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Public Spending

5. Mr. Jack: To ask the Secretary of State for Wales if he will make a statement on his Department's current budget for the level of public spending for the present and next financial year. [2598]

Mr. Ron Davies: My Department's budget for the current financial year is £6,894 million and, for 1998-99, £6,877 million.

Mr. Jack: I thank the Secretary of State for that answer. Can he give me an assurance that those spending ceilings will be adhered to for the next two financial years? Can he also give me an assurance that the ceilings for the departments within that expenditure total will remain unaltered for the next two years? If the Secretary of State is unable to give me satisfaction on those two points, will he undertake to publish details of any changes that he may wish to make over those two financial years?

Mr. Ron Davies: On the first question, I can give the right hon. Gentleman that assurance. He was a Treasury Minister in the previous Government and followed the matters very closely, so I know that he will be pleased with that answer.

On the second question, the right hon. Gentleman would expect the Government to review all their spending plans, and we are doing that. My objective in the Welsh Office is to ensure that the expenditure that we will incur in the current year and in the next year better reflects our priorities. It follows from that that any changes we make to departmental expenditure will be published and we will allow hon. Members the opportunity to question the revised figures.

Mr. Denzil Davies: Will my right hon. Friend not listen to the former Financial Secretary or the siren voices

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from the Treasury? There is plenty of money around. The dreaded public sector borrowing requirement is falling even faster than anticipated, the contingency reserve has not been touched and, no doubt, the Treasury mandarins will come up with a few tax wheezes in the Budget. Will my right hon. Friend therefore press for more money for public services in Wales, because the health service, in particular, cannot take any more cuts?

Mr. Ron Davies: The message from the Treasury is not exactly that the country is awash with money. Details of the Budget are the responsibility of my right hon. Friend the Chancellor of the Exchequer. Any representations made will be from within the ranks of Government and we will all have to wait until Budget day to find out their success or otherwise.

Mr. Livsey: Will the Secretary of State please assure the House that he will continue with the Barnett formula for funding public expenditure in Wales? In the advent of a Welsh Assembly, will he put the formula into a statutory framework?

Mr. Davies: The hon. Gentleman will know that the Barnett formula deals with the increases in the level of Welsh public expenditure, not with the block grant per se. The matters to which he refers are under discussion and we will make the full details available in the White Paper when we publish it next month.

Mr. Barry Jones: I congratulate my right hon. Friend and wish him well in the important work that he has to do for the people of Wales. Will he bear in mind the difficulties in primary schools in my constituency, for example, which need more teachers? Will his spending plans for the next year enable such help to be given?

Mr. Davies: I am grateful for my hon. Friend's good wishes and I know that he will continue to give whatever service he can, both to his constituents and in sustaining the Government. He will know that one of the Government's established priorities is to reduce class sizes in primary schools. The Under-Secretary with responsibility for those matters, my hon. Friend the Member for Neath (Mr. Hain), has already taken early action in Wales to abolish the wasteful, bureaucratic and divisive nursery voucher system. We will move as quickly as we can to put resources into the primary sector, to fulfil our principal objective of reducing class sizes.

Mr. Ieuan Wyn Jones: I welcome the Secretary of State to his appointment and wish him well in his duties. He will recall that the previous Administration, in their spending plans for Wales, originally made a commitment to spend public money to dual the A55 across the island of Anglesey. He will also know that the previous Secretary of State whipped away that money without telling anyone why he was doing so. Will the current Secretary of State assure me that the Government are committed to completing the programme and tell me how Ministers propose to finance it?

Mr. Davies: I am sure that the hon. Gentleman will appreciate that, during the general election, I took a close interest in progress on the A55, and it is a matter of some

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regret that I was not successful in unseating him in that election. I should say that I make those remarks in a spirit of good humour, and I thank him for his good wishes.

The Government are committed to completing the A55, and the Under-Secretary with responsibility for those matters, my hon. Friend the Member for Neath, is examining ways in which we can proceed. As I said, we are committed to the project, and I should like it to be completed as quickly as possible.

Mr. Hague: Can the Secretary of State clarify for the House whether, in future Budgets, the running costs of the proposed Welsh Assembly will be drawn from the Welsh block grant or supplied by all United Kingdom taxpayers?

Mr. Davies: We have already made those points abundantly clear. In debate on the referendum proposals, the shadow Secretary of State asked several times about meeting the costs of the referendum. We made it--

Mr. Ian Bruce: Answer the question.

Mr. Davies: The hon. Gentleman must contain himself, because I will answer the question. I know that he is an excitable fellow and that, today, there is a particularly febrile mood among Conservative Members. Nevertheless, a question has been asked and I will answer it.

The shadow Secretary of State will know that, during debate on referendum legislation and funding, we provided detailed answers to his question. He will also know that we have promised a White Paper, which will be available in July and contain full details of the cost and funding of the Assembly. He will undoubtedly still be shadow Secretary of State in July, and we can return to the matter then.

Inward Investment

6. Mr. Clifton-Brown: To ask the Secretary of State for Wales what proposals he has to attract more inward investment into Wales. [2599]

Mr. Hain: Our commitments to improve the skills levels of our people, create a buoyant economy, improve the infrastructure and take a positive attitude towards the European Union and our proposals to create an economic powerhouse will make Wales even more attractive to inward investors.

Mr. Clifton-Brown: Does the hon. Gentleman agree that the reasons for the previous Government's extremely successful record of attracting inward investment to Wales were flexible labour policies, the lowest corporation tax in the Group of Seven and a willingness to fight for a free and fair market in Europe? If he does not agree with that analysis, how does he plan to encourage inward investment on the scale shown by LG, creating 6,000 jobs?

Mr. Hain: The reason LG came to Wales was that it knew that a Labour Government were on the way. The hon. Gentleman is completely ignorant of the reasons for the success of inward investment in Wales. The success

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is due to the Welsh Development Agency, which was established by a Labour Government, pursuing policies of intervention and partnership--which were anathema to the Thatcherite, free-market dogma that, over the past 18 years, has destroyed jobs in Wales. Such dogma is why the Conservative party was wiped out in Wales.

Mr. Donald Anderson: Does my hon. Friend agree that a new and very positive factor in inward investment decisions is that we no longer have a Government who are involved in Euro-bashing for the purposes of their own internal civil war but have a Government who, as was shown at the Amsterdam Council, are determined to play a full partnership role in Europe?

Mr. Hain: I agree with my hon. Friend, although whether the civil war will continue in the Conservative party remains to be seen. Certainly, the Laurel and Hardy act now about to take over the Tory party bodes ill for it.

Mr. Ian Bruce: Will the hon. Gentleman tell the House, as his right hon. Friend the Secretary of State could not, whether the money that is currently going to the Welsh Development Agency and is helping to bring investment to Wales will be reduced by the costs of having a Welsh Assembly? We know that the referendum will be paid for by the UK taxpayer, but we do not yet know whether it is to be paid for out of the Welsh Office vote and therefore out of the money going to Welsh development.

Mr. Hain: The answer is no. Indeed, it was the Conservative Government who were responsible in recent years for fleecing the WDA of many of its resources. We intend to strengthen the WDA in a new powerhouse for Wales, working with the Welsh Assembly to bring new investment, jobs, opportunities and prosperity.


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