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Mr. Ron Davies (Caerphilly): I thank the Secretary of State for his statement. Those of us lucky enough to read yesterday's Western Mail were treated to a preview. I want to put on record my protest to you, Madam Speaker, and to the Secretary of State, for what I regard as a gross discourtesy to Welsh Members of Parliament. It is clear that the Western Mail received an accurate and deliberate briefing from the Welsh Office.

To make matters worse, the information that it was given on Tuesday is precisely the information that the Secretary of State chose to withhold from Welsh Members at last week's meeting of the Welsh Grand Committee. Does that not show yet again the contempt that the present Administration has for our democratic procedures, especially for the way in which Welsh affairs are run?

Earlier this week, the Deputy Prime Minister strongly attacked what he called the "leak culture". Does the Secretary of State agree with that view? If so, will he now apologise to Welsh Members and to you, Madam Speaker, for his actions and for those of people working on his behalf in deliberately leaking the information contained in today's statement?

There is clearly a difference of opinion between us on the Government's overall spending plans. Do the plans that the Secretary of State announced confirm the figures in his press release of 26 November? That press release stated that there will be a reduction in real-terms expenditure in the total Welsh Office budget next year of 0.9 per cent., a cut of 2.3 per cent. the following year both in cash terms and in real terms, and a further cut of 1.6 per cent. by the end of the decade.

Does the Secretary of State understand that those cuts reflect badly on the economic record of a Government who are failing to meet their inflation, borrowing and

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growth forecasts? Above all, the Government are not taking the right decisions on investment, either in the private sector or in their own spending programmes.

The Secretary of State should realise that his statement shows what everyone now recognises as the Government's true character: they do not plan for the future, and their priority is to promote privilege for the few, not opportunities for the many. Why should anyone believe his forecast for local government--the largest sector--when we all know that he is, at best, dissembling? His total standard spending for next year is £2,931.1 million. That is a cash increase of 66.3 million on last year's expenditure, but spending for the current year in local government is already £207 million more than next year's TSS. Inevitably, therefore, inadequate resources will be available to meet the demands placed on local authorities to provide essential public services.

Why has the Secretary of State not noted the warnings of the Welsh Local Government Association of a meltdown in services? Does he realise that, even with the--I understand--1.8 per cent. capping limit that he has announced today, council tax increases are likely to be substantial for the average band D property in a number of local authorities? The increase is likely to be over £65 in the Vale of Glamorgan, over £60 in Aberconwy, over £82 in Carmarthenshire, over £65 in Pembrokeshire, over £81 in Neath and Port Talbot, over £63 in Cardiff and £76.50 in Cardiganshire. Even if the Secretary of State achieves his maximum figure of 15 per cent., average increases in Wales are still likely to be some 12 or 13 per cent. in council tax bills.

Does that not show that any small benefit that was given with one hand in the Budget will be more than taken back in next year's Tory tax increase? Does the Secretary of State realise that, even with the tax increases, the quality of services will fall, with education--which takes 50 per cent. of total local government spending--bearing the brunt of the cuts? Is that not a clear example of the Government's sacrificing the long-term future of our country?

Will the Secretary of State acknowledge that, over the past two years, pupil numbers in Wales have increased by 10,873, while teacher numbers have fallen by 69? Why should educational opportunities for our children be declining in that way, while the Government plan to waste £45 million next year on the right hon. Gentleman's unwanted and bureaucratic nursery voucher scheme?

This year's Welsh Office spending on the national health service, including the extra £30 million that the Secretary of State added in his winter supplementary estimate, is £2,305 million. I think that the Secretary of State and I agree on that. That figure, however, has produced a current-year spending cash crisis in the NHS, with an astonishing one in three trusts in Wales in deficit at the halfway point this year. If we take into account that winter supplementary estimate of £30 million, there is in fact an increase of £64 million, not £94 million as the Secretary of State tried to claim a moment ago. I fear that he is dissembling again.

How much of next year's apparent cash increase will be swallowed up in covering the deficits in trust and health authority budgets at the end of the current financial year? In particular, what proposals has the Secretary of State to assist general practitioners and hospitals with their emergency medical admissions in the coming winter, to avoid a repeat of last year's disasters?

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Does the Secretary of State recall last year's extravagant claims about the PFI? Does he recall talking of 25 projects with a total value of £1 billion, and the claim that he made on 13 December last year? He said then:

Will the Secretary of State now confirm that the only agreed projects under way to date are the £6 million car park and road scheme at UCH Cardiff, and the Osiris project in his own office? Will he now apologise for having grossly inflated his estimates last year, and will he reflect on the words of Mr. Ken Gill, Welsh managing director of Jarvis and Son, who said on Tuesday this week that he could not wait for the election of a Labour Government who could sort out the PFI mess and use the PFI to supplement public money, not to replace it?

May I remind the Secretary of State of our firm support for the development agencies? Is it not the case, however, that the Welsh Development Agency will still come under great strain, even with expenditure at the £85 million that the right hon. Gentleman has just announced? In real terms, that £85 million is not much greater than the £70 million allocation that existed before his predecessor embarked on a programme of savage cuts in the agency budget.

