsh industry and of success stories in parts of Wales, but we need to look at the overall performance of the Welsh economy since 2010. Wales’s employment growth has been well above that of the UK as a whole. We have seen unemployment in Wales fall, and I am happy to say that that is because of a constructive relationship between the UK and Welsh Governments. That is something we should hear a bit more about, rather than the scaremongering we hear when people continually ask whether there will be job losses as a result of leaving the European Union.
Does the Minister agree that the most disappointing aspect of this debate has been the absence of a single speech from a Conservative party Member of Parliament for Wales?
I thank the hon. Gentleman for his intervention.
Will the Minister take an intervention from me?
I will of course give way to my Parliamentary Private Secretary—no, had I better not. Certainly, the debate has been interesting, but hon. Members are well aware that Members have responsibilities in different parts of the House and are in different debates that are going on, and it is unworthy of the hon. Member for Caerphilly (Wayne David) to try to score that political point.
Going back to the success of the Welsh economy, we need to identify the fact that small businesses are a great part of that success story. Small businesses are growing. Indeed, we have seen the figures that show that small businesses’ growth in turnover in Wales has been among the best in the UK during the past year. The best performing part of the entire UK has been small businesses in Cardiff, which have enjoyed 12% growth in turnover, outpacing the situation in London. I pay tribute to all small businesses in Cardiff that have been part of that success story.
I pay tribute to them, too, as I did in my speech. On the Minister’s earlier comments, to be fair, I did make it very clear that there had been work on the city deal and on the enterprise zone, and that kind of constructive work needs to continue through this period of uncertainty. Does he agree that the very real concerns being raised by a number of businesses in my constituency, despite that growth, are valid and need to be answered?
As a Minister in the Wales Office, I fully accept that small businesses have concerns—indeed, all businesses in all sectors of the economy in Wales have concerns—but they also see opportunities, and we have heard precious little on those opportunities in this debate. The Secretary of State for Wales and I have been out dealing with stakeholders regularly—those in the farming industry, the third sector, the university sector and the further education sector; businesses small and large; the Confederation of British Industry; the Institute of Directors; and the Federation of Small Businesses. We have been talking to all those stakeholders. We have been doing that because this change—the decision made by the people of Wales and the United Kingdom to leave the European Union—is huge, so it is imperative that we talk to individuals, businesses and stakeholders who will be affected.
A Government who were arrogant enough to think that they had all the answers are not a Government I would want to be a part of. The fantastic thing about my involvement in the Wales Office since March has been the opportunity to meet so many stakeholders in Wales and listen to what they want from the decision that was made to leave the European Union.
I am grateful to the Minister for showing his usual courtesy in giving way a great deal. Will he give me an example of one opportunity arising from Brexit that the university sector has told him about?
The hon. Gentleman asks an important question. I have to respond in the same way as some of the hon. Members who mentioned businesses in their constituency but indicated an unwillingness to name them. I was recently in discussion with a university in Wales that saw huge potential to increase its attractiveness to students from outside the European Union; however, it is not a case of either/or. It wants to attract an increasing number of students from outside the European Union, but it also wants to ensure that it keeps the markets that it has in the European Union. These discussions are wide-ranging, and it is fair to say that the responses that we are getting, even from the further and higher education sector, are not as negative as the hon. Gentleman implies.
It is interesting that the Minister has come to the subject of universities, which I mentioned. Does he care to elaborate on his suggestion that universities do not particularly see this as a negative, because that is contrary to the discussions that I have had with them? Also, will he talk about overseas students and the impact of his Government’s plans for overseas students on universities in Wales, Scotland and elsewhere?
The whole point of having consultations with universities is to understand their perspective. Their perspective is that, yes, they have concerns about elements of the decision to leave the European Union, but they are not entirely negative. I am not speaking about a single university; between myself and the Secretary of State, we have spoken to most of the higher education system in Wales since the decision to leave the European Union. We have listened to those concerns, but we are also hearing that they see opportunities. More than any sector, the higher education sector is aware that its success and ability to play a full part in the development of cutting-edge technologies, for example, is dependent not only on our membership of the European Union, but on our partnerships with all parts of the world. I argue that the doom and gloom of some people here, when it comes to us no longer being part and parcel of European projects supporting higher education, can be challenged through agreements with states such as Israel. Again, we need to be slightly more constructive when talking about the response.
I have to make progress, because I have only five minutes left. We also need to talk about exports. We are doing extremely well: Wales has doubled its exporting since 1999, which has been a great success, and many people have highlighted the fact that we export some 60% of our products outside the European Union. We appreciate the importance of the single market to businesses in Wales, but it would be wrong to think that the single market is the only option for Welsh businesses.
I welcome the comments about the importance of the city region deals; they are important. I would not want to underestimate the importance of the guarantee given by the Chancellor that European funding will go on until the point at which we leave the European Union. I am grateful that that has been recognised by some Members.
On Wales’s involvement in the negotiations, we should take some comfort from the fact that there is an ongoing engagement process from the Wales Office and across Government. The Secretary of State for Exiting the European Union and the Secretary of State responsible for foreign investment have been to Wales, so the engagement is there. In addition, cross-Government committees have been set up to ensure that the voices of the Northern Ireland Assembly, the Scottish Parliament and the Welsh Assembly are heard. I have sat on those committees, and I say to the spokesman for the Scottish National party, the hon. Member for East Renfrewshire (Kirsten Oswald), that the contributions made in those committees by members of the Scottish national Government in Edinburgh have been incredibly constructive and positive. Of course there are differences, but the efforts to create a structure that allows all the Parliaments and nations of the UK to contribute to this discussion are very important.
It is only fair to respond to the questions asked by the hon. Member for Ogmore. It is fair to say that we have offered guarantees on European funding up until the point of exit from the European Union. The questions on funding after our exit from the European Union also relate to what we would qualify for after our exit from the European Union. That still needs to be looked at and considered carefully. I am unable to give any assurances on that issue at this point in time; indeed, it would be irresponsible of me to do so.
I was asked about skills, and there is an issue about that. We have had huge investments from European Union funds to support skills, but it is imperative to highlight that some degree of certainty is offered. In addition, I point the hon. Gentleman to the fantastic agreement between the UK Government and the Welsh Government in ensuring that there is a support structure in place for the apprenticeship levy; I hope that he welcomes that.
Another issue that has been highlighted is the triggering of article 50. Most, but not all, hon. Members on the Opposition Benches have supported the fact that there will be more information provided before we trigger article 50. Obviously, the Labour party has stated that it will support the triggering of article 50, and I welcome that development.
We are moving forward, and a detailed plan will be forthcoming, but it is important to stress again that the reason why we are not providing an ongoing running commentary is that we have an obligation to listen to the views of people in Wales and the rest of the United Kingdom. Hon. Members, especially those sitting on the Opposition Benches, ask for clarity; today I have heard a degree of difference in the calls for membership of the single market. For example, the hon. Member for Wrexham (Ian C. Lucas) highlighted that there are genuine concerns in his constituency and other parts of north-east Wales about migration. He will be aware that any efforts to deal with that issue would have an impact on our membership of the single market. That is a more subtle response than we have heard from some hon. Members.
Finally, on this desperate need for information, I fully accept that businesses in Wales need to know more. However, I share the concerns of the hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts); I have had more correspondence relating to business rates than on this specific issue. We have the responsibility to do the right thing. I am confident that we will, and in February more information will be made available.
Motion lapsed (Standing Order No. 10(6)).
Sitting suspended for a Division in the House.
Exiting the EU: Scotland
[Mr George Howarth in the Chair]
It may be helpful if I make it clear at the outset that, as a result of the Division, the proceedings have been pushed back 15 minutes: this debate will conclude at 4.45 pm.
I beg to move,
That this House has considered Scotland and the process of the UK leaving the EU.
It is a pleasure to speak here under your chairmanship, Mr Howarth.
Exactly 174 days ago, 62% of people in Scotland voted to remain in the European Union. We are now about three fifths of the way between the referendum and invoking article 50, so 107 days from now, at most, the Prime Minister intends to trigger—probably irrevocably, although that is subject to some discussion—the process of taking us out of the European Union, despite the fact that 62% of us want to stay in.
Two years after that, we face a spectacle in which the citizens who hold sovereignty over one of the most ancient—indeed, most European—of all nations will face the threat of having our European Union citizenship stripped from us: neither because we wanted to rescind it nor because we broke the rules and it was rescinded by the European Union, but because it was taken from us by the actions of a Government who have never held a majority in Scotland during my lifetime.
