Securing Wales’ Future

Transition from the European Union to a new relationship with Europe

Securing Wales’ Future | 1 Contents

First Minister’s Preface by the Leader Preface of Plaid Cymru 1 Page 4 2 Page 5

The Single Market and Summary International Trade 3 Page 6 4 Page 9

Finance and Migration Investment 5 Page 15 6 Page 19

Constitutional and Social and Environmental Devolution issues Protections and Values 7 Page 26 8 Page 29

Transitional Arrangements Conclusion 9 Page 33 10 Page 34

Annex A Annex B 11 Page 35 12 Page 49

This White Paper been developed jointly by the Welsh Government and Plaid Cymru

email: [email protected]

© Crown copyright 2017 WG30683 Print ISBN: 978 1 4734 8516 7 Digital ISBN: 978 1 4734 8518 1 Mae’r ddogfen yma hefyd ar gael yn Gymraeg / This document is also available in Welsh 1 First Minister’s Preface

A majority in Wales voted to leave the European Union (EU) and the Welsh Government has been clear from the outset that this democratic decision must be respected.

We are equally clear that the questions. The Council for intention of helping shape a viable terms of exit must protect Wales’ Economic Renewal provides a and consensual UK negotiating vital interests and should be particular focus on the economic position. This White Paper sets capable of bringing together those and business challenges. More out the broad aims of the Welsh who voted to leave and those who widely, thought about Wales’ Government for those negotiations. voted to remain. We do not believe future is informed by extensive Throughout, the emphasis is that people were persuaded to and active debate across sectors on preserving and promoting vote leave with the intention that such as agriculture, environment, prosperity while recognising the Wales should become worse off Higher Education, the third majority wish to leave the EU. as a result, nor do we believe sector, the creative sector, that this should be an inevitable local government and others. As we face the future many consequence of leaving the EU. questions remain. The Welsh Departing the EU in no sense Government must approach its Decisions taken in the months means that Wales will turn its work in new ways and the UK ahead will define Wales’ economic back on Europe. Continued full itself must adapt and change. and social interests for many and unfettered access to the We believe that the UK’s exit years to come. Exiting the EU Single Market is fundamental from the EU should be conducted presents clear risks which need to our future. Our friends and through constructive negotiation to be managed and mitigated neighbours in Europe will based on mutual respect and and the Welsh Government has continue to be our friends and shared long-term interests a responsibility to preserve and neighbours, and we need to find among European neighbours. develop the country’s prosperity. new ways of working together There will also be opportunities on our common challenges. to think afresh about our policies Equally, Wales is a world-facing The Welsh and programmes, about how nation. We have a long record Government is we work together in a changed of trade and investment with United Kingdom (UK) outside North America, Japan, the determined to protect the EU, and the potential to Middle East and elsewhere. this country’s vital help businesses explore new We embrace the world and its interests and the markets around the world. horizons, and where new trade opportunities open up, we will future prosperity Politicians in Wales have no work with businesses to help of Wales. monopoly on wisdom and our our economy prosper. perspective has been informed by extensive debate, not just This White Paper outlines Wales’ within the National Assembly key strategic interests and for Wales but beyond it. Our priorities as the UK prepares to European Advisory Group draws leave the EU. We are working on individual specialist expertise with the UK Government, and the spectrum of political Northern Ireland Executive and Carwyn Jones opinion as we consider detailed the Scottish Government with the First Minister of Wales

4 | Securing Wales’ Future 2 Preface by the Leader of Plaid Cymru Since the vote to leave the European Union, Plaid Cymru has advocated that the priority should be to secure and defend the Welsh national interest, in particular our economic interests.

Plaid Cymru outlined our desire solidifies the view of the involved that withdrawal from the EU for a formal Welsh negotiating parties that Wales should be should precipitate a remodelling position on EU withdrawal; for able to benefit from continued of the governance structures of parties to collaborate on defining participation in the European the UK, a long-held belief within and promoting the Welsh national Single Market. There has been our party. interest; and for Wales to secure movement between the parties as much common ground as involved in terms of agreeing It also progresses the Party possible with the other devolved possible forms which this of Wales’ calls for a more administrations so that there is a continued participation could take, comprehensive international ‘Four Countries’ approach. with agreement being reached policy, as well as our key priority that this could include EEA and/ of retaining and enhancing vital Thanks to significant and or EFTA membership, and that it links between Wales and Ireland. constructive efforts through must avoid tariff barriers. liaison between Plaid Cymru and Just as Plaid Cymru has worked the Welsh Government, these The document welcomes the in the name of Welsh national positions have been advanced, contribution of European workers unity to develop this joint position, and will now become the policy of and migrants to Welsh society and we are confident that the Welsh the government, and the position our economy, and challenges the Government will continue to work of a clear majority of Members of negativity which has been allowed with Scotland, Northern Ireland the National Assembly. to dominate political discourse. It and other partners, to identify upholds the principle of freedom common ground, both ahead For Plaid Cymru, this document of movement and is therefore of and during any negotiations. reflects our core principle that consistent with full Single Market Regardless as to how people Wales has a democratic right to participation. shape the kind of EU withdrawal voted in the EU referendum, that takes place. It further sets out a way for Wales there should now be a sense not to lose out financially when of encouragement that Wales Wales’ role should be to influence EU funding ends. The document has a clear and articulate any negotiations which take place, also clarifies that Wales could and position ahead of forthcoming rather than simply accepting that should continue to benefit from a negotiations. Our national EU withdrawal can be carried out range of European programmes interests and needs are clearly without regard to the interests of which are of benefit to our citizens. expressed in this paper, and I Wales, Scotland and Northern have no hesitation in commending Ireland. On the issue of environmental, it to people in Wales. social and workplace regulations, It is therefore of crucial a strong message is sent to the importance that the UK UK Government that these must Government recognises in any not be eroded or discarded in the negotiations that the UK is a multi- name of deregulation or ideology. national state, not a single nation. Crucially for Plaid Cymru, the Leanne Wood In promoting the Welsh national document contains agreement Leader of Plaid Cymru interest, this White Paper

Securing Wales’ Future | 5 3 Summary

This White Paper sets out the its negotiating position. In so shows that any significant main issues which we have doing, the UK will be pursuing reduction in access to the Single identified as vital for Wales as outcomes which we firmly believe Market will be damaging, and the UK moves to leave the EU. will be beneficial for the UK as a the greater the reduction, the It has been developed by the whole, as well as for Wales. worse the consequences will be Welsh Government in conjunction in terms of reduced or negative with Plaid Cymru through an There are six key areas which we growth. We believe that full and official Liaison Committee1. The believe need to be addressed unfettered access to the Single views of the European Advisory in negotiations: the Single Market for goods, services Group, appointed by the First Market and international and capital – including our key Minister in summer 20162, trade, migration, finance and agricultural and food products – have played a helpful role in investment, constitutional and is vital for the forward interests developing its content. devolution issues, Wales’ social of Wales and the UK as a whole and environmental protections and we urge the UK Government The Welsh Government will and values, and transitional to adopt this as the top priority work constructively with the UK arrangements. for negotiation with the EU. Government as the UK prepares There are various ways in which to exit the EU and transition The Single Market and this might be achieved. These towards a different relationship International Trade might involve UK membership with our European neighbours. The Welsh economy is closely of the European Free Trade Together with Plaid Cymru, the integrated into the EU Single Association (EFTA), of which Welsh Government will speak Market and some two thirds of the UK was a member prior to for Wales to ensure that the identifiable Welsh exports go to joining the EU, and through this terms on which the UK leaves EU countries. Wales’ success continuing to form part of the the EU are not damaging to in attracting foreign direct European Economic Area (EEA); Wales’ interests. In return, we investment over many decades or through a negotiated bespoke expect the UK Government to is largely based on access to arrangement unique to the UK. take full account of the issues the EU market of more than we have identified as vital to 500 million customers. Analysis Wales’ interests in forming

(below) Swansea city at dusk

1 In the Paper, “we” should be taken to refer to both the Welsh Government and Plaid Cymru. 2 http://gov.wales/about/cabinet/cabinetstatements/2016-new/euadvisory/?lang=en Migration is linked to employment. For We acknowledge that a wish students and researchers, we to address concerns arising believe continued free mobility from EU migration was part across Europe is in the best of what stimulated support interests of Wales and the UK for leaving the EU and that as a whole. Linking freedom the UK Government sees of movement to employment migration as a key focus of should be complemented the forthcoming negotiations. by rigorous enforcement of Equally, we recognise the very existing legislation to prevent positive contribution EU migrants exploitation of workers, make to our economy and particularly those in low-wage communities. The rights of EU occupations. migrants already living in Wales to remain should be guaranteed Finance and Investment immediately and all who live here must be treated with equal In budgetary respect. We call upon the EU to give a reciprocal guarantee terms, Wales is a to Welsh and UK citizens living net beneficiary of (above) European Investment Bank in Luxembourg in the EU. We believe that current EU funding for regional Wales will continue to need EU membership, economic development in Wales, migration from EU countries to currently receiving agriculture and the countryside. help sustain our private sector about £680million Significant investment in Wales is economy and public services. stimulated by a number of smaller In our view, the key is to ensure in EU funding EU programmes and we strongly that, apart from students and each year. believe Wales should continue to those who are able to sustain benefit from access to them from themselves independently, Not only is this funding hugely outside the EU. These include: freedom of movement of people important to Wales in terms Horizon 2020, ERASMUS+, of driving economic growth Creative Europe and the Wales- and jobs, it also enables the Ireland Programme. We also set Welsh Government to leverage out why we believe the UK should additional resources from both remain a partner in the European public and private sources. Investment Bank. While the UK Government has largely guaranteed funding for Constitutional and projects agreed prior to 2020, Devolution Issues it is crucial in the longer term Withdrawing from the EU is a that EU funding is replaced major constitutional turning point by a revision to the Block for Wales and the UK as a whole. Grant. During the referendum Powers already devolved to Wales campaign voters in Wales – agriculture, fisheries, regional were assured that leaving the development and environment, EU would not result in Wales for example – will in future be being worse off and it is vital to exercised here without an EU public faith in political process regulatory framework. Similarly, that this promise is honoured. reserved powers which would, in Replacement funding from UK sources must reflect

Securing Wales’ Future | 7 principle, be exercised at UK level devolved settlement in relation to Transitional Arrangements (for example, on international the Bill, then we will do so. It seems increasingly likely that trade or competition) would have negotiating both the terms of potential to impact adversely on Social and Environmental our withdrawal and a workable, devolved policies in Wales. Protections and Values detailed future relationship with The UK has been part of the EU The current inter-governmental the EU may not be achieved for more than 40 years and a machinery will no longer be within the limited timescale set substantial body of legislation fit-for-purpose and new ways of for the Article 50 negotiations. has been developed which working – based on agreements Experience from elsewhere protects Wales’ environment freely entered into by the UK suggests that trade negotiation, and social well-being. Clean Government and the three for example, is necessarily air, water and beaches are all devolved administrations and complex and time-consuming. underpinned by this legislation. subject to independent arbitration The scale of work required to A range of rights and protections – must be developed. The scale adapt our legal, constitutional for workers limiting exploitation of change demands that the UK and institutional structures is in the workplace, including, itself be remodelled to energise a equally complex and likely to for example, the Working Time dynamic and decentralised future require significant development Directive, have resulted in safer based on co-operation, common time. We therefore believe the working environments and purpose, solidarity and workable, UK Government should seek better conditions for employees. more federal, structures. We see agreement, as a matter of high The safety of products sold in preparation for departure from priority within the Article 50 our shops and a range of wider the EU as the starting point for a negotiations, on a transitional consumer protections have detailed debate about reform and phase, after our formal exit accrued from EU legislation. change within the UK. We need from the EU, to avoid the chaos In the short term, the so-called sight of detail on the ‘Great and uncertainty which would Great Repeal Bill will preserve Repeal Bill,’ proposed by the arise from a sudden ‘cliff edge’ existing legislation in domestic UK Government before we can departure. Leaving the EU does law. In leaving the EU, we need develop an informed position not mean leaving Europe and we to be vigilant and insistent that on its implication for devolution believe negotiations should be protections and standards which in Wales. If, after analysis, it is based on good faith and mutual benefit our citizens and the well- necessary to legislate ourselves, neighbourly interest. being of society as a whole are in the National Assembly for not eroded. Wales, in order to protect our

(below) Three Cliffs Bay, Gower

8 | Securing Wales’ Future 4 The Single Market and International Trade

Economic impact of leaving the EU The Welsh and UK economies benefit substantially from participation in the European Union Single Market. The latest HMRC figures show that exports to the EU account for around two thirds of all goods exported directly from Wales to destinations outside the UK. The attraction of foreign investment into Wales, a key economic driver since the 1970s, has been driven to a large extent (above) Ferry unloading, Dover by the fact that the UK offers a favourable cultural and • the scale of the negative to trade have been overcome regulatory environment within the impact is expected to be by regulatory convergence, this Single Market. For this reason, directly related to the degree convergence should remain we believe that continuing of access to the Single in place. It is for those who full and unfettered access to Market that is retained believe we should move from Europe’s Single Market is vital after leaving the EU. current trading arrangements to to Wales’ forward economic a worse position, for example, There is strong consensus interests: throughout this White WTO rules, to justify why they among mainstream economic Paper we refer to that access think this is good for business forecasters that replacing Single as ‘Single Market participation’. in Wales and the UK as a whole. Market participation with World The imposition of tariffs, Trade Organisation (WTO) rules The case for continuing and non-tariff barriers such could result in a UK economy up Single Market participation as product certification and to 8 – 10% smaller than would is overwhelming and we can company registration, between otherwise have been the case agree to no other position. the UK and the EU could only and would devastate trade in There are various ways in which be damaging to business in certain key sectors, notably food, this might be achieved. These Wales and the UK (see Annex the UK’s largest manufacturing might involve UK membership A). No argument to the contrary sector, and the automotive of the European Free Trade exists. Indeed, the only serious sector. This would have both Association (EFTA), of which point of discussion is the extent immediate and long-term the UK was a member prior of the economic damage to consequential impact on living to joining the EU, and through Wales if this outcome were to standards and poverty in Wales. this continuing to form part of materialise. Independent expert the European Economic Area We believe it is imperative to analysis of the impacts of exiting (EEA); or through a negotiated retain full Single Market access, the EU on the UK as a whole bespoke arrangement unique without tariffs and non-tariff share common findings: to the UK. Continued Single technical barriers, for trade and • the overall economic impact Market participation means, of investment. Where no tariffs are course, that the UK would have is expected to be negative applied to goods and services and significant a continuing need to ensure now, none should be applied in that the domestic regulatory future. Where technical barriers regime for goods and services

Securing Wales’ Future | 9 Economic links are not confined to a few specific sectors. Direct exports from Wales to the EU are significant across a wide range of goods sectors including agriculture, steel, automotive, chemicals, electronics, aerospace, pharmaceutical, transport equipment and petroleum. Steel is a massive strategic Welsh and UK industry operating in a hugely competitive international market, and closely linked to EU markets and policy. Suggestions by some that individual sector by sector (above) Airbus Beluga on runway at Deeside deals could provide the certainty, breadth or simplicity essential for within the UK are compatible with links with the rest of the UK. businesses across Wales, and those of the EU and that suitable For this reason, we believe it is indeed the UK, are ill-evidenced dispute resolution arrangements essential that the whole of the and could be deeply damaging. are in place. We firmly believe UK should retain Single Market The importance of primary that this is a price worth paying participation. Continuing to production and manufacturing, for the economic benefits which align our standards with those and not just services, needs to can only be secured by strong of the Single Market will not be taken into account in defining continued participation in only protect our economic appropriate Single Market the Single Market. interests but safeguard the UK access. Account must also be internal market as well. This taken of indirect exports (goods In many ways the economy issue is explored further in supplied to English firms which in Wales is closely integrated chapter seven. with the wider UK economy. are subsequently exported), Unsurprisingly, in view of the Our principal argument for services and imports. importance of geographical Single Market participation is It is also important to recognise proximity and a largely common to prevent the haemorrhaging that Wales is potentially more institutional framework, Wales of investment and jobs which vulnerable to economic shocks trades much more with the would flow from a radical than some other parts of the rest of the UK than with other deterioration of the basis on UK due to factors such as countries. The value of trade which Wales and the rest of relatively low household income flows between Wales and the rest the UK trade with our key and a greater reliance on of the UK, particularly England, European markets. In addition, manufacturing. An economic is perhaps four times greater the imposition of barriers to downturn impacting on the UK than the value of direct Welsh imports from the EU would as a result of EU exit could have international exports3. Welsh also produce negative effects a disproportionately high impact goods sent to the rest of the including an increase in on the Welsh economy. UK will often form components consumer prices in many goods in other goods that are eventually and increasing the cost-base of Moreover, in general terms, the exported, although no reliable goods and services dependent lower levels of output in the UK data is available for this. on imports. For example, more economy as a result of a ‘hard than 81% of our timber is Brexit’ would be expected to The largest impact on imported, as is the majority of translate into lower tax revenue Wales from any new trading agricultural feed and fertiliser and greater pressure on the public arrangements that limit access (which has a direct impact on finances, an analysis confirmed to the Single Market would be felt food prices) and, of course, by the Chancellor’s Autumn indirectly through Wales’ trading food itself. Statement. A departure from

