Questions now from the party spokespeople. UKIP spokesperson, David Rowlands.

Diolch, Llywydd. Could the Cabinet Secretary explain the decision not to electrify the Ebbw Vale line?

Moving forward with the franchise of the metro, we will, of course, be looking at the Ebbw Vale line. At present, the responsibilities for rail infrastructure reside with Network Rail, and we have repeatedly expressed our disappointment that, in spite of having 6 per cent of rail lines on the Wales and borders franchise area, we’ve only had 1 per cent of investment in the current control period.

I think it’s worth pointing out that we, as a Welsh Government, have spent more in the current period on rail infrastructure than those who are responsible.

I thank the Cabinet Secretary for his answer, but does he not agree that the South Wales East region fares poorly when it comes to infrastructure improvements under the metro project, compared to other parts of Wales?

As I’ve said to other Members, I think it’s essential, as part of our new approach and our refreshed approach—and I, again, in my speech last week also gave an indication of how I’ll be restructuring my department—that we pay more attention to those communities in those areas that have fared poorly during a period of economic growth. The Member asked about infrastructure and in particular connectivity. I think that’s absolutely essential, and the development of an £11.5 million extension of the railway line form Parkway to the Works site in Ebbw Vale, providing direct rail access to the enterprise zone, and which was completed in May 2015, is a great example of how Welsh Government can use its resources and its levers to better effect to ensure that all parts of Wales gain in economic growth.

I do in fact congratulate the Welsh Government on that extension into Ebbw Vale. It’s certainly very innovative and it’s great to see rail tracks being laid again.

Arriva Trains Wales tell us that they’re unable to offer a service into Newport because there is full capacity for the Ebbw Vale to Cardiff line. Surely electrification and the enhanced service that this promises could help facilitate the operation of the line into Newport, which is a desperately needed link.

Of course, electrification of the main line and electrification of the Valleys lines are huge, huge asks that we’ve repeatedly made. In terms of capacity, there’s no doubt that electrification can assist in terms of being able to run more rolling stock more regularly, but, equally, we need to see more rolling stock on the existing railway infrastructure. I’ve spoken with Arriva Trains Wales, and with other operators, regarding the capacity problem that is affecting the rail services of Britain. I hope that ATW will be in a position, within the coming days, to be able to make an announcement concerning the Valleys lines.

Plaid Cymru spokesperson, Adam Price.

Diolch, Llywydd. Last week, I had the opportunity to visit the Republic of Ireland with my colleague, Steffan Lewis, to meet Irish Government officials, policy makers and politicians to discuss the consequences of the UK leaving the EU for Ireland and for Wales. It’s fair to say that they shared our sense of trepidation. But,as with the economic crisis of 2008, they have at their disposal a tool that we do not—independence—and I don’t just mean an independent state, but also a whole raft of powerful executive bodies, established by the state, independent of, but working closely with, the central Government machine to drive economic strategy: the IDA, Ireland’s inward investment agency; the business development body, Enterprise Ireland; and Board Bia, the Irish food board, just to name some of them.

Now, this model has delivered a handsome return for Ireland, as we know—its GDP per capita has more than trebled since the 1980s, while we have sadly stagnated in relative terms. So, can I plead with the Cabinet Secretary, again, in the context of his current review of the Welsh Government’s economic advisory boards, to consider the case for an arm’s-length independent trade and investment promotion agency for Wales? The Republic has one, and Northern Ireland too; so does Scotland, and England through UKTI. Even the Isle of Man and the Channel Islands have one. Can we afford to leave Wales naked in weathering this storm?

There are a number of points to make, I think. First of all, the Irish economy has fared well in part because so much of the Irish population is based in a city, and we know that cities have grown faster in terms of the economy than rural areas. So, it’s difficult to actually compare a country where a huge proportion of the population occupies an urban area that has grown faster by virtue of its urban nature, to Wales, where we are a far more rural country. That said, there are certainly lessons that can be learned from not just Ireland, but from other countries as well, and, as our fourth biggest export market, I think it is essential that we continue to engage with Ireland.

The Member may have seen in my speech last week my proposals to create regional economic units that will be able to drive economic growth and promote economic activities within their respective areas. I think this gives us a great opportunity because we already have the structures emerging on a regional basis, with the city regions and the growth deal region, to ensure that there is not competition, there is not duplication, but instead that there is a consistent approach at a local government level, a business level, and at a Welsh Government level as well.

