Questions now from the party spokespeople. The Plaid Cymru spokesperson, Adam Price.

Diolch, Llywydd. As we know, Cabinet Secretary, one of the four companies bidding for the Wales and borders franchise suddenly and unexpectedly pulled out of the process on 30 October. I asked you in a written question what the reasons were for that decision and you said in a written statement on 9 November that that was because of their own commercial analysis of the contract. I think, in a statement that Arriva Trains Wales put out, which I think was agreed with the Welsh Government, that they also referred to a risk profile that was not attractive to them. So, can the Cabinet Secretary say what risks Arriva Trains Wales perceived that meant their lawyers advised them not to proceed with this bidding process?

I'd like to thank the Member for that question, but that is a matter for Arriva themselves. Our understanding is that Arriva analysed the balance of risk and reward. We've been very clear throughout this entire process that we expect any excess profits to be redirected into the transport infrastructure and transport services in Wales, and we don't shy away from doing that. We now have three world-class bidders that will be providing their final submissions by 21 December. This is an ambitious programme and I am determined to deliver on it, and I am confident that those bids from the three word-class companies will prove to be incredibly ambitious as well. 

Cabinet Secretary, isn't the real reason that Arriva pulled out because there are too many unknowns with this franchise? It's difficult for us to form a judgment of that because, of course, the Welsh Government has departed from the standard practice of actually publishing the invitation tender, but we do know, of course, that there are unknowns about the exact nature of the devolution of power and responsibility, and uncertainty about the finances of the franchise. We know that because there was a letter from the Secretary of State for Transport of the UK Government to you. Now, can we have at least some clarity on some of those issues that were raised? Can you say who will take the section 30 operator and last resort responsibility? Have you reached agreement with the UK Government on franchise funding of £1 billion that you asked for, which you said would be used for upgrading? Do you have detailed survey information from Network Rail of the track infrastructure for which you're about to assume responsibility? 

I'm sure the Member will appreciate that there are some details that I'm not able to divulge at this moment in time because the procurement process is a live one, and to do so could attract action from one or more bidders after the process has been completed. But I would say that survey work has been carried out and continues to be carried out on the asset, but funding discussions continue to take place with the UK Treasury. There is an acknowledgment of the historic underfunding of infrastructure on our railways in Wales, and there is acknowledgment that there have been historic growth costs that need to be addressed. But also, as this process is nearing a conclusion, as I say, I am confident that with bids from three world-class operators we will have an operator for the next franchise that will deliver a step change in the services that people are able to experience. And whilst this is a new process that we're following for a rail franchise, it's not a new process in its complete entirety. Indeed, we used this process for the procurement process for Superfast Cymru, and that proved to be, given that we now have more than 650,000 properties connected to superfast broadband, or with the potential to be connected to superfast broadband, it's proven to be extremely successful. 

Well, in the debate that later we'll be having on digital infrastructure Members will form their own view on whether Superfast Cymru should be held out as a paragon in terms of what we want to achieve with this contracting process. Can I just paraphrase the answers that he's just given me? So, the Welsh Government hasn't reached final agreement on franchise funding with the UK Government. You haven't got complete information of the entire situation of the track infrastructure; you're continuing with that, you said. And you didn't give us an answer on the operator of last resort responsibilities.

You said that the Transport for Wales team managing the procurement say the other bidders remain fully engaged in the process. Presumably, you thought that until you got the phone call at 5 p.m. on 27 October with regard to Arriva Wales. What effect do you think the knowledge that the incumbent operator—the one bidder that has more knowledge and information than all the other three—has pulled out will have on the three other bidders? Will the risk calculation now have risen for them? Will the bid price that they submit rise to reflect that? Can you say with certainty that no other bidders are about to drop out? What about the fact that Costain—of course, as the partners with Arriva—have dropped out as well of the metro construction courses? What effect will that have? 