3 The true multiple may be considerably larger, given the low domestic value added in several major categories of Welsh exports, such as petroleum products (see below). the EU which does not provide road haulage services, have The EU has also led the Single Market participation will supported the efficient operation liberalisation of air transport almost certainly lead to even of the Single Market for goods across Europe. This has created more significant cuts to public and produce. a number of ‘freedoms’ for services in Wales, or to tax rises, EU-registered airlines which or both, than would otherwise State aid and procurement have allowed them to have a be the case. This underlines rules are particularly important base in one EU Member State the need to ensure that Wales for transport, providing both and operate services between is compensated in full for a framework and a constraint other Member States. This has the loss of European funding for government intervention. increased passenger choice (see chapter 6). Transitional measures in these and reduced the costs of travel areas must be workable in order significantly, and we wish to Transport for the benefits of transport retain these benefits after schemes to continue for the leaving the EU. Transport is crucial to an people of Wales. The UK has effective local and global led the discussion about EU Rail routes in Wales that are economy. EU policy development transport liberalisation and we currently part of the core Trans- over recent decades has been would not want any transport European Transport Network focussed in key transport policy undertakings based in Wales to (TEN-T) are set to achieve areas such as safer skies, seas be restricted from entering the European standards by 2030, and roads; more transport EU transport market place. including electrification and train choices for travellers; passenger length accommodation. The core rights for air travel, rail, ships Over years the EU has routes comprise of the South and buses or coaches; and developed a framework for Wales mainline to Milford Haven technological progress towards enhanced passenger rights and and the North Wales mainline to cleaner transport and the compensation covering rail, bus Holyhead. EU rail interoperability reduction of harmful emissions and coach, air and sea (ferries is key for Welsh regions if they into the environment. In addition, and cruise ships). We wish to are not to suffer disadvantages common standards for vehicles, ensure that these benefits and of peripherality, including driver licensing and driving tests reciprocal rights for passengers unsustainable reliance on the for both professional and private are maintained for Welsh and UK road network as the only realistic drivers, and market opening for citizens after leaving the EU. means of connectivity.

(below) Second Severn Crossing

Securing Wales’ Future | 11 We wish to maintain rail congestion due to the additional passenger accessibility time required and additional Over the last three for people with reduced costs. Should the land border full financial years, mobility, maintain technical between Northern Ireland and interoperability with the Ireland be treated differently there have been a European Rail area to maintain from movement between EU total of 277 foreign or improve Wales’ manufacturing Member States and the rest base, and maintain freedom of the UK, this could impact direct investments for reciprocal EU and UK on trade patterns and freight by companies arrangements to allow movement between UK and participation in tender processes Ireland. If importers / exporters from 34 individual for franchises. choose to move their products countries. via Northern Ireland, this could The Single Market creates disproportionately affect Wales, These investments have created free movement rights for both as proportionally more traffic to or safeguarded more than people and goods. Leaving Welsh ports comes from Ireland 27,000 jobs. Two thirds of these the Single Market would mean compared to the rest of Great projects were from countries policing new restrictions on the Britain. outside the EU and many were movement of people and goods, attracted to Wales because of meaning checks on passengers Continued overseas our access to the Single Market. and goods could be more investment in Wales onerous and resource intensive. Since the referendum, the Welsh Wales has a strong record of This would impact on ports Government has stepped up attracting inward investment and airports as commercial its international engagement, from around the world. entities, which would face with missions to the USA led by the First Minister and to Japan (below) Ringing the bell at New York Stock Exchange

12 | Securing Wales’ Future led by the Cabinet Secretary for Economy and Infrastructure. In future, we believe it will be essential for the Welsh Government to invest even more resource and energy into efforts to promote Wales’ commercial and wider interests abroad, not least to signal that Wales remains an open, internationally-engaged country. We call upon the UK Government and its international bodies – such as the Foreign and Commonwealth Office, the Department for International Trade and the British Council, to support us pro-actively in these efforts. (above) Vehicle queue at border control in Calais port

However, without Single Market A customs union is characterised An additional significant participation, it will become by two main features. It allows benefit of the EU Customs increasingly difficult to convince free trade in manufactured goods Union is that it accommodates potential investors interested within the customs union and complications around Rules in more than the UK market to members agree to a common of Origin requirements, which locate new projects in Wales. external tariff on imports from the would significantly reduce cost Potential inward investment rest of the world. Membership of and bureaucratic hurdles to UK projects have been cancelled the EU Customs Union4 prohibits exports which would otherwise or put on hold pending greater countries from negotiating other apply once the UK has left the clarity about the terms of bilateral trade deals. EU. Inside the EU Customs the UK exit from the EU. The Union businesses benefit from Welsh Government urges the The main advantage of the EU avoiding bureaucratic costs UK Government to end this Customs Union is that it provides and delays and through the uncertainty by committing to free trade in goods with the 56 hidden benefit of not being Single Market participation as countries with which the EU has deterred from trading by a key negotiation outcome. agreements (plus, most recently, customs barriers. Canada). This represents a The Customs Union substantial base of favourable Against these advantages, While the case for ensuring Single trading relationships around the remaining part of the EU Market participation is, in our world for Welsh and UK exports. Customs Union while no longer view, overwhelming, the issue Studies show that the direct an EU member might require of whether or not the UK should benefits of membership of the the UK to introduce tariff free seek to remain part of the EU EU Customs Union are worth access to the UK market for Customs Union is more complex. at least one percent of Gross countries concluding new free While countries such as Norway Domestic Product (GDP), with trade agreements with the and Iceland, which form part of indirect benefits significantly EU, without being immediately the European Economic Area, are higher than that. For Wales to able to secure reciprocal not part of the Customs Union benefit fully from remaining in advantages for UK exports. (EEA), a bespoke agreement for the EU Customs Union, it would In principle, any possible the UK might potentially include be vital that primary agricultural disadvantage here should be this. Arguments for and against and fisheries products were strictly short-term. remaining inside the disciplines included within an agreement on of the EU Customs Union may be the UK’s continuation in the EU marshalled in different ways. Customs Union.

4 The EU Customs Union consists of all members of the EU and some of its neighbouring countries: Turkey and a number of EU micro states including Andorra, Monaco and San Marino. The EU has slightly different arrangements with each of the countries that form the EU Customs Union. For instance, the agreement with San Marino includes agriculture whereas the agreements with Turkey and Andorra exclude agricultural products. It is argued that trade At this point, we are agreements with the largest unconvinced that the Policy Summary global economies – the United possible benefits of The vital importance of EU States, China, India and others withdrawing from the EU – have proven problematic for Customs Union outweigh trade to Welsh businesses the EU, partly as a result of the costs. Participation and to the wider economy, competitive scale. It is further to the Single Market is a underpinning the living suggested that the UK outside critical requirement – all the standards of everyone the EU might in theory be better available evidence suggests who lives in our nation is placed than the EU to negotiate that countries generally clear. We cannot support bi-lateral trade deals with these trade more intensively with an EU exit agreement that kinds of larger countries. geographic neighbours and would leave the UK without similarly developed countries Of course, it cannot be known continued Single Market – and participation in the EU participation. The EU with any certainty at this stage Customs Union is a natural, Customs Union delivers whether the UK would in fact though not essential, corollary benefits for Welsh business be able to negotiate such of this. The EU Customs Union favourable bi-lateral deals with currently offers coherent export and the case for an large countries. For us to support arrangements to many partner alternative strategy has this view, compelling evidence countries around the world and not so far been advanced would need to be presented that complications around Rules with sufficient credibility or such potential benefits would of Origin can only be viewed evidence. We believe at this outweigh the actual and current as disadvantageous. Where stage that remaining part benefits of trading within the there is currently convergence of the EU Customs Union, EU Customs Union. in arrangements which help including for primary businesses export, we should agricultural and fisheries aim to retain that convergence. products, remains the best position for Welsh and UK business.

14 | Securing Wales’ Future 5 Migration

Wales has benefited from legitimate rights of residence • The food and drink sector in inward migration from the EU should be used as ‘bargaining Wales reflects the overall UK and many other parts of the chips’ in negotiations on the figures with over 25% of the world. We believe that migrants UK’s exit from the EU. labour force that is non-UK. make a positive contribution to • Nearly 50% of veterinary Wales’ economy and to society Many sectors of the Welsh economy are dependent on the surgeons registering in the UK more widely. We regret and qualified elsewhere in the EU6. condemn the rise in xenophobia skills of migrants from the EU, for example: Within meat hygiene services, and racism exacerbated by the it is estimated that more than immoderate tone of debate • Some 1360 academic staff in 80% of the veterinary workforce in some parts of the political Welsh Universities came from is made up of non-British community. EU countries as at December EU citizens7. 2014; any restrictions to the We stand in full solidarity with free movement of workers would • The creative sector’s ability to all our people, irrespective severely impact Wales’ ability tour and operate in EU countries of their country of origin and to access academic talent without regulatory cost barriers believe that the UK Government and to engage in cross-border drives significant revenue in this should already have made collaboration. important industry; recruitment clear that everyone legally and retention of staff from EU resident in the UK will have • The life sciences sector and countries is vital to the sector’s their rights guaranteed after the pharmaceutical industry sustainability. we leave the EU. We call upon are significantly dependent on EU citizens. • In the health and social care the UK Government to make a sector, as of September 2015 clear declaration along these • The construction sector is around 1,140 EU nationals lines to provide reassurance heavily dependent on migrant were employed in NHS Wales, 5 to EU citizens living in Wales workers, with serious skills with 6% of our doctors having and elsewhere in the UK. We shortages reported; the UK trained in other parts of the EU. call upon the EU to make a National Infrastructure Plan similar declaration in respect (September 2015) estimated • Current figures suggest that of Welsh and UK citizens living that at least an additional the tourism industry in Wales throughout the EU. We reject 100,000 construction workers employs around 11% of migrant completely any inference that would be needed by 2020. workers, half of which are from the status of citizens with EU countries.

(below) Morvus Technology, Abergavenny

5 References in this chapter to EU citizens should be taken to mean EU or EEA citizens; and EU countries to mean EU or EEA countries 6 Royal College of Veterinary Surgeons 7 Veterinary Public Health Association Securing Wales’ Future | 15 It is vital that different sectors tourists, students and ordinary this country are not in work or in the economy are able to meet business travellers from European are reliant on benefits. their recruitment needs where countries. Equally, the Welsh it has been demonstrated that Government would regret and Indeed, one clear impact of the domestic labour market oppose the erection of barriers migration has been to increase is insufficient. inhibiting ordinary travel by the overall scale of the UK Welsh and other UK citizens in economy and therefore to Direct employment is a major, Europe. The retention, in this increase tax revenues. Migrants but not the only, concern sense, of freedom of movement will, of course, also add to the related to migration. The of people is good for business demand for, and hence cost ports of Holyhead, Fishguard among neighbouring countries of, public services. However, and Pembroke Dock are the with shared interests and any the evidence suggests that the key arterial and logistics suggestion of visas for ordinary economic growth effect is larger routes between the UK and travel between Europe should be than the increase in cost, due in Ireland. These ports also firmly resisted as a backward step. part to the average age-profile form important terminals on of migrants. While we support the Trans European Network, The Welsh Government recognises the reintroduction of appropriate connecting Ireland with Europe that concern about the extent funding mechanisms to support beyond Great Britain. Ireland is and speed of immigration from areas affected by increasing consistently one of Wales’ top the EU was a key concern in the strain on public services export destinations, as well as referendum for many who voted as a result of high levels of a major investor into the Welsh to leave. Concern has also been in-migration, a ‘hard Brexit’ economy, and our businesses expressed about ‘benefit tourism’ with drastic curtailing of EU and tourists, in both directions, by EU migrants. As the research at migration would not only reduce depend on these routes. Annex B demonstrates, the scale employers’ access to skills but of EU migration into Wales is, in also reduce economic prosperity Any changes to migration and/ fact, relatively modest and only a and public spending over and or customs rules would have an small minority of EU migrants to above the negative impact immediate and major impact at the Welsh ports. Cost, time, inconvenience and regulation (below) Higher Education students © Renzo Mazzolini would be added with negative consequences for both private and public sectors, and citizens. The ports could become less attractive commercially and businesses and tourists may be stimulated to seek other routes, driving negative economic consequences for the port hinterland regions more generally – in both Wales and Ireland. Freedom of movement of people, the right of citizens to travel freely and without visas among European countries, essentially as tourists and for short-term visits, is surely a benefit worth preserving. This would be the case even if the EU did not exist. It can serve no positive purpose to impose needless barriers to

16 | Securing Wales’ Future flowing from lost access to the Government to devise such Single Market. a system which is broadly International compatible with the principle of students and their We believe that any future UK freedom of movement of people, system for regulating reciprocal and in line with the practice visitors generated freedom of movement of people of other EU and EEA member £530 million of between the UK and the EU/ states. EEA should be fair, transparent, export earnings non-exploitative and rules-based. Migration within the EU is not, In our view, the key to addressing of course, one-way traffic. Many in 2014, which is concerns is to ensure that, for thousands of Welsh and UK equivalent to 4% of those who are neither studying citizens choose to live, work all Welsh exports. nor have independent means, or study in EU nations under freedom of movement for new the protection of reciprocal This created 7,600 migrants from the EU/EEA into arrangements. This includes jobs and generated Wales is linked to employment. many retirees who have made This might involve the prior offer a lifestyle choice in favour of £400million of Gross of a job or the ability to secure an European countries. In our Value Added over the offer within a short time of arrival view, individuals over retirement 8 in the country. Such a managed age with sufficient resources same period . employment-based approach to live on (either from their We advocate the retention of would restore faith in migration pension entitlement from their reciprocal arrangements which policy and enable the UK to home country or from their own enable EU students to study at assert domestic control over resources) should continue to UK institutions, and vice-versa, migration while also retaining be free to settle in Wales, and, when the UK is outside the EU. mobility of labour within Europe similarly, UK nationals should be We do not believe that students as an underpinning principle of free to settle in EU countries on should be counted as ‘migrants’ the Single Market. We believe the same basis. for the purposes of national it would be possible for the UK Students have benefitted statistics. (below) Higher Education students © Renzo Mazzolini through ERASMUS + and other In all cases, we believe that, as programmes which have created part of such arrangements, EU opportunities for them to study countries should fully protect the or undertake placements in rights of Welsh/UK citizens in EU European countries. countries and that the UK should guarantee the same protections In 2014/15 there to EU citizens legitimately living, were 5,425 EU working or studying here. students and We believe an intelligently devised migration approach 18,805 other should be underpinned by a overseas students strong culture of enforcement of legislation to prevent the studying at Welsh exploitation of workers by Universities, with unscrupulous employers seeking to undercut locally established international wage rates and appropriate students as a industry regulation. All workers in Wales and the UK, whatever whole accounting their country of origin, must for 18.2% of the be treated equally and fairly according to law. We believe that total student an approach to migration along body in Wales.

