Questions now from the party leaders. The leader of the opposition, Andrew R.T. Davies.

Thank you, Presiding Officer. First Minister, the interim report from the commission on health and social care published its findings today. The Government obviously set this commission in motion, and the final report is due at the end of this year. Previous Labour Governments haven’t got a very good record when it comes to implementing detailed findings from commissions, such as the Williams commission for example. Can you give us a feel of what importance the Government attaches to the findings from the commission, and will they be the central plank for this Government, going forward in this Assembly, in the way it shapes health and social care—the recommendations that the report comes out with?

Well, we wouldn’t have set up the review on a cross-party basis if we weren’t going to take it seriously; obviously not. We look forward to the report when it’s published, and that will form the basis of our thinking for the future.

I think what’s important for us to understand, in fairness—. And I commend you for setting up the parliamentary review, because some of the findings that they’ve made available today are backed up by evidence, showing, obviously, in the next couple of years, we’ll see a 44 per cent increase in over-65s, and yet a 5 per cent contraction in working-age people, which shows that there are real challenges to be faced. And where those challenges can be faced cross-party, obviously, those solutions will come a lot easier. But it is vital to understand whether this commission and its recommendations will meet the end of many other commissions that the Government has commissioned—and I use the example again of the Williams commission—or whether these findings will actually form the central plank of Government thinking going forward to the end of this Assembly in 2022.

We have to remember, of course—. He mentions the Williams commission. The Williams commission was opposed by other parties in this Chamber; it wasn’t as if the Government decided off its own bat, despite the support of others, that the recommendations would move forward.

With regard to health, this is a major commitment for us to make. We made it, of course, as part of our programme for government, and it is hugely important that we can do as much as we can to find common ground on health across parties, to understand what the challenges are, because the challenges are the same regardless of politics, and then to see how those challenges can be met. That’s very much part of our thinking. As I say, we will look forward to receiving the report and look forward to acting on as much of it as we can.

I think what would have given us more confidence is if we could have had a clearer answer that would have said, ‘Yes, this will form our thinking going forward—the recommendations’, and that ultimately you look forward to delivering those recommendations, rather than just looking forward to getting the report and then deciding what to do, because time is of the essence. As Mansel Aylward points out, the demographic time bomb has already gone off. The other part of the report talks about the skills crisis within the NHS and social care that needs addressing now—it talks of now, not in the future, but actually happening with our workforce planning at the moment. And, importantly, it talks about structures and the way structures will—and I think the words that they use is:

‘The scale of challenges mean the system is becoming unstable, which cannot be resolved by small, step-by-step changes.’

So, on this basis, then, do you believe that that leads to the obvious conclusion that there will have to be wholesale structural change within the NHS here in Wales and the social care sector, or do you believe that a more incremental approach can deliver the solutions that the interim report points to and that the final recommendations will suggest need to be taken up by the Welsh Government?

There has to be change—it’s clear. I wouldn’t use the word ‘wholesale’. I’m reluctant to express a view without seeing the recommendations of the report, for obvious reasons, but we would want to implement as much of it as we can and to seek consensus across the Chamber in order to do that.

In terms of skills, there is no doubt that any kind of restriction on migration will make the skills situation worse because, of course, the social care sector recruits heavily from outside the UK, as, of course, does the medical and nursing professions. That’s an impact we can’t control directly here. But if he’s asking me the question, ‘Is this simply an exercise that we are taking forward without there being a clear end game?’, the answer to that is ‘no’. We want to make sure that, working with other parties around this Chamber, we can implement as many of the recommendations as possible. We have to see them first in order to make a judgment as to whether we can do that for all of the recommendations, or most of them.

Plaid Cymru leader, Leanne Wood.

