I want to take this opportunity to highlight our approach to Brexit and how we can ensure that Wales is in the very best place to take advantage of the opportunities ahead.
Last week we announced key elements of our approach to exiting the European Union.
First, the timing. Article 50 will be invoked no later than the end of March 2017. This gives us two years in which to negotiate formally the terms and conditions of our exit and trading agreements.
Let’s be clear. We are not turning our backs on our European friends. A poorer, weaker Europe is not in our interest.
We want the EU to succeed and it’s in their interest that the UK succeeds.
We are the fastest growing economy in the G7 and one of the strongest major advanced economies in the world.
The EU can only benefit from having such a close neighbour, ally and major economy on its doorstep that is prospering.
We also announced the process for leaving. We stated our intention to bring forward a Great Repeal Bill.
This is the Parliamentary Bill that will transfer all EU law in to UK law.
It’s not tearing up the rule book. It’s transferring the same standards, regulations and obligations to the UK.
All that will change is that we will have control over the law, giving us an opportunity to make changes in the interests of the UK at a later date to suit UK needs.
We recognise the need for a smooth transition which minimises disruption to our trading relationships and that requires a strong economy and a strong, business friendly environment for foreign investment.
The Great Repeal Bill is significant in offering certainty and security.
Businesses should take confidence from this action. It demonstrates a sensitive, programmatic approach.
This also sends a clear signal to EU leaders that we want to maintain as close a trading arrangement to what we have now.
The Chancellor also confirmed last week that the UK Government will guarantee funding for all structural and investment fund projects, signed before the UK leaves the EU.
We must take this moment as an opportunity to consider whether the approach to what is currently EU Structural Funds is the best way to support these communities.
I’ve already expressed my concerns over how this money has been spent in the past, simply carrying on with the same spending plans in the same old way after two decades is not be an option.
After all, European structural funds are supposed to be a temporary fix, a stimulus for the most deprived parts of Europe.
It is hard to believe that we are 16 years on from the first round of Objective1 with £4Bn spent. We need to ask the question, have we really got the outcomes we wanted out of this? Are the communities in West Wales and the Valleys better off – as we planned and hoped?
A new structure could give us the opportunity to follow UK priorities, investing in a way that is tailored to the Welsh economy.
The instruction from the referendum is clear: repatriate our sovereignty, control our borders and seize the opportunities that the wider world has to offer, but do all of this while protecting our economy, our jobs and our living standards.
As Secretary of State for Wales I will continue to promote Wales to the world. I am determined to help deliver the Prime Minister’s objective to be a confident global Britain that doesn’t turn its back on globalisation but ensures the benefits are shared by all. I will ensure that Wales is at the heart of that vision.
We approach challenges and opportunities of exiting the European Union from a position of economic strength.
Since 2010, Wales has seen the fastest growth outside London.
Latest figures for Wales show that the unemployment rate is at an all-time low and there are a record number of people in work. At long last Wales is closing the Economic Inactivity Rate Gap with the rest of the UK. Welfare reform is making a real difference to incentivise work.
Some of the highest falls in unemployment has been in the most deprived communities.
Thankfully, these jobs have been created by the private sector – there are 126,000 more private sector jobs in Wales than there were in 2010.
Wales is a confident economy benefiting from stable finances, claiming the benefits of difficult decisions taken during the last Parliament.
It’s an economy that is fundamentally stable, highly competitive, and open for business.
Brexit will undoubtedly bring challenges, but we are in good shape to face the transition ahead.
Trade and Investment
Wales is built upon a history of global trade – in the early 1900’s Cardiff and Barry were the two largest coal exporting docks in the world.
As recently as the 1990’s Wales attracted 20% of the UK’s FDI.
Today the value of exports to Wales is significant – £12 billion over the past year. Of that, more than half are exported to non-EU countries.
We have world-leading products and companies located here.
We develop and manufacture the most technologically advanced aircraft wings produced anywhere in the world. Over half of the world’s commercial aircrafts are now flying using those wings made by Airbus in Broughton.
Although our might goes far beyond Airbus. Every two seconds, a GE powered airplane is taking off somewhere in the world. At any given moment, more than 2,200 of these aircrafts are in flight, each carrying up to 600 passengers.
The message we must all take to the world is this: our country remains open for business. As the Prime Minister said at conference, “while we are leaving the European Union, we will not leave the continent of Europe. We will not abandon our friends and allies abroad. We will not retreat from the world.
Wales remains a great place to do business and an attractive destination for overseas investment, providing a valuable boost to the economy and creating thousands of jobs.
Bringing more investment into Wales is something that I’m passionate about.
Last year there were 97 inward investment projects which created over 5,000 new jobs – an increase of 7% in the number of new jobs created on the previous year. 90 of the 97 involved UKTI.