There will be some on the Government Benches—there are not many here today, admittedly—and possibly even on the Opposition Benches, whose public response would just be, “Tough! That’s the way things go. If you don’t like it, you just have to lump it,” dismissing Scotland’s concerns out of hand. My advice to them is to think very carefully indeed about how such an attitude is likely to be received north of the border.
With this debate, I am not trying to reopen the argument that was won and lost in ballot boxes the length and breadth of the United Kingdom. I find it strange that, although I have now accepted that certainly England and Wales are leaving the European Union, some hon. Members who represent constituencies in those countries may be trying to prevent that from happening. I respect the will of the people of England and Wales. They have given a mandate and I understand that the Government seek to implement that mandate. However, I ask the Government to accept—even simply to recognise—the fact that no such mandate exists from the people of Scotland or, indeed, the people of Northern Ireland.
I just wondered whether the hon. Gentleman would remind me of the result of the Scottish independence referendum.
I am delighted to remind the hon. Gentleman that during the Scottish independence referendum, Ruth Davidson, the leader of the Scottish Conservative party, promised the people of Scotland that a vote for independence would take us out of the European Union and a vote against independence would guarantee a place in the European Union. I am also delighted to remind him that, in percentage terms, the majority of the people of Scotland who want to stay in the European Union was almost two and a half times bigger than the majority who wanted to stay in the United Kingdom in the Scottish independence referendum.
Just now we are talking about the threat to our membership of the European Union. Other aspects of our constitutional status may well be up for discussion at some other time but, in the limited time available to me now, I will concentrate on the immediate issue, which is respecting the democratic will of the people of Scotland to remain in the European Union.
I spoke to the hon. Gentleman beforehand to ask whether I could make an intervention. The Scottish fishing sector, like the Northern Ireland fishing sector, voted almost unanimously to leave the EU. It is fed up with the EU telling it what to do, with reduced fishing fleets, imposed quotas and reduced days at sea, and with red tape and bureaucracy strangling our once proud fishing fleets. Does the hon. Gentleman accept that, for fishing across Scotland and the whole United Kingdom of Great Britain and Northern Ireland, our leaving the EU cannot happen quickly enough?
I certainly understand the frustrations of fishermen and women. I have had some dealings with their representatives in Scotland, but I have not had the same discussions with those from other parts of the United Kingdom, so I cannot speak for them at all. We have to remember that the reason why the fishing industry in Scotland lost out through the common fisheries policy is that, as became public many years later, there was a deliberate decision by the UK Government of the day to negotiate away the livelihoods of our fishing communities in return for something that presumably benefited some other community elsewhere.
The hon. Gentleman points to part of the contradiction in the way the European Union operates. Luxembourg, which does not have a fishing fleet for the very good reason that it does not have a coastline, whose population is about the same size as that of Scotland’s capital city, got more votes on adopting the common fisheries policy than Scotland ever had. Regardless of where the European referendum takes us all in the next few years, there are unanswered and unsettled questions about the constitutional status not only of Scotland but of other UK nations in relation to the rest of Europe.
The Government asked the people of the United Kingdom for a mandate on the European Union. They got different mandates from different countries within the UK. That creates a problem—there is no denying that. My concern is how we resolve that problem on behalf of the nation that I call home and that I am here partly to represent.
The concerns in Scotland are the same as those in Northern Ireland, Wales and indeed many local authority areas throughout the UK. However, there are mechanisms: those set up through the Joint Ministerial Council, through the input that Departments in Scotland and Northern Ireland will have in the preparation for negotiations and through the ongoing opportunities for debate in this House and the Exiting the European Union Committee, of which both he and I are members. Do those not give the regions of the United Kingdom the opportunity to ensure that their voices are heard? The important thing is that the Government must respond positively to the concerns raised.
Order. May I remind Members who have made interventions that the terms of the motion are specifically about Scotland? We should not be trying to develop this into a wide-ranging debate about other parts of the United Kingdom, tempting though I am sure that is.
Thank you, Mr Howarth. May I just say in response to the hon. Member for East Antrim (Sammy Wilson) that the jury is still out on whether the Joint Ministerial Council is worth the paper that its name is written on? We will find out once we see the position adopted by the UK Government and the evidence—or lack of evidence—of any change at all in their stance to take account of the very different demands and needs of the different parts of the United Kingdom.
It would be easy for the Government to carry on and negotiate a settlement that satisfied just their own Back Benchers and their own priorities, but to do so would be to ignore the distinct constitutional identity of Scotland and their party’s own promises to treat Scotland as an equal partner in the Union. It would renege on the Government’s call for Scotland to lead the Union and would ditch forever the respect agenda that they were so keen to promote barely 24 months ago.
To ignore and dismiss out of hand the wishes and the expressly stated decision of the people who hold sovereignty over Scotland and who are sovereign even over this Parliament when it legislates on Scottish matters would certainly please the hard-liners on the Government Benches for a few hours—until they saw how it was received in Scotland. How it would be received in Scotland is not hard to imagine, so I do not need to dwell on that here.
The first argument for giving Scotland its proper place throughout the Brexit process is that it is Scotland’s proper place. If we are truly an equal partner in this Union and an integral part of the United Kingdom, we are entitled to nothing less than equal partnership. We should be an integral part of the most important negotiations that the United Kingdom has undertaken since 1945.
The second argument stems from the Prime Minister’s repeated claims that she will negotiate a deal in the best interests of all the United Kingdom. How can she possibly know what is in the best interests of all the different nations and regions of the United Kingdom? Who is now telling her what is in the best interests of the people of Scotland? Who in the inner circle of the Cabinet will speak up for Scotland’s interests or those of other devolved nations when—not if, but when—they do not coincide with the interests of other parts of the United Kingdom? The Secretaries of State for the devolved nations are not even part of that core decision-making team. How can it be credible for Cabinet Ministers to say that they will negotiate for what they know is in best interests of Scotland, when they are fighting among themselves about what is in the best interests of the United Kingdom?
By contrast, the Scottish Government are pretty clear about what they believe is in the best interests of Scottish people. Their immediate response after the referendum was almost unanimous and supported across party lines in the Scottish Parliament. They have committed to publishing proposals before Christmas that could deliver as much as possible of what is in Scotland’s interests, while still allowing the UK Government to respect and honour the decision made on 23 June. It is sad but not surprising that before anyone even knows what that document will contain, it is already being torn to pieces by the social media trolls—none of whom, I am sure, has any connection with the Conservative party.
I hope that the UK Government will at least take time to examine the Scottish Government’s proposals. I am not insisting that they adopt them in their entirety, but I would like an assurance that at least they will be examined and given the respect that they are due. That really is the least the UK Government can do, given that for months their party leader in Scotland has been screaming demands to know the Scottish Government’s plan for Brexit. Interestingly, I do not remember ever hearing her asking to know her own Government’s plans for the United Kingdom, but maybe that is more her problem than mine.
I have not seen the Scottish Government’s document, but—again, in contrast to the UK Government—they have been clear and consistent in setting out what they believe Scotland needs to see at the end of the process. We need to retain full access to the single market. If that does not happen, the impact on our economy may be very serious indeed, because Scotland is a trading nation. Our exports support tens of thousands of jobs—not only in Scotland, but elsewhere. They also provide a very tidy income indeed, thank you very much, for Her Majesty’s Treasury. I hope that that will not be forgotten.
We also want to retain free movement of people. The UK Government have decided that free movement of people is fundamentally a bad thing that we should not accept at all, but in order not to have to accept it they are prepared to lose the benefits of membership of the single market. In Scotland, we do not see a conflict, because we want to keep free movement of people. We see free movement of people as a positive. We have benefited as a nation, socially, culturally and economically, from migrants coming in from other parts of the European Union. Our citizens have benefited from opportunities to become immigrants in other people’s countries. We want that to continue, and that is not just the view of the Scottish Government: all the indications are that it is the overwhelming view of the people of Scotland.
I suggest to the Minister that the apparent conflict between Scotland’s attitude to the free movement of people and the attitude of some other parts of the UK, and between Scotland’s determination to remain a full part of the single market and the lukewarm reception that the single market gets in other parts of the UK, can be resolved if the Government are prepared to countenance a negotiating position that seeks an agreement to allow immigration rules to apply different criteria in different parts of the United Kingdom, to meet different pressures on services and needs in the employment market. If they are prepared to accept that—it is now quite common practice in a lot of EU countries—the rules on the single market, trade areas, customs union and so on do not have to apply absolutely uniformly across the whole United Kingdom.