Will the Secretary of State acknowledge that the WDA's budget has been going up and down like a yo-yo, courtesy of the prevailing political dogma in the Welsh Office? Will he confirm, therefore, that, given his budget and its commitments to the LG project, the agency will face a difficult year? Given that that is true, how can he expect the agency to develop a long-term strategy when it is subject to such dramatic and capricious changes in its funding? Why has the Secretary of State allowed the management and the administrative costs of the top 10 quangos in Wales to increase by £52 million--an increase of 95 per cent.--while simultaneously making cuts in the budget of a whole sector of Welsh Office activity?

Let me list the cuts that I have identified from the right hon. Gentleman's statement. There are cuts in local authority revenue expenditure and in local authority capital programmes, a cut of 30 per cent.--£25 million--in the housing budget, a cut in road programmes of 30 per cent., and a cut in Higher Education Funding Council expenditure of 5 per cent. There are cuts in the budgets of the Further Education Funding Council and of the Development Board for Rural Wales, and cuts in real terms in the budget of the Countryside Council for Wales. Despite the Secretary of State's claims, if the comparison is made in real terms with the 1995-96 outturn cut, there has been a cut in the budget of the CCW, his pet quango.

There have been cuts in the budgets of the national library, the National Museums and Galleries of Wales, the Sports Council for Wales, the Wales tourist board, the CADW agency and the agriculture budget. What assessment is the Secretary of State making of the impact of those cuts on the Welsh economy? Unfortunately, we did not receive any indication that the Secretary of State even understands, let alone has started to assess, their impact on the Welsh economy.

Does not the fact that, last year, the Secretary of State announced a £2 million survey of housing conditions in Wales and, this year, a £25 million cut in housing provision, demonstrate how profligate his judgment is and how devoid he is of any long-term strategy for the improvement of economic and social conditions in Wales?

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Does the Secretary of State realise that this budget does not reflect the priorities of the people of Wales? The role of Government should be to provide prospects for future economic development, to improve the quality of public services and to serve the needs of the community, not the vested interests of a privileged few. This budget does not provide a basis for that. His Government have failed to recognise that the new Government who will be elected shortly will face a challenging time dealing with the legacy of his wasteful, selfish and short-sighted administration.

Mr. Hague: I and the hon. Member for Caerphilly (Mr. Davies) can agree on one point: the carrying by the Western Mail of one element of my statement in its edition yesterday was regrettable. That leak is being investigated. I will be happy to let him know what comes of that investigation.

After that, virtually everything in the hon. Gentleman's question was mistaken or wrong in one way or another. He referred to what he believes to be an increase in the costs of non-departmental public bodies. No one else in Wales recognises his figures. The running costs of those bodies have been flat in cash terms for the past two years, and will be reduced, as I have explained, in the coming year.

The hon. Gentleman had the nerve to criticise the Government's economic record, even referring to inflation and growth. No Labour Government in history have achieved the combination of low inflation, steady growth, falling unemployment and booming exports that exists in this country and that has brought unemployment in Wales down to below 100,000. He had the amazing nerve to criticise my statement as not representing opportunities for the many, yet the statement increases the number of modern apprenticeships and of adult technicians, raises capital spending for schools to the highest level ever, and raises economic development budgets by 14 per cent. in total.

The hon. Gentleman described the WDA as having a difficult year, but it has had the most successful year it has ever enjoyed, as almost everyone else in Wales is aware. I have also announced further increases in its budget in my statement.

The hon. Gentleman calculated that council tax increases would average as much as 12 or 13 per cent. However, based on the capping principles which I have just announced, it is not possible that average increases could be anywhere near that amount. As I explained in my statement, the maximum--the maximum of maximums--would be 15 per cent. Most authorities would be capped at a much lower figure, and many would be capped on anything more than a very small increase.

The hon. Gentleman criticised our record on education. This year, however, there has been an improvement in examination results, and, next year--based on the spending figures I have announced today--there will be more students in higher and further education in Wales than ever before.

The hon. Gentleman criticised my statement for not setting out a plan for the long-term future--but my statement was precisely that. It is a plan that provides for investment in education, investment in the creation of jobs and investment in our health service. He criticised the health service figures, yet he will not match the

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commitment that I have given to increase health spending by more than the inflation rate in every year of the next Parliament. He and those on the Opposition Front Bench have still refused to match that commitment, which makes their criticism of health spending sound very hollow.

The hon. Gentleman said that the statement does not reflect the priorities of the people of Wales. I think that the creation of jobs, support for education, encouragement of modern apprenticeship schemes and a strong health service are exactly the priorities of the people of Wales, and today I am implementing those priorities.

The hon. Gentleman, throughout his question, criticised reductions while welcoming increases. If not for the reductions that I have announced, we would not be able to have the announced increases. The alternative would be to have higher total spending. Therefore, in future--as he is trying to be all things to all people--he will have to answer the question of which increases he does not want. Does he not want increased spending on health or--it was an implication throughout his question--increased spending on the economic development agencies?

My statement reflects the priorities of the people of Wales, and I am confident that that is how it will be received.

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