Questions now from the party leaders and, first of all, the leader of the Welsh Conservatives, Andrew R.T. Davies.

Thank you, Presiding Officer. First Minister, before I start my questions, can I wish you the compliments of the season, and best wishes to your family over the festive period, and best wishes for the new year in particular as well?

Last week, we had the really good news about Tata Steel and the announcement of the agreement that seemed to have been reached between the unions and the company. Bearing in mind where we were this time last year, with 700 job losses announced, and then the devastating news in March that many of us in this Chamber engaged with, and right the way through the election process, it was looking rather bleak. It’s unimaginable to be in the positive territory we’re in at the moment. But there is an important caveat that the deal has to be ratified by the workers around the pension pot and the pension arrangements going forward. Are you confident that that is a deal that should be endorsed by the workers when they’re balloted on it?

Could I first of all reciprocate and wish him the season’s greetings as well, of course? He raises an important issue about Tata. Tata would not be in the position that it’s in at the moment in Wales if it wasn’t for the help that we’ve given, and not just the financial help—the £60 million package—but also the hard work put in by officials of the Welsh Government, in many, many meetings. I’ve spoken to Tata many, many times, both here and in Mumbai, and, in fairness to Tata, they are a company that listens. They are prepared, if you put up the right case, to listen and to move forward, and last week’s announcement illustrated that.

It’s a matter, of course, for the workforce as to what they do, but, if I can put it this way, it is unclear what the future would be if the deal wasn’t accepted. These are difficult times, and I think the emphasis has to be on continuing steel production in Wales, and there will be some difficult decisions around that, I understand. Nevertheless, that has to be the main objective.

I do want to push you on this, First Minister, because I do think it’s important to get a signal from you of endorsement for that deal. And in the response to my first question, you clearly haven’t given that endorsement. Rightly, you’ve pointed to the support that Welsh Government have given, and the UK Government has given as well, and also the change of direction from the Tata main board, with Ratan Tata coming back in and assuming the reins of that company. I think that’s an important development in the direction of Tata and the way it looks at steel, because the takeover of Corus was very much his takeover. But it is important that you occupy a role here in Wales as the most senior elected politician, as First Minister. That deal is on the table and it’s a relatively simple question: do you endorse the deal that’s on the table for the workers to vote on?

[Inaudible.]—yes, I endorse the deal. I think it’s a very good deal, compared particularly to where we were in the spring, when the situation was particularly bleak for steel—the heavy-end steel making in Port Talbot. And it is a tribute to all the hard work that’s been put in by many, many people that we are in a situation now where Port Talbot particularly can look forward. And certainly, I think this deal is a deal that I can certainly endorse and a deal that can provide a future for the plant.

And thank you for that unequivocal endorsement of the deal; I think that’s important to be on the record. As I said, it is the final piece of the jigsaw that does need the agreement of the workers, going forward. But what was important as well in the negotiations were the issues around business rates. Again, I appreciate the comments that you’ve made on that. That’s a very complex area, and the Government were going to engage in discussions with the European Union to see whether there was a possibility of bringing forward a more favourable business rates regime for the Tata operations, which obviously pays business rates to the tune of about £12 million. And this was a direct request to the Welsh Government as to whether it could actually help. But, also on business rates, I had hoped that today we might have had an announcement more generally on business rates here in Wales as to maybe an early Christmas present for businesses around business rate relief—as it has filled postbags of Assembly Members across this Chamber. Are you able to say whether the Government will be coming forward with an enhanced transitional relief programme for businesses here in Wales that have found themselves on the wrong end of the valuations that have gone out before Christmas, because, once we get to the other side of Christmas, many of those businesses are going to be in a very, very difficult place? So, we’d be grateful to get some clarity as to whether the Government are coming forward with an announcement to assist those businesses.

Well, this is something that we’ve been considering as part of the final budget, and an announcement will be made very soon in relation to that.

In relation to business rates at Tata, well, the package we’ve put on the table is £60 million—it’s the equivalent, effectively, of five years free of business rates. It goes beyond what we could have offered in business rates, in any event. Of course, it’s very difficult to offer business rate relief for one particular business in one particular sector without others asking why they shouldn’t have the same thing. So, what we have is a package of support that is state-aid proof, but it’s targeted particularly at Tata.

