6. Statement by the Minister for Economy: Wales and Europe — Managing a new relationship

– in the Senedd at 4:35 pm on 1 February 2022.

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Photo of David Rees David Rees Labour 4:35, 1 February 2022


The next item is a statement by the Minister for Economy on Wales and Europe, managing a new relationship. I call on the Minister, Vaughan Gething.

Photo of Vaughan Gething Vaughan Gething Labour

Thank you, Deputy Presiding Officer. It is now two years since the UK left the European Union, and 13 months since the end of the transition period, when our relationships with the European Union changed radically. Today I want to give an update with my assessment of the current impact on Wales, as our relationship with what remains our closest and most important trading partner moves into a new normal. I'll also talk about our plans to further strengthen our relationship with Europe.

The UK's exit from the European Union has radically changed both the UK's position in the world and the role of devolved Governments. We have significant new responsibilities and duties in relation to matters that previously sat with European institutions. Our EU exit has also led to significant changes in the governance of the UK and the relations between the Governments of the UK. Some of these are the product, I'm afraid, of the UK Government's hostility towards devolution, but others are even more fundamental and arise from our democratic devolution settlement being designed around the UK's membership of the EU.

Leaving the EU has given the UK the ability to enter into its own free trade agreements with countries across the world. Whilst we remain generally supportive of new free trade agreements, these deals have been comparatively small to date and will not make up for the loss of trade with our closest trading partners. For example, the UK Government's own impact assessment of the free trade agreement with Australia is that it could increase UK gross domestic product in the long run by 0.08 per cent. And, of course, the Office for Budget Responsibility's current assessment is that leaving the EU could reduce GDP by 4 per cent. We will continue to support our businesses to adapt to the new trading relationship with the EU, including those changes that have yet to take effect. However, there should be no illusions about the hit that EU exit is having on the economy of Wales and, indeed, the UK as a whole.

With that backdrop, I want to set out how we are trying to manage our new relationship with the EU, as set out in the trade and co-operation agreement. The TCA provides for a system of governance and oversight. This consists of a series of official-level specialised committees and trade specialised committees that ultimately report to the partnership council. Members will recall that we have consistently pressed for proper Welsh Government engagement in these structures, given our legitimate devolved interests. On the whole, in respect of the committees and working groups in which we do have a devolved interest, I'm pleased to report that engagement with the UK Government at official level has been generally good. Officials have been engaged in the preparations for a number of committees and have attended as observers. It is, however, disappointing that the UK Government has not responded to our legitimate call for devolved Government Ministers to be active participants in meetings of the UK-EU partnership council. I intend to raise this again with Liz Truss, who, as Members know, has succeeded Lord Frost as the lead UK Minister.

Before I turn to Wales’s relationship with Europe, I want to briefly mention the Northern Ireland protocol. Our position has consistently been that respecting and safeguarding the Good Friday agreement must be the first priority of the discussions about the future of the protocol. We also have a direct interest in anything that affects the way in which goods flow between Great Britain and the island of Ireland, particularly given the significant impact the EU exit has already had upon our west-facing ports. Only last week, Stena Line reported a 30 per cent reduction in volumes through Welsh ports since the end of transition, which it linked explicitly to leaving the EU. There is real uncertainty about whether this fall in trade will recover or whether the loss is permanent.

It’s vitally important that the issues at stake are resolved, and this can only happen through continued dialogue. I therefore hope that the more constructive tone that we have heard in recent weeks will continue. If agreement on the protocol can be reached, it might also help to move the relationship as a whole away from the antagonistic approach that has all too often been adopted by the UK Government and to put it on a more positive and constructive footing. We want to move over the medium to long term towards the stronger and closer relationship with the EU that we have always advocated.

Deputy Llywydd, following the agreement of the TCA, the First Minister wrote to European Commission President, Ursula von der Leyen, setting out our vision for a close and constructive relationship between Wales and the EU. Our economic, social and cultural histories are intertwined with the rest of Europe and we share with the EU fundamental values covering human dignity, freedom, democracy, equality, the rule of law and human rights.

The EU will continue to be the UK’s closest and most important trading partner, and the influence of the EU on policy making and the regulatory framework in Wales will remain significant for the foreseeable future. It is for all these reasons that we have appointed Derek Vaughan to be our representative on Europe. Supported by our Brussels office, Derek will make connections, gather relevant information and work across the Welsh Government and with stakeholders to support developing policy priorities. He visited Brussels last week for the first time in this role and held very positive and constructive discussions with senior colleagues in the EU institutions, UK Government, other devolved Governments and stakeholders. There is much goodwill towards Wales still within Europe, but many challenges to develop a relationship that can support the needs of the Welsh economy and citizens.

All of our European engagement will support the priorities set out in our international strategy: raising our profile, growing our economy and being globally responsible. We in the Welsh Government will continue to do everything in our power to build a close and positive relationship with the EU, for the benefit of all Welsh businesses and, of course, our citizens. Thank you, Dirprwy Lywydd.

Photo of David Rees David Rees Labour 4:42, 1 February 2022


Conservative spokesperson, Paul Davies.

Photo of Paul Davies Paul Davies Conservative

Diolch, Dirpwy Lywydd. Can I start by welcoming the Minister's, on the whole, constructive statement this afternoon? I'm sorry to hear from the Minister's tweet this morning that he's tested positive for COVID-19, but I'm pleased that he's feeling fine and I wish him well.