It has become increasingly obvious over the past few years that there are very few areas of public policy in which one size can hope to fit all throughout the United Kingdom. I suggest to the Government today that, for some of the major pillars of policy on which we will need to negotiate agreements in the lead-up to Brexit, one size cannot possibly fit both Scotland and the rest of the United Kingdom.
If the Government are not prepared to seek a solution that allows different sizes and different applications of policy in different parts of the United Kingdom, what are they suggesting instead to deliver the stated wish of the sovereigns of Scotland—the 5.5 million people who rightly and inalienably hold the right to determine what the future holds for our nation and which direction it goes in? If they are not prepared to respect that sovereign will, how will they ensure that, when the Brexit process is completed, the people of Scotland believe that they are still valued, equal partners with a mission to lead the Union?
It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Glenrothes (Peter Grant) on securing this debate. It is a pleasure to return to Westminster Hall, which the hon. Member for Glasgow North (Patrick Grady) suggested should be renamed “Brexit Minister Hall” because of the frequency of my visits. I commend him and his colleagues for their active role in supporting the Department’s debates.
Upon her appointment in July, the Prime Minister committed to full engagement with the devolved Administrations to get the best possible deal for all parts of the United Kingdom as we leave the EU. Following the referendum result, her very first visit was to Edinburgh to meet the First Minister of Scotland, followed quickly by trips to Cardiff and Belfast. Make no mistake: the United Kingdom voted on 23 June to leave the European Union, and we will leave the EU as one United Kingdom. I welcome the acceptance by the hon. Member for Glenrothes that a mandate has been given—at least in some parts of the country—for that process, but I noticed that in his avoidance of the intervention by my hon. Friend the Member for Hazel Grove (William Wragg) he neglected to note that the 2 million people in Scotland who voted to stay in the UK in 2014 outnumber significantly those who voted to remain in the EU.
It is great to see the Minister in his customary place; perhaps at the end of the Brexit negotiations his name will be chiselled on to the chair. Does he accept that, as the First Minister said, the United Kingdom that people in Scotland voted to remain part of in 2014 has “fundamentally changed”? That was the expression she used. There has been a fundamental change in circumstances, so we have the right to insist that the mandate in Scotland to remain in the EU is respected in the UK Government’s negotiating position.
I am always pleased to engage with the hon. Gentleman, but it is clear that the referendum was UK-wide. The decision was taken on a UK-wide basis and the negotiations will be conducted on a UK-wide basis. Nevertheless, we do, of course, have to accept the concerns and views of the Scottish people, to which I will come in greater detail.
As we prepare to leave, we stand by our commitment to engagement with the devolved Administrations, including the Scottish Government. The devolved Administrations are having and will have the opportunity to have their say as we form our negotiating strategy. The Prime Minister chaired a plenary meeting of the joint ministerial council in October, at which she discussed the process of preparing to leave the EU with the First Minister of Scotland, the First Minister of Wales, and the First Minister and Deputy First Minister of Northern Ireland.
We have created a new Joint Ministerial Committee (EU Negotiations), which brings together all the constituent parts of the United Kingdom to develop a UK-wide approach to our negotiations. The committee is chaired by my right hon. Friend the Secretary of State for Exiting the European Union and has agreed to meet monthly as we seek to agree a UK-wide approach to negotiations, share evidence and take forward joint analysis. In our commitment to the JMC(EN) process, we have also agreed to work collaboratively, first, to discuss each Government’s requirements for the future relationship with the EU; secondly, to seek to agree a UK approach to, and objectives for, the article 50 negotiations; and thirdly, to provide oversight of negotiations with the EU, to ensure, as far as possible, that outcomes agreed by all four Governments are secured from the negotiations.
I should put on record the fact that although the majority of people in Northern Ireland voted to remain, in my constituency the majority voted to leave. Nevertheless, throughout Northern Ireland many people who were in the remain camp now accept that the decision has been taken UK-wide, and as such they want to move forward. The issue today is not the decision that was taken on 23 June, but how we move forward for everyone, even those who were in a different camp, most of whom accept that we should move forward.
I totally accept the hon. Gentleman’s point. Indeed, I was in a different camp during the referendum. I said at the end of last week’s debate that we all must now move forward to ensure that we make the process work not for 48% or 52%, but for 100%. The hon. Gentleman’s point was well made.
The Minister mentioned the meetings of the committee that has been set up under the Secretary of State’s chairmanship. The Secretary of State agreed last week that a plan would be put to the House before article 50 is triggered—will that group meet before then, during the process, or what?
I am grateful to the shadow Minister for his intervention. I assure him that the group will meet before that plan comes forward. As I said, monthly meetings of the group are already arranged, and there will be further meetings before the publication of the plan. It is important that the views of the JMC should be taken into account.
Although there is going to be consultation through the JMC, will the Minister make it clear, now, that that does not mean that different regions of the United Kingdom can have a different relationship with the EU, either by volunteering for it or by having it forced on them?
I absolutely accept the logic of the hon. Gentleman’s point; we need to conduct the negotiation for the whole United Kingdom. Nevertheless, it is important that we demonstrate that our door is open to the Scottish Government and all the other devolved Administrations.
My right hon. Friend the Secretary of State has already had a number of discussions with the Scottish Government’s Minister for UK Negotiations on Scotland’s Place in Europe, Mr Russell. Indeed, I welcomed Mr Russell’s comments to the Scottish Affairs Committee on Wednesday 7 December, when he said: “The hotline is working”. I personally attended the recent meeting of the British-Irish Council in Cardiff, with the First Minister of Scotland and Minister Russell, and was pleased to have constructive discussions with that important forum. Such engagement at ministerial level is being complemented by a good deal of engagement at official level. We are holding detailed bilateral meetings with each of the devolved Administrations on key sectors that they identified as priorities, and UK Government Departments are continuing to engage with each of them on their key policy areas.
In preparing for this debate, I decided to revisit the views of the hon. Member for Glenrothes on EU policy. I was pleased to read that last November he said that
“the experts on matters such as fishing and agriculture are very often the people who work in those industries. If we do not listen to them from the very beginning of the process, we will get it wrong.”—[Official Report, 10 November 2015; Vol. 602, c. 79WH.]
I could not agree more. It is crucial that, as we prepare to leave the EU, we listen to voices from across the UK, and, indeed, from across Scotland. I have detailed some of our engagement with the Scottish Government, but that is only part of the picture.
The Minister’s exact recollection of my words is better than my own, but I certainly will not disagree that that is what I have said. Given that we agree that the people who understand the fishing industry best are the people who work in the industry, with hindsight does he accept that a previous generation of Ministers treated the fishing industry very badly when they sold it out to Europe in return for benefits elsewhere?
In this debate, we should focus on the future rather than debate the past, but I think we all accept that we are where we are today because mistakes have been made on Europe in the past.
On our engagement with Scotland and more widely, DExEU Ministers have met more than 130 companies from every sector of the British economy since July. That is one part of a whole of Government effort to speak to every sector and region of the British economy. Behind the scenes, officials across Whitehall are working together to ensure that businesses’ views reach the policy makers who are working to get the right deal for the UK. We have hosted round-tables with universities, energy companies, retailers, professional and business services providers, the financial sector, automotive companies, construction firms, oil and gas companies, farmers, fishermen, the food industry and businesses in regions throughout the UK. That is just the start of a national conversation that will continue as we leave the European Union.
We will continue to speak to businesses of all sizes and shapes, in every corner of the UK, including Scotland. We want to give small businesses the opportunity to have their say. The Prime Minister has held her first business summit with the Federation of Small Businesses, and we have been visiting chambers of commerce throughout the country and speaking to groups representing family businesses. Our Ministers have visited Wales, Northern Ireland and every region in England, and, of course, the Secretary of State went to Glasgow, where he visited the Tontine business centre and held a stakeholder round-table at the University of Strathclyde.
I was originally planning to visit Scotland this week, but the pressure of parliamentary business means that I now intend to travel to Scotland early next year, as does my right hon. Friend the Minister of State, Department for Exiting the European Union. Incidentally, on my way here from the voting Lobby, I ran into my hon. Friend the Under-Secretary of State for International Trade, who assured me that he is very much looking forward to a meeting with the Scotch Whisky Association to discuss some of the opportunities of this process. We will listen to stakeholders, including farmers, the fishing industry, and food and drink manufacturers, as well as the universities—including Scottish universities—representatives of some of which I met earlier today.