Diolch, Llywydd. First Minister, all of the opposition parties in the Assembly have called for a full independent inquiry into the decisions surrounding the Circuit of Wales project. Indeed, some of your own backbenchers have said that there are serious questions to answer. The first step in that process will be the publication of your own external due-diligence report, and you’ve agreed to publish this, but only when the Assembly is in recess. Now, for many of us, this looks like a Government that is seeking to postpone scrutiny for a decision that was itself postponed until after the election. Can the First Minister say whether his Government has yet asked the company and the external advisers if they are happy for that report to be published? And in terms of the one piece of information placed in the public domain, which you described as ‘unfortunate’, is the First Minister able to assure us that no-one associated with the Government was involved in its disclosure?

A leak inquiry has been initiated by the Permanent Secretary; that will have to take its course. Secondly, the process of talking to the organisations involved who are mentioned in the due diligence report has begun, with a view to publishing it. We want to publish as much of it as possible.

One of the reasons that an independent inquiry has been called for is because of a series of misleading statements made by the Government, often during election campaigns. I’m sure that is coincidental, First Minister.

Name them.

You were asked on 7 April 2016 why the proposal had been rejected the day before, and you said, and I quote, ‘What happened originally was that they were looking for a guarantee of £30 million from us, it then went up to £357 million.’ When asked when that happened, you said, and I quote: ‘In the last few days.’ You, again, said to Wales Online on 11 April, and I quote again:

‘It was in the last few days beforehand. We weren’t to know the guarantee would be inflated.’

Yet a senior director of Aviva investors, Mark Wells, contradicts what you said. He denied that Aviva had requested a 100 per cent underwrite a few days before the rejection. He says and, again, I quote:

‘this deal had been worked up with the Welsh Government (through civil servants) for many months and nothing in our funding structure changed in the run up to this announcement.’

First Minister, only one of the two of you can be right. Can you tell us today which one of you is right and which one of you is wrong?

I was told on 5 April 2016.

So, that wasn’t a long-term discussion, is that what you’re saying, that you hadn’t been in long-term discussions with that company? Are you denying that now? You said on BBC Wales on 26 April this year, in the run-up to the election, just a few days before, ‘I want the Circuit of Wales to work, end of.’ You added that, since last year, the funding model had changed, in your words: ‘That is changing now; the model is better’, you said.

Can you explain what changed between that statement before the election, and then the rejection a month later, after the election? You’ve told us that in the last 10 days or so, you were told about the balance sheet classification issue. Lots of concerns seem to have been arising for you, First Minister, in the last few days. Your Government’s been looking at this project for six whole years. Why was the classification issue not once, on this floor, raised by you? Why wasn’t it raised in the 28 different meetings that you had with the developers? And considering the £10 million or so of public money that has gone into this project, that could go up because the company behind the project says that there is a legal claim against this Government to be made?

First Minister, you decided to postpone this decision until beyond an election. You decided to postpone the due diligence publication to when this Assembly was in recess. Why didn’t you decide to postpone the final decision so that you could have at least got Aviva and everyone else around the table to see if these issues identified in the last few days could have been resolved?

Well, first of all, I’m sorry I gave a direct answer to a question she asked; she was clearly knocked backwards by it verbally. But let me give you some more direct answers: the project six years ago is not the same project as the project we dealt with. It has changed many times in terms of its financial structure. The project that we looked at was a project that we had seen recently in the course of the last few months. It’s a project, of course, that was based on the guarantee that’s out there publicly. We looked at the financial structure that was proposed, we went through the due diligence, and the due diligence revealed that there was a very high risk of the cost or the guarantee being regarded as being on balance sheet. I don’t know if she knows what that means, but ‘on balance sheet’ means that it'll be treated as if we had given the company money now. It would mean we would find £157 million-worth of capital reductions in this financial year—that’s the risk that we took. We worked with the company to see what we could do to help. There was a meeting between the company and officials after the decision. It was explained to the company what the issues were, and they accepted it. They clearly haven’t spoken to her because the company accepted the issue with regard to the issue of being on balance sheet and the risks that that posed to us—they did not argue with it. Could I suggest she talks, perhaps, to the company to take their view on this?

