Questions now from the party leaders. The leader of Plaid Cymru, Leanne Wood.

Diolch, Llywydd. Tomorrow, the UK Government will trigger article 50, beginning the process by which the UK, or at least some parts of the UK, will leave the European Union. You’ve previously said that you expected to be consulted prior to article 50 notification being made. Can you tell us what consultation has taken place and, also, what you expect to see in the article 50 letter?

Yes, we discussed this at length last week when I met the Prime Minister and met with David Davis. At that stage, it was unclear, on the part of the UK Government, whether it would be a short letter or a longer letter; a longer letter, in other words, outlining the entire case, or the entire position that the UK would take in the article 50 negotiations. But, it seems to me that what will happen is that a letter will simply be sent, explaining what the UK is planning to do. I don’t expect there to be anything in the letter that refers to devolution.

Thank you for your answer, First Minister. It doesn’t fill me with a great deal of confidence that you don’t know exactly what’s going to be in that letter. The think tank Demos yesterday set out that Wales could be hardest hit by the economic impact of Brexit, and we face, as you know, a high risk from any loss of exports, and that’s why continued participation in the single market is so important. We also face a high risk from any loss of EU funding. In terms of EU nationals, Demos describes the situation as low risk to Wales due to the relatively small numbers of people who are here. But we do know that those EU citizens who are here are important to our public services, in particular our NHS. Now, those Demos findings explain exactly why Plaid Cymru has prioritised the economy through all of this. What is your assessment now of a hard Brexit, where these risks could become a reality?

Well, I listened to the comments made by the leader of Plaid Cymru over the weekend, and they were identical to the comments, except for one issue, that I’ve made in the past. The only issue that is different is the terminology that’s used—she uses ‘membership’; we use ‘participation’. I don’t seek to say that there’s any difference between us in terms of what the outcome would be. But what is clear to me, first of all, is that, last week, the UK Governments itself didn’t know what exactly the article 50 letter would look like. I have to say that I advised the Prime Minister; I thought that the shorter the better would be the best for her. We’ll see what the letter actually looks like.

In terms of EU citizens, I have to say that there are still EU citizens in Wales who are concerned. Yesterday, I met with the Romanian ambassador. The Romanian community is quite small, but some of them are concerned that they’ll be deported, literally. It’s not a fear that is grounded in fact, but people saw what happened in the US and they have extrapolated that to the situation here. I have sought to, obviously, allay some of those fears. To my perspective, what is absolutely critical is that, as soon as possible, the issue of EU citizens living across the European Union, and UK citizens living in other countries of the EU, is resolved quickly in order to remove that uncertainty.

And, on the economy, she and I are in exactly the same place: access to the single market, no imposition of tariffs. The ability to have full and unfettered access to the single market is absolutely crucial for an economy such as ours, where 67 per cent of our exports go to the EU.

I thank you for that answer, First Minister. I’ve got no confidence in the UK Government’s ability to reflect our specific Welsh national interests, and there isn’t any information that you’ve given us this afternoon to give us any more confidence. Wales can’t afford to pay a high price for a hard Brexit, and we know that we’re going to have to defend our interests during the article 50 negotiations. But we also need to think about how we move the debate forward to deal with the powers that we need in order to mitigate those economic risks. We want to keep the value of our current EU funding in any replacement scheme, but Plaid Cymru believes that we need more power in Wales to decide exactly how that money is spent. We should be able to use replacement funding to make Wales more attractive to business, and Plaid Cymru wants to see Wales empowered so that we can adapt to the challenge of Brexit. We need tax powers, for example, much wider than those that are already on offer. I’ve set out my demands to the UK Government on this today—what Plaid Cymru sees as being in Wales’s best interests—but can you tell us what you intend to do, as a Welsh Government, to get our country into the position where it can survive an extreme Tory Brexit?

As I said, much of what she said is basically what I said the week before and in the weeks before that. We’re in no different a position in terms of that. Well, let me explain: first of all, I am not as optimistic—probably the wrong word, but as optimistic as she is that there will be any money post 2020. I’m not convinced there will be any money to replace structural funds. I’m becoming increasingly unconvinced that there’ll be any money to pay farming subsidies. More and more, we are hearing that the common agricultural policy is a problem. We heard it from Iain Duncan Smith. That means farming subsidies could well disappear—they could well disappear. That is my greatest fear. We know what that would mean for the economy of rural Wales.