The Minister is right to say that it has been two years since we left the European Union, and in that time there have been a number of developments, some within the Welsh Government's scope and some, of course, outside its remit. Nevertheless, it's vital that Wales has a successful trading relationship with Europe, given that the EU is the main international export market for Welsh goods and agricultural produce.

Of course, trade is a reserved competence, and so it's crucial that there are strong inter-governmental relations between the Welsh Government and the UK Government in this area. Therefore, I am pleased to read in today's statement that engagement with the UK Government at official level has been generally good, and I agree that devolved nations should be as involved as possible in discussions going forward. For example, I know the ministerial forum for trade has been productive and has given the Welsh Government an opportunity to feed into trade deals in a way that was positive and beneficial for Wales. Perhaps the Minister can provide an update on the latest discussions of the ministerial forum for trade, and, in particular, what discussions have taken place in relation to trading with European partners.

Today's statement refers to the Northern Ireland protocol and the recent comments from Stena Line that Welsh ports have seen a 30 per cent fall in traffic as a result of the new trading relationship with the European Union and that the logistics industry has been hit quite hard following our departure from the EU. Whilst this is clearly disappointing, Stena Line made it very clear that

'If we look at the Irish Sea in its entirety, the freight volumes are roughly the same. What has been adversely affected is really the Welsh ports and the Welsh routes so far.'

Therefore, perhaps the Minister can tell us if he has met with shipping operators recently to discuss the impact of the new relationship on the logistics industry and outline what steps the Welsh Government is taking to support the sector going forward.

I'm heartened to hear that Stena Line have reiterated their long-term commitment to Welsh ports, and that they expect the situation to improve, and so perhaps the Minister could tell us whether he agrees with Stena Line that things are expected to improve, and will he publish the Welsh Government assessment of the new relationship with Europe and explain what modelling it's using to forecast future predictions for the Welsh economy? This is also important in terms of setting up border control posts, and the Minister and I have had several discussions regarding this matter in recent months. And I, of course, declare an interest, Dirprwy Lywydd, as there is a possibility that a border control post could be located in my constituency.

Now, the Minister has previously said that if there is a permanent or future reduction in trade, then it would affect the size of border control post, and so can the Minister provide an update on where we are with border control posts and what developments have been made? Of course, it's crucial that the site of a border control post is decided carefully, and I know from the representations that I've received in my constituency how controversial the location is. The Welsh Government must take into account the impact that a border control post will have on local communities and on local infrastructure, and so perhaps the Minister can tell us how he'll be ensuring that local voices are heard when deciding on specific sites. I know the Welsh Government is in discussion with the UK Government in relation to funding the operation of border control posts, but perhaps the Minister can update us on the latest discussion on this matter as well. 

Now, as the new relationship with Europe takes shape, it's vital that the Welsh Government prioritises exports and trade, and the export action plan shows some of the activity taking place to support Welsh exporters going forward. The export action plan looks to build capacity and capability for exporting to ensure Welsh businesses have the right skills, know-how and confidence to be successful exporters. Given that the export action plan was published over a year ago, perhaps the Minister can provide an update on whether that capacity has been built, by confirming exactly what new action has been taken to address any capacity and capability issues. And perhaps he can also tell us whether he's confident that Wales now has enough capacity and capability to drive the growth of Welsh exports in the longer term and increase the contribution that exports make to the Welsh economy.

Finally, Llywydd, today's statement talks about that

'the influence of the EU on policy making and the regulatory framework in Wales will remain significant for the foreseeable future.'

I know that the Welsh Government has been developing a diaspora initiative, which will include a small number of hand-picked envoys, as well as businesspeople in key markets who can support opening doors to export opportunities for Welsh businesses. Therefore, perhaps the Minister can confirm how many in-market opportunities in the EU have been identified so far and also tell us how much has been spent on these envoys.

Therefore, Llywydd, in closing, can I thank the Minister for his statement this afternoon and say that I look forward to working with him constructively to ensure that Wales has the best possible relationship with Europe so that our businesses can continue to trade successfully in the future? Thank you.


The Llywydd took the Chair.

Photo of Elin Jones Elin Jones Plaid Cymru 4:48, 1 February 2022

Can we have the Minister unmuted? Sorry, I think we missed the start of your response there, sorry.

Photo of Vaughan Gething Vaughan Gething Labour

I'm normally used to people hearing me when they shouldn't. [Laughter.]

Thank you for your good wishes for what I hope will be a swift recovery through COVID. I actually feel fine, it's just a bit frustrating, but we should all be following the rules. 

Look, on—. Just to start, you made a statement that trade is, of course, reserved, and it isn't—what is reserved is the ability to conclude new international arrangements—and you asked me a number of questions about what we're doing in the area of trade, including support on the export action plan. I'll be more than happy to bring a fuller statement for Members, whether in writing or otherwise, about what we're doing with the export action plan. The challenge is that, in concluding new agreements, those regularly do cross over into devolved areas. It's part of the reason why it's important for us to have a constructive working relationship with the UK Government, but also, from a business point of view, to be clear about how the different Governments in the UK should be working together. In this, we have established success through Business Wales and others where we help and support businesses to identify and secure export and future trade opportunities. We want to make sure that the picture is as uncomplicated as possible, and, on that, there have been some constructive conversations that the Member will be aware of from both committee scrutiny and our previous conversations.

