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Virginia Crosbie (Ynys Môn) (Con)
I beg to move,
That this House has considered freeport proposals for Wales.
It is a great pleasure to serve under your chairmanship, Mr Vickers. The debate comes at a crucial moment not just for my constituency of Ynys Môn but for north Wales and the whole country. In the coming weeks, we expect a decision on the site of the first freeport in Wales. That will be a monumental moment for Wales, whichever bid is successful, and the potential for boosting the economy of north Wales via a freeport on the Isle of Anglesey is enormous.
It is the privilege of my life to represent the people of Ynys Môn. It is a proud island with a wonderful history, and our ports have long been critical to our success, providing communication and trade links throughout history, from the Roman fort in Holyhead, which was positioned to overlook the port, to Amlwch, whose port and copper trade once made it the second largest town in Wales.
Ynys Môn’s relationship with the sea is well documented. Since the 1800s, the port of Holyhead has been a key link in the chain between the UK, Ireland and Europe. It developed as part of the fastest route between London and Dublin, and is still the second busiest roll-on roll-off port in the UK, but time moves on, and Ynys Môn needs to progress to the next step in its journey. The obvious way forward is the freeport programme.
For several years, I have been leading the campaign to secure freeport status for the island, and over the past six months I have been working alongside a consortium of partners led by Stena Line and Isle of Anglesey County Council to deliver a bid that we can be proud of. Colleagues will also be aware of the work I have done with my north Wales Conservative colleagues—particularly my hon. Friend and neighbour the Member for Aberconwy (Robin Millar)—to raise the prospect of the freeport. Indeed, I have spoken of little else in this place for the past few years, and that is because of the bid’s potential to transform Anglesey. That transformation would truly be life changing for so many people and communities across north Wales. Behind the scenes, I have also been corralling others to join the cause, and I am pleased that more than 40 businesses, local councils and education institutions now support the bid, as well as more than 1,500 residents from across north Wales.
Since the UK Government announced in 2020 that they would use our post-Brexit freedoms to establish 10 freeports, I have been unequivocal about the importance of giving freeport status to Ynys Môn. That is because my constituency faces a range of challenges that are holding people back, the root cause of which boils down to a lack of long-term, sustainable investment. In the 21 years since the Senedd was established, and with a Labour Welsh Government in Cardiff, the island has systematically lost major employers, including Anglesey Aluminium, the Wylfa nuclear power station, Octel and Rehau, which led to huge job losses on the island. That continues to this day with the deeply disappointing anticipated loss of the 2 Sisters poultry plant, and with it around 730 jobs, which was announced in January.
We have seen next to nothing from the Welsh Government to address those issues, and at times it can feel as though there is a reluctance in Cardiff to recognise the urgency of the situation. The damage to the island caused by employers closing their operations does not stop at the tragedy of people losing their jobs; those people have to move away from the island, which in turn means taking their children out of school. The limited availability of jobs means that, for those young people who go through school on the island, there is limited choice, and that choice is often to move away to Cardiff or England. Meanwhile, the island becomes even more dependent on seasonal tourism. No wonder Ynys Môn has one of the lowest gross value added rates in the UK.
Most recently, the announcement that the Welsh Government will not pursue their plans for a third bridge to the island has made our maritime infrastructure even more important. There are two bridges to the island: the Menai suspension bridge is 200 years old and access to it is restricted for safety reasons, and the Britannia bridge is a single carriageway that regularly congests and closes in high winds. Those road infrastructure challenges are a real concern for businesses looking at the island for future operations. They significantly restrict the opportunities for Ynys Môn to achieve its economic potential.
In the light of the decision by the Welsh Government, we have no alternative but to maximise the opportunities offered by our sea routes and maritime infrastructure. I cannot bear to see such wasted potential, and we must do everything we can to ensure there are good-quality, well-paid jobs on Anglesey. That is how we stop our young people leaving, maintain the proud heritage of the Welsh language and preserve our local heritage. The catalyst for bringing those jobs is a freeport. It would give businesses the green light they need: the confirmation that the UK and Welsh Governments are serious about attracting investment to the island.
There is an incredibly strong case for the Governments to make Anglesey the first Welsh freeport, not least because the solution to making serious progress towards meeting the UK’s net zero objectives or addressing reduced post-Brexit trade flows is right there on Ynys Môn. Anglesey stands on the brink of becoming a centre of excellence for energy production, and freeport status would only boost its progress towards making that a reality. The waters around Ynys Môn have been identified as some of the best for tidal power projects. Like the Cromarty Firth freeport in Scotland, the island would be a prime location for building, assembling and deploying offshore wind turbines. BP has been given preferred bidder status for its Mona and Morgan offshore wind farms in the Irish sea. It is actively looking for the right location from which to build its base and support operations, and a freeport on Anglesey would be the obvious place.
Companies such as Menter Môn and Minesto are homing in on tidal energy and wave production. Menter Môn owns the lease on the largest consented tidal stream site in the world, which it envisages would generate just under £100 million of inward investment by 2027. Freeport status would enable 60% of that to be retained in the local economy, which would deliver the long-term, high-paid jobs that the people of Anglesey so desperately need.
Then, of course, there is new nuclear at Wylfa, which has been my other main topic over the past few years. Wylfa offers the best new nuclear power site in the UK—possibly the world. It has the potential to power 2 million homes, and it offers to be Wales’s biggest single contribution to tackling climate change. Beyond that, the site has the support of local people and would offer 9,000 construction jobs, 900 long-term, permanent, skilled, well-paid careers, and thousands of supply chain roles across north Wales. Companies such as Rolls-Royce SMR, Bechtel, Westinghouse and Last Energy stand ready to turbocharge the nuclear offering on the site.
Home-grown energy will be essential if we are truly to tackle climate change, achieve our 2050 net zero target and protect our energy sovereignty. Anglesey has the ability to upskill the workers of north Wales. Bangor University and Grŵp Llandrillo Menai are working with the bid team to make the most of the opportunities the freeport would bring. Part of that is M-SParc, the first science park in Wales, which focuses on supporting growing local businesses and investing in green energy research and development.