As she will know, on many, many occasions, I have said that this process will only work if all four nations agree to the final settlement. I don’t believe it’s in any way possible to get a final settlement by March 2019, because it would have to be concluded by the autumn of next year, and that is a tall order. Of course, in order for the internal single market of the UK to survive, there need to be state aid rules within the UK; they have to be agreed by the four nations, not imposed by the UK Government; and there has to be an independent adjudication process to police those rules. I think it’s workable then. But, my greatest fear is that this is not well understood at Whitehall. On Thursday, we’ll see the White Paper on the so-called great repeal Bill. If it focuses solely on preserving the existing acquis of European law, that’s sensible. If, however, it strays into the territory of suggesting something like, ‘Well, EU powers should come back to Whitehall on a temporary basis and then there’ll be a discussion about where they go,’ that would not be acceptable, because I don’t believe that the ‘temporary’ would mean temporary. We will see on Thursday whether the UK Government is serious about working to ensure that the UK continues to work as a partnership.

Leader of the Welsh Conservatives, Andrew R.T. Davies.

Thank you, Presiding Officer. Yesterday, First Minister, we learned that four health boards in Wales have a chronic deficit position, and I think that’s a fair comment—a chronic deficit position. The Welsh Government have drawn a line in the sand and said that they will not be bailed out. The health Secretary did say that no services will be lost anywhere in Wales because of a lack of money. Can you confirm that is the case and that is Welsh Government policy?

Yes, it is. The health boards are being told—the four are being told—that they must keep within budget. They were told that at the very beginning. They must not harm services as a result of that. We will look again at their accounts in June, and if further action needs to be taken, if they are unable to deliver on that, then that action will be taken.

In fairness, Betsi is in special measures, run by the Welsh Government, but you can’t divorce the ability to put money into the health service from maintaining the services that people rely on, and my question to you was about the endorsement of the Cabinet Secretary’s point that no services would be lost because of money. When Abertawe Bro Morgannwg, one of the four health boards, is projected to have a worse deficit position next year—£52 million, as opposed to £39 million this year from a break-even position last year—the statement just doesn’t work, or it’s unbelievable, First Minister. How are you going to be able to maintain services when four of the six health boards have such a chronic deficit position and, ultimately, waiting times are constantly going up?

It’s four out of seven. First of all, waiting times are not going up. It’s four of seven, but he asked the question, ‘What will happen if they don’t come in within budget?’ We look very carefully at what they are doing. If they do not come in in budget without harming services, then we will have to look carefully at the governance of those boards, and we will not shy away from that in the same way as we did not shy away from dealing with Betsi Cadwaladr when that situation arose.

I deliberately used four out of six, because, obviously, Powys health board does not have a district general hospital within its area, and the high end of acute services is in the district general hospitals, and those seem to be the health boards that do clearly have a big deficit problem, as I’ve used Abertawe Bro Morgannwg with a projected deficit next year of £52 million. You talk about looking at governance arrangements, you talk about looking at the balance sheet next June, and I can hear from a sedentary position that I need to look across the border. The deficit position of the Welsh NHS is double—double—what the English NHS is facing. I don’t discount—[Interruption.] I do not discount the issues across the whole of the NHS in the United Kingdom, but it is not unreasonable—it is not unreasonable, people in those health board areas trying to reconcile the statement that there will be no loss of services and there will be no increase in waiting times, when you’ve got to put such downward pressure on the budgets without additional money going in. So, I do ask you again: what specific measures do you believe that you will be able to take, as you’ve identified June being a critical point, and governance arrangements, to address this shortfall? I accept the shortfall is across the United Kingdom; I’m not trying to make that political point. What I’m trying to make is the point that constituents and users of these services are not unreasonably concerned because, obviously, there is a huge issue about how these deficits will be brought back into control.

Well, other health boards are managing. Powys is a health board, and it buys in most of its services. In fact, one could argue that it’s more difficult for Powys, because so few services are actually provided in Powys because of its rurality, yet Powys manages. Again, the message that we have given to the health boards that are saying to us that they will not come in on budget is: ‘You must manage this. You must make sure that you cut in areas that are not providing services to the public. You do not look at services provided to the public in terms of looking to cut, and you come in within budget.’ That is what health boards are to do. It’s their responsibility, ultimately—that’s why we have health boards. And they will have to answer for their actions in a few months’ time when we look again at the financial situation.

On behalf of the leader of the UKIP group, Mark Reckless.

Diolch, Llywydd. My group leader asked me to pass on his apologies, as he is at a family funeral today. May I commend the First Minister on his Government’s 13 March response to the UK Government’s consultation paper on the future of the Severn tolls? It’s well argued, and faithfully reflects the unanimous view of this Assembly on my motion to support the abolition of tolls on the Severn bridge following their return to the public sector. One would, though, hope there would be a greater degree of engagement between the Welsh Government and the UK Government than merely filing a consultation response. The Silk commission proposed close co-ordination between the two Governments over the future of the Severn crossing. The St David’s Day agreement then said that the UK Government would work with the Welsh Government to determine the long-term future of the Severn crossings, and even the UK Government’s own road investment strategy says,

‘The Department for Transport, working with…the Welsh Assembly Government…will examine the future of the crossing in detail’.

Could the First Minister tell us how that engagement is going?