The hon. Member for Glenrothes touched on the future trading relationship with the EU. One of our first priorities is to allow UK companies to trade as freely as possible with the single market in goods and services—that is the very point he was making. We will work hard to get the best deal for the whole UK, and we are considering all factors carefully in implementing the referendum decision. We are, though, looking for a unique outcome, not an off-the-shelf solution. We are aiming for the right deal for the United Kingdom. As we conduct our negotiations, it is a priority to secure British companies’ trade with the single market in goods and services.
Indeed, we want the best possible arrangement for trade in goods and services with the EU. We are not seeking to replicate any other model; we want a bespoke approach that works for the whole of the UK, including Scotland. This objective is a priority that I believe businesses across the United Kingdom and across Scotland will share. A single UK position in relation to our future relationship with the EU is vital to protecting the UK’s interests as a whole.
For Scotland, exports to the rest of the UK are worth four times as much as those to the EU. This Government are determined to promote Scotland’s future, including through the extra £800 million of capital funding through Barnett consequentials, as a result of the autumn statement. If that funding is used properly by the Scottish Government, it will make a real difference to productivity, jobs and growth, so that the Scottish economy can perform even more strongly in the future.
I note that the hon. Member for Glenrothes and some of his hon. Friends have touched on a role for the Scottish Government in the negotiations themselves. We have made no decisions yet about the format of the direct negotiations with the European Union. Of course, it will be for the Prime Minister to ensure that we negotiate the best possible future for the United Kingdom, and our Department is there to support her, representing the interests of all the UK’s constituent parts. However, it is very clear that in each of the three devolution settlements, the conduct of international relations is a matter that is expressly reserved. In the Scotland settlement,
“international relations....including relations with the European Union”
is a reserved matter. That does not diminish our commitment to engaging the Scottish Government. I say again that the JMC(EN) has an important and enduring role in overseeing these negotiations as they take place.
The hon. Gentleman also talked about Scotland’s position on free movement and I know that in the past he has raised the issue of EU citizens living in the UK. Let me repeat what I have said many times on that: I want and the Government want to ensure the rights of EU citizens living in the UK. We need to do that through negotiation and through a reciprocal agreement that also secures the rights of UK citizens, including many Scottish citizens, living in the European Union. It is absolutely vital that we do that at the earliest possible opportunity, and I hope that we will be able to bring news on that front early in the negotiation process after article 50.
Although it is a priority to do that, obviously it must be done through negotiations. Doing otherwise would risk adversely affecting our negotiating position and hence the position of British citizens, including many from Scotland, who have chosen to build a life with their families in other countries.
This is a very important issue and an important debate, and I welcome the discussion that we have had today. The hon. Gentleman is clear that Scotland’s voice will be heard in this process and so am I. We have established good processes for engaging with the Scottish Government and other devolved Administrations through the JMC forums. As we have seen today, Scottish MPs are playing a full and active part in the parliamentary scrutiny that is ongoing in this United Kingdom House of Commons. As the hon. Member for East Antrim (Sammy Wilson) pointed out, MPs from across the United Kingdom have that opportunity and are taking it.
We are ensuring that channels exist for official-level discussions on the detail and seeking to build a common evidence base. We stand ready to talk to the Scottish Government at any time. I know that we have heard much talk of plans lately in this House, as per the debate last week, and we will set out more of the detail for the UK plan ahead of the notification of article 50 before the end of March 2017.
We will leave the EU as one United Kingdom, but in doing so it is vital that Scotland’s interests are understood and that the voices of the people, businesses and other groups in Scotland are heard.
Question put and agreed to.
Greater Manchester Spatial Framework
I beg to move,
That this House has considered the Greater Manchester spatial framework.
It is a pleasure to serve under your chairmanship, Mr Howarth, and it is also a pleasure to be joined by colleagues from both sides of the House for this debate. The cross-party interest in this matter demonstrates the real concerns about the spatial framework that exist among residents right across Greater Manchester. I wish to highlight some of those concerns and draw them to the Minister’s attention today.
The Greater Manchester spatial framework is the product of the Greater Manchester combined authority. It represents the authority’s plans for the management of land for housing, commercial and industrial use for the next 20 years. The framework is currently in draft form and subject to a consultation; I gently remind colleagues and all interested parties that the consultation is open until 23 December.
I am grateful to my hon. Friend for giving way so early in his speech. I wonder whether he has had the same concerns expressed to him that I have had expressed to me about the fact that the consultation period has been so short and that the consultation has had so little publicity.
I have picked up on that concern and doubtless other right hon. and hon. Members will have heard similar concerns, so I thank my hon. Friend for that intervention.
I want to make it clear from the outset that I am not against building and development per se, nor am I against the concept of the framework itself; on the contrary.
The hon. Member is supportive of house-building. How many houses does he think should be built in his constituency?
If the hon. Gentleman waits with bated breath, he will have the answer, later in my speech.
As I say, I am not against development per se and I think that a cross-regional approach for strategic housing allocation across Greater Manchester is to be welcomed. Of course we need to provide new developments to fill the housing shortage, but it must be done in a way that is sensitive to both the local environment and the wishes of local communities. Also, it should be provided only where there is a genuine need and where the infrastructure exists to support such developments.
A vital part of the infrastructure that must be taken into account is public transport, such as railways. Should not any new housing developments be located on existing public transport routes?
My hon. Friend makes a very sensible point. If he, too, waits until later in my speech, I will refer to what he has just said in detail.
Before he moves on, will the hon. Gentleman give way?
I will happily give way to the hon. Gentleman, my neighbour.
I am very grateful to the hon. Gentleman, but is he concerned, as I am, that there does not appear to be any joined-up thinking between different parts of the combined authority? We are currently in a consultation on the spatial framework, which is identifying whole tracts of land for future development, yet we have just finished a consultation on the Greater Manchester transport strategy 2040, under the guise of Transport for Greater Manchester, which bears no relationship to the spatial framework?
The hon. Gentleman makes a very important point about the need for greater “joined-up thinking”, a phrase that is perhaps over-used but rarely put into practice.
It is in this spirit—of building where there is genuine need—that I wish to raise some specific concerns about the methodology behind the framework. The draft framework proposes that 227,200 net additional dwellings will be needed by 2035 to home a projected population increase of almost 300,000 people. It also apportions this house-building target across the 10 Greater Manchester councils, and in the case of Stockport, the allotted target is 19,300 new homes.
I have concerns about how these figures have been arrived at. To estimate the population growth, the spatial framework considered information from the Office for National Statistics, the Department for Communities and Local Government, an economic forecasting model, the Experian credit-referencing agency and independent business consultants. In 2014, the combined authority produced a 165-page document, outlining and consulting on its methodology for calculating future housing needs. Dozens of tables and graphs later, we arrive at the magic prediction of 294,800 extra people by 2035, which translates into that figure of 227,200 new dwellings that I gave before.
Forecasting is a very difficult and complex task, and it is always subject to a degree of uncertainty. However, taking just the most recent three forecasts from the ONS—from 2008, 2010 and 2012—there is a variance of almost 200,000 people between the highest and lowest estimates for the population of Greater Manchester by 2032. This means that the framework’s magic number is two thirds within the margin of error of the three most recent ONS forecasts, and that is without even cross-examining the four other sources.
It is also curious to observe that 10 large housing developers all claimed that the authority’s objectively assessed need figure was too low, whereas the Campaign to Protect Rural England claimed it was “excessively high”. Faced with such wild variance in the estimates of population growth, it is difficult to have faith in the combined authority’s arithmetic. One wonders whether the projected need goes beyond the true need.
I congratulate the hon. Gentleman on securing this debate. My constituents are also concerned that an absolute number is meaningless if it does not take account of the mix of housing need, which must be matched to the population. They have particularly expressed concern about the need for family homes and affordable homes. Does he agree?
I agree with the hon. Lady, who raises an important point.
My second major area of concern about the draft framework is the proposal to release green-belt land for housing development. It proposes to build on 4,900 hectares of Greater Manchester’s green belt, representing a net loss of just over 8%. Locally, Stockport is set to lose some 9% of its green belt. Some 8,000 homes will be built on green belt in the constituency of my hon. Friend the Member for Cheadle (Mary Robinson), whereas in my constituency permission will be given to build a further 4,000 homes on fields around the village of High Lane, essentially doubling the village’s size. Those housing developments have been proposed with little regard for the burden of increased traffic on the road network or the increased pressure on public services, as my hon. Friend the Member for Bolton West (Chris Green) said.