Freeport status would boost our proud trading history. Holyhead port is the second busiest roll-on roll-off port in the UK, which makes it a vital hub for international trade. The freeport would help to increase the activity at the port by revitalising the GB land bridge, whereby goods can move from the island of Ireland to mainland Europe without having to sail around the south coast of Great Britain. In the last few years, the GB land bridge has seen a 20% decline in trade, and a revival of the GB land bridge, ushered in by boosted trade through the freeport, could bring up to £6 billion in trade uplift to the UK economy by 2040. We are working with the likes of Fujitsu on digital trade corridors to ensure the utmost safety and transparency of goods flowing through the port. Analysis by the Centre for Economics and Business Research has shown that the Anglesey freeport could bring up to 13,000 jobs to north Wales over a 15-year period and increase UK GDP by £1 billion by 2030. This Government could provide no clearer signal of their support for the people of north Wales than granting freeport status to Anglesey.
Finally, let me focus on environmental protection and nature restoration.
Jim Shannon (Strangford) (DUP)
I commend the hon. Lady. In the short time she has been in the House, she has been a very assiduous Member for Ynys Môn and for Wales as a whole. I support her ambition for a freeport in her constituency, and I wish to see similar opportunities for us in Northern Ireland. I know that the debate is about Wales and that the Minister is answering for the Wales Office, and I support the hon. Lady’s request for a freeport, but I also request that something similar happens for us in Northern Ireland. Does the hon. Lady agree that, in the levelling-up process, the Government should cast their net wide and ensure that Northern Ireland is part of the freeport strategy?
Virginia Crosbie
I thank the hon. Gentleman for his intervention and his support for a freeport. He makes a good point about how important freeports are for levelling up not only Anglesey and Wales but the whole UK. This freeport is significant for what it will do for the GB land bridge and what that will mean for the whole UK.
Finally, I want to focus on environmental protection and nature restoration. The Welsh freeport prospectus includes the condition that any freeports need to meet environmental sustainability objectives. Ynys Môn has a wealth of experience in balancing environmental concerns and economic development. The extensive studies of wildlife in the waters around our island being undertaken by Morlais could be used to establish a detailed baseline for our understanding of the current marine environment so that we can ensure there is no impact on it.
A freeport on Anglesey can be an example of Conservative environmentalism in action: a low-tax, business-focused approach that attracts investment, spurs innovation and promotes growth. It would take full advantage of the benefits Brexit has given us—the Brexit that more than half of my constituents voted for; indeed, more people on Ynys Môn voted for Brexit than for Welsh devolution.
I want to draw my remarks to a close by mentioning the hopeful way in which I have seen political differences put aside to get us where we are today. The Welsh Government have matched the constructive spirit with which the UK Government have brought forward this exciting freeport opportunity for Wales. Members of this House and the Senedd from both sides of the political aisle have come together to show their support for the Anglesey freeport. I am incredibly grateful for that unity, because it shows that what is most important here are the communities of Anglesey and north Wales. In the light of the failure to invest in a third bridge, the future of our communities and children can be secured only through the prosperity that a freeport will bring. Diolch yn fawr.
Stephen Kinnock (Aberavon) (Lab)
It is a pleasure to serve under your chairship, Mr Vickers, and to follow the hon. Member for Ynys Môn (Virginia Crosbie), who has been making this case very strongly throughout her time in this place.
The decision that the two Governments are set to make on the location of the Welsh freeport is right at the heart of the debate about what a future British economy will look like and of the ambition that the Government have for Britain in the world. It is clear that by backing the Celtic Freeport bid, both Governments would be sending a clear signal that they are not looking backwards or simply managing decline by seeking to make up a bit of missing post-Brexit trade here or restoring a bit of pre-covid demand there; rather, it would show that Britain is truly ready to become a world leader in the green industries of the future.
The Celtic freeport, situated in the ports of Port Talbot and Milford Haven, would bring with it initial business rates exemptions, capital investment exemptions and seed funding that would drive £5.5 billion of inward investment into the local economy. Perhaps even more importantly, it has the potential to bring £54 billion into the supply chain of the vital new renewable technology of floating offshore wind.
The Celtic freeport would sit at the heart of the emerging green ecosystem in south Wales, which is set to play a central part in providing the green, competitive and secure energy supply our country is crying out for. South Wales was the cradle of the first industrial revolution, and we can now be the cradle of the green industrial revolution. The Celtic freeport can drive forward the green technology that will power our domestic, sovereign and sustainable energy supply, drive down household energy bills, support green steel making and, of course, create up to 16,000 new local jobs. The new technology at the heart of this green manufacturing revolution will be floating offshore wind.
The UK has led the world on the mass deployment of offshore wind power generation. Across nearly 50 sites, offshore wind contributes about 13% to the UK electricity mix. No one country—even giants such as China—can touch our footprint, so we have a lot to be proud of. Britain can ill afford to let this new technology of floating offshore turbines pass by, because if we do, we risk falling behind.
Floating offshore wind is a technology whereby wind turbines are attached to floating platforms that are secured by mooring lines and anchored to the seabed to keep them in place. This modern science uses the same technology as wind turbines that are fixed to the seabed to generate electricity, but the floating platforms can be installed in deeper areas of the sea, which frequently have higher wind harvesting potential.
This modern manufacturing renaissance, which will bring a £54 billion supply chain to the heart of Wales’s new economy, could drive forward a green ecosystem of sustainable growth and good jobs across Aberavon, Wales and the entire United Kingdom for future generations. Whether people are looking to become welders, electricians, data specialists or marine surveyors, floating offshore wind will create thousands of high-quality, high-skilled jobs right on our doorstep.
The Celtic freeport bid is about prosperity, but it is also about pride. It is, of course, about prosperity for our economy and people, but it is also about pride in our country and community. We can once again lead the world in tackling the major global challenge of the 21st century, namely climate change. For our local communities, it is about taking pride in the fact that their work will contribute to that national and global mission.
The new green ecosystem can also play a critical role in strengthening the backbone of our national economy. The covid pandemic and Putin’s barbaric invasion of Ukraine have turbocharged the need to build resilience into our supply chains. Floating offshore wind in the Celtic sea will be able to generate 24 GW of clean, green, renewable energy by 2045, which is a quarter—an enormous amount—of the UK’s total target.