On the ministerial forum for trade, I recently met other Ministers in that forum—Penny Mordaunt for the UK Government, and the relevant Ministers in Scotland and Northern Ireland. It was a constructive conversation, but most of the work going through that is largely about the rest of the world free trade agreements at present. We will have further discussions about Europe, but Liz Truss is the lead UK Minister on relationships with the European Union, and she obviously has work to do, given that Lord Frost left with that work being incomplete. So, she's leading on the protocol and more broadly on the impact that has on relationships with the European Union. It is still a challenge, and one where, as I said in my statement, I think we need a constructive tone that allows us to have answers, and not just for the island of Ireland, but that will have a direct bearing upon our wider trading relationships with the rest of the European Union, and the choice that the UK Government have made on the form of leaving the European Union and what means for our ability to then engage in a range of other areas.

Photo of Vaughan Gething Vaughan Gething Labour 4:51, 1 February 2022

I also recently met with a group of stakeholders last week, discussing some of the changes following the change in trading relationships. I've previously met Stena as well, to discuss some of the impacts on the port of Holyhead in particular. It's estimated that we could see—and this is direct from stakeholders involved in running ports and the logistics industry—. There could be 100,000 fewer lorry movements per year if the change in trade is permanent, with the loss in volumes. Now, that's a significant amount of trade that isn't coming through Wales, and that will have an impact on the activity, including the jobs, around ports. So, it's not a trivial matter to see 30 per cent of trade being lost at present. Holyhead is likely to survive, of course, because it's such a significant port for the UK as well as for the European Union, but it is more challenging still for our Pembrokeshire ports, and in particular the arrangement the Member touched on for border control posts, and whether or not there is a charging regime and how that would actually be fixed, because a charging regime designed for very large ports with very high volumes of traffic may not work for smaller volume ports in any part of the UK. So, there are real challenges about any regime that's designed.

That does go into the points the Member made about conversations with the UK Government about funding. We had a wholly unsatisfactory response from the UK Treasury on the running costs of border control posts, which are likely to be in the millions, and actually those are costs that should not be shifted directly on to Welsh Government responsibilities. We'd have to find the money in the budget, money that can't be spent in other areas to support the economy or public services. I'd welcome it if there was genuine cross-party support for further movement on that, including from Conservative Members, who will recognise the damage that would potentially otherwise do to various parts of the economy, not just Holyhead and our Pembrokeshire ports.

It isn't, though, clear if the reduction in trade will recover. We've already seen a number of direct routes from the island of Ireland direct into continental Europe, and it's something that's come up in our engagement with Irish Ministers as well, that some businesses will prefer certainty, even with a higher cost, compared to the uncertainty of what will happen to the traditional land routes through Wales as well. So, I can't give an assurance on whether that trade will recover, or a direct assessment, because that still isn't certain.

On site selection for border control posts and border control posts more generally, I think it would be most helpful if I provide an update to Members on this issue generally, because of the progress we are making, and our desire, with some support from the UK Government, which has been welcome, and constructive progress, on the construction costs for a border control post around the port of Holyhead.

I should just say, on your broader point about export action, it's been interesting that, with the barriers and tariffs, actually the biggest challenges for trade are the non-tariff barriers, the additional paperwork, the additional cost. You'll have seen the pictures of lorries queuing outside the ports and the narrow straits in England, and actually that's been a really big factor in those businesses that are no longer trading with businesses based in the UK, including here in Wales, but also for those businesses that are looking to withdraw from being export businesses as well. It's worth while noting that actually the UK's trade with the EU has fallen, but also with the rest of the world outside the European Union as well, and I think that is a product of uncertainty and the lack of clarity about where the UK is.

On envoys for Wales, again, I'd be more than happy when updating people about the export action plan to provide an update on the work our envoys are doing. I've met each of our envoys in different parts of the world. They're very proud to be part of the Welsh diaspora, to be fighting Wales's corner for future investment in other parts of the world, and I hope, once I'm over my own COVID-enforced isolation, to meet envoys in those countries where we recognise we have real opportunities for further success for Welsh businesses, and I certainly would appreciate the opportunity to work constructively with Members across the Chamber to do just that for Welsh businesses and, of course, Welsh jobs. 

Photo of Luke Fletcher Luke Fletcher Plaid Cymru 4:55, 1 February 2022


I thank the Minister and I wish him a speedy recovery. 

Photo of Luke Fletcher Luke Fletcher Plaid Cymru

We have seen the inconsistent and poor use of joint ministerial committees, which were supposed to enhance co-operation between the UK and devolved Governments, but were mostly, in my cynical opinion, just a box-ticking exercise. I am concerned that many of the forums established through the withdrawal agreement and the trade and co-operation agreement will see Wales's role either non-existent or purely artificial, without the voices in Wales truly being heard in the UK's future relationship with the EU. And your statement does nothing to reassure me that Wales will be heard. 