Is the hon. Gentleman concerned, as I am—he sounds like he is—about the release of green-belt land? We understand from national guidance that green-belt land should be released in only the most exceptional or very special circumstances. In fact, I had a quick look at the planning practice guidance, which says:
“Unmet housing need…is unlikely to outweigh the harm to the Green Belt and other harm to constitute the ‘very special circumstances’ justifying…development on…the Green Belt.”
Does he agree?
The hon. Lady’s point is entirely correct. My concern is that the combined authority’s housing target will become an exceptional circumstance, as it appears to think.
Will the hon. Gentleman give way?
How can I resist?
The hon. Gentleman is being very generous. On the allocation of green-belt land for housing, does he agree that the figure is dependent on an assessment of the pipeline of brownfield sites, which has always been underestimated?
The hon. Gentleman is entirely correct. Again, he alludes to something that I will address in my remarks. He is spot on.
If the homes in Stockport are realised, they will account for only two thirds of Stockport’s overall target, so I fear this is likely to be the thin end of the wedge. Last night, my hon. Friends the Members for Cheadle and for Bury North (Mr Nuttall) presented petitions on behalf of thousands of our constituents who oppose the massive-scale development on the green belt and who want to prioritise building on brownfield land.
The voices not only from my constituency but from neighbouring constituencies, as evidenced by the attendance in Westminster Hall this afternoon, show a clear concern that the green belt should be protected. Green belt is easily the best loved and understood British planning policy, and it is hugely valued. It has been a long-standing commitment of Governments of all colours that redevelopment and reuse of land in urban areas—so-called brownfield sites—should take priority over greenfield sites, and rightly so for a number of reasons. First, it protects the countryside and provides the benefits of green spaces and access to nature and recreation.
On regeneration, we need to get people living in town centres again. Our cities are thriving, but medium and large towns are being neglected. Such depopulation leads to further decline and creates a vicious cycle, as I fear has been witnessed in Stockport. However, Manchester, to its credit, has made great strides. The green belt encourages the regeneration of our towns and the best use of our land.
The green belt also prevents urban sprawl. My constituents in the towns of Heywood and Middleton are extremely concerned about the erosion of the green belt, to the extent that they are worried that, eventually, the two towns will cease to exist, becoming something like Heyton or Midwood.
The hon. Lady possesses great powers of foresight, because my next paragraph is on green belt being a vital barrier to urban sprawl. In the case of Heywood and Middleton, the green belt is an important barrier between the two communities.
As a vital barrier to urban sprawl, the green belt encourages us to build upwards not outwards, to live nearer our places of work and not to commute or congest. Our local roads, infrastructure and transport capacity already struggle with existing demands. The proposals for massive developments in semi-rural areas will only make matters worse.
By contrast, developing vacant brownfield sites that have previously been used for other purposes is a more sensible approach to house building. Such sites are closer to urban centres, retain the countryside, boost regeneration and ease transport pressure yet, before many brownfield sites have been properly utilised, the framework seeks to release green-belt land that, once gone, can never be gotten back. Although building on greenfield sites is sometimes necessary, the release of green-belt land now, and on the scale proposed, is a huge disincentive to the proper use and regeneration of brownfield sites.
Most of our housing is now provided by volume house builders, which are essential to housing provision, but it is worth considering how they operate. Their business model favours large new greenfield developments. If we make sites on green belt available, the volume house builders will develop those sites first and will make the case that sites in our towns are unsuitable or, indeed, unprofitable. Once they have developed on the green-belt releases, they will come back for more before they even look at urban land. Therefore, the opportunity for real regeneration in Stockport and other Greater Manchester towns will be lost for a generation.
The hon. Gentleman is making an important point about the value of the green belt to people living in Stockport and Tameside. He will know that much of our green belt is also recreational space for those two boroughs. Is he concerned, as I am, that some of the sites that have been identified in the spatial framework are within the Tame valley? One site is at Hyde Hall farm in Denton, and there is also a large industrial proposal on the edge of Denton in his constituency. That is wrong, is it not?
It is wrong, and I know the hon. Gentleman had a battle on his hands with the threatened encroachment on Reddish Vale country park.
What will we do to ensure that brownfield developments are prioritised, that our towns are regenerated first and that green-belt land is released only when it is the last option? First, we need an accurate estimate of the amount of urban land available. According to the combined authority’s own figures, Greater Manchester has at least 1,000 hectares of undeveloped brownfield land that has not been earmarked for use. Taken together, the sites have enough space to build at least 55,000 homes—that is a very conservative estimate—which is almost a quarter of the entire Greater Manchester target, as set out in the framework. This is merely a pilot exercise, and I am confident that more sites can be found, as the hon. Member for Blackley and Broughton (Graham Stringer) mentioned. However, releasing green-belt land now would totally undermine the incentive for such developments.
Secondly, Greater Manchester combined authority needs to address the familiar issues that prevent development of urban land, such as split ownership, land banking, unrealistic expectations of land value, access, contamination and others.
Thirdly, to make housing in urban areas attractive to new owners and tenants, we need to make town centres places where people want to live, with pleasant, safe surroundings and the right facilities, amenities, public services, schools and healthcare. Those aims could perhaps be achieved by creating a development corporation or similar body with responsibility for regenerating Greater Manchester and with a remit to recycle land and to create fit places to live. That need not cost much, but it would create the proper planning that would stop Greater Manchester sprawling out unsustainably in all directions.
I have three questions for the Minister. Does he agree about the need to protect the green belt and to prioritise the redevelopment of brownfield land as an alternative? Does he agree that green-belt sites should be used only as a very last resort when all brownfield sites have been exhausted? Does he share my ideas for prioritising brownfield development, and what other steps are the Government taking to encourage it? Does he think that Greater Manchester combined authority is justified in its housing target and its desire to release green-belt land in the immediate future?
As I said at the outset, I and the thousands who signed local petitions are not against house building, but we believe in brownfield sites. Sites that have been developed previously should be prioritised for building homes, which not only protects the countryside but focuses development where regeneration is needed and where the necessary infrastructure already exists. The strength of local opinion is clear to see, and it is clear to see in the turnout of colleagues from Greater Manchester in Westminster Hall this afternoon. I thank all those who have supported the campaign.
It is a pleasure to serve under your chairmanship, Mr Howarth. I thank the hon. Member for Hazel Grove (William Wragg) for securing this important debate. It is right that the Greater Manchester spatial framework be properly scrutinised, as any development will have a lasting effect on our conurbation. Likewise, it is perfectly understandable that many of us have been raising concerns about specific developments and potential developments in our constituencies.
We also have a duty to think about the prosperity of our region and the country as a whole. We need to take into account the views of businesses as well as residents. We need to think about not only those who voted us into office last year, but the young people in our constituencies who, in 10 to 15 years’ time, will be looking for a home in which to live. I therefore want to focus on the bigger picture of what the spatial framework means for the future of Greater Manchester. For me, it is about unleashing opportunities. Our city region is world-renowned for its cultural and sporting dynamism, entrepreneurial spirit and innovation in science and technology. We are a thriving city region, and to sustain that, we need to be able to grow, so that we can attract business, tourists, workers and students, and we need to ensure that Greater Manchester can provide enough homes for future generations to move into and start their own family. The Greater Manchester spatial framework aims to achieve exactly that. It also seeks to address some of the big challenges that this country faces.
We politicians constantly bang on about the housing crisis, and we all agree that to solve that problem, more houses must be built. The spatial framework will help build the houses we desperately need. We also constantly talk about the need to rebalance the economy and address the north-south divide. The spatial framework will go some way to tackling that inequality, so I for one welcome the plan. However, I am not giving it a blank cheque. New homes must be affordable for first-time buyers and people needing to rent at all levels of the market.
I recently had a quick look at the homes that are going up in my constituency on patches of land. The lowest price across the range of new homes was £225,000 in Little Hulton, and the highest was £550,000 in Boothstown. The difficulty is that the homes that go up are aspirational four and five-bedroom homes. They are not affordable.
I appreciate the hon. Lady’s intervention. I completely agree: there needs to be diversity and a mix of accommodation created. The plan has to take that into account, but the plan is designed specifically for new development and is only in draft form. As I pointed out, I do not give the plan a blank cheque; it has to match the needs of every section of our communities.
As the hon. Member for Hazel Grove made clear, infrastructure must be provided with new development. It cannot be an afterthought; that is a particularly important point. I am talking about infrastructure in the broadest sense of the word—about schools, not just roads. I understand other Members’ concerns about the green belt and the need to prevent urban sprawl. While I do not dispute that access to green open spaces is important to people’s quality of life, surely it is equally, if not more, important to people’s wellbeing to have a roof over their head and a job—things that this plan provides.