To generate that amount of energy, we will need to build and deploy over 60 turbines a year. Tata Steel estimates that that would require 6 million tonnes of steel between now and 2045. The energy produced through floating offshore wind could then help to produce the green steel that Tata Steel plans to make in its future electric arc furnaces—which will replace the current blast furnace technology—at a lower cost per unit than is possible with the sky-high electricity prices that are currently holding our steel industry back.
The driving purpose of the Celtic freeport bid is to be a force multiplier, catalysing our green economy through floating offshore wind, building our energy security and strengthening our ability to stand on our own two feet by making, buying and selling more in Britain. The Celtic freeport offers one of the biggest opportunities of its type for Wales, which is why I and many hon. Members are backing the bid.
The cross-party support from Members in this place runs broad and deep, from the right hon. Member for Preseli Pembrokeshire (Stephen Crabb)—my fellow lead on the campaign, to whom I pay tribute—to hon. Members from Plaid Cymru. We also have support from a large number of businesses, ranging from Tata Steel to South Hook, from LanzaTech to SSE Renewables. They can see that the potential for the Celtic freeport bid will be as a platform for floating offshore wind, thus putting Wales at the forefront of the green industrial revolution. They understand that the Celtic freeport is a multi-port solution that builds on the strengths of two of the UK’s leading ports—Port Talbot and Milford Haven—to create a green investment corridor.
Combined with the supporting infrastructure, heavy engineering, industrial clusters and skills base along the M4 corridor, as well as the immense connectivity we have along the M4 corridor, our bid has what it takes to be a genuine game changer for our economy and security and in the battle against climate change. The prize is clear: the creation of a new long-term industry, where high-value manufacturing has “Made in Wales” firmly embossed on the tin.
Our ports are playing their part too. Associated British Ports and the Port of Milford Haven have committed to invest £710 million in their green energy-focused ports, while the first phase of construction at Pembroke Dock is already under way, as I am sure the right hon. Member for Preseli Pembrokeshire will illustrate in his remarks. That port infrastructure will act as a launch pad to help leverage a further £700 million of investment in factories to build the massive renewable sub-structures and turbines.
The decision about the selection of the Celtic freeport is the next vital step to secure this industry for Wales. It will provide the signal to global markets that will be needed if we want to lever in the high-impact private sector investment we need to take us forward. I will continue to make the case, and I hope that local businesses and residents across the Celtic freeport area and beyond will join me in making it. At the stroke of a pen, British and Welsh Ministers can unlock this new industry and repurpose our strengths for a green future. I hope that the UK and Welsh Governments will seize this opportunity. Wales was at the forefront of the first industrial revolution. With the right investment, commitment and decisions, we can put ourselves at the forefront of the net zero revolution.
Stephen Crabb (Preseli Pembrokeshire) (Con)
It is a pleasure to serve under your chairmanship, Mr Vickers, and to follow the hon. Member for Aberavon (Stephen Kinnock). I agreed with pretty much everything he said; thankfully, there is no rule against repetition in this place, so I will proceed with my remarks.
First, I would like to put on record my respect and appreciation for my hon. Friend the Member for Ynys Môn (Virginia Crosbie) for securing this important and timely debate, and for the articulate and energetic way she has championed her constituency and a freeport for Wales. In all seriousness, I do not think Ynys Môn has had a stronger voice in the House of Commons in its history as a constituency. I encourage my hon. Friend in the work she does.
Welsh ports have a long history in helping to shape the economic, social and cultural fabric of Wales, as one would expect from a nation with a coastline in the north, west and south. It is three years since the Select Committee on Welsh Affairs examined the proposal for a freeport in Wales. In our report, we noted the positive response from ports around Wales in the written evidence they gave, often citing the potential role of a freeport in regeneration. However, we argued that to make a lasting contribution to the regeneration of the poorest regions and nations of the UK, including in Wales, freeports should be assessed on the economic and social gains they are forecast to bring to local communities. In our view, freeports could help to revitalise the Welsh economy only when they fit with other policies that help Welsh ports and their local communities to thrive.
We noted that many areas of port policy and supporting infrastructure are either devolved to the Welsh Government or are shared responsibilities between the Welsh and UK Governments. We urge the two Governments to work together constructively, especially if a freeport bid is successful in Wales. Crucially, in our report we urged the UK Government not to cap artificially the number of potential freeport sites in Wales, nor to create a Welsh freeport purely for optical or political purposes.
I am pleased we have got to this hopeful and expectant point to hear the outcome of the bidding process for a freeport in Wales. I congratulate the Wales Office on its role in working with the Welsh Government and Ministers across Whitehall to bring us to the point where there could be agreement. There were moments, certainly three years ago, when some of us on the Welsh Affairs Committee were concerned that we might not get to this point, and that the differences in opinion between Welsh and UK Governments would be so great that the freeport policy would not happen in Wales. I am pleased we are at this point; the role the Wales Office played in that was extremely important.
I obviously have a constituency interest. Pembrokeshire is home to the port of Milford Haven, which is one of the UK’s leading energy hubs, hosting a wide range of conventional energy companies such as the Valero oil refinery, the Dragon liquefied natural gas import terminal, South Hook LNG import terminal, the RWE gas-fired power station and the Puma fuel storage site, among others. Those are all located on the Haven waterway. The port of Milford Haven is strategically one of the most important energy hubs in the UK, and the infrastructure it hosts plays a critical role in our national life. Undoubtedly, that port has played an integral role in shaping Pembrokeshire’s local economy through the high-quality job opportunities that those energy companies have provided to local people for many generations.
Those industries are changing, and need to change. The hon. Member for Aberavon made the point that recent events have highlighted the need for our energy mix to diversify, and our demand for home-grown renewable energy has never been greater. Right now we have a unique opportunity to build on that heritage and the excellent skillset in Pembrokeshire to use vacant brownfield sites for the new and exciting energy revolution that is just in front of us.