8 All figures; Universities Wales, 2015 Securing Wales’ Future | 17 these lines both recognises the concerns of Welsh Policy Summary EU migrants make a voters while protecting the We recognise that there valued contribution to our economy. We further believe economy, public services that linking migration to work, are concerns around under a transparent rules- aspects of inward and communities and must based domestic system, is in migration. We believe be treated with respect and keeping with the spirit of free there is scope to address equality. movement of people in the these concerns through a We are clear, too, that Single Market and provides a twin-track approach that any changes to migration sound basis for negotiation. maintains the benefits of policy should not harm migration for businesses We believe it is also relevant businesses, higher and communities: to negotiations to note that education or public services Wales and the rest of the • ensuring a stronger link in Wales. We believe UK were open to migration between employment students are not migrants from ‘accession countries’ and the right to remain and should not count immediately following the for new EU migrants towards national migration major expansion of the EU who are neither from 15 to 25 Members statistics. Full mobility for studying nor have in 2004, while other EU students and researchers independent means, countries (except Sweden across Europe should be and Ireland) remained closed an approach which retained. to migration for a number we believe is broadly of years after this date. compatible with the The ports of Holyhead, This represented a strong principles of freedom Fishguard and Pembroke demonstration of economic of movement of people Dock are key economic arterial routes and the solidarity between the UK and • much stronger the then accession countries particular interests of those enforcement to protect and forms a significant communities should be low paid workers from backdrop to negotiations. taken into account and exploitation. Competence for migration protected in respect of policy rests with the UK It is morally and any changes to border Government but, as part of economically vital arrangements. our forward arrangements, to protect the rights the needs of public services of citizens from EU and business sectors in countries who currently Wales must be taken into live and work in Wales. account. Any rules must be We firmly believe based on clear principles and that all who live and be accessible transparently work in Wales must be to employers and public protected by law on an services. We are keen to work on proposals in greater detail equal basis. We wholly with the UK Government and reject any attempt to we call on them to act in the exploit migrant labour best interests of Welsh and on inferior terms to UK business and society as domestic workers. a whole.

18 | Securing Wales’ Future 6 Finance and Investment

for example) but these would require only modest contributions while the benefits to the Welsh and UK economy are significant.

Regional economic development Regional economic development is a devolved competence to Wales and is significantly underpinned by EU legislation. ESIF amounting to some £370 million annually are invested into Wales alongside the Welsh Government’s own resources In total Wales receives around EU would be not a penny worse and other funding sources, £680 million in EU funding off than it would otherwise have including private investment. annually. The bulk of this funding been within the EU. comprises receipts under the Common Agricultural Policy (CAP) The baseline of the Block Grant The overall and Structural Funds with the payment for Wales must be re- figures comprise balance made up from Horizon adjusted, at the point of exit from 2020 and other smaller, but the EU, to reflect the real loss £295 million economically significant, pots of of funds in Wales arising from annually for funding such as Creative Europe. leaving the EU and taking into account funding which Wales Structural Funds, would have otherwise reasonably £80 million for the Unlike the UK as a expected from EU sources. Rural Development whole, Wales is a We recognise that continuing Plan and £2 million net beneficiary of participation in the Single Market would require a financial from the Maritime EU funding. contribution from the UK. Given the evidence on the extent of and Fisheries Fund. This means that the funding the benefits of trading freely in received in Wales is greater than These resources are vital the Single Market we believe to Wales. Since 2000, the the amount contributed by Welsh that an appropriate negotiated taxpayers via the UK’s payments investment of EU funds has contribution would be clearly helped to arrest the decline in into the EU budget. EU funding offset by the wider economic benefits Wales by addressing Wales’ economic performance benefits to business and the and laid foundations for more need through a transparent and Welsh and UK economy as a rules-based formula. We believe sustainable prosperity, especially whole. The UK will no longer in the targeted West Wales these principles must underpin participate in the CAP and the approach to replacement and Valleys region. Among the the main European Structural benefits we have seen are: funding for Wales from within and Investment Funds (ESIF) UK resources when the UK has programmes. We wish to • growth in employment in the left the EU. In recognising the remain eligible for smaller West Wales and the Valleys referendum result in June 2016 EU programmes as outlined region from 64.6% in 2000 to we made clear our determination elsewhere in this White Paper 70.7% in June 2016 to hold to account the campaign (Horizon 2020 and ERASMUS+, promises that Wales outside the

Securing Wales’ Future | 19 • falling levels of unemployment The current ESIF programmes support 5,000 people a year into and economic inactivity (from are worth more than £2.4 work and help around 21,500 30.8% to 25.2% in West Wales billion to Wales over the people annually gain qualifications. and the Valleys) period 2014-2020, with the The success of regional economic larger share allocated to West development is achieved most • increasing skill levels across Wales and the Valleys and the strongly at a micro-level in Wales; between 2014 and balance to East Wales. These communities and we acknowledge 2015 the proportion of resources are hugely important the powerful contribution, through working age adults with no to Wales in terms of driving partnership, made by employers, qualifications has fallen from economic growth and jobs. The local authorities and the third 17% to 9.5% and programmes are investing over sector across Wales. • investment in research and £1.1 billion towards boosting development has more than research and innovation, The European Agricultural Fund for doubled since 2000, from business competitiveness, Rural Development (EAFRD) covers £351m to £716m, driven increasing renewable energy over 600,000 ha of land and by increased private sector and energy efficiency, and benefits some 1.3 million people investment, and keeping pace improving connectivity and across rural Wales. Investments with UK averages. urban development. This include training for around 10,000 includes investments in major people and the creation of 860 transformational projects such jobs in rural areas. Our coastal communities benefit directly from Since 2007, EU as the South Wales Metro which will help deliver a wider package EU funding in aquaculture and funded projects of proposals and generate other competitiveness measures. have helped support further investment under the The Welsh Government will Cardiff City Region and City Deal continue to work with farmers, the nearly 73,000 proposals. rural communities and the fishing industry to map a dynamic future. people into work and In addition, around £800 million Policy in Wales is complemented 234,000 people to European Social Fund(ESF) and underpinned by pioneering gain qualifications. will be invested in measures legislation in the ‘Well-being of to help tackle poverty and Future Generations (Wales) Act’ They have helped to increase social inclusion by which requires future investments create nearly 12,000 supporting people into work in Wales to integrate policy and increasing skills (including objectives and adopt long- term businesses and some among young people and the sustainable outcomes. 37,000 jobs. most disadvantaged). The funds

20 | Securing Wales’ Future The terms of EU exit negotiated by the UK Government could have a major impact on delivery of current EU programmes in Wales which may extend until 2023. The Welsh Government needs to be especially closely involved in this aspect of negotiation to ensure that it makes best use of EU funds and avoids sending any funds back. Despite the successes of regional development policy, it is important that Wales’ long-term challenges and disadvantages continue to be recognised (above) Cockle Pickers, Gower as requiring dedicated and additional investment – with UK these funding instruments will and other partners to create allocations to Wales reflecting cease to apply. dynamic, forward-looking the loss of EU funds – at levels Welsh agriculture and fisheries equivalent to what Wales would Wales’ receipts from the CAP are policies. Food production is a have otherwise received through significantly above the ‘Barnett major competitive advantage the EU. Regional economic share’ of UK receipts, reflecting for Wales and it is vital that development is a devolved the high proportion of Least it retains and builds on its area of policy and only the Favoured Areas (LFAs) and the competitiveness, with a strong Welsh Government, working in marginal nature and low incomes emphasis on export. partnership with local authorities, of much Welsh farming. Many businesses and the third sector, farms are dependent on the Securing resources is not only has the strategic capacity support they receive to maintain about supporting farming. With to deliver micro economic viable businesses. While the 83% of Wales’ land surface development at community or work already underway with being managed for farming and regional levels. We will reject agriculture and environment 14% for forestry, a separation firmly any attempt by the UK stakeholders has started to between the management Government to infringe this area identify ways in which the sector regimes for ‘environment’ and of devolved competence. can respond to the challenges ‘agriculture’ is at best artificial. and opportunities created by A crisis in Welsh farming would Agriculture and Fisheries EU withdrawal, including by pose huge risks for maintaining strengthening supply chains the environmental resources Welsh food and farming is and increasing added value, of Wales. The countryside directly threatened by any this re-orientation will take and coastline are essential disruption to Wales’ Single Market time and require resources. to the heart of Wales and an participation, given the high level It is therefore essential that asset for all our people. Our of the EU’s Common External equivalent or greater resources languages, our culture and Tariff on agricultural products. to those Wales would have many of our traditions as a Moreover, Welsh farmers and received from the CAP and CFP country are sustained in the landowners currently benefit from are provided from the UK to countryside and it is here around £274 million each year in Wales to support Welsh farming that EU withdrawal may be direct subsidies under the CAP, and fisheries. Within Wales, most dramatically and quickly while the fishing industry and the Welsh Government needs apparent. It is vital that rural Welsh coastal areas benefit from to address the substantial interests are protected and more limited funding from the challenges of exiting the CAP feature strongly as Wales Common Fisheries Policy (CFP). and CFP through working closely works towards a future When the UK leaves the EU, with industry, communities outside the EU.

Securing Wales’ Future | 21 Regional Aid– accompanied by transparent and Competition Policy fair competition policies in order We strongly Outside the EU new to avoid ‘a race to the bottom’ advocate that the arrangements will need to be among competing regions. A good drawn up for managing the deal of work remains to be done UK should remain competition/state aid rules in this area and we call upon the a shareholding currently applied through the EU. UK Government to involve Wales closely from the outset. partner in the EIB The Welsh Government must and that Wales have the opportunity to exert real European Investment influence on the development of Bank (EIB) should continue any new framework so that it can The EIB is an active investor in the to gain from our command respect and be seen Welsh economy. Over the decades direct relationship to work fairly in the economic of EU membership hundreds of interests of Wales and all parts millions of pounds of EIB loans with the Bank. of the UK. have been pumped into Wales. The ability to provide regional There is no equivalent body in Partnerships, Networks and aid is vital if Wales is to remain the UK providing the same sort Territorial Cooperation competitive as an investment of investment funds at equivalent Wales is an outward facing, location. cost. While most of the EIB’s work globally trading nation and has is in Europe, it also supports attracted investments from across projects across the globe, building the world. Our universities and In 2014, for up infrastructure and capacity for innovators work with partners example, large improved economic development. throughout Europe and beyond. We want Welsh students to continue to organisations The UK, as a member of the EU, is a 16% shareholder in the EIB. have the opportunity to experience accounted for Under current rules, only EU education in Europe (ERASMUS+ just 0.1% of all Member States can own a share and Europass) and we want in the EIB. We believe the UK Welsh researchers to continue to enterprises in Wales, should negotiate to continue as collaborate in European research but provided 55.8% a subscribing partner of the EIB. and innovation networks (Horizon 2020). of all turnover The EIB brings direct benefits to our economy as well as improving Wales has a particularly close and 41% of all economic capacity elsewhere, co-operation with the Irish employment. thus helping the global trading Republic, our maritime neighbour, environment which we support. through the European Territorial Regional aid both supports The UK’s financial contribution to Cooperation (ETC) Programmes investment by indigenous the EIB is loan capital and repaid, and we wish to maintain access to companies and helps thus neutral in its impact on this joint working after the UK has secure inward investments9. UK budgets. left the EU. When the UK leaves Diversification of the Welsh There are additional benefits to the EU this form of co-operation economy has been hugely Wales and the UK through access will become, if anything, even more assisted by inward investment: to the significant commercial important and, in particular, we are in 2015/16, 96 investment expertise within the EIB. The committed to strengthening the projects were recorded from South Wales Metro project, for relationship between Wales and 23 countries around the world, example, benefits from the EIB’s Ireland. Wales especially needs collectively worth circa £660 commercial expertise informing to build prosperity around our key million to the Welsh economy. the procurement process, while ports – Holyhead, Fishguard and Pembroke Dock – and protect Equally, we recognise that previous investments in Wales have, similarly, benefited from their roles as the main arteries to intelligent and rational and from Ireland and Wales (and, regional aid policies must be expertise and best practice offered by the EIB. indeed, the UK as a whole).

9 European Commission: Ex-Post evaluation of the Regional Aid Guidelines 2007-2013. Luxembourg: Publications Office of the European Union, 2013 – 194 pp. – 21.0 x 29.7 cm ISBN 978-92-79-28199-0 doi: 10.2763/32114 Wales has always been a strong supporter of the work of the British – Irish Council and, after the UK leaves the EU, we believe it will be important to intensify joint working at a strategic level between all parts of the these islands through this body. Cross border collaboration in research and development, principally through the Horizon 2020 programme at present, is particularly important and should continue after the UK has left the EU. EU programmes provide (above) Dr Who Tardis in Cardiff Bay opportunities for businesses to collaborate with each other and has been key to Wales’ prospects for participants the work together towards common positioning as an active and international experience gained goals, often for societal benefit. respected partner in Europe through studying, volunteering Wales and the UK as a whole and to securing investment. The or working aboard provides have been major beneficiaries Creative Sector, an industry in a boost to participants self- from EU Research and which Wales has increasingly a confidence, helping them to Development Programmes, which natural comparative advantage, stand out and succeed in the job are open to other non-EU member- has particularly flourished market. We believe that Wales states, provided they make a through access to cross-border and indeed the whole of the UK financial contribution. We want EU programmes. It is essential should continue to participate in Wales to continue to access these that this engagement continues international exchanges such as programmes. after the UK exits the EU and ERASMUS+ and its successors that Wales retains a platform after the UK leaves the EU: our Wales has been particularly active from which to project outward proposed approach to migration in the ETC programmes, attracting facing strategic priorities in in chapter five would support this funding of around £7.3m per year. Europe. ambition. Wales also benefits financially, Under the 2007-13 culturally and economically We want the UK to negotiate programmes, this through active participation in continued participation in the the ERASMUS+ programme. Creative Europe programme. involved participation During 2014 alone over 2,000 This supports co-operation in the in 94 co-operation participants were involved in cultural and creative sector and Welsh international exchanges Wales has derived significant projects bringing and between 2014-2015 Welsh benefit, with good return on almost £35m of EU organisations secured around investment, over recent years. A number of Welsh language investment to Wales. £10 million of funds across 86 projects. projects, for example, have been able to collaborate successfully Moreover, Wales participates in a with European partners through whole range of other partnerships ERASMUS+ provides valuable this programme. Broadcasters and networks (membership of life-skills and international have been able to access funds which is often extended to experience to help participants – and wider audiences – through European countries outside the develop personally, European co-operation in a way EU) enabling us to build links with professionally and academically which would not be possible partners to share best practice as part of today’s global within an exclusively UK context. and to undertake collaborative economy. As well as boosting work. This style of collaboration skills, employability and salary10

10 The UK Higher Education International Unit reports that students who study abroad are less likely to be unemployed and earn more on average than those who don’t go abroad during their degree. Securing Wales’ Future | 23 (above) Higher Education students © Renzo Mazzolini

Leaving the EU does not require Higher Education that Wales turns its back on Universities are among The total value Europe – and we have no Wales’ and the UK’s greatest to exports from intention of doing so. On the institutional assets, and the contrary, we are clear and terms of UK exit from the EU international determined that Wales will should do nothing to undermine students as a continue to pursue its priority that. Demand for places at our mutual interests with European universities makes a significant whole in Wales friends and neighbours from a contribution to Welsh exports as is estimated new position outside the EU. We well as building long-term good wish, too, to remain engaged will and recognition for Wales. to be around with existing European networks £530million11 and bi-lateral links and we will Researchers and academics remain open to forging new and operate in an internationally so any decline deeper relationships in pursuit competitive ‘market’ and our in international of Welsh interests. Beyond institutions risk becoming Europe, we remain committed isolated if we do not participate numbers damages to our Wales for Africa at a European level. Since Welsh exports. programme and an appropriate universities are at the forefront Welsh voice on global of innovation there is also We believe it is misguided citizenship. We are committed plainly a wider economic benefit and inaccurate to count to developing an even more in retaining access to European students in national migration active policy of international programmes. statistics and that this leads engagement. Developing and to artificially inflated figures. In There are currently more than further enhancing our effort to our view, students are plainly 5,000 EU students at Welsh promote Wales internationally not migrants in the commonly Higher Education institutions for trade and investment is an understood sense of the and we regret that this level important priority. word. They come to Wales for seems certain to drop as a a time-limited period and for result of the referendum.