Will the hon. Gentleman give way?
I will just make a little progress.
I am fortunate that Rochdale has many green and open spaces, the vast majority of which will not be affected by the proposals. In fact, the plan promises to create alternative green-belt land in Rochdale, which will go some way to compensating for what is lost. Additionally, many of the development sites in Rochdale will be brownfield sites, using up wasteland and former industrial areas, so it is not as though the proposal has set out to target green-belt land without considering other options first.
Finally, we need to consider the bigger picture. We need to welcome the opportunities provided in the spatial framework—the jobs, the homes and a real plan to tackle national challenges and boost productivity in the north-west. No scheme will be perfect. While we scrutinise and improve the draft proposals, we must also show a degree of pragmatism and, indeed, political leadership.
Before I call the next speaker, I should point out, for the avoidance of doubt, that because of the earlier Division, which caused the sitting to be suspended for 15 minutes, we will conclude at 5.45 pm.
It is a great pleasure to serve under your chairmanship, Mr Howarth, and to see Members from right across Greater Manchester and on the Opposition and Government Benches here to debate this important issue. I am grateful to my hon. Friend the Member for Hazel Grove (William Wragg) for securing the debate.
I am conscious of time, so I will get straight to what the debate is about. I think we are in agreement that we need a good local plan for the area that provides the housing and infrastructure that we need, but this is not it. The plan lacks vision and has no real foresight or ambition for the future development of Cheadle. While I accept that there is a need for more housing across the country, that should never be achieved through the indiscriminate development of our green belt. Instead, as others have said, we should regenerate our brownfield sites—and there are brownfield sites to be regenerated in our areas.
I have campaigned to protect areas of Cheadle from inappropriate development, and last night I was pleased to join my hon. Friends the Members for Hazel Grove and for Bury North (Mr Nuttall) in presenting my petition against the plans to the House. It collected more than 2,600 signatures, which was quite an achievement. I was overwhelmed by the thousands of constituents who have been in touch with me on the issue. The strength of feeling shows that local people do not want their future development to look like the draft plans. People care about their local community and want to see urban areas regenerated. They love their open and rural spaces, and recognise their value for physical and mental health and wellbeing.
In my constituency, that strength of concern is most evident in the activities of local neighbourhood groups, such as Woodford Neighbourhood Forum, which was set up in October 2013. Since then, members and residents have raised funds and spent thousands of hours working on their local plan. Getting a local plan together is no mean feat. Over the past three years, they have put together more than 340 pages of material, and I am concerned to ensure that their voices are listened to.
There is an urgent need to identify all suitable brownfield sites, including ones in and around Stockport and in urban areas across the Greater Manchester city region, where communities would benefit from the additional investment generated by regeneration projects. The Campaign to Protect Rural England has identified that brownfield sites in the UK have the potential to deliver 1 million houses. As my hon. Friend the Member for Hazel Grove described, it has been assessed that it is necessary for Stockport to have 19,300 of those houses. It shocks me to say that it is expected, hoped or proposed that more than 8,000 will be built on the green belt in Cheadle. Should the plans go ahead, they will not only devastate the countryside, but place unprecedented pressure on our local infrastructure and undermine our communities. I am a member of the Select Committee on Communities and Local Government.
Actually, the situation is worse than the hon. Lady describes, because for perfectly good reasons, all 10 local councils want to use the plan as an opportunity to increase their council tax base. Therefore, it will predominantly be executive homes that are developed. Is the real risk not that we end up crashing the housing market in Greater Manchester because we have an over-supply of the wrong kind of homes?
I absolutely agree. The hon. Gentleman makes a fundamental point. Indeed, it is expressly in the plan that the area around Cheadle—particularly Woodford—will be allocated for high-end, low-volume housing, and the expectation is that funds will come to Stockport Council. That is exactly it. Of course, the hon. Member for Rochdale (Simon Danczuk) will not necessarily get the housing that he needs there if developers choose to build on our green belt.
The truth is that if we do not have a plan, we will get the housing that the developers choose to give us.
Absolutely. I started my speech by saying that we must have a plan—we all acknowledge that—and that it has to be the right plan for our areas and for Greater Manchester. It is great that we all have that common theme in mind.
The Campaign for Better Transport has spoken about the necessity of commuter hubs and the challenges for housing allocations that are more than a 15-minute walk from rail and tram stations, yet the draft plan mentions no provision for new railway stations or transport infrastructure.
Do my hon. Friend’s constituents have the same fears as mine, who think that we will definitely get the houses in the housing proposals, but are less certain about getting the other infrastructure developments? Will we get health, school and transport infrastructure to go along with the houses? We will get the houses first, but the other things may or may not follow.
Absolutely. That uncertainty adds to our feeling about the plan. The framework notes that significantly improved public transport is a prerequisite for the site off the A34. However, the walking distance between Woodford and Bramhall and Poynton railway stations is certainly a lot more than 15 minutes, even for the most ardent trekker.
The hon. Lady makes an important point about transport links. Does she share my surprise that transport operators—both bus and train operators—told me that they have no knowledge of the details of the proposed spatial strategy and that they have no plans to adapt their forward planning to take account of what might be in the strategy?
That is an excellent point well made. That is lacking in the plan. When it comes to the northern powerhouse and what we want to do in Greater Manchester, it is essential that we get those transport links right. That needs to be considered.
Finally, I make a plea to the Minister to listen to local voices. It is important that people’s voices are heard in this consultation and through the other representations that they make. Local people have already formed themselves into groups, such as the Woodford Neighbourhood Forum, to plan and shape their neighbourhoods.
It is a pleasure to serve under your chairmanship, Mr Howarth. I congratulate the hon. Member for Hazel Grove (William Wragg) on securing this debate on a subject that will affect all our constituents in Greater Manchester. I am sure that we all subscribe to the aspirations set out in the draft framework to enhance economic performance, improve the environment and provide additional homes and jobs for the future. However, linking the green-belt review to the plan has not facilitated plan development; it has simply led to a feeding frenzy among developers, who have identified the easy pickings: the green-belt sites.
Particularly for the outer boroughs, the plan needs to be considered in conjunction with other neighbouring authorities and their aspirations. It has not been demonstrated that the duty to co-operate has been met. Indeed, St Helens Council, which adjoins my constituency, has plans to remove the green belt for three large logistics parks, which would cause considerable problems for the road network, merge distinct townships—Ashton-in-Makerfield does not want to merge with St Helens, which is in a different borough—and cause complete urban sprawl. West Lancashire Borough Council is considering hubs, and Warrington has already got a large area covered in warehousing adjacent to the M62. Will the Minister ensure that the duty to co-operate is fully enforced and that the sustainability of these developments is considered holistically, not just through a single plan?
Is my hon. Friend concerned, as I am, about the impact that these houses could have on the gridlock on our roads? The recently completed north-west quadrant study, which the Minister can perhaps study, shows that the motorway and road network near my constituency has 15 of the 100 worst-performing motorway sections in the country for journeys completed on time. Our journey times are four and a half times longer than the mile a minute they are supposed to be, we have one of the poorest safety records in the country on our local roads and motorways, and almost all the motorways near my constituency are in the top 20% worst performing, in terms of casualties. The real killer, if I can put it that way, is air pollution and air quality problems, which are dreadful in Salford—much worse than the national average.
Order. Before the hon. Member for Makerfield (Yvonne Fovargue) continues, I have been very tolerant of lengthy interventions. Some Members have had the equivalent of a speech in interventions during this debate. Interventions need to be a bit more focused.
I agree about the gridlock. Some of the developments that I am talking about involve heavy goods vehicles, so there will be thousands more movements of HGVs on our already gridlocked roads. That adds to the air quality problem.
The hon. Lady makes an important point. Does she accept that there are those of us whose constituencies already have to accommodate considerable additional development adjacent to them? There are many new developments going on at Airport City, which is very close to my boundary. That is a continuing process.
I accept that. We need to look not just within but outside Greater Manchester. Many hon. Members have mentioned the removal of the green belt. In my constituency, green belt status has been removed around junctions 25 and 26 of the M6. As we have heard, removing green belt status requires exceptional circumstances. In 2013, the independent inspector deemed that the local authority’s request to remove half the area it is now proposing to remove around junction 25 was not exceptional, so it was refused, yet a mere three years later, the M6 South of Wigan Action Group, which did sterling work with me in opposing the plan, is in exactly the same position as it was. We are again opposing the plan together.