The port of Milford Haven is in prime position to shift from being one of the UK’s leading conventional energy hubs to being one of the UK’s leading renewable energy hubs. The decarbonisation of Wales’s primary industrial cluster, which stretches from Milford Haven all the way to Port Talbot and further east across the south Wales coast, is the prize in front of us. That decarbonisation has already begun, as we have already heard this morning, and will make a significant contribution to helping the UK meet its net zero targets.
In 2019 the Conservative party stood on a manifesto to deliver at least one freeport in Wales. Fast-forward four years and the necessary steps have been taken to ensure that that ambition becomes a reality. The Welsh and the UK Governments will jointly evaluate bids and select a freeport for Wales in early spring. As we know, for politicians “early spring” can mean anything, but I hope that it means in the days and weeks ahead. We have a prime opportunity, if the Government want to take it with St David’s Day just around the corner, for a really significant announcement that would make a difference for people and communities across Wales. We therefore expect to receive confirmation of the winning bid imminently.
I want to briefly put on the record why I think the Celtic freeport bid should be the frontrunner in this race—it is a competitive process. The Celtic freeport bid is a private-public sector partnership led by Associated British Ports, Neath Port Talbot Council, Pembrokeshire County Council, and the port of Milford Haven. The bid has been backed by prominent businesses across Wales as well as numerous MPs from all parties and Members of the Senedd as well, demonstrating the evolution of a collective consensus that is necessary to drive forward the Celtic freeport vision. The bid goes far beyond party political lines, with a broad recognition of the wide-ranging benefits that the Celtic freeport will bring to Pembrokeshire, Port Talbot and the whole of south Wales. That is why I have been working so closely with the hon. Member for Aberavon to help build momentum behind that important bid.
It was encouraging to see so many MP colleagues from across different parties attend our recent drop-in event to hear more about the exciting potential of the bid. I was delighted that so many of my colleagues put pen to paper that day to confirm their backing for it. If we are awarded freeport status, more than £5 billion of new investment will be unlocked, potentially creating more than 16,000 new high-quality green jobs across the south and west Wales economy. Furthermore, securing freeport status across the key sites of Milford Haven and Port Talbot will enable them to begin their journey towards energy diversification through, as we have already heard, the emergence of the new floating offshore wind technology.
As I explained in my debate on floating offshore wind in this Chamber last October, offshore floating wind represents a major, exciting new opportunity for the UK to tackle pressing issues: jobs and skills regeneration, wholesale energy prices, energy security, levelling up and, as I have said, net zero targets. The UK Government have set ambitious targets to deliver floating offshore wind in the years ahead, and both Milford Haven and Port Talbot have already been identified by leading developers as key locations for the early development of this new industry for Wales. Hopefully Milford Haven will be a hub for operations and maintenance, with Port Talbot at the forefront of assembly and manufacture.
The potential to unlock a UK market in the construction, maintenance and operations of floating offshore wind projects could be worth more than £54 billion in the decades ahead. That is the prize in front of us. It is clear that the establishment of a freeport across the sites at Milford Haven and Port Talbot will enable this exciting renewable vision to flourish. The war in Ukraine, coupled with rising energy prices, has underlined the urgent need for the UK to become less energy dependent. The need to diversify our energy mix has never been more apparent as the dial shifts to the development of green, sustainable energy. Floating offshore wind represents the next big renewable opportunity for Wales. With the expertise and heritage in the Milford Haven waterway, and the skillset and industry in Port Talbot, these two locations at the heart of the Celtic freeport bid are ideally suited to supporting the industrial-scale deployment of floating offshore wind.
Freeport status would be hugely advantageous in that process as it would allow this new green vision to flourish, with the tax breaks, simplified customs procedures and streamlined planning processes helping to ease the transition from conventional to renewable energy. In turn, there is a potentially enormous investment to be unlocked in the supply chain, and that is the prize here. The UK has made enormous progress in the fixed-bottom offshore wind industry and has taken strides in expanding that deployment, but the one thing that did not happen in was we did not create strong domestic content for the UK. We did not capture a bigger share of the full economic value of offshore wind as we should have done. We now have the opportunity with floating offshore wind to get it right and to deploy these structures to give us clean energy in a way that creates long-term jobs and training opportunities in our communities.
Stephen Kinnock
The right hon. Member is making an excellent speech. Does he agree that it is vital that the Crown Estate sets up a licensing process that guarantees localised supply chains and that there should be penalty clauses in the process, so that developers will be held to account?
Stephen Crabb
The hon. Gentleman makes a crucial point. He is absolutely right that the Crown Estate must ensure those contracts have teeth. That will be crucial to ensuring that developers deliver on their commitments because, as he knows, it is one thing for them to speak to us politicians and tell us about all the good things they will do in our communities, but actually making sure they do them when push comes to shove is another.
The other part of the equation is ensuring that we get the contracts for difference right and ensuring that the financial architecture around floating offshore wind is the right one to enable that investment in the UK and Welsh economies. Of course, there is a potential first-mover advantage waiting for the nation that makes the biggest and earliest strides to deploy floating offshore wind at an industrial scale. The Welsh Affairs Committee was recently in the US and met with a floating offshore wind developer there who was also looking to develop in the Celtic sea. They have secured seabed leases off the coast of New York and in California. There is a global race to be the first nation to see serious industrial-scale deployment of offshore wind, and I believe it should be Wales and the UK that does that.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Wales, indeed. Does the right hon. Gentleman join me in wondering whether Wales would be able to put better procurement requirements in place and ensure that the benefits are accrued more effectively to Wales if the Crown Estate, as in Scotland, was devolved to Wales?
Stephen Crabb
It pains me to disagree with the right hon. Lady, but the debate about devolving the Crown Estate is a red herring. It is a question that I have explored with potential developers and something I have discussed with the Crown Estate and other potential players in this field. That will not be the critical intervention to ensuring this vision is realised in the way that we all hope. I appreciate some of the arguments she is making about the devolution of the Crown Estate, and she has made them articulately before in this Chamber, but, as I say, it is something of a red herring.