11 The Impact of Higher Education in Wales; Universities Wales, October 2015 We advocate that the UK Government should seek to Policy Summary ensure continued participation Wales currently benefits in Horizon 2020 and its successor programmes. from around £680 million This should include the of EU funds annually. The ability for UK Universities Welsh share of CAP and and research partners to regional development co-ordinate projects funded funding is based on by these programmes. There need and rules set out are fundamental advantages in EU legislation, and to coordinating international is significantly greater collaborations, and losing than the proportion of UK this capacity would diminish Government expenditure and isolate the Welsh and UK used in the Barnett research landscape. formula. In other words, Specifically, our main Wales (unlike the UK as a demands in relation to whole) is a net beneficiary maintaining the excellence of EU funding. and economic importance of universities in Wales are: Wales must receive • maintenance of funding after 2020, engagement in Horizon when the current EU 2020 and other EU led Financial Perspective the specific purpose of study, research schemes expires, which it would after which most leave the • reciprocal arrangements have reasonably expected country. While they are here regarding student tuition if the UK were to remain in they represent no drain on the fees so that Welsh students the EU. The UK Government public purse. On the contrary, studying in the EU pay local must make good the they pay fees, which count as student fee levels and EU exports, and sustain themselves promises made during students studying in Wales the referendum campaign financially while contributing to are treated as UK students that Wales would not lose the local host economy. for the purpose of fees and the costs of study a penny in funding as a Science, research and innovation result of leaving the EU. capability is important for • continued participation in Wales and the UK. Research in the ERASMUS+ scheme of We believe the UK should Wales will be severely affected staff and student exchange continue to participate in through reduction in income, • guarantees regarding the key European programmes an exodus of researchers and visa and citizenship status open to non-Member the failure to attract new talent of EU nationals working in States, notably Horizon if Wales does not continue UK universities 2020, ERASMUS+ and to participate in Europe-wide research programmes. We look • not counting students on Europass, ETC, Creative to the UK Government to provide national migration statistics Europe and their successors assurances that current levels • participation by Welsh after 2020 and that Wales of investment in EU science universities in the post- should seek to raise its programmes will be maintained, study work visa scheme international profile to alongside the free movement currently being piloted in counteract any impression of researchers which would four English universities that leaving the EU is a be achieved by the policies • active promotion of greater sign of a move towards advocated in chapter five of outward mobility by students isolationism. this White Paper. and staff studying and working in Welsh universities.

Securing Wales’ Future | 25 7 Constitutional and Devolution Issues

establishment of a Constitutional Withdrawal from Convention to review Parliament, unless and until there constitutional arrangements and is agreement to further change to the EU represents practice within the UK and we the devolution settlement, which a fundamental believe that the scale of change we regard as a work in progress. We advocate that these changes constitutional change which will flow from leaving the EU demands that the UK is require a new approach to the UK’s for Wales and the UK remodelled around new, more governance structure that reflects federal, structures. the interdependencies and interests as a whole. Returning between devolved and non-devolved. to pre-1973 practice is Currently a range of powers already devolved to the We recognise that in some cases, in simply not an option National Assembly for Wales the absence of EU frameworks which since devolution and the Welsh Government provide an element of consistency are operated within an EU across the UK internal market, it will was not then part regulatory framework. These be essential to develop new UK-wide of the UK’s political include agriculture, fisheries, frameworks to ensure the smooth working of the UK market. structure. environment and economic development. At the point of We stand ready to play a very active In any case, any Government UK exit from the EU, when EU part in developing such frameworks seeking to heal the deep regulatory and administrative subject to several principles in divisions brought to the fore by frameworks cease to apply, respect of devolved policy areas: the referendum and wanting to these powers will continue to be devolved in Wales. Similarly, • the free consent of the three reconcile people with differing devolved legislatures and views, rather than alienate them, a number of reserved powers in which Wales has an active administrations to participate will surely want to provide an on equal terms with the UK impetus to develop a fresh sense interest, and which directly impact on devolved policy Government, representing the of purpose underpinned by new interests of England collaborative ways of working areas, such as competition to reflect common interests. policy, employment law • a model which retains at least and international trade, will the current levels of flexibility to The Welsh Government has continue to be the function implement policies tailored to advocated for some time the of the UK Government and the specific need of each nation

(below) The Senedd, Cardiff Bay

26 | Securing Wales’ Future • robust, and genuinely independent arbitration mechanisms to resolve any disputes over the compatibility of individual policy measures in one nation with the agreed frameworks. This will require wholly new inter-governmental machinery for a. enabling UK wide frameworks for devolved matters where the four administrations agree that a common approach is needed; and b. ensuring robust shared (above) Snowdonia arrangements in respect of resilience and sustainability matters that are not devolved Inter-governmental of Welsh agriculture and rural but which have major relations and reserved policy: Welsh Government communities. It is essential that implications for devolved and UK Government such matters are not regarded functions. working together as being exclusively in the outside the EU remit of the UK Government Environment and and Parliament. Robust and Rural Affairs This White Paper underlines the crucial importance of areas transparent mechanisms need The constitutional implications such as international trade to be established to identify and challenges of EU exit are negotiations and competition potential impacts in advance particularly acute in the field of policy, which are currently of agreements being entered environment and rural affairs. reserved to the UK Government, into and to enable appropriate These policy areas are all but which will have major action to be agreed in response. significantly devolved and over implications for devolved In cases where there is a very the 17 years since devolution functions and for the prosperity major impact on devolved policy began there has been significant and well-being of Wales. areas and where the Devolved divergence of policy direction Administrations are not in between the different parts Managing these policy areas agreement with the action the of the UK. will require much more serious UK Government proposes to and intensive inter-governmental The details of the impact on take, there must be independent mechanisms and governance these areas are set out in mechanisms to resolve disputes. structures than those currently chapter 8. They illustrate the in place. The Welsh Government case for the wider recognition is seeking new and robust We believe that of the need for a clear UK arrangements to meet our needs governance structure that government and safeguard our interests reflects the interdependencies within a new UK political and machinery models and interests between devolved constitutional landscape. and non-devolved. The clear can and should be need is for a regulatory For example, if the UK leaves created which will framework that enables us the Customs Union, and pursues to support progress, meet an independent trade policy, meet the forward challenges and drive forward it is conceivable that new governance economic and social outcomes, free trade arrangements with challenges for while respecting devolved countries such as New Zealand competences. or Argentina could have very the UK. major direct effects on the

Securing Wales’ Future | 27 For example, we believe that However, we are concerned the existing Joint Ministerial that this is potentially an Policy Summary Committee (JMC) could be enormous task, given that In areas of devolved over-hauled and rebuilt into a much of the legislation, UK Council of Ministers covering particularly directly policy, particularly where the various aspects of policy applicable EU regulations, significant changes are for which agreement between is not easily translated required after the UK leaves all four UK administrations is into a context where EU the EU, there must be mutual required. The Welsh Government institutions no longer have respect for the differing roles is very ready to be active in any authority. Further, the of the four Governments. Any further thinking about how Bill may significantly impact, UK wide frameworks must the UK develops binding and intentionally or not, on the be based on common consent inclusive decision-making legislative competence of by all four Governments. processes outside the EU. the National Assembly for They will need robust Wales, and our core standing and independent dispute Legislative continuity and policy is that the UK exit from resolution mechanisms. The the devolution settlement the EU must not result in current JMC machinery will The UK Government intends to devolved powers being clawed not be adequate for what introduce a ‘Great Repeal Bill’ back to the UK Government. to preserve EU law in the UK, at Any attempt to do so will should be seen as ‘pooled the point of exit, as it currently be firmly resisted by us. sovereignty’ within the UK applies. Depending on its for agreed areas of common We await sight of the detail precise provisions, this Bill may interest. Policy areas which UK Government’s Bill to require the legislative consent of are not devolved, but which inform further thinking about the National Assembly for Wales. whether the Parliamentary have major implications The effect of the Bill would be Bill adequately reflects for devolved functions, to leave EU legislation in place the devolution settlement. notably international in Wales, until the Welsh or UK If, after analysis, it is trade negotiations and Government (depending on the necessary to legislate competition policy, should competence) decides what, if ourselves in the National also have robust shared any, changes to make. Assembly for Wales in order sovereignty arrangements. We agree with the UK to protect our devolved We need sight of detail Government’s view that it is settlement in relation to the on the ‘Great Repeal Bill’ essential to provide legislative Bill, then we will do so. before we can develop an continuity at the point at which informed position on its the UK leaves the EU, and we implication for devolution understand that this is the in Wales. If, after analysis, principal aim of the proposed ‘Great Repeal Bill’. it is necessary to legislate ourselves in the National Assembly for Wales in order to protect our devolved settlement in relation to the Bill, then we will do so. It is clear that leaving the EU is a fundamental constitutional change for the UK, one which requires imagination and vision to stimulate new ways of joint working among administrations outside the EU. 28 | Securing Wales’ Future 8 Social and Environmental Protections and Values

Overview frameworks created by the EU, or development goals. There is a Since the UK joined the EU in to replace them with alternative continuing need to ensure Wales 1973, there has been great approaches tailored to Welsh can deliver against international progress in developing minimum needs. As noted previously, obligations. We are committed, standards for vital quality-of-life in some areas the Welsh for example, at a minimum, to issues such as the environment, Government may wish to discuss maintaining current standards in rights at work and equalities. joint decision-making with the respect of air and water quality, We acknowledge and pay tribute UK Government and the other emissions and environmental to the tireless work of the Devolved Administrations on protection. common UK wide frameworks, disability movement, equalities In particular, we are committed campaigners, environmentalists, where we believe that will be in Wales’ best interests. to the principle of using trades unions and others in ‘green growth’ as a means of helping, through concerted Natural Resources fostering economic growth and action at EU level, to develop development, which is socially the quality of life for everyone in Wales is proud of the progress equitable and ensures that natural our country. We strongly believe it has made on environmental resources are sustainably used that leaving the EU must not be outcomes and it should and managed. an excuse for diluting or rowing be recognised that the UK back on standards which have as a whole benefits from Examples of green growth include: improved the lives of our citizens. environmental goods and • Moving towards a more resource services and wider public efficiency, circular economy The proposals to provide benefits provided by Wales, legislative continuity after we • Supporting the sustainable for example, in terms of access management and growth leave the EU, discussed in to clean water and renewable chapter seven, mean that the of Wales’ natural resources energy resources. Many of based sectors – farming, Welsh Government will have these benefits have been the new opportunities and new forestry, fisheries, tourism and direct result of EU legislation renewable energy policy choices to make in these and funding, including delivery areas, enabling Wales to protect of Wales’ global sustainable

Securing Wales’ Future | 29 • Developing high value markets for directing policy. For example, for new and innovative in relation to chemicals, the EU products and services Regulation on the Registration, based around sustainable Evaluation, Authorisation and management. Restriction of Chemicals provides the directly applicable legislative framework with much of the Wales’ natural administrative support supplied by resources have the European Chemicals Agency. This Regulation has acted as the a central role to driver for setting standards at an play in the Welsh environmental level as well for production. Government’s Some EU legislation which delivery of currently applies in Wales puts green growth as in place requirements necessary their effective for animal / human health protection and food chain security. management is We will need to uphold these (above) Doctors, Ystrad Fawr Hospital, Caerphilly key to the delivery requirements and standards regardless of EU obligations to settlement will need to change to of Wales’ seven avoid significant risk to the general provide full executive and legislative statutory well-being public, to the future environment competence to enable continued and to the Welsh economy. management of fisheries across goals. the Welsh Zone, and Welsh fishing In order to ensure that the Welsh businesses wherever they are. Our ability to ensure the Government can continue to In addition, a fairer rebalancing continued evolution of the policy manage Welsh fisheries once of UK fishing quota is needed. and regulatory framework to the UK leaves the EU, changes Currently, small vessels, making support green growth is key – are needed to the devolution up the majority of the English and and as noted in chapter six, will settlement. Management of Welsh fishing fleet, have access to depend on making good the loss fisheries is devolved to Wales very little fishing quota. In Wales, of funding to the land-based through the Government of the under 10metre fishing vessels sector which will result from Wales Act and the UK Concordat. (around 426 vessels) makes up exiting the CAP. The Welsh Government is about 90% of the Welsh fleet, but responsible for managing and The EU currently provides both have only 3% of the total UK fishing regulating aquaculture, intertidal, the direct legislative framework quota in Welsh areas of interest. commercial and recreational (EU Regulations and EU sea fisheries throughout Wales, Decisions) and also centralised Food and Drink including its territorial seas and administration and operations the Welsh Zone. The devolution Wales needs to retain its strong ‘brand’ underpinned by high standards and the quality of its produce.

The reputation that has been built for Welsh produce, in particular its food and drink, is based on a number of factors, including human health protection, effective animal disease control, environmental 30 | Securing Wales’ Future individual workers can secure a fair return for their productivity and thereby access to goods and services. We want to see a prosperous Wales based on fairness, decency and social justice. The EU referendum itself highlighted the extent to which many people felt that, despite the legislation in place, and the high rates of employment, their lives were impoverished by insecure work, low wages and poor working conditions. As noted in chapter five, we believe that stronger enforcement of existing protections is a vital part of addressing these concerns (above) Doctors, Ystrad Fawr Hospital, Caerphilly which have also manifested themselves through worries standards, the use of protected and we anticipate a continuing about migration. food names and high standards demand for recruitment of of animal health and welfare. doctors, nurses and other We are deeply concerned at the These are currently assured health workers from within the potential for exploitation of low within an EU framework and this EU in future. We call upon the paid workers, including migrants. will provide the foundation stone UK Government to work with We advocate that a vital part of for our forward ambitions for this us to develop an approach to the UK Government response vital sector. migration which avoids damaging to EU withdrawal should be to NHS Wales. ensure vigorous enforcement Health of existing legislation, such as A range of reciprocal health care Employment and the Minimum Wage and health arrangements apply to Welsh Social Protection and safety legislation, to protect and UK citizens travelling and We believe that the current suite the rights of vulnerable workers. living in Europe, and vice versa of employment protections, We note that in recent years (some of which pre-date the UK’s such as maximum working there have been severe cuts to EU membership and apply on hours under the Working Time the budgets for the Health and a bi-lateral basis). We believe Directive, are crucial to the Safety Executive, while the UK it is in the general interest maintenance of the economy Government has confirmed in of Welsh and UK citizens for and society that we want to Parliament that a limited number such reciprocal arrangements promote. Exit from the EU must of staff is employed to police the to continue where possible, not lead to ‘a race to the bottom’ Minimum Wage legislation. based on mutual interest and in workers protection based We also call upon the UK respect for the integrity of on the fallacy of promoting Government to engage actively, individual national health care competitiveness. That route before the UK leaves the EU, arrangements. The NHS, and can only lead to low wages, job with the discussions within indeed the health services of EU insecurity and discriminatory the European institutions countries, should be protected practice, the result of which about reforms to the Posted from illegitimate exploitation. would be felt not only in the Workers Directive to reduce any prosperity of Wales but also opportunities for employers to As set out in chapter five, the in the delivery of social policy. NHS forms a significant area of use this to undermine social our forward thinking on migration Employment protections provide protections. issues. The contribution of EU the mechanism by which nationals to NHS Wales is vital, Securing Wales’ Future | 31 Procurement Equalities We believe that, to the extent We need to consider in detail Policy Summary a new settlement with the EU the implications for equalities of We remain committed enables the UK to move away exit from the EU and will develop to the important social, from EU procurement rules, dialogue with the Equalities and environmental and it is essential that the Welsh Human Rights Commission to employment protections Government secures full control take this forward. In particular, which have been secured of public procurement policy for consideration must be given to application across the Welsh the potential impact of the loss through EU membership. public sector. This should allow of EU funding for equalities and These must not be a rethink of current limitations to the well-being of people with undermined after leaving using procurement proactively as protected characteristics. Our the EU. In particular, there a tool to generate local economic guiding principle is that leaving must be no rolling back of activity and may enable us – the EU should in no way reduce employment rights and where it represents value for our focus on promoting equalities protections for workers, money to do so – to keep public and challenging discrimination which have improved sector expenditure in Wales. wherever it exists. In addition, significantly over the in line with Article 12 of the last couple of decades United Nations Convention on as a result of action at Wales based the Rights of the Child (UNCRC), an EU level. There must suppliers currently we will listen to the views of children and young people as the also be a proper, effective win 55% of the decisions made will be critically and transparent UK annual £5.5bn important for their future. framework to provide legal public procurement underpinning for effective Consumer Protection regulation of issues such as expenditure. We do not believe that it is environment, agriculture in anyone’s interests that and fisheries which are A new set of rules which consider Welsh consumers should heavily governed by the total cost of contract be exposed to sub-standard decisions could enable this EU law. goods and we believe that figure to be further increased, continued integration with the supporting jobs and acting EU regulatory environment, as a catalyst for Wales’ future necessary to retain Single industrial and economic strategy. Market participation, would also The current procurement have the benefit of retaining legislation also provides a current consumer protections. definition of disadvantaged We need also to recognise that workers and supported any radical pursuit of free trade businesses to which contracts agreements with third countries may be reserved. With full control with much lower standards of over procurement policy, this consumer protection – in order definition could be reviewed to to compensate for losing access ensure that it accurately reflects to EU markets – could potentially the demographics of Wales’ pose serious risks to consumers population, driving further within the UK. benefits for people in Wales.