While Liz Truss's predecessor, Lord Frost, suggested that devolved Governments will be involved in forums established by both agreements when items of devolved competencies are mentioned, he also noted that this is ultimately subject to the final discretion of the UK co-chair from the relevant leading Whitehall department. If the problem with this isn't clear, it can be very clearly seen when, in November, the Minister requested to attend joint committee meetings as a contributing member when matters relating to Northern Ireland were discussed, due to, of course, their impact on the Welsh ports, but I understand that you were denied that request, Minister. I'd be interested to know on what basis you were denied and your view on this, especially given, as you've already pointed out, that, in the news just this last week, we have seen that Welsh ports have experienced a 30 per cent reduction in traffic due to Brexit, with a significant chunk of that being due to changes in the use of the land bridge route to EU ports via Caergybi, as Paul Davies also referenced. 

After the first meeting of the trade and co-operation agreement partnership council took place, you, Minister, wrote to Lord Frost describing the meeting as deeply unsatisfactory and one that the Welsh Government could not credibly support. I note that the Minister, in his statement on the whole, is pleased that engagement has been generally good, but does the Government truly have enough influence to properly represent the voices and needs of the people in Wales in these agreements? If the Minister doesn't believe that Wales can be truly represented, then what channels are available to the Government to raise their concerns?

And, finally, devolved Governments must inform the UK Government of all content and contact that they have with EU institutions and member states, and, from your statement, it's clear that the First Minister has been in contact with the European Commission President to set out a future constructive Wales-EU relationship, which is of course welcome, and of course Derek Vaughan's representations. To what extent is the Welsh Government intending to engage with EU institutions and member states, and what exactly does the Minister envision this future relationship looking like?

Photo of Vaughan Gething Vaughan Gething Labour 4:58, 1 February 2022

Thank you for the series of comments and questions and, again, for your good wishes for a recovery, I hope within the new isolation period. Look, on your points around the JMC and how inter-governmental relations are supposed to work, I think this shows the difference that the leadership at the UK level makes. I certainly had more than my fair share of disagreements with the Government led by Theresa May when she was Prime Minister, but I do think that there was greater attention paid to what was agreed and being agreed through that inter-governmental process, through JMCs, and in fact, of course, JMCs just ceased to meet. The challenge now is that our new inter-governmental machinery actually works and is real and we don't see Welsh interests—not only Welsh interests, but from the other devolved Governments—simply ignored or overlaid by an over-mighty UK Government that is not interested in making the partnership arrangements we should have in place work. I think, whilst you and I have different perspectives on the union, I want to see the union work, and that must mean there has to be proper respect from a UK Government for the agreements we have in place on exactly how that is supposed to happen. 

When it comes to the UK and EU partnership council, as I said in answer to Paul Davies, Lord Frost departed with work incomplete in a range of the areas that he had been running for the UK Government. I've made it clear that Ministers cannot be observers in the partnership council; we must be participants, or Ministers will not attend. It is a poor use of my time or any other Minister's time to simply sit mute on the sidelines whilst the talking is only done by one UK Government Minister on behalf of all four nations, including those areas where there is a plain and obvious devolved interest. And this does doesn't have to be an area where there is antagonism or disagreement between the four UK Governments. Members will be aware I've regularly referred to previous occasions where Ministers from different parts of the UK in our previous engagements with the Council of Ministers within Europe agreed common positions and devolved Ministers would lead on some of those items. That is a valuable exercise of ministerial time. It should promote greater working to make sure that we do maximise our shared interests across the UK, and anybody who wants a fuller explanation of this only needs to spend a few hours of time with Alun Davies to get a fuller rundown of how that has worked successfully in times past. So, there is already a model that has been proven to work but does not get into an area where the UK Government feels that its position is being usurped, but more broadly, actually, builds upon that as well. And that is the way in which we approach our broader relationships as well.

So, on your final points about maintaining contact with the UK Government on our relationships and contact with Europe, we do that as a matter of course. We don't set out to do this in a way that is deliberately antagonistic or deliberately cuts across UK Government interests. We do so in a way where there is genuine sharing of information to ensure that we are doing what we say everyone else should do, and being genuinely interested in how we promote the interests of Wales, and to do so in a way that should add strength to where the UK is rather than to undermine it. So, I'm very confident that we can carry on doing that, where Derek Vaughan works to priorities set by the Welsh Government on behalf of the people of Wales, and does so in a way that I think is a model for what should happen in the future both within the UK and externally. 

Photo of Jack Sargeant Jack Sargeant Labour 5:01, 1 February 2022

I thank the Minister for this important statement. Llywydd, if I may, I want to start by welcoming the appointment of Derek Vaughan to this role. Derek will bring a wealth of experience to the role, and I think it's a fantastic appointment. Minister, one question from me. Do you agree and can you confirm today that one of the priorities for those who are looking to strengthen our relationship with the European Union should be that organisations in Wales should be able to still take advantage of the research funding from Horizon Europe, as and when the EU agrees our participation? 

Photo of Vaughan Gething Vaughan Gething Labour 5:02, 1 February 2022

'Yes' is the very clear answer. It's a key priority for the Welsh Government in terms of our continuing relationships with the European Union. We've made this point very clearly in our conversations with the UK Government around this. It's a vision shared by other parts of the UK as well. There's an awful lot to be gained from being able to do this not just with continental Europe, but also, of course, with our partners on the island of Ireland. If we are excluded from taking part, then it will be Welsh jobs, businesses and research that will lose out. There's significance resource available not just in financial terms, but the opportunity to share learning and insight that really should help the future of Wales's research and innovation, and, of course, what that means from a business and jobs point of view. And I'd be more than happy to keep the Chamber and Members updated on the progress of those talks to ensure that Wales really can continue to take part successfully in the Horizon Europe programme.   