The freeport intervention would be a critical intervention in helping to unleash and launch this new, exciting industry for Wales. I hope that when the UK Government and the Welsh Government sit down together to assess the bids, they will look at the strength of the industrial proposition behind the Celtic freeport bid. I grew up in Wales and have been a politician in Wales long enough to have seen a lot of failures of economic development around Wales. So much public money has been thrown at different schemes and interventions over the years—so often they seem to have the word “park” in them: food park, science park, tech park and so on—that never really achieve the vision and potential that politicians hoped for when they were spending taxpayers’ money because very often there is no real substance behind them.
I hope that in making this freeport intervention, the Government recognise that they need to work with the grain of the private sector and industry and recognise where real, substantial projects are already starting to happen—in Port Talbot, the port of Pembroke and Milford Haven—and capture that and work with it. That is what will deliver real economic and social benefits for our communities in the way that freeports are intended to do. If the UK Government want to improve our energy security, help us to take a big step towards meeting our net zero ambitions and invest in creating good-quality jobs and training opportunities in our constituencies—that is the essence of levelling up and rebalancing the economy, as it would mean that young people do not have to leave their communities in Wales to work elsewhere, allowing them to stay and be part of those communities, to build and to raise their children there—they will recognise the strength of the Celtic freeport bid and what it proposes. I really hope that the Government take this opportunity and give us the freeport status that we are looking for to help to create this new industrial revolution.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
It is an honour to serve with you in the Chair, Mr Vickers. It is also an honour to follow my friends, the hon. Members for Ynys Môn (Virginia Crosbie) and for Aberavon (Stephen Kinnock) and the right hon. Member for Preseli Pembrokeshire (Stephen Crabb). It will probably be noticed that I am the only Member present not representing a constituency that would be directly affected by these freeports, although I have a professional interest in Holyhead, where I used to be a news reporter, and a family interest in Milford Haven, where my daughter works for the tug companies.
I was very interested in what the right hon. Member for Preseli Pembrokeshire said about the significance of freeports for the economic, social and cultural fabric of Wales. As I have the opportunity now to respond, I must take issue with what he said about the Crown Estates. What we have seen much in Wales is a history of extraction from our resources and infrastructure. If the Crown Estates were devolved to Wales, we in Wales would have far more control over the nature of supply lines and procurement and what we choose to emphasise, in the way that Scotland does in Scotland. The way that something has always been done in the past may not actually reflect the best that we can do in the future. Historically, we have seen that loss. The first places that lose out on economic development in Wales have historically been the furthest west, as well.
Alongside the co-working happening here, there is a different sort of co-working happening already in Wales with the Welsh Government aspect of the freeport programme. I would like to put a couple of things on the record to show how different what is happening in Wales is, because it is important for us to be aware of that. The prospectus that initiated the 12-week bidding process—published back in September—included a commitment that a freeport or freeports in Wales would operate in a manner that aligns with the Welsh Government’s policies on fair work and social partnership, where
“workers are fairly rewarded, heard and represented, and can progress in a secure, healthy, and inclusive working environment, where their rights as workers are respected.”
TUC Cymru also welcomes the involvement of trade union representation in the governance of freeports in Wales. Can the Minister say what estimate there is of the impact of national insurance variations within freeport development zones and how that might play out against the Welsh Government’s views and stated intentions on how freeports should operate?
The freeport development proposed for Holyhead is also the result of a long-term partnership between Stena, the ferry company, and Cyngor Ynys Môn. Stena, of course, is the harbour authority for Holyhead. The Senedd Member for Ynys Môn, Rhun ap Iorwerth, raised the discrepancy between the initial offer of £8 million in seed funding for the Welsh freeports and the £26 million for freeports in England, which ensured that the funding level was on the Welsh Government’s agenda. We now have a commitment that freeports in Wales will be funded to the tune of £26 million.
The right hon. Member for Preseli Pembrokeshire mentioned that he was concerned that there might be “optical or political purposes” in proposing two freeports for Wales. I think that it is essential to have viable ongoing projects for two freeports in Wales.
Stephen Crabb
Just to clarify, that remark about “optical or political purposes” was a quote from the Welsh Affairs Committee report. It was not just a personal opinion.
Liz Saville Roberts
I stand corrected and welcome that, but I think there is a really important question here for the Minister, and I press him for a response. My understanding is that for Wales to have two freeports, two exceptional cases have to be made. Now that we appear to be approaching the time when announcements are going to be made, it is important to know what constitutes an exceptional case, because we have two communities—three if we include Port Talbot—that have great expectations. Can the Minister clarify whether the bids are being assessed by both the Welsh and UK Governments? Will the Welsh Government have a meaningful say on whether the two bids meet the requirements? I would appreciate a response on that. Given the initial revelation that a lower level of funding was being allocated for a freeport in Wales, if both freeport applications are successful, will they both receive £26 million in initial funding?
Virginia Crosbie
The right hon. Member is making an excellent speech. Does she agree that it is going to be £25 million, plus the £1 million—not only in Wales, but in Scotland? In addition, there has been a one-year delay while the deliberations have gone on. This means that we have lost out on potential investment and skills that could have been transformational not only to Wales, but to the wider economy.
Liz Saville Roberts
I agree; this is a critical part of levelling up. One of my personal interests in this is support for communities in the far west. Next, I will look at some of the concerns that have been expressed in relation to displacement and freeports per se. The fact that these applications are in the far west is possibly beneficial—as long as we know the details—to other areas around those freeports, so it is important.
There are concerns for north Wales, given that the Liverpool city region has been granted a freeport. I would be interested to know whether the UK Government have made an assessment of the likely impact on the north Wales economy of the possibility of displacement to the east, and the significance of that for decisions on the two freeport bids. Bearing in mind that we have had the terrible news that the 2 Sisters meat processing factory in Llangefni is due to close, with the loss of 700 jobs—I understand that many of those jobs are located in Gwynedd, so they are within my own home county—what assessment has been made of displacement, in favour of or as a risk to other counties that could be affected by development? There are concerns here, and it is due diligence for us to know what assessment has been made of them, particularly in relation to Liverpool but also locally in relation to Anglesey. What pros and cons have been put forward?
Much has been made of the freeport bids in Wales and how they could play a critical role in accelerating the renewables revolution, but we must remember that freeports are not the only aspect. The UK Government should make it clear that energy security is a priority. Can the Minister guarantee that they will work alongside the Welsh Government with areas whose bids have not been successful, to make sure that they receive strategic investment, too? The very fact that a bid has been made shows that a need has been recognised.