32 | Securing Wales’ Future 9 Transitional Arrangements Policy Summary It will clearly be challenging There is increasing recognition Regardless of the longer-term to successfully complete that the two-year window conclusion, we believe that the negotiations on both an available to conclude UK should remain in the Customs EU Exit Agreement, and a negotiations under Article 50 of Union, at least for a transitional new economic agreement the Treaty on European Union period, to provide continuity and between the UK and – which must include time stability for exporters. The UK for any ratification processes, Government aims to explore the EU in the two-year including European Parliament opportunities for free trade window post-Article 50 consent – may well prove deals on a bi-lateral basis with notification. Accordingly, too short to enable the UK countries such as USA, China it is essential to agree, to conclude successfully a and India, not covered by current as a fall-back and on an withdrawal agreement and a EU customs agreements. interim basis, transitional new trading relationship with our arrangements which enable The Welsh Government EU partners. Businesses have the UK to maintain Single made clear their grave concern recognises the potential value that such agreements, if they Market participation and at the prospect of a ‘cliff edge’ membership of the Customs where the two-year period are capable of being negotiated, Union while future trading elapses without agreement. might bring, in the longer-term. However, such agreements relationships are explored We believe it is essential that could not replace the benefits and negotiated. transitional arrangements of Single Market participation. should form part of the Article In those circumstances, after a 50 negotiations, securing transition period, there may be continued access to the Single better value in withdrawing from Market and minimal changes the Customs Union. In that case, to the way in which our trading the UK Government should aim relationships are structured, to to replicate on a bi-lateral basis come into effect at the moment with all willing partner countries the UK leaves the EU and to last the terms of the Customs Union until a new and fuller economic to carry forward outside. relationship has been agreed and come into effect. This The benefits of continued should sit alongside work to Single Market access might ensure that our domestic legal be achieved on a transitional and political frameworks can basis through continued cope with such a transitional membership of the EEA period (see chapter seven). (with an application for EFTA We do not believe that the membership as needed). consideration of such an issue This option, with appropriate can sensibly be left to the end provision to support continued of the process: rather the UK trading opportunities for Welsh Government needs to start and UK primary agricultural and the Article 50 negotiations fisheries produce should be with a firm request that such fully considered. arrangements are negotiated.

Securing Wales’ Future | 33 10 Conclusion

This White Paper focuses In any case, the Welsh The UK Government must on the main issues for Government is committed maintain a commitment Wales which we believe to continue working to negotiating on behalf the UK Government must closely with the UK of all of its people and fully incorporate into its Government. We urge all of its constituent negotiating position as it the UK Government to countries. We will hold it enters the formal period take Wales’ interests, as constructively to account of exit negotiations. This outlined by us, fully into on behalf of the people of paper is not, and cannot account within the wider Wales. We aim to ensure be exhaustive. It has been UK position. Just as this that the democratic will written without the benefit White Paper represents the of the people of Wales, of a clear plan, to date, views of more than one and our economic, or analysis from the UK party in Wales, we are clear social, environmental Government about how it that decisions taken must and cultural needs, fully sees future options. As the have regard for the long inform the UK’s approach, UK develops its thinking term national interests so that leaving the EU can and enters into a period of Wales and the UK. We be, not a threat, but an of formal negotiations, will be supportive where opportunity to secure a the situation may alter we can be but vigorously positive future for Wales. and some perspectives critical where we see Wales’ may shift. interests in danger of being squandered or neglected.

34 | Securing Wales’ Future 11 Annex A – Summary of potential economic impacts on Wales from ‘Brexit’ Prepared by Chief Economist, Welsh Government

Effects over the longer run market comes from indirect and The analysis reported in Table 1 economy-wide effects, including focuses on the longer run UK level analysis indicates those that result from reduced impacts (with 2030 selected (unsurprisingly) that the scale of imports and inward investment. for illustration), not the trade between the UK and the consequences of any short run EU is a key factor in explaining Indicators of economic growth, shocks, which may or may not the magnitude of the impact of and particularly Gross Value materialise during the process reduced levels of access to the Added (GVA) per head and of negotiating exit and/or new Single Market on the UK economy. Household Income, show trading arrangements. Nor does that Wales and the UK have As set out below, the regional the analysis assess the potential experienced similar trends over impact of a protracted period export statistics show that Wales the medium term (10-15 years). is even more dependent on EU of uncertainty as a result of the In view of the magnitude, and the process. The range of possibilities markets for its overseas export of variance, of the estimates that goods than is the UK as a whole. in these areas is simply too wide have been made for the scale to allow meaningful quantification, However, it is not possible to of the potential impact of Brexit but under some scenarios the determine the impact of spatial at the UK level, it is reasonable costs could be very high. variation in access to the Single to use these estimates as the Market with any precision. basis of a preliminary estimate The analysis reported in the As explained below, the regional of the likely overall impact on the table was undertaken prior to export statistics are of limited economy in Wales. the referendum. As the analysis relates to longer run impacts, the value for this purpose and there Estimates of the longer run is no reliable data on indirect economy’s performance in the economic impact of various months immediately following the effects which would be manifested Brexit scenarios from three key through intra-UK trade. referendum does not contribute to researchers (two of which are the assessment of its reliability. In any case, the larger part of the independent) are set out in impact from leaving the single Table 1.

Table 1: Direct Indirect Assessment of Scenario Organisation (% of GDP) (% of GDP) 2030 economic EEA membership CEP -1.3 impact of Brexit NIESR -1.8

HM Treasury -3.8

Free Trade Agreement with EU CEP -7.9

NIESR -2.1

HM Treasury -6.2

WTO rules CEP -2.6

NIESR -3.2 -7.8

HM Treasury -7.5 Source: IFS

Securing Wales’ Future | 35 The figures reported in the table based on an estimate that to quantify, so the figures here are in each case the central the impact of leaving the EU should be treated with a fair estimates (from a wide range) of on trade flows could be less degree of caution. the differences the new trading than assumed by most other arrangements would make – researchers. Overall, the economic losses in other words, the change to associated with Brexit are whatever the level output would Analysis produced by potentially very large, but also 16 have been in 2030 had the ‘Economists for Brexit’ closely related to the level of current arrangements persisted. (not shown in the table) is the access to the Single Market that main outlier amongst published is retained. If maximum access Lower growth of Gross Domestic studies, suggesting a positive could be retained, the losses Product (GDP) would also be impact were the UK unilaterally could be relatively modest. reflected in lower wages and to adopt a policy of eliminating all incomes. Purely for illustration, barriers to imports. Mainstream It is possible that new free trade and expressing the impact in researchers (such as those at agreements with other countries today’s values, if the impact on the CEP) have regarded this as could substitute to some extent growth was at the lower end an unlikely scenario. They have for reduced access to the single of the range in the table, each also noted that the scope for market. However, and aside person’s income in Wales would trade with more geographically from the practical difficulties of be around £200 per year lower distant countries is more limited. securing such deals, there are than otherwise. If the impact on In addition, they have argued two main problems. First, there growth was at the upper end of that for many products, prices is strong evidence that proximity, the range, each person’s income on global markets do not reflect especially in geographical terms, would be around £1,200 lower economic value because of but also in terms of the stage of per year. differences in safety and other development, is important for aspects of product quality. levels of trade. Second analysis Results are shown for the two of has shown that non-tariff barriers the most respected independent The direct impacts shown in are probably a bigger obstacle to economic research bodies, The the table arise from reductions trade than tariffs themselves. Centre for Economic Performance in export and import volumes (CEP)12 at the London School of with the associated reduced The estimates in the table Economics (LSE) and the National opportunities for specialisation relate to the consequences of Institute for Economic and Social and the loss of scale economies, leaving the EU Single Market Research (NIESR)13. from higher import and input and do not consider the option prices and from reduced inward of the UK remaining in the EU HM Treasury results are also investment. These effects are Customs Union for goods while 14 included – these are broadly relatively straightforward, and leaving the Single Market in other in line with the independent uncontroversial, to estimate. respects. The advantages and estimates where comparable. The figures expressed are net disadvantages of remaining in the A range of other bodies have also of changes in contributions to EU Customs Union are considered produced figures using a variety the EU budget (assumed to be on the next page. of methodologies. In general, the zero in the case of the WTO figures quoted in the table are option and lower than current Shorter run economic effects consistent with the broader range contributions in the other cases). The estimates described above of studies. represent long term impacts. The indirect effects result from a The Centre for Business Research Much attention has been focused lower rate of productivity growth on estimates of potential impact at Cambridge University has that results from factors such as recently published research15 of ‘shocks’ associated with reduced pressure of competition the referendum result and its which suggests that impacts, and lower rates of inward while negative, could be at or immediate consequences. So far, investment. The qualitative such impacts have been much below the bottom end of those evidence for such effects is indicated in the table. This is more modest than many expected. strong, but they are much harder This has been attributed by some 12 CEP analysis: http://cep.lse.ac.uk/pubs/download/brexit02.pdf 12 13 NIESR analysis: www.niesr.ac.uk/sites/default/files/publications/National%20Institute%20Economic%20Review-2016-Ebell-121-38.pdf 14 HM Treasury analysis: www.gov.uk/government/uploads/system/uploads/attachment_data/file/517154/treasury_analysis_economic_impact_of_ eu_membership_print.pdf 15 www.cbr.cam.ac.uk/fileadmin/user_upload/centre-for-business-research/downloads/working-papers/wp483revised.pdf 16 www.economistsforbrexit.co.uk/ commentators in part to the substantial base of favourable The depreciation of sterling pre-emptive actions taken by trading relationships around the serves as something of a the Bank of England. Consumer world for Welsh and UK exports. cushion. The beneficial effects spending, in particular, has been of sterling’s depreciation include buoyant, but it remains early days. In addition, the commitment to a more competitive prices for both common external tariff typically exporting and import competing In any case, the analysis of short allows the removal or reduction industries. Over time, as firms are run impacts raises different of complex customs procedures able to change production levels, issues from those that arise at borders, particularly those this should result in higher levels of in analysing the longer run related to ‘Rules of Origin’ exports and lower levels of imports. consequences that will only requirements. The value of income earned take full effect after the UK overseas should also increase. has actually left. It is challenging to estimate the economic costs of such customs’ These effects will be reflected in an Perhaps the most obvious short- related non-tariff barriers, but improving position on the balance of run impact of the referendum consideration of the results of a payments. result so far has been on the range of studies suggests that The main negative effects take the exchange rate. At the time of they could amount to around one form of higher import prices. These writing the effective sterling per cent of GDP. higher import prices both erode the exchange rate has fallen by There are no quantified beneficial effects of depreciation around 12% since the period for exporters (as many inputs are before the referendum. estimates of the overall benefits of remaining in the EU Customs imported) and reduce real wages Union, as the available studies and real incomes. This is a one-off, The Customs Union 18 have not been able to distinguish short run effect – but if it persists Customs unions are the trade benefits associated people’s future income growth arrangements among countries with membership of the Customs is effectively reset onto a lower in which the parties: Union from those associated with trajectory. • Agree to allow free trade in membership of the Single Market. The role of imported inputs, and the goods within the customs The benefits of the Single Market fact that much competition in export union, and are generally greater as they prices may turn on factors other • Agree to a common external include lower non-tariff barriers than price, may in part explain why tariff (CET) with respect to in most areas (other than the UK’s experience of the impact imports from the rest of customs processes) and positive of previous periods of sterling the world. effects on the service sector. weakness on international trade has been rather disappointing. The EU Customs Union covers A disadvantage of the UK It may also limit the scope for EU members plus Andorra, San remaining in the Customs Union depreciation to cushion the impact Marino, Monaco and Turkey. after leaving the EU would be that this would preclude the UK of the decision to leave the EU. One of the main advantages of from negotiating other bilateral It is sometimes argued that the remaining in the EU Customs trade deals and could see the effect of depreciation will be to Union would be that we would UK being required to introduce (perhaps more than) offset the retain free trade in goods with tariff free access to the UK impact of any tariffs or other EU members as well as Andorra, market for countries concluding trade barriers that result from San Marino, Monaco and Turkey new free trade agreements with the new trading arrangements and the countries which are the EU, without being immediately that will have to be put into place. partners in the EU’s 56 free able to secure reciprocal If the mainstream experts are trade agreements, which provide advantages for UK exports. right, however, this view betrays a better access to markets outside misunderstanding. Depreciation of the EU17. This represents a is the counterpart of lower future