Photo of Laura Anne Jones Laura Anne Jones Conservative 5:03, 1 February 2022

Thank you for your statement, Minister. It will be six years in June since the people of Wales voted to take back control and leave the European Union. Britain is now two years into regaining our freedoms, and, although hampered by a pandemic, we are starting to see what the fruits of a truly independent global nation can achieve. It is time we started to see the potential of what Brexit has to offer, like striking trade deals with 70 countries, worth over £760 billion, including landmark deals with Australia and New Zealand that pave the way to our entry into the £9 trillion comprehensive and progressive agreement for trans-Pacific partnership. Britain has finally reopened the door to the rest of the world, and we're now going to see the benefits of it. 

This morning, I was involved with the European Committee of the Regions's commission for citizenship, governance, institutional and external affairs, with Alun Davies, where we discussed strengthening the EU-UK relationship at a sub-national level. It was a very positive discussion, unlike your statement, Minister, where great ideas were raised to maximise the benefits of our new relationship, one that's built on co-operation, trust and mutual respect, but within the parameters of Brexit. It is clear to me that, in the immediate future, the Senedd and Government need to look at economic co-operation agreements, linking businesses and institutions with aligned cities and areas, just like Manchester and the UK Government have recently achieved with Germany's largest metropolitan region, the north Rhine. The co-operation agreement aims to strengthen cultural and economic links, with a focus on climate actions, sustainable transport, digitalisation, cyber security, innovation and research. This, really, could be an exciting approach for us, Minister. Are you actively seeking to adopt such agreements? What are you and the Welsh Government doing to ensure that Welsh businesses have the very best chance of being included in those co-operation agreements? Have you a plan in place within your international agreement to ensure that both the regions of Europe and Wales can continue to benefit from each other within our new relationship? Lastly, what plans do you have to attract very important inward investment into Wales? Thank you.

Photo of Vaughan Gething Vaughan Gething Labour 5:05, 1 February 2022

On inward investment, we continue to see inward investment as a balanced part of our approach to the future of the economy, together with growing Welsh firms and businesses that don't rely on foreign direct investment. I think, on your comments about regaining freedoms, it isn't that our freedoms were ever taken away from us; we were in a different trading relationship and one that worked successfully and well for Welsh businesses and Welsh jobs. If you don't believe that, go and talk to the people who run Airbus about their investment choices and what that means for good jobs in Wales, go and talk to people who've traded successfully with the European Union and now find they're in a position where that isn't possible. We've heard, of course, lots about the Welsh shellfish industry and the challenges they have. So, the real issue here is, having made a choice to leave the European Union, the form of leaving the European Union is the one that we now have, and that was a choice made by the UK Government. That's a choice that will, inevitably and undoubtedly, make it harder for Welsh businesses to trade with the rest of Europe. Now, it would be honest to say that you think that that's a price worth paying. It isn't honest to say that we're somehow in a position where the trading relationship hasn't been changed and isn't materially more difficult for Welsh businesses that want to work with European partners. Wales, as a matter of fact, has more of our trade with the rest of the world and with the rest of Europe than other parts of the UK, so it's particularly important for the interests of the Welsh economy. Of course, of the 70 countries that we have trade deals with that you mentioned, the great majority of those are roll-over trade deals that simply take on board the terms that the European Union had negotiated with those countries as well. It is misleading—I'm sure not deliberately so—to try to suggest that 70 individual trade deals have been negotiated by the UK Government in that time in an entirely novel way.

I should also point out that whilst you're trumpeting the potential to enter the pacific trade partnership, of course the difficulty is that the trade deals with Australia and New Zealand set a bar or set an entry point for doing so. That, in particular, I think is a real risk for Welsh agriculture. As I said in my statement, we're broadly in favour of new free trade agreements, but we don't agree with the approach that agriculture should be traded away as a makeweight for those trade deals to take place. But that, I'm afraid, is the approach that has been adopted in a clear-sighted way by the UK Government. Don't take my word for it; ask the Farmers Union of Wales. They're certainly not political travellers and friends of Welsh Labour. If you don't take their word, ask Minette Batters, the president of the National Farmers Union. This is not something that can simply be brushed away. There are real risks being taken not just with sectors of the Welsh economy, but with what that means for the Welsh way of life in large parts of rural Wales.

I take on board your point about opening a door to the world. Well, actually, in reality, we're doing less trade with the rest of the world since our departure. Now, we are doing all that we could and should do, I think, to support Welsh businesses to carry on trading successfully with European partners and with the rest of the world. Our challenge is doing so in a way where that trade has become more difficult. As part of that, that's why I have been keen to maintain direct relationships with regional Governments within Europe. I've spoken to regional Governments within the Netherlands and I've also spoken with the regional Government of the Basque Country recently as well to make clear that we still want to carry on the good relationships we had and the trading opportunities, and to make sure that we can share information, share resources and make sure that that's good for Welsh businesses and Welsh jobs. That will continue to be the approach that I take as long as I'm in this Government.  