My next question is about governance and monitoring. We have heard that the parameters for bids are different in England and Wales, with the emphasis in Wales being on meeting the goals of the Well-being of Future Generations (Wales) Act 2015 on social partnership and on safeguards for the environment and workers’ rights. How will the UK Government work with the Welsh Government to realise that? Those are very worthy goals, and they make it easier for me and for my party to stand here and support the bids, but I want to know how they are going to move ahead.
I have a question on the national grid. In its report on the grid in Wales, the Welsh Affairs Committee warned that we in Wales would be unable to realise our full renewables potential without expanding grid capacity. The Government refused in their response to commit to undertaking an assessment of current grid capacity in Wales. In recognition of the fact that the lack of a fully functioning grid will undermine any freeports in Wales, will the Minister look again at delivering the Welsh Affairs Committee’s recommendations on the national grid? It is critical to future developments in both projects.
To close, I will emphasise the bid in Holyhead and Ynys Môn, which is the closest one to my constituency. Great Britain’s land bridge has lost 20% of its trade, and that is down to Brexit, which has had a direct effect on the economy of Ynys Môn. It is recognised that that link is important to Holyhead, Ynys Môn, north Wales and the whole United Kingdom. The degree of partnership between the hon. Member for Ynys Môn; the local authority, Cyngor Sir Ynys Môn; the port authority, Stena; and the north Wales Senedd Members—there was cross-party representation in a letter that they wrote yesterday to Vaughan Gething, the Minister for the Economy in Wales—shows that there is co-ordination and a real desire for co-working in these projects. Fundamentally, the Welsh economy, our communities and our young people deserve and need the two projects to move ahead to see the best benefit for Wales.
Alex Norris (Nottingham North) (Lab/Co-op)
It is a pleasure to serve with you in the Chair, Mr Vickers, and to speak on behalf of the Opposition. I congratulate the hon. Member for Ynys Môn (Virginia Crosbie) on securing this debate, and I thank the Backbench Business Committee for granting it. She started the debate with characteristic vigour and passion, which set the tone for a series of excellent contributions from colleagues.
On the hon. Lady’s point about Holyhead, we are all aware of its totemic role in north Wales, Wales more generally and the whole of the UK, and we all have concerns about the challenges it faces in relation to trade. She made the case for its exciting future, and that is where we need to move the conversation. She and her colleagues have clearly built a strong coalition at home. Whether through this process or others, they ought to have the power and resources to shape Holyhead’s future so it can continue to be a crucial part of the UK.
The hon Lady’s point about this being a levelling-up issue was pertinent. Perhaps I would say that as shadow levelling-up Minister; I see levelling up everywhere. However, the test will be whether young people in her community and her part of Wales feel they do not have to move to Cardiff, London or the rest of England. That will show us whether we have delivered for them through this process and through levelling-up more generally.
The debate became a de facto freeport hustings, and Port Talbot and Milford Haven were also well represented. I agree with my hon. Friend the Member for Aberavon (Stephen Kinnock) that this is not about single project interventions here and there to add a bit of lost GDP or gross value added in different parts of our nations and regions. It has to be much more fundamental. We need to re-gear our nation’s economy around the things that we do well and where we can compete globally, and it is clear that he and his colleagues are using the Celtic freeport bid to do that. I agree with his point that the green industrial revolution is where we need to focus. His community is clearly a long way down the road when it comes to floating offshore wind, and there is real potential in that.
Renewables, including floating offshore wind, are a way to tackle our three domestic crises: the cost of living, regional inequalities and reaching net zero. They will help us to add skilled jobs to our economy so that people have long, viable careers; to spread opportunities more fairly around our nations and regions; and to protect our planet. My hon. Friend the Member for Aberavon and his colleagues have clearly put a lot of thought into doing that with the Celtic freeport bid. As the right hon. Member for Preseli Pembrokeshire (Stephen Crabb) mentioned, the plans change will that community, which we may associate with energy generation methods from the past, into a place of energy generation for the future.
The exchange between the right hon. Member for Preseli Pembrokeshire and the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on the Crown Estate was important. Having had similar conversations with the right hon. Gentleman, I know that it has levelling up at the forefront of its mind. It is important that we write that into the way in which future transactions are done. Perhaps that is a debate for another day; but I know they will have listened to our debate with interest. That test really must be passed.
The right hon. Member for Preseli Pembrokeshire alluded to a point raised in the Welsh Affairs Committee about not doing things for “optical or political purposes”. That is important, too; it is a challenge to us all. One of the most dangerous arguments in politics is that something must be done. Doing anything is something, but what our constituents want and need is for us to do meaningful things, based on a sober look at the reality and the evidence. In relation to the levelling-up fund, we have had plenty of conversations in the last two weeks about bids and single interventions, where we almost compete with each other. In such situations, some will go away happy because they have won, in the broadest sense, but others will go home disappointed because they have not got anything. I want to move away from that, because levelling up, and our nation’s economic future more generally, is for me about the devolution of power and resources to local communities to shape their own places. It is not about feast-or-famine, cup-final individual interventions, which can become a bit optical or a bit political. We need to move beyond that.
I want to make a few points of my own. It is important to state that freeports and the freeports programme are not, in and of themselves, a panacea for tackling the challenging picture of economic growth across all our nations and regions. Sometimes I wince when I hear freeports mentioned as an example of how communities have been levelled up, as if the mere existence of a freeport has done that. Freeports do not automatically lead to more jobs, better skills and wider prosperity unless—this is what we have heard in both the cases that we have discussed today—they are seen as part of a broader national, regional or sub-regional economic strategy for the area in question. Otherwise, they are just more single interventions.
It will be important and constructive for all of us in this place to have a tight eye on the evidence of the impact of freeports. We know that the risk is that they do not bring additionality but instead result in displacement, as the right hon. Member for Dwyfor Meirionnydd has said. We need to have an honest conversation about that. Nevertheless, such decisions are fundamentally for local communities to make. As has been set out in “Prosperity for All” and by colleagues today, Wales has outstanding economic potential, whether that is in foundation sectors such as food and tourism, or in harnessing our location for import and export, and, in particular, in clean energy. That is a promising economic outlook.