I have to say, it is important now that the UK Government doesn’t lose sight of the fact that not just Tata but many other industries are saying that energy prices are too high in the UK. So, energy-intensive industries will need to see more done in order to help them. We cannot afford to be seen as an economy where we are uncompetitive because of the price of energy. Our energy mix is very similar to many, many other countries in Europe, but because of the obscure nature of what alleges to be an energy market in the UK, it does make the UK more expensive, and more work needs to be done by the UK Government in that regard as well.

The leader of the UKIP group, Neil Hamilton.

Diolch, Lywydd. At the end of the year, it’s a time when we can look back on the last 12 months on what we’ve achieved, or not, as the case may be. And I wonder if the First Minister can, in all candour, tell us today what he thinks the greatest failure of his Government has been. Would it be in schools, where the PISA results have shown that Wales is ranked worst in the UK yet again; would it be in the health service, where half our health boards are either in special measures or targeted intervention; or would it be more widely in poverty in Wales, because, having been second from the bottom of the income table of the nations and regions of the United Kingdom when Labour came to power nearly 20 years ago, now we are actually at the bottom of the heap?

Well, we have seen poverty—household poverty—decrease in Wales, actually. We’ve just had the latest figures—the first time in many, many years. We’ve seen what’s happened with social care in England and the crisis that exists there, and we’ve seen health spending in Wales increase over the years, and we’ve seen the same with education. But he asks me a fair question, and I’ll give him a fair answer. What is the greatest failure? The greatest failure as far as this Government is concerned is to see him opposite me asking questions in this Chamber.

Well, I’m grateful for the compliment, even though it’s only implied. But, as regards education, the PISA report says that 21 per cent of students at the age of 15 can’t read well enough to participate effectively and productively in life, that 23 per cent can’t solve problems routinely faced by adults in their daily lives because they can’t count, and this is the fourth set of PISA results in which Wales has performed worse than anywhere else in the United Kingdom. Wales and Scotland are the only parts of the UK to have gone backwards in the last decade. Isn’t that the real failure of his Government?

That’s not true if you compare the figures over the last three years, though we know there are challenges. I remind the leader of UKIP of what the OECD have said, and that is that Wales is on the right track, that we should stay with what we are doing, that we’re going in the right direction and we will see improvements in the future. We’re seeing it with GCSE results, we’re seeing it with A-level results. What the OECD have said is that they would not be supportive of selective education. I know that’s a major policy plank for his party, but the OECD don’t support that. They see that as making it even more difficult for children from poorer backgrounds to succeed in education. They don’t support the policy that he advocates.

We’ll return to this no doubt in due course. But without wishing to spoil the genial asperity of our weekly exchanges, can I compliment him on the style and finesse, the skill and dexterity with which he occasionally answers my questions and more often swerves around them? After many years in a similar position in politics, he compares very well with all the opponents that I’ve had across the despatch box. I wish him all the best for the next year and I hope his Government is more successful than it has been in the last.

He has, through those words, probably undermined my position amongst my own group more than any other over the past few months and years, but I’ll take his words at face value and wish him the compliments of the season as well. Of course, I’m sure that all Members look forward to us crossing swords in this Chamber for many, many months and years to come.

Arweinydd Plaid Cymru, Leanne Wood.

Diolch, Lywydd. First Minister, can you tell us the difference between yourself and your UK Labour Party leader, Jeremy Corbyn, on immigration policy and specifically relating to the question of the free movement of people?

Yes. I think I’m closer to her position as leader of Plaid Cymru, actually, than any other. She and I said something very similar last week, namely that there should be freedom of movement for work. She made the point on freedom of movement to look for work within a certain amount of time. I think there’s merit in that. In fact, it’s what the European regulations actually say, if you look at them with the strictest interpretation. I don’t believe that she and I are in a very different position when it comes to freedom of movement.

Well, it seems to me that there’s very little difference between yourself and your own party leader on immigration, and it’s quite heart-warming to see the Labour Party actually united on something for once. But actually, you said last week that there is a difference between yourself and your leader, when he said that he would not play the numbers game or fan the flames on immigration, yet your comments on immigration on 9 December suggested that there was a split or major disagreement with your leader and you made out that you were on a different page to him—that you were somehow tougher on the question of immigration than he is.