Photo of Rhianon Passmore Rhianon Passmore Labour 5:09, 1 February 2022

Thank you, Minister, for an important update to the Senedd. I very much welcome the experience and expertise that Derek Vaughan will bring to this role. As you rightly state, it's imperative that we do all that we can to maintain and foster that excellent working relationship between Wales and the European Union, and that we do continue to seek proper inter-governmental relations and working with the UK Government. But it is a fact that the UK Tory Government pledged in it's election manifesto in 2019 that a new shared prosperity fund would at a minimum match the £1.5 billion a year in EU regional funds that was returned to the UK in its EU membership commitment. Indeed, the Welsh Tory promise, 'not a penny less', rang like a weak and wobbly male voice choir around this Senedd Chamber. However, the truth is the Welsh Government has calculated that Wales will be close to £1 billion worse off over the next three years. The question to be put is: how does this leave Wales not a penny worse off? The levelling-up UK Tory Government department itself has confirmed that the UK Government's spending would not match the £1.5 billion average EU payments until 2024-25. We know that Tory MPs in red wall seats and the so-called red wall voters who voted Tory in 2019 feel betrayed. So, Minister, how can the Welsh Government keep the UK Tory Government to their promises, their pledges to the people of Wales, when again and again, time after time, Alexander Boris de Pfeffel Johnson and his millionaire Cabinet believe they can continually take us all for fools?

Photo of Vaughan Gething Vaughan Gething Labour 5:11, 1 February 2022

Well, you may have seen that the Financial Times today, again—not noted for being common travellers with the Labour Party—have done their own investigation into what's been happening with replacement European Union funds. There was a very clear pledge in the 2019 Conservative manifesto—I think it was page 44—that the nations of the UK would have at least as much in replacement funds as when we were part of the European Union. That promise has been broken, has been broken in plain sight, and you're right that the overall total, when taking into account the loss of farm and agricultural income as well, is about £1 billion over the next few years.

It's bad news for Wales. It's also bad news for the UK, because regions in England, Scotland and Northern Ireland that were previously reliant on this money are also going to lose out significantly. Bad news for jobs, bad news for skills, bad news for research and development, and the worst part of this is, there is not a whimper of protest from a single Welsh Conservative in the Senedd about £1 billion being hijacked from Wales. It is a disgrace that this has happened—a plain broken promise, and worse than useless from the Welsh Conservatives who still demand that we accept, not just accept but cheerlead, having that money sucked out of Wales. I think the only way to get something done properly is for either the UK Tory Government to accept that they have to one another promise and they have to work properly and directly with the Welsh Government to ensure that those funding promises are met, and if that doesn't happen, then I think it's very plain that what we need is a new United Kingdom Government, and I look forward to the next election campaign to make sure that does happen.

Photo of Alun Davies Alun Davies Labour 5:13, 1 February 2022

I'm grateful to you, Presiding Officer, and grateful to you, Minister, for your statement this afternoon. I hope that you do continue to recover from COVID, and I think people across the Chamber want to wish you well with that.

Like others, I want to congratulate you on the appointment of Derek Vaughan. Those of us who've worked with Derek Vaughan in the past in the institutions of the European Union know how effective he's been standing up for Wales, and we look forward to seeing him continue to do that.

In terms of your statement this afternoon, I agree very much with much of what you said, but I want to ask you one question, Minister, and I want to ask you to do one thing in the coming years: I want you to tell this Chamber and the people of Wales the truth about Brexit. I want you to tell us and I want you to come to this Chamber at least once every quarter to give an assessment of the damage that is being done to this country as a consequence of Brexit and the impact it is having. We have seen lost businesses, we've seen lost trade, we've seen lost funding, and the Tories laugh. One of the most extraordinary things about this statement this afternoon is the more people talk about the funding that is lost to the people of Wales, the more their backbench laugh. At least their frontbench is wise enough to know the damage this is doing to this country.

I hope, Minister, that you will be able to speak to how we are losing opportunities, but creating barriers—barriers to business, increased bureaucracy, increased red tape. It doesn't matter to them because they don't give a damn. We know what the Tory leader said about business; I won't repeat it this afternoon, but they've made it their objective of policy, and that's the only policy in which they are succeeding.

Photo of Vaughan Gething Vaughan Gething Labour 5:15, 1 February 2022

Thank you for the comments. I think there are two aspects. The first is Derek Vaughan is well respected across Europe, so it's a good appointment for us after an open and proper civil service appropriate recruitment exercise.

Photo of Elin Jones Elin Jones Plaid Cymru

I can't hear the Minister because there is an ongoing conversation in the Chamber. So, please, can we listen to the Minister's response? Thank you. Minister.

Photo of Vaughan Gething Vaughan Gething Labour

As I was saying, Derek Vaughan was recruited properly and in line with civil service recruitment procedures, and I always say that the Welsh Government could do with a bit more Vaughan to make it more effective.

On your broader point, though, about what has happened, I take the view that it doesn't matter how you voted now, the referendum happened and we've left the European Union. What does matter is that we're straight with people about what that means: there are different relationships in place; the UK has chosen to be a third country; the Government of the UK has chosen not to take part in a single market or customs union. That means there are more barriers in place. The trade and co-operation agreement that we have does not fully replace those; it makes it more difficult to trade with the European Union. And the UK Government's own assessment is that the pandemic is likely to reduce GDP by 2 per cent. Leaving the European Union on the terms that we have done is likely to double that—a 4 per cent loss of GDP. That's the choice that has been made by the UK Government. I don't remember the last time a UK Government chose deliberately to reduce the economic output of the United Kingdom, or what that means in terms of jobs and businesses here. That's in addition to the choices that they have then made about what has happened, including the £1 billion removed from Wales, including the deliberate breach of a manifesto pledge that Wales would receive not a penny less. That's the truth of the matter, and if nothing else, I think the Welsh Conservatives would do themselves some favours if they only acknowledged the facts of what is happening and did not take us all for fools. This is the choice that you have made, you have argued for and you're defending. You could, of course, choose not to defend the indefensible of the UK Government and choose to join us in standing up for Wales. I won't hold my breath.