The Welsh Government need to work in concert with local authorities and communities, which are clearly ready, able and waiting to deliver. The question for us in this place is how we get the right powers and resources out of here to them, to allow them to do so. I do not want to dwell too much on the history, but the initial knockings of this debate between the UK and the Welsh Governments did not offer a particularly solid demonstration of the devolution settlement. I think we would all have struggled with the idea that the UK Government could impose a freeport without putting the backing in; that would not have been a good thing. Happily, cooler heads have prevailed, and the two Governments have negotiated two important things: the non-repayable starter funding for the freeports established in Wales on a similar footing to deals in England; and the agreement that both Governments will act as a partnership of equals, and, as the right hon. Member for Dwyfor Meirionnydd said, in a manner that works with the Welsh Government’s policies on fair work and environmental sustainability, including the commitment to net zero. That provides a bedrock of certainty for the people of Wales and their business leaders to allow them to plan for the future.
The Minister has an unenviable job of arbitrating between the multiple bids on offer, or perhaps choosing them all. I suspect that today might not be the day to make that decision. However, I hope to hear from him a commitment that, fundamentally, yes, this is about the UK Government taking a view, but it is also about giving the people of Wales—whether it is north Wales, south Wales or anywhere else—the tools and the resources to decide their economic future, take a hard look at what they are good at and where they are going to be good in the future, and build out from that. We see our role here as enablers of that, rather than deciders. That is hugely important, and I look forward to the Minister’s contribution.
The Parliamentary Under-Secretary of State for Wales (Dr James Davies)
It is a pleasure to serve under your chairmanship, Mr Vickers, and to make the winding-up speech in a Westminster Hall debate for the first time.
I congratulate my hon. Friend the Member for Ynys Môn (Virginia Crosbie) on securing the debate—I know how hard she works for the island—and thank other Members for articulating their views. Happily, we have heard a range of opinion, from north Wales and from south Wales, in support of the Anglesey bid and the Celtic freeport bid. For balance, there is a third bid in Wales, centred around Newport.
We have had an excellent debate, and I am pleased to have the chance to set out the opportunities being created by the freeports programme in Wales, as well as how it, along with other UK Government support and investments, will help to level up communities the length and breadth of the UK. As my right hon. Friend the Chancellor said last month, the Government are committed to ensuring that the benefits of economic development are felt everywhere—not just in London and the south-east, but across the UK. The Government intend to do that by spreading opportunities more equally across the country, empowering local leaders and bringing left-behind communities up to the level of more prosperous areas.
In that regard, freeports are already playing a key role in creating hundreds of thousands of jobs across the UK and helping to drive economic growth by attracting investment to their local areas and regions. Our new freeports programme in Wales, which is being delivered with the Welsh Government and backed by £26 million, of which £25 million is seed capital and £1 million Government support, will help us to make the vision a reality.
The freeports programme is one of the core parts of the Government’s levelling-up agenda, and it will look to incentivise private businesses to invest in new opportunities in Wales. We have worked constructively with the Welsh Government to design a bespoke freeports model that will deliver for Wales. It will make the most of the unique opportunities in Wales, which will ultimately benefit businesses, ports and communities across Wales.
The Wales freeports model is based on three main objectives: promoting regeneration and high-quality job creation, establishing at least one freeport as a hub for global trade and investment across the economy, and fostering an innovative environment. Freeports are magnets for investment, and businesses located in freeports will benefit from a generous package of measures comprising tax reliefs, customs advantages, business rate relief, innovation, and trade and investment support. Those tools, paired with the ambitious £26 million of public investment in seed funding, will unlock much-needed investment and high-quality jobs not just for businesses located in the freeport, but for the surrounding areas and regions.
The freeports programme will drive forward our ambitions for Wales to compete at a global level while creating new high-skill, high-wage and local jobs, putting Welsh communities on the path to long-term growth and prosperity. The freeport programme in Wales will, once the competitive process concludes, join the freeports in England and the green freeports in Scotland to help to deliver the UK Government’s levelling-up ambitions.
The operational freeports in England are already delivering jobs and investment across local areas such as Plymouth, Solent and Teesside. The newest operational freeports—the Liverpool city region freeport and freeport east, announced at the end of last year—will also drive investment and industrial growth to deliver thousands of skilled jobs for local communities and regions.
The process in Wales is well under way and I, like many others, look forward to the benefits the programme can bring to communities in Wales. We and the Welsh Government have committed to delivering at least one freeport in Wales, and we both remain open to considering the designation of an additional freeport if there are sufficient exceptional bids. Unfortunately, as we are still in a competitive process for Wales, I am unable to comment on individual applications. However, I look forward to seeing the outcome of the competition process and thank all those who developed the bids submitted in Wales.
I very much welcome the contributions to the debate. My hon. Friend the Member for Ynys Môn powerfully articulated her arguments for the Anglesey freeport. She focused on net zero, the need to boost trade flows, energy and, of course, jobs.
The hon. Member for Strangford (Jim Shannon) asked about Northern Ireland. He is no longer in his place, but I should say that discussions about extending the freeport programme to Northern Ireland are ongoing.
The hon. Member for Aberavon (Stephen Kinnock) spoke about green energy—in particular, his desire to see the success of the floating offshore wind agenda—and energy security. My right hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb) echoed those comments. He particularly wanted to highlight the importance of job opportunities, energy companies in his patch, and the decarbonisation of the industrial cluster in his part of the world. He, too, spoke about floating offshore wind and the importance of the supply chain.
The right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) kindly presented me with a lengthy list of questions, which I will do my best to answer. First, she asked about national insurance. Freeports will introduce secondary class 1 NI contributions relief for eligible employers on the earnings of eligible employees working at a freeport tax site. I am happy to find out further detail for her in due course if she writes or speaks to me.
I welcomed the right hon. Lady’s general support for the concept of freeports and having as many as possible in Wales. She highlighted her long-standing view that the Crown Estate should be devolved. Particularly in the Celtic sea, the opportunities for floating offshore wind relate also to south-west England, not just Wales, so my personal view is that breaking up the Crown Estate would not assist in that endeavour.