First Minister, only 2.6 per cent of the entire Welsh population come from other European countries. That’s 79,000 people. You know that Wales has a low proportion of EU migrants compared to other parts of the UK. You’ve interpreted your leader’s view on immigration as playing into the hands of UKIP. But by implying there isn’t really much of an immigration problem here in Wales, it’s you that is dancing to UKIP’s tune. You will know, as well as I do, that Welsh communities need to attract and retain people to work hard and to generate tax revenue in this country and that we need workers from overseas in our health service and some sectors of the economy. So, why are you making out that we don’t? First Minister, can we now move on from perceptions and have an honest debate about immigration, public services and the economy here in Wales?

I’m surprised because, as I said earlier on, she and I have said almost exactly the same thing when it comes to the issue of freedom of movement. What she says is perfectly correct. Of course we’re reliant on workers from abroad to fill so many vacancies in the Welsh economy. That said, neither she nor I, I don’t think, can deny that the issue of immigration loomed large in the referendum. It was perception rather than reality, that much is true, given the numbers, and so, from my perspective, I don’t believe that we can say that the current system gets the wider support that it should, so we have to look at alternatives. She has made the point, and I’ve made the point, that there can be a modification of that system where there’s a freedom to move to a job or freedom to look for work in specific circumstances. I think that’s reasonable; I think the majority of the people of Wales would think that’s reasonable, and I would think they would see that as a system of freedom of movement that they could support. I really don’t see there’s much between us.

First Minister, you should be dealing in realities and not perceptions. You shouldn’t be playing along with the myths, okay? We need to have this honest debate on immigration. You shouldn’t be implying that we’ve got a problem when we don’t have a problem. There is a migration issue in Wales. We have a problem of emigration. Too many younger and skilled workers are leaving this country, and there’s also an imbalance within Wales with jobs and prosperity not spread evenly throughout this country. We’ve got no problem in attracting people here to retire and those people remain welcome here, but overall, we are facing a situation where our working-age population is set to decrease in the coming years while the retired population will increase. As well as impacting upon Welsh communities and the Welsh language, the overall situation is simply not sustainable. That’s why Plaid Cymru put forward the policy that we did on higher education during the last election to deal with the problem of emigration. In terms of solutions from Labour, you’ve offered nothing except to fuel this myth on overseas immigration—internal rows with your Labour leader in order to deflect from your own policy weaknesses. First Minister, instead of pandering to UKIP, when are we going to have a real debate about the real solutions about the real migration problem here in Wales?

I regret the fact that the leader of Plaid Cymru didn’t listen to the answers that I was giving her, answers that I thought were reasonable and not in any way hostile. [Interruption.] And now she shouts. The point that I have made is that she and I are not very far away, but she must understand—I know she understands—that perception is important, and where people believe something to be true, it’s hugely important to make sure that they see what the reality is. That was the problem in the referendum in June; people’s perception was stronger, she was right to say, than the reality of the situation. She and I have both suggested a modification of the current freedom of movement rules. We’re very close in that regard. I think that there are sensible ways forward here that don’t let loose the jackals of racism and don’t let loose a system of politics that seeks to blame others for economic ills.

She makes the point about the economy. Unemployment is very low—lower than in England, Scotland and Northern Ireland. It’s true to say that some communities have moved further ahead than others in terms of economic development, yet we see towns like Merthyr—Merthyr is doing very well—where there were great difficulties for many, many years after the 1980s, and we know full well that it’s important to attract investment into as many communities as possible. That’s why, of course, we have Tenneco and General Dynamics in Merthyr and TVR coming to Ebbw Vale. These are all significant investment projects that, 10, 15, 20 or 25 years ago, wouldn’t have come to Wales, but we’ve been working hard to make sure that that happens. We know that Wales is an attractive place to come and live and an attractive place to come and work, and a welcoming place, and we will continue to be an open and welcoming country whilst considering, of course, how we can make sure that the concerns of some about freedom of movement are addressed, but addressed in a sensible, rational and fair way.