17 However the EU does not have trade deals with many large economies. The current list of EU FTA markets includes: Mexico, Chile, Peru, Morocco, Algeria, Tunisia, Egypt, Jordan, Israel, Occupied Palestinian Territory, Lebanon, Syria, FYR Macedonia, Albania, Serbia, Montenegro, Bosnia and Herzegovina, Switzerland, Korea, Antigua, Barbuda, Belize, Bahamas, Barbados, Dominica, Dominican Republic, Grenada, Guyana, Haiti, Jamaica, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Suriname, Trinidad and Tobago, Colombia, Honduras, Nicaragua, Panama, Guatemala, Papua New Guinea, South Africa, Madagascar, Mauritius, Seychelles, Zimbabwe, Costa Rica, El Salvador, Fiji, Cameroon, Georgia, Moldova, Ukraine, EU Customs Union (Andorra, Monaco, San Marino, Turkey), EEA (Norway, Iceland, Liechtenstein). 18 As they are a one-off transitional effect, the price increases are not in this sense “inflation”. growth; so by definition, any The OBR’s estimates of the access to the Single Market is likely beneficial effects must have been short run impact on growth are to be felt indirectly through Wales’ more than outweighed by the towards the less pessimistic end trading links with the rest of the UK. negative consequences of leaving of the range of figures produced This follows from the scale of the on productivity. by independent forecasters, but impact on UK economic output and still represent a major economic income, the scale of the trading A prolonged period of uncertainty cost and do not imply that the links between Wales and the rest associated with the process estimates for the longer run of the UK, the fiscal impacts, and for negotiating exit from the effects set out above are unduly the fact that analysis shows that EU and securing alternative negative. the larger, indirect, effects are the trading relationships would economy-wide consequences of be expected to have negative, Welsh-specific lower productivity growth. possibly severely negative, shorter-run effects economic consequences over However, there will also be Although over the medium the medium term. Reduced important direct impacts on sectors term the economy in Wales business investment could be a in Wales that export, either directly has tracked UK economic key channel through which these or through the provision of inputs performance quite closely, negative effects are transmitted. to products exported from the rest over the short term Wales is It is not possible to provide firm of the UK. As already noted, there potentially more vulnerable to estimates of these effects, which are no statistics on the latter, economic shocks than many are contingent on how the process ‘indirect’, exports, but approximate other parts of the UK. unfolds. However, the potential calculations suggest they could for large negative consequences This vulnerability reflects lower be as important to the economy in increases the case for the resilience, due to lower wages Wales as direct exports. The Welsh early agreement of transition and incomes and to higher levels Government is therefore engaging arrangements, if (as seems likely) of deprivation. Greater reliance with businesses in Wales in order to rapid progress on permanent on manufacturing than in many better understand potential impacts arrangements is unachievable. other parts of UK may also via indirect exports. increase the risks facing Wales. The Office for Budget Important effects on import-using Responsibility (OBR), in its In addition, it should be noted sectors and consumers would also November 2016 Economic that Welsh international exports be expected if imported goods and Fiscal Outlook19, identified are dominated by a small become more expensive or difficult reduced investment and lower number of large exporters to obtain. in-migration as the principal which could mean that loss of Analysis is being undertaken by channels through which the key industries would be very the Welsh Government to improve process of leaving the EU would significant to some geographical understanding of the implications impact on the UK economy over locations. the short run. for key Welsh economic sectors For all these reasons, if the under different scenarios for the The OBR’s central estimate of the process of leaving the EU UK’s future trading arrangements. impact of reduced investment results at some point in a sharp This Annex is not intended to on output in 2021 was for a slowdown, perhaps even a provide such an analysis, but reduction in UK GDP of 1.5%, with recession, the negative effects rather to set out what is known GDP per head down 1.4%. Lower in Wales are likely to be greater about the current pattern of Welsh migration resulted in GDP down than for the UK as a whole. international trade and highlight 1% in 2021 with GDP per head some of the major issues that arise reduced by 0.3%. The combined Impact on Welsh sectors in interpreting the associated data. effect of lower investment and dependent on international migration in 2021 was a reduction markets Welsh export and imports in GDP of 2.4% and of GDP per As explained above, the largest In respect of direct trade, data is head of 1.7%. However, the OBR impact on Wales were new available on exported and imported stressed the great uncertainty trading arrangements to limit goods from HMRC20. associated with these estimates.

19 http://cdn.budgetresponsibility.org.uk/Nov2016EFO.pdf 20 https://www.uktradeinfo.com/Statistics/RTS/Pages/default.aspx The preparation of the Furthermore, the figures for export shipments. For this reason, data for data involves a degree of values do not reflect value-added a single year, and even more for an apportionment of UK totals for in Wales. This is a key point, individual quarter, must be treated as businesses operating across the which is explained further below, indicative rather than definitive. UK. This means that the figures and means that great caution may not reflect accurately the must be exercised before making With these caveats in mind, recent dependency of Welsh business inferences about the economic trends in Welsh exports of goods units on specific export markets. impact of changing export levels. are shown in Charts 1a and 1b. It also means that the data may Recent methodological improvements have limited value in informing Data for exports can also be undertaken by HMRC mean that data Welsh Government policy volatile, in part because a for the years prior to 2012 are less implementation, for example in small number of businesses reliable than data for more recent respect of identifying market account for a high proportion of years, particularly in respect of levels segments where export promotion Welsh exports, and figures can of trade. Chart 1b is included only to may have most potential. be influenced by the timing of illustrate broad trends.

Chart 1a: 14,000

Goods exports 12,000 from Wales. Total 2013-2015 10,000 £m 8,000 EU 6,000

4,000 Non-EU

2,000

0 2013 2014 2015 Source: Welsh Government analysis of HMRC data

Chart 1b: 250 Goods exports 210 Non-EU from Wales 200

2006-2011. 182 2006=100 147 157 150 Total 134 148 137 123 EU 125 116 100 108 100 96 94

50

0 2006 2007 2008 2009 2010 2011

Source: Welsh Government analysis of HMRC data

Securing Wales’ Future | 39 It can be seen from Chart 1a exports to non-EU countries to around half for the UK as that the total value of Welsh had been growing. This is a whole (for comparison, the goods exports to EU countries likely in part to have reflected Scottish share is also around is significantly greater than that a period of recovery in global one half). of goods exports to non-EU trade following the recession. countries, and has been broadly Table 3 provides an analysis stable over the last 3 years. Data for major categories of at a more detailed level for the goods exports from Wales, and exports of goods products which Chart 1b, which shows changes from the UK as a comparator, have the highest value, averaged from the base year (2006) are shown in Table 2. over the most recent three years rather than levels, indicates that to reduce the impact of annual over the medium term, prior to Table 2 shows that around two- volatility. 2012, exports to EU countries thirds of Welsh goods exports had been broadly stable, while go to EU countries, compared

Wales UK Table 2: Export of Share Sector Share Sector Goods, 2015 to EU share to EU share (%) (%) (%) (%)

Food and Live animals 83% 1% 71% 2%

Beverages and tobacco 43% 1% 39% 3%

Crude materials, inedible excl fuels 28% 4% 41% 2%

Minerals, fuels, lubricants etc 47% 21% 74% 4%

Animal and vegetable oils etc. 61% 0% 84% 0%

Chemicals and related products 55% 16% 49% 19%

Manufactured goods 68% 18% 53% 9%

Machinery and transport equipment 80% 25% 42% 43%

Miscellaneous manufactured goods 55% 13% 47% 15%

Commodities not classified elsewhere 87% 0% 15% 3%

All 67% 100% 48% 100% Source: Welsh Government analysis of HMRC data

40 | Securing Wales’ Future Table 3: Products exported from Non Wales, 2013-15, £m EU EU All

Other transport equipment 151 2,156 2,307

Petroleum, petroleum products and related materials 999 1,022 2,021

Iron and steel 265 662 927

Electric machinery, apparatus etc. and parts NES 328 280 609

Non-ferrous metals 278 326 604

Road vehicles (incl air cushion vehicles) 79 354 432

Medicinal and pharmaceutical products 215 145 360

Miscellaneous manufactured articles not elsewhere specified 62 295 358

Profesional, scientific and controlling INS and apparatus NES 187 102 288

General industrial machinery and equipment and parts NES 148 139 286

Furniture and parts thereof; bedding and mattresses etc. 198 85 283

Organic chemicals 126 153 279

Manufactures of metal not elsewhere specified 76 175 251

Power generating machinery and equipment 123 125 248

Metallifferous ores and metal scrap 155 63 218

Machinery specialised for particular industries 127 76 203

Plastics in primary forms 68 126 194

Paper, paperboard and manufacturers thereof 53 121 175

Chemical materials and products not elsewhere specified 92 83 175

Office machines and ADP machines 48 120 168

Non-metallic mineral manufactures not elsewhere specified 52 104 156

Plastics in non-primary forms 56 89 145

Telecomms etc apparatus and equipment 36 74 110

Essential oils and perfume materials; toilet preparations etc. 42 67 109

Rubber manufactures not elsewhere specified 15 89 104 Source: Welsh Government analysis of HMRC data

Securing Wales’ Future | 41 Data on services exports are export of services cannot generally component of ‘Goods – Minerals, produced by the Office of be broken down by destination. Fuels, etc’), which shows a very high National Statistics (ONS) on Data on international students’ value but where a large part of this an experimental basis. spending, which represents a form value is accounted for by imports of service exporting, is compiled that are subsequently re-exported Total service exports from Wales in from a different source and may with little or no processing. 2014 (the most recent year) were not be fully comparable22. £4.7bn compared to total goods The share of Welsh value-added exports of £13.3bn. The export data for both goods and employment will probably be and services reflect a broad higher in the production of most The top three categories of measure of ‘output’23 and not services exports than goods, so service sector exports from ‘value added’. In consequence, the headline data in Chart 2 will Wales in 2014 were: a high value for exports does tend to downplay the importance of • Insurance and pension not necessarily mean that Wales the former compared to the latter. services (25%) benefits from a high level of Services are also likely to play an • Manufacturing services e.g. value-added or employment. For increasingly important role over repairs (25%) context, value-added in production time, as there is a general tendency industries is typically around one- across developed countries for the • Financial services (18%). quarter the value of turnover; the demand for services to outpace that Chart 2 provides a high-level share of value added in the data for for manufactured goods, reflecting breakdown showing the largest exports will be even lower24. changes in the patterns of demand Welsh export sectors covering as affluence increases. Lorem ipsum The most extreme example of both goods and services the disparity between export Table 4 provides more detail on (averaged over the most recent values and value-added is export destinations, ranked by their three years to reduce volatility21). probably provided by the export of importance to Wales, with the UK The experimental data on the Petroleum etc (by far the largest again shown as a comparator. Chart 2: 0 1000 2000 3000 4000 5000 Welsh Goods Machinery and Transport Equipment

and Services Manufactured Goods Exports, Minerals, Fuels, Lubricants etc. average 2013-2015, £m Chemicals and Related Products Services – Insurance and Pensions Services EU Miscellaneous Manufactured Goods Non-EU Services – Manufacturing All Services – Financial

Services - International Students (illustrative 2013/14)

Services – Transport

Services – Travel

Crude Materials, Inedible, excluding Fuels

Food and Live Animals

Services – Information and Communications

Services – Real Estate, Prof., Scientific and Tech. Source: Welsh Government

21 Data for services is not available for 2015, so is a two year average. 22 Spending by international tourists, which has been around £400m per year over recent years, will be largely reflected in ‘Services – Travel’. 23 The export values recorded in the regional trade statistics for goods have a broader definition than the value of sales – they cover the value of goods crossing the border, even where ownership has not changed (for example where refurbishment has been undertaken). 24 A provisional attempt to estimate the Welsh value added associated with direct Welsh exports is presented in this Annex. Table 4: Goods exports, 2015 Wales UK

Germany 24.8% 11.0%

USA 14.6% 16.0%

France 13.7% 6.5%

Ireland 7.6% 6.1%

Netherlands 5.2% 6.3%

Belgium 3.8% 4.2%

Spain 2.7% 3.2%

Italy 2.1% 3.1%

China 1.8% 4.1%

Sweden 1.8% 1.6%

Canada 1.8% 1.4%

Switzerland 1.2% 2.0%

Poland 1.2% 1.3%

South Korea 1.2% 1.7%

Turkey 1.1% 1.2%

India 0.8% 1.4%

Japan 0.8% 1.5%

Australia 0.7% 1.3%

Singapore 0.7% 1.3%

Saudi Arabia 0.7% 2.0%

UAE 0.7% 2.1%

Hong Kong 0.6% 1.9%

Czech Republic 0.6% <0.5%

South Africa 0.5% <0.5%

Norway 0.5% 1.1% Source: Welsh Government analysis of HMRC data

Securing Wales’ Future | 43 The top three countries to which Welsh goods imports pan-UK basis. This means that Wales exports accounted for HMRC also provides data on the the data may not accurately over 50% of all exports in 2015 import of goods (but no data is reflect the dependency of Welsh (the top 10 countries made up available on services imports). business units on imported nearly 80% of all exports). Data for the most recent inputs. Along with the role of ‘indirect’ exports and imports Table 4 also highlights some calendar year are shown in Table 5. which take place through Welsh differences between the UK and trade flows with the rest of the Wales in terms of key export As with the export data, UK, this means that it is not markets. In particular, Germany the figures are derived by appropriate to compare Welsh and France are both more apportioning import data for exports and imports to compute significant markets for Wales businesses operating on a a Welsh ‘balance of trade’. than for the UK.

Table 5: Goods imports, 2015 Wales UK

Food and Live Animals 5% 8%

Beverages and Tobacco 1% 1%

Crude Materials 6% 2%

Mineral Fuels 19% 8%

Animal and Vegetable Oils 0% 0%

Chemicals 10% 13%

Manufactured Goods 13% 11%

Machinery and Transport 33% 38%

Miscellaneous Manufactures 12% 16%

Other commodities 0% 2%

Share from EU 48% 55% Source: Welsh Government analysis of HMRC data

44 | Securing Wales’ Future Spatial implications of an area on manufacturing be affected by reduced market Reduced access to European industry is likely to provide a access, and, depending on the markets that impacted on the broad indication of vulnerability. replacement arrangements viability of Welsh exporting Table 6 shows the share of the put in place, by changes to the businesses might be expected workforce in each local authority system of agricultural support. to result in effects that differ area in Wales that works in The relative dependency of Welsh spatially. Data on exports is not the production sector (which is local authority areas on agriculture available below the all-Wales level, comprises mainly manufacturing is indicated by the data on but the extent of the dependency industry). Agriculture may also employment in Table 7.

Table 6: Workforce in the production sector, 2015, %

Flintshire 25%

Blaenau Gwent 23%

Caerphilly 22%

Neath Port Talbot 21%

Wrexham 21%

Torfaen 18%

Merthyr Tydfil 16%

Rhondda Cynon Taf 15%

Isle of Anglesey 15%

Bridgend 14%

Carmarthenshire 13%

Newport 12%

Vale of Glamorgan 12%

Monmouthshire 10%

Powys 10%

Gwynedd 9%

Denbighshire 9%

Pembrokeshire 8%

Cardiff 7%

Swansea 7%

Ceredigion 5%

Conwy 5% Source: Welsh Government

Securing Wales’ Future | 45 Table 7: Workforce in agriculture, forestry and fishing, 2015, %

Powys 16%

Ceredigion 11%

Isle of Anglesey 8%

Carmarthenshire 7%

Pembrokeshire 6%

Gwynedd 6%

Denbighshire 5%

Monmouthshire 5%

Conwy 3%

Flintshire 2%

Wrexham 1%

Vale of Glamorgan 1%

Swansea 1%

Neath Port Talbot 1%

Rhondda Cynon Taf 1%

Torfaen 1%

Caerphilly 1%

Bridgend 0%

Merthyr Tydfil 0%

Newport 0%

Cardiff 0%

Blaenau Gwent n/a Source: Welsh Government

As noted above, although there rest of the UK can be gained by Table 8 shows areas where Wales are no official statistics, the examining the degree to which is most and least specialised value of Welsh trade with the rest Wales is relatively specialised compared to the rest of the UK. of the UK is understood to be across sectors. This helps provide These figures are created by several times greater than that some context for considering comparing levels of employment of Welsh international exports. which sectors could be vulnerable by industry in Wales with levels An indication of sectors in to decreases in demand from the across the UK as a whole25. which Wales is likely to be a net wider UK economy. exporter (importer) to (from) the 25 The location quotient shows the relative intensity of employment in Wales compared to the UK as a whole. A ratio of one indicates that Wales has the same share of employment in the sector as the UK as a whole. A figure of, for example, two, indicates that Wales has twice as high a share of employment in the sector as the UK, while a figure of 0.5 indicates a Welsh share of employment that is half that for the UK as a whole. The data in the table is currently being updated by ONS, but location quotients generally evolve gradually so the data for 2011 should remain reasonably accurate. Table 8: Specialisation by Sector in Wales (2011) Most specialised

Manufacture of basic metals 3.2 Mining of coal and ignite 2.8 Forestry and logging 1.9 Water transport 1.9 Manufacture of basic pharmaceutical products etc. 1.8 Repair and installation of machinery amd equipment 1.7 Manufacture of paper and paper products 1.7 Crop and animal production, hunting and related service activities 1.7 Manufacture of other transport equipment 1.7 Manufacture of coke and refined petroleum products 1.6 Manufacture of electrical equipment 1.5 Manufacture of motor vehicles, trailers and semi-trailers 1.5 Other mining and quarrying 1.5