A week ago, my hon. Friend and I held a meeting in Kitt Green in my constituency, which borders hers. The sight of hundreds of people queuing on a dark, cold night to get into a church hall to make their views heard was deeply moving. Does my hon. Friend agree that the strength of feeling expressed in that hall simply cannot be ignored by local authorities and the Minister?
I agree. I am moving quickly on to junction 26. I ask the Minister: how can we be in the same positon three years on? What weight will be given to the inspector’s decisions throughout this process?
Let me move on to the infrastructure. Junction 25 is a one-way junction. In the plan for transport, there is an aspiration to have a two-way junction, but it is said that it could take 40 years. Until then, there will be thousands more HGV movements on already gridlocked roads in an area that, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) said, already fails air quality standards. That does not appear to meet any definition of sustainable development. It does not increase the attractiveness of the area, and it certainly does not improve the air quality. Equally, as my hon. Friend mentioned, the land at junction 26—the Bell—has infrastructure issues. It is accepted that development will be difficult unless there are major upgrades to the road system, including a new slip road. I think the phrase “cart before the horse” was used at the public meeting that we called, which attracted nearly 200 residents.
Let me move on to how those residents can make their voices heard by the leaders of their local authorities. Usually, it is via their councillors and in discussion at council meetings. However, there is some doubt about whether these plans need to be approved by local councils, whether they should be taken at cabinet level at each local authority, or whether it is solely the prerogative of the leader of each local authority to approve the plans at a meeting of the combined authorities. Can the Minister clarify that? How does a local councillor, elected by their constituents, stand up and represent their views if they are denied a forum in which to speak? Is there not a democratic deficit in that?
No one is against jobs and growth, but the plans have to demonstrate that the growth is sustainable. As for the warehousing development in my area, this is an area with a net loss of graduates and people who need high-quality jobs. We need the right jobs in the right place. We have to balance quality of life and the attractiveness of the environment.
I will bowlderise an Ogden Nash poem—I am going back to my youth—to express what I feel about this: I think that I will never see a warehouse attractive as a tree. The green belt gives us green fields, trees, relief from urban sprawl and better air quality. It is the green lung of our urban areas. It increases the attractiveness of an area, which encourages people to come to it. An ambitious plan for Greater Manchester, which will be seen as a trailblazer on this issue, should not take the easy option and reduce green-belt land. It should look for innovative and exciting ways of promoting the use of brownfield sites to improve the environment for those coming into the borough and for those who already live there.
It is a pleasure to have you taking charge of this debate, Mr Howarth. I congratulate my hon. Friend the Member for Hazel Grove (William Wragg) on securing the debate and for the very sensible and valid points he made in his opening speech. There can be no doubt that the spatial framework produced by the Greater Manchester combined authority has caused enormous consternation across my Bury North constituency. It is probably one of the biggest issues that I have come across in the last 10 or 12 years.
It clearly makes sense for any local authority or group of local authorities to have a plan, to review that plan and to determine how many houses might be needed for the next few years. I think we could all agree on that. Like my hon. Friend the Member for Hazel Grove, I have my doubts about how robust the figures used in the framework are, with immigration over the past few years—I am not making a political point; this is just a fact—running at more than 300,000 a year, which even the latest figures show.
The hon. Gentleman will be aware that he belongs to a party that has been in government for a considerable time and that said it would dramatically reduce the number of immigrants coming into the country. There has been a complete failure by his Government to do that.
I do not want to be diverted on to a debate about immigration when we are discussing housing, but the two things are connected. More can be done and I have argued that point many times in the Chamber. One thing has fundamentally changed since those figures were drawn up and that is the referendum we had in June. That will enable this country to have more control over its borders as far as immigration from the European Union is concerned. That is a fact. We can debate lots of other things, but that will happen, and I wonder to what extent that has been reflected in the numbers.
The biggest concern of most of the hundreds, if not thousands, of people who have contacted me about the plans is the erosion of the green belt. My view is that the green belt is there for a purpose. It was put there to protect the land from development.
Before I came to this place, I was involved in the legal profession. We acted for one or two house builders, so I know how they operate. I can tell the House this: given the choice between developing a nice, flat, green field and having to sort out a brownfield site, they are going to choose the greenfield site every single time. The plan is like manna from heaven for developers. They were asked to put in bids and to give expressions of interest. Obviously, they came round Greater Manchester and thought, “This is fantastic! We’ll have that site, we’ll have that one, we’ll have that one and I wouldn’t mind building a few houses there!” In my own patch, for example, Bury’s green belt is threatened around Elton reservoir, with nearly 3,500 new homes planned, and between Walshaw and Tottington, where another 1,250 homes are planned. Some 100 homes are planned in Holcombe Brook and they are nibbling at the green belt around Gin Hall for an industrial estate.
I appreciate that I do not have time to go into detail about all those sites, but I want to place on record a point about infrastructure, which has been mentioned by a number of hon. Members today. We do not have to speculate on what will happen; we just need to look at the history. My constituency has had house building galore over the past few years. We can see what happens. House building goes ahead without any of the necessary infrastructure in place, without the necessary road improvements and without schools. On the site at Walshaw, the spatial framework says:
“Elton High School is within easy reach of the site. The school is currently subject to a Government-funded rebuilding programme that will provide good quality opportunities for secondary education in the vicinity of the site”.
It is not “will”—it has already happened. It is open and the school is there. The point is that the school is full. There is no point saying that it is going to provide extra places for all the thousands of new homes that are going to be built. That is just one example of how the spatial framework does not take account of reality.
I agree that brownfield sites should be developed before greenfield sites, but I can be as sure as anything that if this plan sees the light of day, the developers will all want to put pressure straightaway on building on the greenfield sites and the brownfield sites will still be brownfield sites in 20 years’ time. They still will not have been developed.
Finally, perhaps—I do not know what time you want to start the wind-ups, Mr Howarth?
At 5.30 pm, but the hon. Gentleman should not feel that he is required to take up all the intervening time.
I am conscious of that. In my constituency, which has been very badly affected by flooding, the drainage and sewers are of significant importance and that may be the case in other constituencies as well. Everyone can agree that some of that is directly related to the house building that has gone on. I have spoken to representatives from United Utilities, who have said, “Look, all these houses were built here and we are just suddenly expected to have to try and provide extra drainage for them.” We know from history—we do not have to speculate—what will go on.
Wildlife habitats will be lost and I have had a lot of representations about that. The point about air quality was mentioned by the hon. Member for Makerfield (Yvonne Fovargue) as well as by other hon. Members. We already have gridlock virtually every night in Bury town centre. If there are thousands more cars on the streets arising from these housing developments, the air quality will only deteriorate further.
I hope that the brief discussion we have had here this afternoon will give pause for reflection. We accept that there has got to be new housing, but the powers that be in Greater Manchester should look again at the numbers and what they are doing to devastate the green belt and say, “We are not going to do any of that until we have built on these brownfield sites.” When we have done that, let us bring the plan back and have a proper consultation over a few months and let the public look at it. I would be grateful if the Minister in his summing up gave an undertaking that he will do what he can to ensure that the voices of our constituents are heard right across the Department for Communities and Local Government.
It is a pleasure to serve under your chairmanship again, Mr Howarth I congratulate the hon. Member for Hazel Grove (William Wragg) on securing the debate. Members in all parts of the Chamber have spoken passionately for their areas, and we have clearly been discussing a huge local issue.
The Opposition do not have a particular problem with the concept of a spatial framework. Setting out a plan to deliver new homes and jobs up to 2035 is important, in particular to identify new infrastructure that will underpin such development—providing that happens, of course. The framework is also useful to sit alongside local plans, but it is not clear to me how those are being collected. On the consultation, there seem to be some issues to do with the timeframe and local views being taken on board.
The idea of the spatial framework therefore is good, but I am not absolutely convinced that in its current mode it is fit for purpose. Four areas seem to have been identified this afternoon: the inadequate evidence base for the green-belt proposals, and too much reliance on the green belt in the framework plan; the lack of protection for green space in the plan; the democratic deficit, given that we are not sure who will make the decisions about the plan; and the lack of ambition and imagination in relation to the area’s needs. I will deal briefly with those four points.
The national planning policy framework makes it clear:
“Green Belt boundaries should only be altered in exceptional circumstances, through the preparation or review of the Local Plan.”
Interestingly, the consultation on the Greater Manchester spatial framework stated:
“It is concluded that we have to consider Green Belt release to meet this need and that exceptional circumstances exist to amend the existing Green Belt boundaries, as set out in the background evidence papers”,
but the study to which that refers actually makes no comment at all on whether green-belt land should be released. There therefore seems to be a complete lack of an evidence base to enable councils to build on the green belt. Furthermore, they have not demonstrated clearly that brownfield development will not be enough, and that needs to be done in some detail, because the Government now require a brownfield register to be put together. We simply have not seen that, and it has certainly not been subject to enough scrutiny.
