3. What discussions has the First Minister had with the Prime Minister about future regional policy? OAQ(5)0400(FM)

I have raised the issue of replacement funding, which is needed to finance regional policy. I raised that at my very first meeting with the Prime Minister last June. And we have been very clear about all our priorities, including regional policy, at each Joint Ministerial Committee since.

I thank the First Minister for that response. When he next meets Prime Minister Theresa May in the context of the Brexit negotiations, will he be certain to stress how vitally important regional economic strategy is to Wales? Would he emphasise that replacement funding from the UK Government must be at least equal in size to lost EU funding, and, finally, that it must be under the Welsh Government’s control?

A promise was made by some in the campaign last year that Wales would not lose out a penny if Wales left the European Union. I expect that promise to be honoured. If not, then the people of Wales have every right to ask why they were, if it is the case that this is true, misled. Secondly, it’s hugely important that the economic policies that we’ve developed here, the lowest unemployment for many, many years, lower than England, Scotland and Northern Ireland, and the best foreign direct investment figures for 30 years, are fully within the control of the Welsh Government to deliver those benefits for the people of Wales.

First Minister, this morning I attended the annual Farmers Union of Wales’s farmers breakfast in the Pierhead building, hosted by Paul Davies—an excellent event, as ever. Farmers were understandably eager for clarity on the system of farm payments to be created in the wake of the UK leaving the EU, when that eventually happens. Can you update us on your Government’s discussions with the UK Government on the best way to safeguard future support for the Welsh farming industry?

I heard the comments of Mr Roberts, the FUW’s president, last week, when he expressed his concern about a perfect storm, and he is right to do so. At the moment, we have no clarity beyond 2020. There are some within the Department for Environment, Food and Rural Affairs who suggest there should be no farming subsidies at all. That is not something that we would support as a Government. And there are some who suggest that the European market is not important for farming—90 per cent of our food and drink exports go to the European market. It cannot be replaced easily as a market for our goods, so we must ensure that, as the UK leaves the EU, nothing interferes with the ability of our famers to sell on the same terms as they do now to by far their biggest market.

Pre 1979, UK regional policy had three elements—grants through the regional employment premia, but also fiscal incentives through the selective employment tax, and cheap loans. In his discussions with the UK Government, in the new ministerial forum that was announced earlier this week, will he ask that all of those levers will be available for us to ensure that Wales can develop its competitive advantage?

I think we are in very new territory in terms of what will be needed in the future to attract investment into Wales. For example, there are issues such as tax incentives, which I think need to be further developed. Should there be the ability, for example, to look at tax incentives for research and development, and see them devolved? Air passenger duty—a great driver, not just for Cardiff airport, but for Valley and other airports in Wales as well. It was refused for no good reason other than the fact that they see that it was a mistake to devolve it to Scotland, so, therefore, it doesn’t come to us. But, I think it is important that, as we look at the next few years, there is an innovative way of looking at the way tax incentives are used across the UK, rather than taking the view that one size fits all.

First Minister, would you welcome the fact the Prime Minister has announced an industrial strategy? It’s better late than never. I’m encouraged that one of the sectors the UK Government intends to prioritise includes robotics and automation. The Bank of England has estimated that there are 15 million jobs across the UK at risk from automation; 700,000 jobs in Wales. And would you work with employers in Wales to make sure that they futureproof their workforce to meet this huge challenge for us?

Well, I think there are two issues about the industrial strategy. I mean, there’s little in it that could be disagreed with, but, of course, it’s a bit of a mishmash, because some of the pillars are actually devolved—they’re not the responsibility of the UK Government. Some of them are, some of them are mixed, so there needs to be greater clarity there.

Yes, I think there will be a temptation to automate further, which is why we need to focus very, very strongly on raising the productivity of workers across the UK, to make sure that employers are not tempted to replace human beings with machines because of a productivity issue. And that is something, certainly, that we will want to focus on very, very strongly—raising productivity levels, for example, to at least the level of Germany, to make sure that our working people in Britain are not disadvantaged because of those productivity levels.