And finally, just to test, Cabinet Secretary, how good your antennae are and how good the antennae of your team in Transport for Wales are, can you confirm if you were aware that one of the other bidders mothballed their team and put them on standstill for an entire month over the summer due to the delay in the franchising process? 

That delay in the franchising process I was deeply disappointed by. We overcame that. We now have three bidders—three bidders—who will be submitting their tenders by 21 December, and all three are world class. The alternative to the risks that the Member has identified would have been to do nothing and to maintain on the current terms the current franchise arrangements. Could you argue that that would be in the best interests of the passengers that have to experience services today? Because I don't think many of the people sitting around you would argue that that's the case. We are delivering a step change through the new franchise. We will deliver that with a world-class bidder. 

Conservatives' spokesperson, Russell George. 

Diolch, Llywydd. Cabinet Secretary, after many years of trying to retrieve this information from you, you have now finally provided the breakdown of the numbers of jobs created, safeguarded and supported by Wales's eight enterprise zones, and I thank you for those figures. The enterprise zones made clear that just—I've got the figures here—2,998 new jobs have been created since the zones were first set up. That's despite £221 million of public funds having been allocated to the zones over the past five-year period. This means that the average cost of creating one new job in the enterprise zones has been just over £73,000. That's the equivalent of a business employing a full-time worker for just under three and a half years. Do you believe that spending over £73,000 to create a single job represents good value for the Welsh taxpayer?

I'm not sure that the Member is calculating on the basis of sustaining jobs as well, and securing jobs. For example, in Port Talbot, one of the most significant successes of this Government in recent times has been to secure the future of its steelworks within the enterprise zone area. Making sure that we secure jobs can be just as important as creating new employment opportunities as well. What we've done with enterprise zones—and there has been varied success; I would admit to that—but what we have done with enterprise zones is offer attractive places for investors, but also attractive incentives for existing businesses to remain operating successfully.

I appreciate your honesty with regard to there being a mixed picture on enterprise zones. I take on board as well that it's important to safeguard jobs, although I will say that, in a document from you here, it says,

'Enterprise Zones objectives are to: grow the local economy and provision of new jobs'.

So, the data reveals that less than a third of the jobs that have been supported by enterprise zones are new jobs. Is it the case that the Welsh Government's ambition for enterprise zones has diminished over time, in step with the failure to create new employment, and that the new zones are now simply a collection of subsidy farms that are failing to raise employment opportunities in the communities where they are supposed to be located?

I'm not sure I'd use the term 'subsidy farms' in front of any of the businesses that have benefited from enterprise zone status. What I would say though is that we have suffered, especially in recent times, from incredible uncertainty in terms of where the economy is going to go because of the referendum result. Again, we make no apology for investing in enterprise zones as one of many methods to secure current employment and to ensure that we go on growing employment opportunities. The Member is right about the long-term ambition for enterprise zones to attract and create new employment opportunities, but I still contend that, in many parts of Wales, securing work is just as important as creating new opportunities.

Despite the hundreds of millions of pounds that have been invested in the zones, the economy of Wales, I would say, continues to lag behind most other parts of the UK. GVA per head in Wales in 2015 was £18,000, at the bottom of the league table of home nations for GVA per head and it has been at that bottom position for the past 20 consecutive years. In addition, weekly average earnings in Wales are £43 lower than in Scotland, despite it being in exactly the same place 20 years ago. So, can I ask, Cabinet Secretary: do you accept that the economic data on the performance of the Welsh economy in recent years further underlines the failure of the enterprise zones as the data clearly demonstrates that the zones have failed to boost the performance of the Welsh economy?

Well, I'd say that, in many enterprise zones, there's been tremendous success. Deeside, for example: huge numbers of new jobs have been created there and many, many more have been secured. Likewise in Cardiff. There has been success with the enterprise zone initiative, but that does not mean that it should not undergo further reform and change where necessary. I'm certainly looking at that.