Well, officials are in discussions, but our preferred position is that we should take over the running of both the bridges—take control of the tolls. Before we do that we would have to have a robust understanding of what the condition and upkeep costs of those two bridges are. The figures we’ve had vary wildly. That would need to be nailed down—almost literally, I hope—but we’d need to understand what they are, and our view is we should control the tolls. I don’t understand the resistance of the UK Government in this. I don’t understand why they feel that a bridge that is, at the end of day, a bridge that is the main entrance to Wales should not be controlled from Wales.

I agree with the First Minister, and wish him, Ken Skates and his officials well in pushing that position. The UK Government, I believe, has three very serious legal risks if it seeks to continue tolling without our agreement, and any one of those could be fatal to any plan that it has. First, the Severn Bridges Act 1992 says that tolls should cease after a further fixed sum is raised, and that would be likely to happen by around the end of next year. Second, we have, under Schedule 5 to the Government of Wales Act 2006, it lists the devolved matters including matter 10.1,

‘the making, operation and enforcement of schemes for imposing charges in respect of the use…of…Welsh trunk roads’.

And it’s that, I believe, that’s led the UK Government to propose continued tolling only on the English half of the Severn bridge, because that supersedes their being the charging authority. And they would need to enforce that toll, potentially, at a plaza in Wales, which I submit runs counter to the Government of Wales Act. And thirdly, they have a further problem that the Transport Act 2000, which they’re now planning to use, says that,

‘A trunk road charging scheme may only be made in respect of a road if…the road is carried by a bridge, or passes through a tunnel’.

It doesn’t provide for them charging for part of a road carried by a bridge, and the use of the phrase ‘passes through a tunnel’ implies, by analogy, going from one side of the river to the other. So, for all those reasons, can the First Minister consider what more he or his Government might do to emphasise to the UK Government, at the very least, the legal risks they run if they do seek to impose charges in future without our agreement?

The Member has raised these issues before. We did look at them. It appears to us that, because of the nature of the legislation governing the Severn bridges, they are reserved. That does not mean, however, that the points that he’s already raised should not be investigated further. I’ll do that and I’ll write to him because they merit further investigation. Of course, the tolls on the old bridge are on the English side, and the tolls on the new bridge are on the Welsh side. We’d prefer it if there were no tolls at all on either side, and an agreement reached in terms of the maintenance of the bridges.

I thank the First Minister for his response. The legal position, at least the position that was sent to me in correspondence, has, however, changed. Initially, the focus was that the UK Government could do it because it was the charging authority, but actually the UK Government isn’t seeking to enforce on our side of the road, and it would need to enforce, and there are real difficulties in doing that in a later Act. There are three different arguments, any one of which would be fatal to the UK Government’s position. So, they’re looking to either use the current toll plaza despite the Government of Wales Act saying it’s our right to enforce on roads in Wales, or they’re looking at investing in a free-flow scheme—a lot of capital—without legal certainty that if someone goes through and doesn’t pay, they chase them for the debt, they have to go to court, and unless they can know with certainty that that court is going to say, ‘Yes, that is a valid charge’, then it’s incredibly difficult for them to invest in that scheme. The frustration that I have over this is that there’s this fixed sum of, I think, £75 million or so that the UK Government says, it would raise that and we’d just beat it, but it would raise that within a year or so of continued tolling. Then it says that the continued operation and maintenance cost is about £15 million a year, but much of that is actually the operation of the tolls itself. So, we’re perhaps looking at a sum of around half that. While it’s not our ideal scenario, would the First Minister consider that it might be better than nothing if tolling continued just for a further year, and if thereafter we were able to make a modest contribution of perhaps £2 million or £3 million to the tolling cost, does he think that would be a deal worth having in order to get rid of those tolls? And will he work with parties across the Chamber to try and agree that?

Well, as a matter of principle, we wouldn’t seek to contribute to anything that wasn’t devolved. If it’s not devolved, then it’s a matter for the appropriate UK Government department to deal with. It strikes me that he’s suggested a way forward, but the easier way, to my mind, is simply to have no tolls at all, and in an interim period to have electronic tolling, although there’s substantial investment that’s required in that. And, of course, the issue for us is that the faster the traffic goes through the Severn bridges, the faster it arrives at the Brynglas tunnels, adding to the congestion that already exists at those tunnels. That is a fact that we’re aware of, and obviously he will know the proposals that the Government have made in terms of that. To me, this is a simple issue that doesn’t need to be made complex. We need to have an understanding of what the condition of the two bridges actually is. We don’t know that. I’ve seen figures well beyond the figure that he has suggested in terms of maintenance and upkeep. That needs to be robust, first of all, and then we can have an understanding of what the liability is. What I’ve always said is that, for us as a Government, we would like to take the tolls over, but before we do that we need to understand what we’re taking on.