As the Cabinet Secretary has just said, Ireland is a strategically vital export market for the Welsh economy, worth more than £800 million a year. Now, on the negative side, during our visit, we were told that moves were already afoot to start channelling freight to mainland Europe away from Welsh ports and through Roscoff. Is the Cabinet Secretary aware of this, and what is the Welsh Government planning to do in response? On the positive side, we were told that Irish businesses are looking to invest in the UK and in Wales in order to build up their presence in the UK market after Brexit. Now, this is a specific opportunity for the Welsh economy, with many established Irish companies, such as Dawn Meats in Carmarthenshire, for example, already here. Can I ask the Cabinet Secretary whether his officials have already drawn up a list of Irish companies looking to invest or expand their existing operations? And, finally, given the important interrelationships between our two economies, will the Welsh Government consider investing in a permanent representation in Dublin and encourage his Irish counterparts to reopen the consulate general here in Wales, so we can strengthen the economic partnership between our two countries?

I think the partnership between our two countries extends, of course, beyond economic values as well. There are incredibly strong cultural ties between Ireland and Wales, which can deliver great economic benefits as well. I recall speaking with the President of Ireland a few years back about how we could utilise the Year of the Sea for the purpose of, potentially, a cultural crossing to not just promote our respective cultures, but also to drive visitors to and from Ireland and Wales. I think there are huge, huge potential opportunities—which can be had in spite of leaving the EU—to grow and develop our economies, which are often based on mutual interests. I do believe that there are opportunities for further investment in Wales by Irish investors, particularly in higher quality and higher GVA areas of economic activity—for example, in the life sciences sector.

In terms of ports, the development fund that is being made available for Welsh ports will be important, as will direct engagement between Welsh Government, local authorities, and also the ports themselves. I recently took part in a panel discussion with representatives of Welsh ports, and there is no doubt that, whilst there is trepidation concerning Brexit, there are also opportunities. We need to maximise those opportunities and ensure that we all work together to overcome the barriers and the challenges that Brexit will face. In terms of our ability to attract further foreign direct investment, of course Brexit will pose a challenge; we know that. But we’ve recorded, in recent years, record high—or near-record high—levels of foreign direct investment. We would hope to be able to maintain a good interest by foreign investors in the Welsh economy, but it’s also my intention to place a sharper focus on the potential growth of our economy, based on inward investment from England and Scotland, Northern Ireland, and also, of course, the growth in our existing companies, to ensure that they can be de-risked from growth and they can maximise on their potential.

It’s gratifying to hear that the Cabinet Secretary is engaging with Irish politicians. Could I urge him, in further discussions that he’ll have, to learn from some of the tools and tactics that the Irish themselves have adopted? The Irish Government has recently, for example, published a designated trade strategy. Wales doesn’t have, at the moment, a specific trade strategy. It sets out a targeted, regional approach for Asia, for the middle east, and Africa—key sectors where there are particular opportunities identified. It’s a whole-of-Government approach, which also incorporates other bilateral relationships, including education, culture and development aids, et cetera.

Now, the Cabinet Secretary will be aware that the most recent export statistics show that, even though Wales has a healthy trade surplus influence with the EU, we have a £3.7 billion deficit with the rest of the world, and that’s going to be a key market, obviously, post Brexit. We need a strategic approach from the Government, but we also need a sense of urgency. The Irish Government have already, through Bord Bia, created a Brexit barometer to help businesses assess how ready they are for the threats and opportunities that Brexit represents. As well as offering a similar barometer for Welsh business, perhaps the Government might want to sit the test themselves, because, compared to the Irish, I’m afraid we are currently wanting in the level of planning and preparedness for the biggest economic challenge that any of us have ever faced.

I agree that we do have an incredible challenge on our hands, and ahead of us, but I also believe that we have the right people within Government, and in partnership with Government, to see us through what will be a turbulent time. In terms of our operations abroad, I think one of the biggest mistakes that were made in recent times is the loss of many of the Welsh overseas operations. Of course, we’ve now reinstated them, and the results have been impressive. We now have officers in key strategic territories, in key strategic cities, engaging directly with potential investors, but also ensuring that we can promote Welsh goods and services to those markets where we know the greatest growth potential is. So, for example, whether it be in China—in Shanghai, Chongqing and Beijing—or whether it be in the United States, through Atlanta, San Francisco and New York, we are already targeting those territories, those regions and those cities where the growth will come from. But, in terms of a trade and investment strategy, this is part of the work that’s taken place between my office and the office of the First Minister to ensure that Wales is promoted better abroad, that we have a clear brand abroad, and that we are perceived as a place where people can access the highest quality goods and services, and where we have some distinctive values concerning the sustainability and fairness of our economy.