But I would say, after the Member raised the issue of weekly average earnings, that I'd invite him to support this Labour Government's ambition to introduce fair work practices across our economy, to drive up working standards, to drive up wages, to make sure that we do reduce that weekly average earnings gap. Also, I'd hope that the Member would support our call for in-work welfare cuts to be stopped and to make sure that people are able to earn a decent wage for a decent day's work.

I think it's important to say as well, as I mentioned earlier, that, in terms of GVA per head, it's been growing faster on average recently in Wales than across the UK. As I said earlier, we are on that runway, but we need to ensure that we are investing in the right way to take off. And that's why we are reconfiguring the department to make sure that we place a greater focus on regional strengths, so that we grow the economies outside of the more intensely urban areas.

UKIP spokesperson, David Rowlands.

Diolch, Llywydd. Cabinet Secretary, we constantly hear from the First Minister that we need to remain in the single market and the customs union. Do you agree with the situation that, regardless of the booming markets outside the European Union, that is the case?

I'm yet to be convinced that establishing trade agreements with countries outside the EU will compensate for the consequences that a hard Brexit or 'no deal' would result in. It's my firm belief, based on the evidence that I have seen and the lack of evidence to the contrary, that a transition arrangement must be secured, and eventually a deal must be secured that does not damage the country's economic prospects for the long term.

I've heard a lot said recently about preparations for a 'no deal' scenario, as though it's possible to prepare for a 'no deal' scenario in the same way that you could prepare for a soft Brexit. This is not the case; you can't prepare for a 'no deal' scenario to the extent that its impacts are fully mitigated. Preparing for a 'no deal' scenario, I think, is a bit like preparing to swim through lava; it will be a dangerous experience for the economy and we will not be able to compensate for it through establishing trade agreements with other countries outside the EU.

Well, I thank the Cabinet Secretary for those observations. And I can see that the EU is a very important market for British and Welsh products. But the fact is that our trade with Europe is falling rapidly, whilst our trade with the rest of the world is rising rapidly. So, does the Cabinet Secretary not agree that freeing ourselves from the shackles of EU legislation, and being able to trade with the rest of the world under our own terms has the potential to massively expand our trade outside the EU?

But the fact remains that—. The Member said that it has dropped significantly; it hasn't dropped significantly in terms of exports—from just over 60 per cent to just below 60 per cent—to the EU. So, the consequences of leaving with no deal in place would be pretty devastating for the Welsh economy, and it would not be compensated for by establishing deals elsewhere around the globe with third parties. It just will not be compensated for. What we need is certainty for the business community and a deal that does not damage our long-term economic prospects.

Well, let's have an honest and frank discussion about this European Union and our dependence on it.

The Office for National Statistics figures show that 80 per cent of our overseas earnings comes from the services sector, which is outside trade deals. So, even if the EU was to cut off its nose to spite its face and choose to implement tariffs on UK goods, the overall cost to the UK economy would be limited—much less than that envisaged by the remain camp.

If we examine this a little further, we would of course come under World Trade Organization rules, which might result in a 5 per cent tariff on goods, both from Europe and into Europe. Should this be the case, because of our trade deficit with Europe, this would yield some £4 billion net profit to the UK economy. Would you not agree that this would be ample money, not only to compensate Welsh farmers and businesses for any loss of trade, but most of the UK farming industry to boot?

I was recently at the WTO in Geneva. I met with various experts and came away from there having learnt a good deal about economic development, sustainable development and inclusive development, but I also learnt that the likely consequences of reverting to WTO rules could mean that the UK economy shrinks by between 8 and 10 per cent. That would not be good for the services sector, and it certainly would not be good for the manufacturing sector.

Although the Member highlighted the significance of the services sector to the UK economy, actually, manufacturing in Wales is crucially important. It offers a larger share of the economy as a whole than it does across the UK and we know that tariffs or technical barriers concerning the manufacture of goods in the UK could be hugely damaging for the UK and Welsh economies. So, once again, I would say that a 'no deal' scenario would be a desperate scenario for the Welsh and UK economies, not something that should be cheered, and certainly not something that could be prepared for as though it's some form of soft Brexit scenario.