Photo of James Evans James Evans Conservative 5:17, 1 February 2022

Minister, thank you for your statement. Since the people of Wales voted to leave the European Union on 23 June 2016, you and your Government have fought tooth and nail to prevent Brexit from happening. Court cases, calls for a second referendum and an out-and-out rejection of the mandate of the people of this country who voted to leave the European Union.

Minister, in your statement, you mentioned about new responsibilities coming to the Senedd, and I think that's a really positive thing because it actually makes people in this place more accountable to the people who elect us here. I also don't agree with you, as you can probably gather, on your statement about the UK Government's hostilities towards devolution. As the Prime Minister himself has said, he likes devolution; the problem is we've had the same Government here since 1999, having record failure for the people of Wales.

Minister, I do have a couple of questions for you. Can you please outline—I know you've outlined a little bit here—about the appointment of former Welsh Labour MEP Derek Vaughan, and the remit of his role and how he's going to work with UK Government officials within the EU to best benefit Wales? And can you also outline what discussions you've had regarding opportunities for Wales with the UK department of trade to make sure that our businesses here can be a part of a truly global Britain? And finally, will you take this opportunity to apologise to the majority of the people of Wales and retract the actions, comments and statements made by you and your Government in relation to Brexit, and embrace the opportunities that Brexit brings for the people of Wales?

Photo of Vaughan Gething Vaughan Gething Labour 5:19, 1 February 2022

Thank you. We have constructive conversations between officials and, indeed, with Ministers in the Department for International Trade. You may not have been listening, but I actually recounted, in answer to the first set of questions from Paul Davies, the constructive conversations we had at the ministerial forum for trade, and actually our desire to have further constructive conversations around the future of our relationships with the European Union. So, actually, we have always been willing partners in wanting to do the right thing and in a constructive manner. What we won't do is roll over whilst powers are being stolen from us.

It is, frankly, ridiculous and reality-denying gaslighting rubbish to try to suggest that Boris Johnson's Government is not hostile to devolution. They have, on a fairly regular basis, threatened, or, indeed, in some cases, tried to override devolved powers and competence. The United Kingdom Internal Market Act 2020 is not so much a Trojan horse as a smash-and-grab on devolution whenever UK Ministers choose to use it. And it is extraordinary that people who are elected to the Welsh Parliament are then celebrating when responsibilities are taken away from the Welsh Parliament, despite the mandate—to use his term—that the people of Wales have given to this place in not one, but two referenda for powers and responsibilities to lie with the people elected to this place. When it comes to respecting mandates, this, from a man who goes on an extraordinarily hostile news organisation to claim that because Welsh Labour continue to win elections and lead the Government of Wales, he doesn't feel like he lives in a democracy. I think he may need to look at himself and think rather more carefully about some of the things he is prepared to say about people who do actually manage to win elections here in Wales. I will, though, carry on working with every constructive Member of the Welsh Conservatives and, indeed, across the Chamber to do the best for businesses and jobs and deal with the new realities of our very different relationships with the European Union. 

Photo of Jane Dodds Jane Dodds Liberal Democrat 5:21, 1 February 2022

Diolch, Gweinidog, and I hope that you do recover soon.

On 29 January, Minette Batters, the National Farmers Union president said, and I quote:

'I feared farmers would be used as a pawn in trade deals—and that's what happened.'

My clear question to those Conservatives who've spoken is this: do they think she is not representing farmers' views if they continue to say that these trade deals are positive moves?

We have also talked about ports in Wales, and at least 1,000 jobs in Holyhead and around 4,000 in Pembrokeshire are connected with the ports. So, families may be directly affected by the issues around the decline in shipping from Ireland. The red tape has led to numerous hauliers deciding to bypass the UK and Wales altogether, with direct ferry routes between France and Ireland increasing in 2021. In 2020, there were fewer than 12 direct routes, and it is now 44, as of October 2021. They're bypassing Wales altogether, so the movements in the Irish sea are high, but Wales is being bypassed.

Minister, on all of these issues affecting Welsh lives—and I can hear the passion in the Senedd—be they farmers or people working in ports, what would you say to all of us across the Senedd, whatever party we're in, to ensure and work hard to see that our rural and coastal communities remain healthy and vibrant? Diolch yn fawr iawn.

Photo of Vaughan Gething Vaughan Gething Labour 5:23, 1 February 2022

Thank you for the two questions. I think I have outlined before the reality that agriculture has been used as a makeweight in new international trade agreements. And I don't think that's a fringe view; I think it's pretty impossible to look at the deals that have been done and not to come to those conclusions. That's a clear risk for the future of agriculture in every part of the UK, and that was part of the discussion we had at the ministerial forum for trade and I've raised that repeatedly with UK trade Ministers since being appointed to this role. 