One thing that Plaid Cymru have never said is whether they agreed with the decision or not. Until we know whether they agree or not, so we can assess whether they think that there are high risks to be taken with Welsh public spending, then, of course, I cannot accept a lecture from the leader of Plaid Cymru.

The leader of the UKIP group, Neil Hamilton.

Llywydd, I agree absolutely 100 per cent with everything that the leader of Plaid Cymru has just said—[Interruption.] There are occasions when UKIP can be ecumenical. In the interests of the Welsh people, this is one of them, and it’s something that, perhaps, we can follow up in the Public Accounts Committee, if not in a public inquiry, if that be not granted.

But I want to ask about the First Minister’s forthcoming meeting with Michel Barnier, the EU chief negotiator on Brexit, which I understand is happening on Thursday. Is he going to use this opportunity to complement the UK Government’s negotiating strategy or to seek to undermine it? I believe that the First Minister accepts that we are going to leave the single market, and the Government has said it is going to leave the customs union. That is something that I don’t believe to be negotiable. I read that he is going to say to Michel Barnier that it is vital in the interests of Welsh jobs that we remain, if not members of the single market, at least with full frictionless access to it, but does he not accept that, when you go into a negotiation, like Michel Barnier himself, you should play hardball, not softball. If you go into a negotiation accepting the fundamental tenets of the other side’s arguments, then you’re not likely to get the deal you want, but a worse one. So, what he should explain to Michel Barnier on Thursday is the advantages of mutuality here, both to the Europeans and to the British of having the maximum possible free trade between us. Simply using it as an opportunity to grandstand against the negotiating strategy of the UK Government is likely to fail anyway, but will also do the Welsh Government no good in its dealings with the UK Government at home.

Well, I’m grateful for his display of telepathy, telling me what I’m going to say on Thursday, and I’m grateful for his advice on that. I can say that I’m not going there to negotiate; I’m going there to explain the position that we have taken as a Government in our White Paper, agreed with Plaid Cymru, and our position is very clear publicly that, whilst we are leaving the EU, the terms upon which we leave the EU are hugely important. As regards undermining the UK’s negotiating strategy, I have no idea what that is. Until we have a better idea of what the UK Government’s own view is on these things, rather than different voices—Boris Johnson again today, Michael Gove saying something different, David Davis saying something different, the Prime Minister saying something she’s repeated several times over that she’s seen on a piece of paper—. We need to know what the position of the UK Government actually is. We don’t know that.

The First Minister’s obfuscating here. He knows perfectly well that the aim of the UK Government is the same as the aim of the Welsh Government, and that is to achieve the maximum possible degree of free trade between the UK and the EU. But this is a reciprocal process. If we are not granted free trade to Europe, we will not grant the EU free trade with us, and, given that they have a trade deficit of £61 billion a year with us, it’s as much in their interests as it is in ours—as it is in trade worldwide—that we reduce barriers to the free exchange of goods and services. So, if he uses this opportunity on Thursday to reinforce that message, he may do himself a bit of good with the UK Government by going with the grain. I wholly agree with what he said earlier on about DEFRA Ministers not meeting with Welsh Ministers. I do believe that that was disrespectful and unhelpful, but it may be that the attitude of the UK Government towards the Welsh Government is informed by the approach that he and his colleagues have taken to the Brexit negotiations. They may think, ‘What is the point of meeting with them, because they’re only going to disagree with us?’

Well, the Prime Minister went into the general election on the basis of obtaining a mandate to leave the single market, leave the customs union and leave the jurisdiction of the European Court of Justice. On each of those points she failed. She failed. The British people did not support that view, and so now it’s incumbent on us to find a way that provides the greatest level of consensus. Yes, we’re leaving. Yes, nobody wants WTO rules to apply, but they will apply unless there is at least a transitional period, because there’s not going to be a deal by March 2019. Nobody, surely, can believe that, given—. I’ve spoken to trade negotiators and they say to me that it takes 18 months to agree on what you’re going to talk about, let alone getting a deal. These things are, by nature, very, very complicated, so it is hugely important that we look at transitional arrangements.