The right hon. Lady asked what constitutes an exceptional case. Essentially, the process is being judged equally by officials in the Welsh Government and the UK Government, and Ministers in both Governments will have equal decision-making powers. It is for them to judge the exceptionality of the cases based on what is submitted to them, but all will become clear in due course.
The right hon. Lady asked whether, were there to be more than one freeport, there would be two or more allocations of the £26 million. I can tell her that yes, that is the intention. She asked about the freeport in Liverpool. As she knows, Growth Track 360 held a reception here yesterday. Liverpool is of course an important element of the north-east Wales economy, and success in Liverpool’s economy benefits north-east Wales, so I urge her to bear that in mind.
Liz Saville Roberts
I am grateful for the Minister’s explanations and responses to my questions. It is worth putting on the record that Liverpool will have an effect on the whole of north Wales, along the A55 and into Ynys Môn. That is another argument for a counterbalance in the north-west for Caergybi, because that will, I hope, see developments across the north-west of Wales and into other counties, such as Gwynedd and Conwy.
Dr Davies
In many respects, the right hon. Member is making the case for investment across north Wales and into Anglesey. The agenda to upgrade infrastructure to link in with the north-west of England is also important to benefit north Wales. I hope that I covered most of her questions; should she have others, I am happy to answer them.
Liz Saville Roberts
There was one other question about reconsidering grid capacity in Wales. I would be grateful for a response to that.
Dr Davies
The right hon. Member makes a good point. Clearly, the Welsh Affairs Committee has considered these issues in detail. They are important to me, and the role of the Wales Office is to liaise with the Department for Energy Security and Net Zero, as it is now called, to ensure that grid capacity meets aspirations. I assure her that I hope to have that influence.
Stephen Crabb
I reiterate the point that the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) made about grid capacity. If we read in detail the evidence received by the Welsh Affairs Committee, we see that it is very clear that when it comes to investment in the grid, business as usual is simply not going to cut it. I appreciate that the Government are making efforts to secure more timely investment, but if we are to meet the targets and aspirations we have been talking about, we need to see a sea change.
Dr Davies
I take that point on very much board and thank my right hon. Friend for all his efforts in that regard.
Let me take the opportunity to outline other core elements of the Government’s levelling-up agenda. Wales is front and centre of our plans to level up the whole of the UK, and areas across Wales are already benefiting from more than £1.7 billion of local growth funding. From large-scale transport improvements to regenerating town centres and refurbishing cultural assets, the levelling-up fund will deliver lasting improvements in local communities across Wales, giving people renewed pride in their local areas. Ynys Môn alone is receiving £17 million from the levelling-up fund for the cultural regeneration of Holyhead town centre. I was pleased to visit a few weeks ago and see the efforts being made to ensure that people who use the port see all that Holyhead has to offer.
In total, the Government are investing more than £208 million in 11 projects across Wales through the second round of the LUF. That is almost 10% of the total UK allocation and builds on the £120 million that the Government invested in Wales in the first round of the fund. It is far more than Wales would have received through a Barnettised formula and is testament to the dedicated work of local authorities across Wales, which developed high-quality applications. The Government are also investing more than £790 million in Wales’s four city and regional growth deals. The deals are starting to deliver real change on the ground, from the Swansea Arena to investment in the digital signalling processing centre at Bangor University.
Furthermore, £2.6 billion has been allocated to places across the UK through the UK shared prosperity fund. Of that, £585 million has been allocated to Wales, including more than £126 million for north Wales. This trailblazing new approach to investment and the empowerment of local communities to level up and build pride in place will see direct investment in three local priorities: communities and place; support for local businesses; and people and skills. The funding is now in the hands of Wales’s four regional partnerships, through which local leaders are empowered to decide how best to invest the funding to better promote local growth, help to regenerate local economies and build a better future.
Stephen Kinnock
We are in danger of going down an SPF rabbit hole rather than discussing freeports, but as the Minister raised the SPF, I cannot resist. May I ring an alarm bell? As we head towards March 2025, when the long tail of European funding will tail off, there is going to be a cliff edge. Organisations that are delivering what is currently a sort of hybrid of EU and SPF funding are terrified that their projects will collapse, and have not had enough lead time to plan. Can I mark the Minister’s card in respect of the ticking time bomb with regard to the SPF? If he could look at a more flexible way of conducting the comprehensive spending review that does not have the arbitrary March 2025 deadline, that would salvage the programme. If he does not do that, we are in danger of seeing some difficult decisions having to be made in the very near future.
Dr Davies
I thank the hon. Member for raising his concerns about the shared prosperity fund. He will know that very large sums of money are being allocated through local authorities, and I hope he is having some input into that process in his own area, as I am in mine, and articulating his concerns, to ensure that projects that he feels are in need of support and protection in that respect get the hearing that they need.
I will move on from the SPF to conclude this excellent debate by again thanking my hon. Friend the Member for Ynys Môn for securing it. She is a champion for Ynys Môn on issues from the freeport bid to nuclear and green energy and transport connectivity. I know how important it is to her to see well-paid jobs on the island and to provide good reasons for young people to stay on Anglesey. I would welcome the opportunity to have further conversations with my hon. Friend about freeports in Wales once the competitive process concludes. Of course, that invitation extends to all right hon. and hon. Members.
Virginia Crosbie
I thank the Backbench Business Committee for allowing me to hold this debate and all those who have spoken. I think we would all agree that we have had some excellent speeches, as well as the Minister’s full response.
There are three freeport bids in Wales: two in the south and one in the north. We have heard about two of them this morning—the Celtic freeport and the Anglesey freeport. There are eight freeports in England and two in Scotland, and there is to be at least one in Wales, so it is a really exciting time. A decision is expected early in the spring.
In conclusion, I sincerely hope that we will all be back here in Westminster Hall this time next year speaking in a debate with the title, “Welsh freeports: delivering levelling up, delivering net zero and delivering the green revolution”.
Question put and agreed to.
Resolved,
That this House has considered freeport proposals for Wales.