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Mr. Ruane: In Rhyl?

Mr. Jones: As my hon. Friend says, we witnessed it in Rhyl, and when we published our report last month at the Dusty Forge centre in Ely, Cardiff.

Capacity-building programmes--led from the bottom up by enthusiastic, energetic local people--can, we believe, be extremely effective in tackling social exclusion, especially when they are run in close co-operation with a supportive local authority, as we observed in Swansea, Torfaen and Wrexham.

The common problem associated with all the projects has been a lack of stable, sustainable funding. To address this, we recommend that funding for social exclusion projects should in most cases be for a minimum of five years. Project organisers should be given a little breathing room to put their begging bowls away for a few years and concentrate on the core work of the project. It struck us that many enthusiastic, talented people who wanted to put their energies into regenerating their local community had to spend much of their time justifying their funding and trying to make sure that the project would still exist the following year.

Pump-priming has its place and can produce impressive results, but it will not be enough in every case. In some of the most disadvantaged areas, funding may be required on a permanent, or at least an on-going, basis. We also believe that the funding regime for social exclusion projects should be streamlined and simplified. At the moment, there are too many different pots of money and too much bureaucratic control is exercised over them. It may be that we need to learn to accept a degree of risk in our social investment. After all, how often is the cost of not investing in a project given equal consideration to the cost of spending the money?

We need to move away from challenge funding to sustainable funding wherever it is required. But the National Assembly will be unable to provide this unless

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it is provided with adequate resources. Objective 1 offers a unique opportunity to bring a large injection of public funding to west Wales and the valleys, and we must ensure that it is used to good effect to tackle social exclusion. European funding is not the only answer, though. The Government must match their fine words by tackling social exclusion with hard money. The extent of social exclusion in Wales must be recognised in the funding allocation to Wales.

Ms Julie Morgan (Cardiff, North): Does my hon. Friend agree that one of the key issues highlighted in the Select Committee's inquiry was the difficulty of moving from benefits into work? Is it not one of the important recommendations that new benefit ideas should be tried out in a pilot area in Wales?

Mr. Jones: Indeed. We need to test which benefit changes might work in the effort to tackle social exclusion. In Ireland, benefits are tapered to allow people back into work without running into a brick wall of benefit loss.

It is true that the Barnett formula is probably overdue for a revamp to reflect the real needs of both Wales and other parts of the United Kingdom. We need an anti-poverty strategy with the goal of eliminating not only child poverty--as the Prime Minister has already pledged--but all poverty, within a realistic time scale, based on clear, objective measures of the number of poor people. The Government have set the date of 2020 for the elimination of child poverty, so perhaps we could aim at eliminating all poverty in 30 years.

Mrs. Lawrence: Does my hon. Friend agree that the fact that 360,000 children are benefiting from increased child benefit shows that the motion is totally incorrect in its insinuations?

Mr. Jones: Absolutely. I will not read out the whole list of all the benefits that the Government have brought to Wales. [Hon. Members: "Oh, go on."] All right, then. In Wales, 67,000 families are benefiting from the working families tax credit; 27,000 jobless people have been helped into work through the new deal; since the launch of the new deal throughout Wales, the number of 18 to 24 year-olds unemployed and claiming jobseeker's allowance for six months or more has fallen by 73 per cent; more than 100,000 workers are benefiting from the national minimum wage--that is especially impressive in Wales, with our lower gross domestic product; and 500,000 pensioner households are receiving the increased winter fuel payment of £200.

Mr. Ruane: How does my hon. Friend feel about the contrast with the Conservative Government, under whom 5,000 pensioners froze to death--they had hypothermia--in their own homes in 1985 because they were too scared to turn on their gas or electric fires? How does that compare with Labour's record of reducing VAT on fuel from 8 per cent. to 5 per cent.--the Tories wanted to stick it up to 17.5 per cent.--and giving pensioners £200 last December in a winter fuel allowance so that they can be secure in their own homes and know that they can keep warm and pay their fuel bills?

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Mr. Jones: Winter fuel allowance for those on income support means that they, too, need not suffer from cold in the winter.

In Wales, 210,000 pensioner households are entitled to free television licences; all 630,000 pensioners are to gain from above-inflation pension increases this year and next; 360,000 children are benefiting from increases in child benefit; and we have had the longest period of sustained low inflation since the 1960s.

The Government are also responsible for the tax regime, which is so important to the economic prosperity of Wales. In Ireland, the tax regime--notably the low rate of corporation tax--is attractive to both inward investors and domestic entrepreneurs, who consider it far more important than objective 1 funding in promoting economic growth and regeneration. It is time for the Government to consider regional variations in tax to encourage investment in the less developed areas.

Mrs. Lawrence: Does my hon. Friend agree that one of the major issues in tackling social exclusion must be economic stability, especially for people on low incomes? Does he agree that the fact that we have the lowest mortgage and interest rates for 30 years and the lowest unemployment rate since 1978 will go a long way towards tackling social exclusion?

Mr. Jones: Absolutely, and that also gives the Government the wherewithal to help those areas of the economy that have not yet benefited from the economic turnaround.

Mr. Evans: I am sorry to intrude on the love-in taking place on the Government Back Benches, but what about the fuel tax, which hits poor people disproportionately hard?

Mr. Jones: We reduced fuel tax from 8 per cent. to 5 per cent., as my hon. Friend the Member for Vale of Clwyd (Mr. Ruane) said. The hon. Gentleman cannot have been listening.

Mr. Evans: I am talking about petrol tax. We have among the highest petrol taxes in the world.

Mr. Jones: The Conservative Government put the biggest chunk of tax on fuel when they increased VAT to 15 per cent. The hon. Gentleman is trying to stir up this nonsense again about fuel costs being down to tax. He talked about how farmers are struggling. Many of them are struggling because of the increase from 7p to 28p a litre. There is no duty.

Mr. Evans: When farmers drive cars and use lorries to transport goods, they are paying duty. When the accelerator had done its bit and it was proved that it was not working--

Mr. Jones: You introduced it.

Mr. Evans: Indeed, but when accelerators come to the end of their useful life, they should be scrapped. The Government have been putting petrol taxes up for four years, hitting the poorest hardest.

Mr. Jones: The hon. Gentleman argues against his own case. The fuel tax escalator--rather than accelerator,

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as he was saying, perhaps because he knows that if he kept his foot off the accelerator he would not be spending so much on fuel--was begun by the Conservative Government, and we stopped it.

Mr. Evans: Labour put it up.

Mr. Jones: Of course we put up the price in accordance with the escalator before we stopped it. Fuel for the hon. Gentleman's farmers went up from 7p a litre to 28p a litre. That was the biggest increase, and everyone else was paying it, too. As usual, he is talking a load of nonsense.

Mr. Denzil Davies: To return to the proposal about a differential rate of corporation tax, and the Irish lower rate, did the Committee consider the fact that the lower rate in southern Ireland covers the whole country, so that Dublin and Galway do not have differing rates? Did it consider the problem that, if we introduced a differential system in Wales, there would be a different rate in Newport, outside the objective 1 area, and in Swansea, which is inside it?

Mr. Jones: My right hon. Friend is right. The Irish corporation tax rate is nation wide. We noted that a lot of the country's industry is based around Dublin. The economy as a whole is doing very well, but there are regional problems. We should try out different ideas, recognising that they might not all work.

Mr. Öpik: Does the hon. Gentleman accept that road haulage is particularly important in rural areas where there is no rail network on which to move goods? It would be helpful if the Government gave strategic consideration to managing that issue so that the countryside was not disadvantaged.

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