Welsh Conservatives spokesperson, Russell George.

Cabinet Secretary, much has been made of the recent Demos report, which highlights the impact, of course, of Brexit on UK regions such as Wales. Now, on looking at the report in its entirety, a number of relevant and pertinent points are highlighted, including the potential for city deals and devolved administrations to look beyond the UK and the EU to attract foreign investment. In Wales there is still a very heavy reliance and strong reliance on exports, of course, to the EU. The latest figures suggest that 67 per cent of our exports go to the European Community, compared to just 44 per cent in 2012. So, can I ask you, Cabinet Secretary, what steps you have taken to ensure that local authorities involved in city deals are using their influence to help Welsh businesses look beyond Europe and prepare for new exporting markets?

I think the Member makes a very important point in that local authorities have a significant role in promoting economic growth within their respective areas. One of my concerns in my time in this job has been the lack of capacity in some parts of Wales to do just that at a local authority level, and that’s why I commend the approach being taken at a regional level, through the city region and growth deal region areas, to bring together those who are successful in driving local growth and those who are experienced in exporting. Now, what we’ve done in south Wales and in north Wales—and we’re looking to do the same in mid Wales—is to bring together, at a local authority level, those who are responsible for economic development, and those who are experienced in exporting, and reach out to all potential exporters within any given region to make sure that they are being given all of the advice and support needed to take advantage of exports in the future.

Cabinet Secretary, there are investment opportunities, of course, outside of Europe, which the Demos report highlights, including China. Now, China currently represents 2 per cent of the Welsh export market, and exports have reduced by 3.5 per cent since 2013. A recent trade mission to China was largely to cement links with Welsh companies, but little has been reported on any substantive success in that regard. The Welsh Government has had five trade missions to China since 2012 and yet exports have not substantially increased since those visits. Will you, Cabinet Secretary, outline what you’ve planned to rebalance Welsh exports in favour of large markets such as China?

The trade mission wasn’t just about securing more export opportunities. It was also about securing investment opportunities as well, and, in that respect, the trip was clearly a success, because, during the course of the mission, I agreed two deals for investment in Wales, creating a good number of jobs. But the Member is right that there are huge export opportunities, particularly, I believe, in the food and drink sector in China. In terms of exports alone, the sector has grown by 95 per cent in the last 10 years, and, in terms of changing tastes and attitudes and customer persuasions, we know that China is a growth territory.

Recently, my colleague the Cabinet Secretary for Environment and Rural Affairs announced a £21 million fund through Project Helix to look globally at where emerging trends and changing trends offer up greater opportunities for the food and drink sector. This is to be commended. I think it will give us a great opportunity to grow the sector internationally and to create more jobs at home. But, insofar as China is concerned, I’m in no doubt that the strong cultural ties that we’ve established over the last decade should now result in more economic wins for Wales, and, in the years to come, that’s where I’m going to be focusing my attention. I think a great deal of work and a huge amount of success has been realised in terms of developing the cultural bonds between Chinese regions and Wales. But now I want to see those bonds translated into more jobs, more investment, and more exports for Welsh companies.

Now that the UK Government has triggered article 50, I would say it’s imperative, of course, that Wales has an economic strategy in place in order to support what is a fragile economic market. So, what is your plan to support SMEs specifically during this time? Can I also ask when you’ll be publishing your response to the UK Government’s industrial strategy?

I’ll be writing to the Secretary of State for Business, Energy and Industrial Strategy in the coming weeks, outlining my response to the proposals. I’ve already met with Greg Clark in person and I’ve told him what I’ve said publicly, which is that there is little to disagree with in the strategy. There are areas of the strategy where I have a particular interest, especially those areas where we could see additional resource brought to Wales through research and development and innovation funding, and also through potential sector-specific deals. The quid pro quo is that the UK Government will work with Welsh Government in developing more detail of the industrial strategy, and, based on the discussions that I’ve had with the Secretary of State, I’m confident that we will be able to work closely together in this turbulent time, for the benefit not just of the Welsh economy, but of the whole of Britain.