On green space, it would be helpful for all Members present to talk to their communities about designating under the NPPF any sites of real value to the local community. A green space designation gives a degree of protection. That needs to happen.
The councils together also need to address the issue of the democratic deficit. It is wrong for people to think that planning is done to them and that their voices are not heard. We should have a spatial framework that starts with a neighbourhood plan, listens to what local communities want and relates that to the local plan and then to a spatial plan. I hope that once my right hon. Friend the Member for Leigh (Andy Burnham) is elected Mayor, he will look at how to put together a better spatial framework that will enable local communities to plan for the future, because that is what they want. They want enough housing and jobs, and a good built and natural environment for people to live in.
For the record, may I point out that there is an excellent Conservative candidate for the mayoral election next year, Sean Anstee?
Will the Conservative candidate have good ideas about planning? That remains to be seen.
I suggest to the Minister—
Will the hon. Lady give way?
I am afraid I cannot give way, because I am in my last minute. I am terribly sorry.
It is important for the Minister to talk to the combined authority about how it can put together a spatial framework that better reflects what local people want and so that a system is in place to enable all aspects of the planning system to connect. We can then get the homes, jobs and infrastructure that we need, so that the area can develop.
I begin with an apology. This is my second appearance in Westminster Hall this week, and on neither occasion have I come to respond on my own area of policy. I can only assume that that is because I am doing such a good job that no one has felt the need to hold me accountable for it yet. However, I apologise today on behalf of the Minister for Housing and Planning, who is in the main Chamber for the important debate on homelessness.
Order. The Minister should be aware that lack of knowledge never seems to impede anyone in this House.
As we are about to prove, Mr Howarth.
I was also tempted simply to hand the debate over to the various candidates standing for the mayoralty, so that they could offer up their vision of the plan. Shortly, thanks to the devolution deal negotiated with the Manchester authorities, the spatial framework will land on the combined authority and the new Mayor’s desk, whoever he or she is.
I will not press the Minister too much on detail, but will he be clear that the Greater Manchester spatial framework is a matter for local determination and that the Government in no way seek to force on Greater Manchester certain figures for housing development or the removal of green belt?
Absolutely. The housing figures are generated by the local authorities. I cannot comment on their validity or the merits of the Greater Manchester numbers because of the obvious proprietary reasons, which I will say more about in a moment. The figures are locally determined and are not provided by central Government.
I congratulate my hon. Friend the Member for Hazel Grove (William Wragg) on securing the debate and on representing his constituents today with skill and passion. I have listened carefully to the concerns about potential green-belt loss, brownfield development and the capacity of local roads and infrastructure generally to cope. I will respond to as many of the points made as possible in the time available.
I cannot comment on the Greater Manchester spatial framework in detail because of the proprietary reasons to which I just referred. It will be subject to examination by independent inspectors appointed by the Secretary of State. My quasi-judicial role in the planning system means that I may have to intervene at later points on matters relating to the plan. I am therefore unable to comment in any greater detail, other than to say that my hon. Friend the Member for Hazel Grove painted a familiar picture of the difficult choices that have to be made by local areas to secure economic growth and to tackle the historical under-delivery of homes, including affordable homes.
I will briefly clarify what it takes for a local authority to plan for growth. The context is important. The process begins with the local authority understanding the disparate needs and aspirations of local people and gathering a detailed evidence base—again, to respond to my hon. Friend’s point, this is bottom up, from local authority level—to determine the needs of its area. That has to be balanced, of course, with the views of residents, who, as many hon. Members rightly said, should be at the centre of the planning system, and with Government policy, MPs’ views, environmental constraints and external pressures from developers.
The plan then has to identify objectively what development is needed for employment, economic growth, housing and infrastructure, to come up with strategic options and, of course, to engage local people again in deciding where that development should go. I reiterate that this is a very democratic process, and rightly so. Local people need to be at the heart of it.
The dates for the current consultation have already been referred to, but there has been a series of public consultations on the spatial framework draft plan. The consultation document was published on 31 October, and the consultation will end on 23 December. A final draft of the plan is expected in 2017.
The picture that the Minister paints is very different from my experience and that of many of my colleagues and my constituents. Most of my constituents had never heard anything about the plan before I wrote to tell them about it. Even the name—Greater Manchester spatial framework—is deliberately off-putting to people. It is incredibly difficult for the public to get into these documents, understand what is proposed and make their voices heard. It would be very welcome if the Minister acknowledged those difficulties and put his support behind the public having a real say in the matter.
I served for 10 years as a local councillor, and I cannot pretend that agreeing our joint local plans or strategic planning policies necessarily excited the electorate or was the talk of the Dog and Duck on a weekend, but the public are certainly interested in the delivery of more homes, industrial development and all the rest of it. This process is managed locally, not by central Government, so the hon. Lady will need to speak to her local authorities about how they have advertised and consulted the public; it is not a matter for me to determine.
Will the Minister give way?
I have literally five minutes, but I will give way to the right hon. Gentleman as long as he is very quick.
One of the problems that our constituents will have with this plan is about how the road network will cope, because it feels like it is already at saturation point. The north-west of England desperately needs significant investment in rail infrastructure. Does the Minister for the northern powerhouse agree that high-quality west-east rail across the north of England is a higher investment priority than Crossrail 2 in London?
I am not going to get into the divisive argument about whether what happens in London should happen elsewhere. This country should be capable of delivering proper rail networks for both London and the north of England.
All parties have a responsibility for the decades of under-investment in the north of England, particularly in east-west connectivity. We are putting £2.8 billion into the current franchises for improvements and £13 billion into transport improvements across the north over this Parliament. We have, of course, created Transport for the North, which will come forward next year with strategic rail investment proposals for the entire north. That is something we have never seen before, and it will have the basis and nature of what happens in London with Transport for London. The northern powerhouse rail and High Speed 3 proposals, which are being developed at the moment, are of course part of that. That work will be completed next year, and I hope that Transport for the North will come forward with strong proposals for rail investment, because infrastructure is really important.
I have only three or four minutes left, and I want to respond clearly to a couple of points that my hon. Friend the Member for Hazel Grove made about brownfield sites. We have been clear that we are seeking to prioritise brownfield sites for development. We have reaffirmed our commitment to 90% of suitable brownfield sites having planning permission for new homes by 2020. We have taken action such as widening permitted development rights to help give new life to thousands of under-used buildings. We are ensuring that the new homes bonus continues to reward councils when long-empty homes are brought back into use. We are accelerating the disposal of surplus public sector brownfield land for development, and we have put an additional £1.2 billion into enabling starter homes to be created on brownfield sites.
Importantly, we will create a brownfield register, which will provide up-to-date, publicly available information about brownfield land that is suitable for development, so the public will be able to see what land is designated as brownfield in an area and whether it has been developed. We have also introduced permission in principle, a new route to planning permission that will give up-front certainty that the fundamental principles are acceptable before developers need to get into costly technical matters.
My hon. Friend asked whether we should have a more rigid brownfield-first policy. We must be careful, because not all brownfield sites can be developed, due to environmental and pollution concerns and all the rest of it, but we are clear that brownfield sites should be prioritised. That is why the percentage of new residential addresses—that includes conversions, some of them under the rules changes I mentioned before—created on brownfield sites was 61% last year, up from 58% in 2014-15. We are quite rightly trying to prioritise brownfield sites.
My hon. Friend the Member for Cheadle (Mary Robinson) and the hon. Member for Makerfield (Yvonne Fovargue) raised infrastructure, and the hon. Member for Worsley and Eccles South (Barbara Keeley) mentioned road safety. Yesterday, we devolved some functions to Greater Manchester through statutory instrument, and one of those was road safety promotion. The combined authority and the Mayor will be able to exercise that new power.
We must match infrastructure to development—there is no doubt about that. That is why we announced in the autumn statement a £2.3 billion housing and infrastructure fund to do that. Over the last decade or so, we have all been victims of developments in our local areas that have not necessarily come with the most appropriate infrastructure, so we are absolutely clear about the issue.
In my final five or 10 seconds, I reiterate that the plan can go ahead only if it enjoys the unanimous support of every council that sits on the combined authority. It really is in the hands of local people.
Motion lapsed, and sitting adjourned without Question put (Standing Order No. 10(14)).