Least specialised

Manufacture of leather and related products 0.5 Publishing activities 0.5 Motion picture, video and television programme production etc. 0.5 Activities auxillary to financial services and insurance activities 0.5 Fishing and aquaculture 0.5 Activities of head offices; management consultancy activities 0.5 Repair of computers and personal and household goods 0.4 Information service activities 0.4 Computer programming, consultancy and related activities 0.3 Scientific research and development 0.3 Advertising and market research 0.2 Air transport 0.2 Source: ONS Manufacture of wearing apparel 0.2

Securing Wales’ Future | 47 Inward investment It is of course highly likely that existing overseas investors from Foreign owned firms account for inward investment across the making new, or replacement, a high share of manufacturing UK will be negatively effected by investments. These adverse 27 output (and investment) in the UK leaving the EU . Again, effects might be mitigated by early Wales. In the most recent the strength of the impact over agreement on favourable transition available year, non-UK owned the long term will be determined arrangements. firms accounted for around 30% by the level of access to the Single Market that is eventually The adverse effects of lower of Welsh value-added – see inward investment to Wales could Chart 3. This is only slightly secured and the importance of EU markets to the investors be very significant, not least higher than the proportion for because the evidence shows the UK as a whole, although the in question. The latter will inevitably vary28. that productivity, and pay, tends representation of manufacturing to be higher for people employed in the Welsh total is much However, the uncertainty in multi-national businesses29. greater (not shown). created by a prolonged In addition, there is evidence Wales has performed well in negotiating process may be of that such businesses generate 30 attracting new foreign inward more immediate concern as ‘spill-over’ effects , prompting investment projects over the last this will created uncertainty productivity improvements in few years26. deterring both new inward indigenous firms. investors and discouraging

Chart 3:

Value added by USA 12% country of ownership, 2013 Netherlands 5%

Germany 2% Luxembourg

United Kingdom 2% 70% France Other 1% 8%

Source: ONS

26 Data for 2015/16: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/550779/DIT_Investment_Results_2015-16_ v1_05-09-2016.pdf 27 Recent evidence suggests that membership of the EU may have increased FDI into the UK by around 30%: http://cep.lse.ac.uk/pubs/download/ dp1453.pdf 28 For the importance of access to the EU Single Market and of other factors influencing inward investment, see: https://www.gov.uk/government/uploads/ system/uploads/attachment_data/file/277171/ep7-foreign-direct-investment-trends-manufacturing.pdf 29 http://cep.lse.ac.uk/pubs/download/dp0672.pdf 30 Evidence on spillover effects summarised here: http://cep.lse.ac.uk/pubs/download/brexit03.pdf However, earlier analysis for Wales shows a more mixed picture: http://gov.wales/docs/caecd/research/090617-foreign-direct-investment-en.pdf 12 Annex B - Evidence Summary on EU Migration in Wales Prepared by Public Policy Institute for Wales (PPIW) for the Welsh Government’s European Advisory Group November 2016

Summary Swansea, Flintshire and more likely than those in other Wrexham. parts of the UK to believe that • The First Minister has asked immigration should be reduced. the Public Policy Institute for • The distribution of and the Wales to provide analytical increase in EU migrants in • The existing data do not show a support to the European Wales has been uneven. strong correlation between the Advisory Group (EAG). The Some areas, for example scale of inward migration into an Institute’s work will complement Merthyr Tydfil, have seen large area and the size of the vote in analyses conducted by Welsh percentage increases, albeit favour of leaving the EU. from a low base. Government officials and Policy implications others. Migrant workers • The relatively low level of • This note has been prepared • Most long term EU migrants migration from the EU to Wales to help inform discussion come to Wales to work. suggests that restrictions on at the EAG’s meeting on More than half report that free movement of people may 28th November. It draws they already had a job to go have less impact in broad together existing evidence to on arrival. aggregate terms than in other on four issues: the scale of • Working age EU migrants parts of the UK. EU migration to Wales; EU in Wales are more likely to • The uneven distribution of migration from Wales; the be in work than the rest of EU migrants living in Wales demographics and labour the population. On average, means that the size of the market characteristics of EU migrant workers in Wales earn impact of restrictions on free migrants living in Wales; and slightly less than those born movement could vary between public attitudes to EU migrants in the UK and are more likely communities, or spatially in Wales. to be employed in elementary concentrated industries and • There is scope for further occupations (performing services. analysis to fill some of the gaps simple and routine tasks that • The overall figures may also in the existing evidence base. often require physical effort). mask the vulnerability of some This could be prepared in time • There are more than three public services and economic for the EAG’s next meeting early times as many EU migrants sectors to restrictions on free in 2017. as non-EU migrants in movement. Analysis shows that manufacturing, while for public tourism and manufacturing The scale of EU migration administration, education might be more susceptible in Wales and health, there are more than other sectors. It has also • The proportion of those living than twice as many non-EU been suggested that the Welsh in Wales who are EU migrants migrants as EU migrants. NHS could be vulnerable to is low compared to the UK restrictions on the number of average. Public attitudes EEA healthcare professionals • In the last decade the • Recent survey data suggest working in the UK (Zolle, 2016). proportion of EU migrants has that people in Wales are less • Restrictions on free movement increased but more slowly than sympathetic to EU migrants may not address the underlying the UK average. than people in other parts causes of dissatisfaction in • More than half of EU migrants of the UK. communities where large in Wales are concentrated in six • Almost three quarters consider majorities voted in favour of local authority areas – Cardiff, EU migrant workers to be a net leaving the EU. Newport, Carmarthenshire, cost, and people in Wales are Securing Wales’ Future | 49 Further analysis support to the European Advisory There is scope for further • This report is based on a Group (EAG). The Institute’s analysis to fill some of the gaps rapid review of the available work will complement analyses in the existing evidence base secondary data. conducted by Welsh Government and this could be prepared in officials and others. time for the EAG’s next meeting • The initial conclusions that early in 2017. we have presented could, One of the themes currently and we believe should, be being considered by the tested through more in depth European Advisory Group (EAG) Migration to Wales analysis of administrative is the implications for Wales data which would provide a of any changes to the freedom Non-UK born residents better understanding of recent of movement of people as a in Wales migrant flows and the role that result of the UK leaving the A lower proportion of people EU migrants currently play in European Union. This note has living in Wales are migrants than Wales. been prepared to help inform is the case in the UK as a whole. • This analysis could also discussion of these issues at In Wales 2.6% of the population help to identify areas and the EAG’s meeting on 28th are EU migrants and 3.2% are sectors where restrictions November. It draws together non-EU migrants compared on free movement are likely existing evidence about: to the UK average of 5.2% EU to have the biggest impacts migrants and 8.5% non-EU • The scale of EU migration to migrants (Table 1). and explore the impact of Wales; different scenarios in terms of • EU migration from Wales; Wales is home to 4.8% of the restrictions on free movement total UK population but just 2% of people. • The demographics and labour of the UK migrant population. market characteristics of EU This means that it has a smaller Introduction migrants; and share than almost any other part • Public attitudes to EU migrants of the UK (Figure 1). The First Minister has asked the in Wales. Public Policy Institute for Wales (PPIW) to provide analytical

Table 1: Wales UK Scale of EU % of % of and non-EU Number population Number population migration into EU migrants 79,100 2.6% 3,379,500 5.2% Wales and UK (based on country of Non-EU migrants 97,500 3.2% 5,467,000 8.5% birth) Total migrant population 176,600 5.8% 8,846,500 13.7%

Source: StatsWales (June 2016) based on data from Labour Force and Annual Population surveys

50 | Securing Wales’ Future Figure 1: 0% 5% 10% 15% 20% 25% 30% 35% 40% Where do people born abroad live London 36.7 in the UK? (2015) South East 12.8

East 8.4 Migrant share (%) West Midlands 8.0 Total population share (%) North West 7.7

East Midlands 5.9

Yorks and Humber 5.6

South West 5.2

Scotland 4.6

WALES 2.0

North East 1.7

Northern Ireland 1.5

Source: ONS (December 2015) based on data from Labour Force and Annual Population surveys

Figure 2: Where do EU 0% 5% 10% 15% 20% 25% 30% 35% migrants live in 29.3 the UK? (2015) London South East 12.8

East 10.4 EU migrant share (%) North West 8.1 Total population share (%) West Midlands 7.8

East Midlands 7.0

South West 6.1

Scotland 6.0

Yorks and Humber 5.8

Northern Ireland 2.9

WALES 2.3

North East 1.6

Source: ONS (December 2015) based on data from Labour Force and Annual Population surveys

Securing Wales’ Future | 51 Non-UK born Almost a quarter live in There are wide variations between residents by local Cardiff. Other areas with the areas. Non-UK born residents largest numbers of non-UK make up just 2% of the population authority area born residents are Swansea, of Rhondda Cynon Taf and Neath Six local authority areas account Newport, Carmarthenshire, Port Talbot but more than 10% in for 61.4% of all non-UK born Wrexham and Flintshire Cardiff and Newport. people living in Wales. (Table 2).

Table 2: % of all non-UK born Residents in local residents in % of local authorities in Total Wales population Wales born outside Cardiff 41,100 23.3% 11.6% the UK (ranked in Newport 15,300 8.7% 10.5% descending order by percentage of Swansea 21,800 12.3% 9.1% population) Carmarthenshire 13,300 7.5% 7.3% Ceredigion 4,900 2.8% 6.6%

Wrexham 8,600 4.9% 6.3%

Flintshire 8,400 4.8% 5.5%

Vale of Glamorgan 6,500 3.7% 5.2%

Conwy 5,600 3.2% 4.9%

Gwynedd 5,800 3.3% 4.8%

Torfaen 4,100 2.3% 4.5%

Monmouthshire 4,100 2.3% 4.5%

Pembrokeshire 5,100 2.9% 4.1%

Denbighshire 3,800 2.2% 4.1%

Anglesey 2,700 1.5% 3.9%

Powys 5,000 2.8% 3.8%

Merthyr Tydfil * 2,100 1.2% 3.6%

Bridgend * 3,900 2.2% 2.8%

Blaenau Gwent * 1,900 1.1% 2.8%

Caerphilly 4,900 2.8% 2.7%

Neath Port Talbot * 2,900 1.6% 2.1%

Rhondda Cynon Taf * 4,800 2.7% 2.0%

Source: StatsWales (June 2016) based on data from Labour Force and Annual Population surveys * Based on small sample sizes (between 25 and 40 responses)

52 | Securing Wales’ Future EU migrants by local authorities have the largest UK born residents. EU migrants local authority area numbers of EU migrants and constitute around 1% of the account for more than half of all population of Torfaen compared The pattern of EU migration EU migrants in Wales. to 5.4% in Newport (Table 3). is slightly different to that for non-UK born residents as a The variation between areas is whole. However, the same six smaller than is the case for non-

Table 3: % of all EU EU migrants migrants in % of local living in local Number Wales population authorities in Newport 7,900 10.0% 5.4% Wales (ranked in Carmarthenshire 7,600 9.6% 4.2% descending order by percentage of Wrexham 5,300 6.7% 3.9% population) Flintshire 5,500 7.0% 3.6% Cardiff 11,800 14.9% 3.3%

Ceredigion 2,400 3.0% 3.3%

Swansea 6,400 8.1% 2.7%

Pembrokeshire 3,300 4.2% 2.6%

Anglesey * 1,700 2.1% 2.4%

Monmouthshire * 2,200 2.8% 2.4%

Vale of Glamorgan * 3,000 3.8% 2.4%

Conwy 2,700 3.4% 2.4%

Denbighshire * 2,000 2.5% 2.1%

Powys * 2,500 3.2% 1.9%

Bridgend * 2,500 3.2% 1.8%

Blaenau Gwent ** 1,200 1.5% 1.7%

Caerphilly * 3,100 3.9% 1.7%

Merthyr Tydfil ** 1,000 1.3% 1.7%

Gwynedd ** 1,500 1.9% 1.2%

Rhondda Cynon Taf ** 2,900 3.7% 1.2%

Neath Port Talbot ** 1,500 1.9% 1.1%

Torfaen ** 900 1.1% 1.0%

Source: StatsWales (June 2016) based on data from Labour Force and Annual Population surveys * Limited quality: based on between approximately 25 and 40 responses ** Low quality: based on between approximately 10 and 25 responses

Securing Wales’ Future | 53 There is a wide variation across Country of origin (6,296). The Census data show Wales in the proportion of non- that migrants from these countries UK born residents who are EU Analysis by Krausova and were not evenly distributed across migrants. Less than a third of Vargas-Silva (2014) shows that Wales, and that Polish born non-UK born residents in Cardiff the countries of origin from which residents were the least evenly and Swansea are EU migrants the largest numbers of non-UK distributed of the top five groups. compared with almost two thirds born people came to Wales Their share of the local non-UK of non-UK born residents in were Poland (18,023 residents), born population ranged from 3.8% Flintshire and Pembrokeshire Ireland (12,175), India (11,874), in Vale of Glamorgan to 38.5% in (Table 4). Germany (11,208) and China Merthyr Tydfil.

Table 4: % of non-UK EU born residents EU migrants as a Non-UK born migrants who are EU proportion of residents (N) (N) migrants non-UK born Flintshire 8,400 5,500 65.5% residents in local Pembrokeshire 5,100 3,300 64.7% authorities in Wales (ranked in Bridgend * 3,900 2,500 64.1% descending order Caerphilly * 4,900 3,100 63.3% by percentage of Blaenau Gwent ** 1,900 1,200 63.2% population) Anglesey * 2,700 1,700 63.0%

Wrexham 8,600 5,300 61.6%

Rhondda Cynon Taf ** 4,800 2,900 60.4%

Carmarthenshire 13,300 7,600 57.1%

Monmouthshire * 4,100 2,200 53.7%

Denbighshire * 3,800 2,000 52.6%

Neath Port Talbot ** 2,900 1,500 51.7%

Newport 15,300 7,900 51.6%

Powys * 5,000 2,500 50.0%

Ceredigion 4,900 2,400 49.0%

Conwy 5,600 2,700 48.2%

Merthyr Tydfil ** 2,100 1,000 47.6%

Vale of Glamorgan * 6,500 3,000 46.2%

Swansea 21,800 6,400 29.4%

Cardiff 41,100 11,800 28.7%

Gwynedd ** 5,800 1,500 25.9%

Torfaen ** 4,100 900 22.0%

Source: StatsWales (June 2016) based on data from Labour Force and Annual Population surveys * Limited quality: based on between approximately 25 and 40 responses ** Low quality: based on between approximately 10 and 25 responses

54 | Securing Wales’ Future Increases in enlargement countries) for the The number of people moving to migration first time (69,000 and 68,000 the UK for work related reasons respectively). The gap between has risen sharply since 2013, The Office for National Statistics the numbers of non-EU and EU while the number arriving for (ONS) reports that long-term long term1 migrants to the UK formal study has declined since immigration to the UK from has also narrowed in recent 2011 (Figure 4). The majority the EU rose sharply between years. By 2016, immigration of (62%) of those whose main reason 2012 and 2014 but has since EU citizens was estimated to be for migration was work-related been broadly flat. It also notes 268,000, and immigration of were EU migrants. The majority that immigration of A2 citizens non-EU citizens was estimated (72%) whose main reason was (from Bulgaria and Romania) to be 282,000 (Figure 3). study were non-EU migrants. have drawn level with A8 (2004

Figure 3: 400,000 Long term immigration 300,000 Non EU to the UK by EU citizenship 200,000 (2006 to 2016) 100,000 British

0 YE Jun 07 YE Mar 10 YE Sep 11 YE Mar 13 YE Sep 14 YE Mar 16

Source: Long Term International Migration based on International Passenger Survey (ONS, 2016). NB: British citizens are those returning to the UK after living abroad for a year or more, or citizens born abroad coming to the UK for the first time

Figure 4: 400,000 Main reason for migration 300,000 Work related (2006 to 2016) 200,000 Formal study

100,000 Accompany or join Other Non stated 0 YE Mar 10 YE Sep 11 YE Mar 13 YE Sep 14 YE Mar 16

Source: Long Term International Migration based on International Passenger Survey (ONS, 2016)

1 The UN defines a long term international migrant as someone who moves to a new country for a period of at least 12 months. By 2016, work was the main of the population living in Wales Migration Observatory has reason cited by those moving that were born abroad increased analysed changes in migrant to the UK (by 303,000 people). from 3.9% (114,700 people) populations at local authority Almost two thirds (62%) of to 5.8% (176,600) between level in Wales between 2001 those who reported that they 2007 and 2016. Over the and 2011 using Census data were coming for work were EU same period, the proportion of (Krausova and Vargas-Silva, citizens and more than half of the UK population born abroad 2014). EU migrants (56%) arriving for increased from 9.8% (5.9 million) work-related reasons reported to 13.7% (8.8 million). They report that over the ten they had already secured a job year period the number of to go to. EU migrants living in Wales residents in Wales who were increased from 1.4% of the born outside the UK increased Between 2015 and 2016, population in 2007 (40,100) to by 82%, from 92,263 to the number of EU-15 citizens 2.6% in 2016 (79,100). For the 167,871 but there were wide migrating to the UK specifically UK as a whole, the proportion variations between areas. At looking for work increased of EU migrants increased from the upper end, Merthyr Tydfil significantly from 20,000 to 2.6% (1.5 million) to 5.2% (3.4 recorded an increase of 227% 31,000. The ONS comments that million) (see Figure 5). (1,834 people), which was the this may, in part, reflect weaker second highest percentage labour market conditions in Existing data are not sufficiently increase in England and some southern EU-15 countries. robust to provide an accurate Wales, albeit from a low picture of increases by local base. By contrast, Torfaen Reflecting to an extent the overall authority areas right up to experienced an increase of trend for the UK, the proportion present. However, the Oxford 36% (Table 5).