We talked earlier in this statement about the reality that the trade at ports in Wales facing the island of Ireland has been directly affected because of the significant increase in traffic that has simply avoided Wales and gone directly to continental Europe. If we want to have a proper future for coastal communities, for agriculture and for all those businesses that do rely on a proper relationship for goods and services with the European Union, then we need clarity from the UK Government about the future of those trading relationships. There needs to be clarity; there needs to be a constructive approach to the trade and co-operation agreement, and that must be focused on getting deals done and not simply on writing articles to stir up different parts of the Conservative Party's base.

It also means that we need to be honest with people. For all of the shouting and the cheering in the Chamber that I've heard, claiming that in our new relationships there is no downside to where we are, in reality, that is not what businesses are finding. We should respect the fact that that's the reality of those businesses and the jobs that they support, and we need to deal with those realities or we will never take advantage of where there are opportunities as well as finding ways through some of the very real challenges that jobs and businesses face. A deal of honesty, which I know is not always something that every political activist places a premium on, particularly in the current times, but a deal of reality and honesty has to be the right way forward, and I think it's a duty on all of us, regardless of what party we're in, to take that approach.

Photo of Huw Irranca-Davies Huw Irranca-Davies Labour

Diolch, Llywydd, and I, like others, welcome the appointment of Derek Vaughan as the Welsh Government representative on Europe. Any fair-minded observer will recognise his vast relevant experience and his knowledge, and the reputation he brings with him across parties, and also the relationships he can draw upon in the EU. He is, Minister, an inspired choice, and we wish him all the very best in his dealings for Wales.

Can I welcome as well the restatement of our shared values with progressive European neighbours? We may have left membership of the EU, but we have not set aside those fundamental shared values of human dignity and freedom and democracy and equality, the rule of law and human rights, and I welcome that restatement. Could I ask him to confirm that we in Wales will continue to work with friends in Europe to protect and promote those values, not just across the EU and the continent but worldwide?

Now, Minister, I won't repeat the observations by many today on what were blatant lies told by the Prime Minister to the electorate, including to those who voted to leave the EU, that not a penny would be lost to Wales in structural funds to places like the south Wales Valleys, or that Welsh farmers would not lose out on any funding or be sacrificed in fire-sale trade deals. But lying eventually catches up with liars, and we're seeing that now in Westminster.

But one final question, Minister: could he clarify the engagement of the Welsh Government on future trade discussions with the EU? The ability to influence and help shape trade in the EU and outside is critical, and it would be a mark of grown-up Governments, and both Alun Davies and I have some experience of how this can work effectively. Even if the pole position is taken by UK Ministers, it would be a foolish UK Government that sought to put aside the devolved Governments. It would be a wise UK Government that sought to harness the specialist skills and insight and impact and influence of the devolved nations, and to use our well-established relationships in the EU to enhance negotiations and get better outcomes for Wales and for the UK.

Photo of Vaughan Gething Vaughan Gething Labour 5:27, 1 February 2022

Thank you. I think there's a couple of points to respond to there from the Member for Ogmore, and I certainly do agree—that's why it's in the statement. We do share values with European countries across the European Union: our democratic values; the fact that we accept election results, whether we like them or not; the fact that we have free and fair elections; the fact that all of us, including Ministers, are equal before the law and subject to the rule of law. These are things we don't see in every other part of the world, and we should not treat them lightly or surrender them for narrow party advantage. We've seen that course and what that means. If you look at America, you've got people prepared to storm the capital in America because they didn't like the outcome of a free and fair election. So, we should guard those values jealously and carefully, whether it's here or in other Governments across the UK as well.

And when it comes to free trade agreements, actually, one of the things that we do think has been valuable has been some of the points on values, on looking at action on people's participation in public life and what we're looking to try and achieve. So, actually, that also includes some of the environmental points that the UK Government did try to build in to the free trade agreement with Australia. So, there are opportunities within those free trade agreements, and that's why we're trying to point out that this is a Government that is committed to taking a constructive approach, and that's why our officials have worked constructively with UK Government ones. It's why we do think it would be sensible to take advantage of not just the experience, but the insight that Welsh Ministers bring, with the mandate we have directly from the people of Wales, in the way that these negotiations could and should be undertaken with the rest of Europe. I don't think it's an unreasonable point of view and, as you say, you, as well as the unusually quiet Alun Davies, also have experience of doing this on a regular basis as part of a team UK that respects the position of the UK Government but other administrations as well.

I look forward to seeing whether the post-European-Union membership actually lives up to the promises that have been made, whether we will see those broken promises being remedied when we finally get the long-delayed levelling-up White Paper, and, given that the Member represents a good chunk of the county of Bridgend, to make sure that need is properly reflected in the way that future funds are going to be delivered. I think the way that Bridgend, Caerphilly and Flintshire were treated in previous pilot rounds was shocking and indefensible. I look forward to a proper framework about how money will be allocated that properly takes account of need in every part of the UK, with a proper role for the Welsh Government, and, indeed, an end to the broken promises, to make sure we get all of the money that we were promised. Regardless of how you voted, that was a direct pledge of the Government of the UK, and one that I expect them to meet. 

Photo of Elin Jones Elin Jones Plaid Cymru 5:30, 1 February 2022


I thank the Minister and I wish him a speedy recovery.