We have put forward our view: it’s in the White Paper. It’s very clear. Whether people agree with it or not, at least people can see that it’s there. I have no idea what the UK Government’s current position now is. That’s in no-one’s interests, and it’s hugely important that they work with the devolved administrations to get there. We don’t start from a position of trying to undermine the UK Government. We will be vocal, publicly, if we disagree with what they’re saying, but that’s not where we start. But, unfortunately, we can’t even get to that point because the UK Government at the moment has shut up shop to ourselves and Scotland. Now, that is not a sensible way forward if we’re going to get a Brexit deal that attracts support across the UK.

Well, I’ve made my point on that, but the EU comprises another 27 member states. With almost all of them, we have a trade deficit. In Germany’s case, for example, we have a trade deficit that amounts to £25 billion a year. One in 10 of every car made in Germany is exported to the United Kingdom. There is a massive interest in Germany in retaining the maximum possible free trade with Britain. There is a huge deficit in most agricultural products in the UK, and therefore there is, again, a mutuality of interest in maintaining the maximum possible freedom, for example, to export French wine subject to the lowest possible form of restriction. Therefore, I’m asking the First Minister whether he will take steps, along with his colleagues, to do a tour of the capitals of Europe to talk to the Governments of individual member states, because they won’t be involved directly in the Brexit negotiating process, in order to see what mutuality of interest we can engender there to help put pressure upon the EU Commission, which is, of course, unelected, to take the most liberal attitude towards free trade between our respective countries.

Well, first of all, it’s been made absolutely clear, and there is no dissent amongst the EU 27 about this, that the UK’s future arrangement cannot be as beneficial as membership of the EU. For obvious reasons, they take the view that you can’t have your cake and eat, to use that phrase. That’s the first thing to remember. The European Union is now stronger and more united, probably, than ever it has been. We must be very, very careful that that isn’t a unity against the UK, and diplomacy must be used to make sure that that doesn’t happen. This is not a negotiation of equals. The EU is eight times bigger than the UK. Its market is far, far larger. It’s far more attractive to foreign investors and exporters than the UK is, because it’s got far more consumers than the UK. So, we have to come at this from a realistic viewpoint.

He makes the point about the EU exporting more to the UK than the UK does to the EU in terms of numbers. Well, it would be odd if it didn’t, given the fact that it’s eight times bigger; of course it’s going to export more in terms of money and numbers. But, if you look at percentages, actually we export far more of our exports into the European market than EU products coming into the UK. I think about 8 per cent of the EU 27’s exports go into the UK. From Wales’s perspective, it’s 67 per cent the other way. So, actually, as a percentage, we stand to lose far more than Europe does. Bear in mind, of course, the EU has just signed a free trade deal with Japan. The German car manufacturers will eye that very, very greedily, because they will look at that free trade agreement with Japan as a huge opportunity for them in a market that’s twice the size of the UK, bluntly—twice the size of the UK. The German car manufacturers have already said that, from their perspective, they’d want the UK to stay in. They are not going to press their own Government for some kind of special deal for the UK, and the Germans value the EU and its unity more than anything else. That’s been very clear over the course of the past few months. BMW are not a member state of the EU, and that’s something we should remember.

We are realistic. Mutuality is important. A good deal for all is important, but, of course, we are now faced with a position with a Prime Minister who went into an election with a clear programme of what she wanted to do and lost, or failed—failed to win the election as a result of that. And that’s why it’s so important that the UK Government works with the devolved administrations to get to a position on Brexit that we can all try and support. But so far, the door’s been shut.