Figure 5: 16% Migrants as 2014: A2 Work restrictions lifted 137 All migrants a proportion 126 (UK) of the 12% population 108 in Wales 98 and the UK (2007–2016) 8% All migrants 57 58 (Wales) 45 45 EU migrants 52 (UK) 4% 39 34 26 26 25 19 EU Migrants 14 (Wales)

0% 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: StatsWales (June 2016) based on data from Labour Force and Annual Population surveys. In 2014, UK work restrictions on citizens from Bulgaria and Romania were lifted

56 | Securing Wales’ Future Table 5: % increase in non-UK born % change in Increase in non-UK population non-UK born Local authority born population (2001 – 2011) residents Merthyr Tydfil 1,834 227% (2001 to 2011) Wrexham 5,308 168%

Swansea 9,274 117%

Newport 6,310 105%

Cardiff 22,849 99%

Carmarthenshire 3,620 91%

Blaenau Gwent 710 90%

Gwynedd 2,755 87%

Powys 2,320 71%

Flintshire 2,621 69%

Rhondda Cynon Taf 2,982 68%

Ceredigion 1,813 66%

Bridgend 1,840 58%

Caerphilly 1,463 53%

Denbighshire 1,322 52%

Monmouthshire 1,318 48%

Neath Port Talbot 1,116 45%

Pembrokeshire 1,736 45%

Vale of Glamorgan 1,745 40%

Anglesey 670 39%

Conwy 1,351 37%

Torfaen 651 36%

Source: Census 2001 and 2011

Securing Wales’ Future | 57 Migration from Wales the ONS, the number of British The sample size for Wales is small nationals emigrating from the so the data should be interpreted Our rapid review found very little UK declined from 2006 to 2010 with caution. However, the pattern data on migration from Wales before levelling off (Figure 6). of emigration from Wales does not to other EU countries. However, The number of emigrants peaked show the same downward trend according to the International in 2006 at 196,000. In 2014, between 2006 and 2010 as the Passenger Survey published by the number was 127,000. UK (Figure 7).

Figure 6: 250,000 British nationals 200,000 emigrating from the UK 150,000

100,000

50,000

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: International Passenger Survey data (ONS)

Figure 7: 12,000 British 10,000 nationals emigrating 8,000 from Wales 6,000

4,000

2,000

0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: International Passenger Survey data (ONS)

58 | Securing Wales’ Future of working age (16-64) in Wales for the general population and Labour Market 2 and Employment are in employment compared 71.5% for all migrants (Table 6) . to 71.3% of the total working Characteristics of age population and 69.3% of all The proportion of people in Migrants migrants. employment in Wales who were migrants increased from 4% in In 2016, EU migrants in Wales This is similar to the pattern in 2004-07 to 8% in 20153,4, and have a higher employment rate the UK as a whole where the from 11% to 16% at UK level than the working age population employment rate of EU migrants (Figure 8). as a whole. 79% of EU migrants is 79.5% compared with 73.7%

Table 6: Wales UK People aged Number in % in Number in % in 16-64 years in employment employment employment employment employment EU migrants 48,400 79.0% 2,135,600 79.5% (2016)

All migrants 97,000 69.3% 5,137,000 71.5%

Total population 1,360,400 71.3% 30,130,400 73.7%

Source: StatsWales (June 2016) based on data from Labour Force and Annual Population surveys

16 Figure 8: 16 16 15 % in non UK-born 14 (UK) employment 14 who are 13 migrants 12 11 11 Percentage of those 10 in employment in 9 Wales who are 8 8 non-UK born 7 7 6 non UK-born 6 (Wales) Non UK-born, UK 5 4 Non UK-born, Wales 4 2004–07 2010–11 2014 2015

Source: Markaki and Vargas-Silva (2016) based on Labour Force Survey

2 National Insurance data show that there are 7,760 non-UK nationals in Wales of working age who are claiming benefits (DWP, 2016). These benefits include in-work and out-of-work benefits, covering Jobseeker’s Allowance; ESA and Incapacity Benefits; Lone Parent Income Support; Carer’s Allowance; Income Support and Pension Credit; Disability Living Allowance and Personal Independence Payments; and Widow’s Benefit. 3 Figure 8 and Tables 7-10 are based on research by Markaki and Vargas-Silva (2016), who did not split non-UK born into EU and non-EU. The Labour Force Survey (LFS) does allow for this, although sample sizes might preclude meaningful analysis (see note below). 4 Estimates using the LFS are subject to significant sampling variability, as with any sample survey. In each quarter of the LFS, between 143 and 218 working age respondents who reside in Wales are non-UK born. To increase sample size and improve the reliability of the statistics, the analysis pools together all quarters for 2004-2007 (2,798 respondents), 2010-2011 (1,557 respondents), and four quarters from 2014 (773 respondents) onwards. For further discussion see the data sources and limitations section of the Migration Observatory website. Migrants living in Wales have in ‘elementary occupations’ education and health (34%), a slightly higher rate of self- (i.e. performing simple and followed by distribution, employment than those born in routine tasks that often require hotels and restaurants (20%) the UK (Table 7). physical effort) and, to a lesser and manufacturing (16%). extent, professional services The proportion of UK born On average, migrant workers (Table 9). workers in these industries is in Wales earn slightly less than similar, with the exception of workers born in the UK (Table 8). The largest proportion manufacturing (Table 10). of migrant workers work Migrant workers are more likely in public administration, than non-migrants to be employed

Table 7: Wales UK % of working Self- Self- age population Employees employed Employees employed who are Born in UK 61% 9% 64% 10% employees or

self-employed Migrants (2015) (non-UK born) 57% 11% 59% 11%

Source: Markaki and Vargas-Silva (2016) based on Labour Force Survey

Table 8: Wales UK Average Born in UK £23,417 £26,050 annual salary of workers Migrants (2015) (non-UK born) £22,478 £26,222

Source: Markaki and Vargas-Silva (2016) based on Labour Force Survey

Table 9: Share of migrants Occupation Share of UK born (non-UK born) groups in Professional 18% 22% Wales for those Elementary 12% 19% of working age Caring, leisure 11% 12% (2015) and other services

Source: Markaki and Vargas-Silva (2016) based on Labour Force Survey

60 | Securing Wales’ Future Table 10: % of migrant % of UK born (non-UK born) Industries in workers workers Public admin, Wales for those education and health 34% 34% of working age Distribution, hotels (2015) and restaurants 19% 20%

Manufacturing 11% 16% Other industries 36% 30%

TOTAL 100% 100%

Source: Markaki and Vargas-Silva (2016) based on Labour Force Survey

Analysis suggests that tourism same proportion of the workforce education and health, there are (11%) and manufacturing (9%) but there are exceptions. There more than twice as many non- have the largest proportion of are more than three times as EU migrants as EU migrants migrants in their workforce. many EU migrants as non-EU (Figure 9). migrants in manufacturing, In most sectors, EU and non-EU while for public administration, migrants account for broadly the

Figure 9: 0% 2% 4% 6% 8% 10% 12%

Migrants as Tourism 5% 6% a proportion of workforce Manufacturing 7% 2% in Wales by Transport and communication 4% 4%

Industry Distribution, hotels and restaurants 4% 4%

Public admin, education and health 2% 5%

Banking and finance 3% 3%

Construction 2% 1%

Energy and Water*

Agriculture, forestry and fishing*

% of workforce that are EU migrants

% of workforce that are non-EU migrants

Source: Welsh Government *For ‘energy and water’ and ‘agriculture, forestry and fishing’, it is estimated that EU migrants and non-EU migrants each account for less than 1% of the workforce

Securing Wales’ Future | 61 Public Attitudes suggest that age, educational larger proportion than in any other to Migration attainment and income level are part of Britain (Figure 10). all much stronger predictors of Scully (2016) found that 29% views towards Eastern Europeans Although the sample sizes are of people in Wales who were than where people live. small and the data should therefore questioned as part of the Welsh be treated with caution, people in Election Study reported that they The British Social Attitudes Survey Wales seem more likely than those had an unfavourable view of found that 71% of respondents in other parts of Britain to favour Eastern Europeans who come to from Wales thought that EU reducing immigration, and support live in Wales. Additional (as yet migrant workers brought more for this view increased between unpublished) analysis of the data costs than benefits which was a 2011 and 2013 (Figure 11).

Figure 10: 100 Perceived 80 contribution of 45% 54% 54% 56% 51% people who come 71% to work in 60

Britain from 22% 40 other countries 22% 28% 29% 24% that are part of 20 13% 32% the European 25% 16% 20% 20% 15% Union 0 Scotland North Midlands South London Wales Net benefit

Equal / don’t know

Net cost

Source: British Social Attitudes Survey (2013) based on 1,055 respondents (unweighted) Sub-sample sizes are quite small, so quality of data is limited

Figure 11: 100 86% % of 83% 83% 80% 81% 80% 81% respondents 80 78% 71% who think 69% 62% immigration 60 55% into Britain should be 40 reduced

20

2011 0 Scotland North Midlands South London Wales 2013

Source: British Social Attitudes Survey (2011 and 2013). Sub-sample sizes are quite small, so quality of data is limited At the UK level, public salience Mori (2016) note that there is Overall, change in levels of inward of immigration as an issue is at a growing generational divide, migration into an area is not an all time high. In September with older people becoming more strongly correlated with voting 2015, 56% of respondents to concerned than younger people patterns in the EU referendum. the Economist/Ipsos Mori Issues about immigration. Wrexham, Ceredigion and Merthyr Index mentioned immigration Tydfil had the highest percentage as one of the most important Ipsos Mori also found that 41% changes in inward migration as issues facing Britain. This is of respondents had changed a proportion of their populations the highest recorded figure for their views on immigration ‘a between 2013-14 and 2014-15 but immigration since the index little’ or ‘a lot’ since the 2010 the proportion voting leave in these began in the 1970s and Ipsos general election, with 86% of areas varied widely (Figure 12)5. these becoming more worried.

Figure 12: % voting leave 65% Blaenau Leave vote Gwent and the Wrexham changes in 60% inward Bridgend 55% Merthyr migration as Tydfil a proportion 50% of population Ceredigion 45%

Cardiff 40%

35% -15% -5% 0 5% 15% 25% 35% 45%

% change in inward migration as proportion of population (2013–14 to 2014–15)

Source: Welsh Government data

Policy Implications Second, the uneven distribution that the Welsh NHS could be of EU migrants living in Wales vulnerable to restrictions on The initial evidence that we have means that the size of the the number of EEA healthcare been able to draw together in impact of restrictions on free professionals working in the UK this note seems to point to a movement may vary between (Zolle, 2016). number of potentially important communities, or spatially policy implications. concentrated industries and Fourth, while the level of public concern about immigration has First, the relatively low level of services. increased in recent years, levels migration from the EU to Wales Third, the relatively low overall of migration to most Welsh suggests that restrictions on free level of immigration into Wales communities have remained movement of people may have may mask the vulnerability relatively low. To the extent less impact in broad aggregate of some public services and that the leave vote was driven terms (in terms of restricting economic sectors to restrictions by factors other than direct labour market supply or ‘freeing on free movement. Figure experience of immigration, up’ employment opportunities for 9 shows that tourism and restrictions on free movement UK-born workers) than in other manufacturing might be more may not address the underlying parts of the UK. susceptible than other sectors. causes of dissatisfaction in It has also been suggested these areas.

5 It is also noteworthy that for all areas apart from Cardiff, annual inward migration was less than 1% of the existing population. Although Wrexham, Ceredigion and Merthyr Tydfil show the largest proportional change, this only represents between a 0.1 and 0.2 percentage point increase in inward migration as a proportion of the local populations (e.g. inward migration as a proportion of the total population increased from 0.4% to 0.6% in Wrexham). References and Datasets Next Steps DWP (2016) Nationality at point of NINo registration of DWP working This report is based on age benefit recipients: data to Feb 2016. Available online: https:// a rapid review of the www.gov.uk/government/statistics/nationality-at-point-of-nino- available secondary data. registration-of-dwp-working-age-benefit-recipients-data-to-feb-2015 The initial conclusions Ipsos Mori (2015) Economist/Ipsos Mori September 2015 Issues that we have presented Index. London: Ipsos Mori. could, and we believe Ipsos Mori (2016) Shifting Ground: Views on immigration during should, be tested through the long term and during election campaigns. London: Ipsos more in depth analysis Mori. Available online: http://www.ipsos-mori.com/Assets/Docs/ of administrative data Publications/sri-shifting-ground-attitudes-to-immigration-2016.pdf which would provide a better understanding of Krausova, K. and Vargas-Silva, C. (2014) Wales: Census Profile. recent migrant flows and University of Oxford: The Migration Observatory. Available online: http://www.migrationobservatory.ox.ac.uk/resources/briefings/ the role that EU migrants wales-census-profile/ currently play in Wales. Markaki, Y. and Vargas-Silva, C. (2016) EU Migration to and from the This analysis could also UK. University of Oxford: The Migration Observatory. Available online: help to identify areas and http://www.migrationobservatory.ox.ac.uk/resources/briefings/eu- sectors where restrictions migration-to-and-from-the-uk/ on free movement are likely to have the biggest NatCen Social Research (2011 and 2013) British Social Attitudes Survey impacts and explore the impact of different ONS (2016) Population of the United Kingdom by Country of Birth scenarios in terms of and Nationality. Available online: restrictions on free https://www.ons.gov.uk/peoplepopulationandcommunity/ movement of people. populationandmigration/internationalmigration/datasets/ populationoftheunitedkingdombycountryofbirthandnationality ONS (2016) Provisional Long-Term International Migration (LTIM) estimates. Available online: https://www.ons.gov.uk/ peoplepopulationandcommunity/populationandmigration/ internationalmigration/datasets/ migrationstatisticsquarterlyreportprovisionallong terminternationalmigrationltimestimates Scully, R. (2016) A Bit More on Prejudice in Wales. Cardiff University blog, available online: http://blogs.cardiff.ac.uk/ electionsinwales/2016/10/31/a-bit-more-on-prejudice-in-wales/ Welsh Government (2016) StatsWales Data Catalogue – Detailed Official Data on Wales. Available online: https://statswales.gov.wales/Catalogue Zolle, N. (2016) Impact of Brexit on Public Services in Wales. Cardiff: Wales Public Services 2025. Available online: http://www.walespublicservices2025.org.uk/files/2016/05/ Brexit-WPS-2025-Revised-5th-July-16-v2.pdf

64 | Securing Wales’ Future