The new Department for International Trade is bigger, bolder and more proactive. It’s not just UKTI, it involves so many other support services. It is a department for the whole of the UK. Every business here is equally entitled to the support DIT offers as any business in Bristol, Bath or Newcastle. The Trade Missions, Embassy and Consulate support and the Networking opportunities. I will have more to say on this over the coming weeks.
This is not instead of Welsh Government activity in this area but in addition to. It is important that we co-ordinate in the interests of Wales.
Wales now has a strong platform to build on over the coming months.
Leaving the EU offers us an opportunity to negotiate our own trade agreements and to be a positive and powerful force for free trade.
Across the world, we are going to bang the drum for Britain and pull out all the stops in boosting our trade: promoting the UK as a place to do business and trade with; driving inward investment; and negotiate trade agreements.
Investing in Innovation
It’s not just a history of global trade, we are responsible for some of the most significant innovations.
From the growth of higher value manufacturing and engineering in the aerospace, automotive and defence sectors, to an emerging life sciences sector where researchers are at forefront of bio-technology.
At the cutting edge of many new technologies, the UK is becoming a world leader again.
Nowhere is this truer than in South Wales, where we remain at the forefront of developments in semi-conductor technology. Our Catapult Centre will exploit absolutely the local expertise for the benefit of the Welsh and UK economy. It will develop Europe’s most sophisticated cluster and make a real difference to the value and productivity.
Infrastructure is also key to your ability to succeed.
Our programme of investment in rail infrastructure is one of the most ambitious since the development of the rail network in the 19th Century.
Huge sums are being invested to electrify the Great Western Mainline.
Just this morning I had the privilege of seeing the electrification works from the front of this morning’s 07:45 from Paddington to Bristol and a pleasure to inspect the cables being erected in the Severn Tunnel.
I recognise the closure of the tunnel has been a challenge for many of us here, but it’s clear the benefits will vastly outweigh this short period.
Electrifying the Great Western Main Line is fundamental to our connectivity and will help improve productivity.
Our £500 million contribution to the Cardiff City deal will support electrification of the Valley Lines railways.
Crossrail – Europe’s largest Civil Engineering project will enhance the shorter journey times offered by electrification of the mainline – bringing Cardiff closer to Canary Wharf – in around 2 hours.
We’re investing to link Heathrow airport to the Great Western Mainline – cutting half an hour off the journey between Heathrow and South Wales.
The Severn Crossings are equally relevant to our access and competitiveness, we will halve the tolls once the Crossings are in public ownership.
We are also scrapping the second category so that small goods vehicles will pay the same amount as cars.
I will review the case for free-flowing tolls on the Crossings.
We are spending significant sums to improve Broadband across the UK; With Wales currently at 89% covered.
We are also working to reduce mobile not-spots with a deal to guarantee voice and text coverage from each operator. The UK will have 98% 4G coverage by end 2017, with Wales and the other nations of UK having at least 95%. This is a very different approach to the 3G Auction for which there were no demands for coverage – largely why we have the not spots I mentioned.
This is an area where the Welsh Government and I are working closely together to press operators to play their part in filling the gaps.
Careful, targeted public investment in high value infrastructure will be an important part of the Government’s strategy to build an economy that works for everyone.
The Chancellor confirmed last week that protecting and supporting the economy would take precedence over eradicating the deficit.
As the economy responds to the impacts of leaving the EU, fiscal policy may have a role to play.
We are ready to take whatever steps are necessary to protect our economy.
But a strong economy is not built on infrastructure alone. Our economy requires long term, sustainable, balanced growth.
We are still too reliant upon a few key sectors that tend to be focussed on London and the South East.
Productivity in Wales is lower than the US, Germany, France and Italy. If this improved by just 1% every year for a decade, this would generate £250Bn, £9,000 for every household.
London and the South East are the only regions in the UK higher than the UK average. However, even they are below the US, France, Germany and Italy average.
The good news is Wales has been narrowing the gap, but there is more to do. Closing that gap will be key to Wales’ future outside the EU.
The function of Regional devolution deals is to help deliver that, along with productivity improvements. Tackling those regional differences will be one of the key drivers for the government’s industrial strategy.
The £1.2 billion Cardiff City Deal is the UK’s largest City Deal. It is about unlocking economic potential. There is more work to do on this but we believe that business leaders and local decision makers are best placed to understand what is most needed to drive growth in their area.
We are also working closely with local partners to help them develop a City Deal for the Swansea Bay Region that will help them drive the local economy and deliver productivity growth.
We’re also working on a North Wales Growth Deal and I’m keen to see this operate on a Cross Border bases.
This will help to strengthen the region’s economy and make the most of its connection to the Northern Powerhouse.
I’m determined to see North Wales plugged into the economic opportunities of Manchester, Liverpool and Cheshire.
You can be assured we are prepared to take the necessary steps to safeguard the economy and take advantage of the opportunities that will arise as we forge a new relationship with the European Union and make Britain a country that truly works for everyone.
We are the same outward-looking, globally-minded, big-thinking country we have always been and our country remains open for business.