Legislative Programme and Pre-Budget Statement

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The Chairman: I thank the hon. Gentleman for his 10-minute speech.

12.25 pm

Mr. Dafydd Wigley (Caernarfon): I listened with considerable interest to the hon. Gentleman's criticisms of the Lib-Lab Government in Cardiff.

I compliment my hon. Friend the Member for Ceredigion on his excellent opening speech. The programme that the Government outlined in the Queen's Speech is limited and thin. It is clear that a general election is on the way. However, we have until May 2002, so I cannot understand the rush and panic. What are the Government running away from? Is there bad news around the corner that we do not yet know about?

I shall deal mainly with the economy, but I want to mention a couple of other matters first. I greatly welcome some features of the Queen's Speech, such as the Children's Commissioner for Wales Bill, the Bill to ban the advertising of tobacco, which is long overdue, and—subject to seeing more detail—the Bill on leasehold reform.

As the First Minister said on Friday, the Queen's Speech includes four Bills—in addition to the children's Bill—with specifically Welsh provisions. The Secretary of State mentioned three of those four Bills. I hope that they will be flexible enough to enable the National Assembly for Wales to develop policy in line with the needs of Wales while making more imaginative use of our secondary legislative powers.

The Queen's Speech could have covered some additional matters. For example, all hon. Members with maritime constituencies will be aware of the pressure for legislation to control jet skis and power craft. That has been discussed by a cross-departmental working party of which the hon. Member for Bridgend (Mr. Griffiths) was a member. There have been signals of an intention to legislate, but it has not yet happened. I would have thought that such a small piece of legislation could be included. I would also have welcomed a statement that responsibility for the census will be transferred to the National Assembly, given the difficulties that have arisen in that respect.

The economy was little mentioned in the Queen's Speech. That suggests that there may be a danger of complacency and that the Government believe that everything in the garden is rosy. That is not the message from the steel industry, farming, rural post offices and people with screwdriver-type jobs who are paid a pittance.

In objective 1 areas, the main challenge is to raise gross domestic product per head. That involves three factors: reducing unemployment, increasing activity rates and securing better-paid jobs. Unemployment has fallen, which is greatly to be welcomed—although pockets of difficulty remain, on which attention must be focused. However, activity rates have not increased as we had hoped—indeed, some figures point to continuing reductions. Unless we tackle that problem, we will have the devil of a job to increase GDP per head by the necessary amount.

We must secure job quality and ensure that jobs are well paid and sustainable, especially in areas that have experienced a shortage of new jobs. In order to provide such jobs, we must identify the key growth sectors of the economy and equip the work force with the skills that are relevant to those sectors—not only now, but in three, five and 10 years' time. That is quite a planning challenge.

In that regard, the role of objective 1 could be central, but there is a danger that we have put the cart before the horse. We should have had a detailed economic strategy before objective 1 status applied. In years gone by, the Welsh Office did not get around to that, and in that regard I look to previous Governments as much as this Government. The Lib-Lab Government in Cardiff are trying to make progress in that direction, but it would have been better if that strategy had been in place before objective 1 status. As a result, we could have had a more coherent approach.

On the important points made by the hon. Member for Rhondda (Mr. Rogers), we are still affected by the problems that arose from the Treasury's failure fully to fund objective 1. During the coming year, serious knock-on effects will be felt in the education sector and in the level of housing expenditure in Wales. We must find £180 million a year from within the Welsh block to match-fund objective 1, which inevitably means that less money will be available for other services. We welcome the Lib-Lab Government in Cardiff's safeguarding of next year's health sector spending. However, that means that there will be a lower increase in education and housing expenditure in Wales than in England. As a direct result of underfunding of match funding in the Barnett formula, schools in Wales will be unable to get the same ring-fenced resources as English schools. That problem is caused by the interplay between European money and the Barnett formula.

Housing is a serious problem. Council house tenants are waiting too long for repairs, and some owner-occupiers have been waiting years for renovation grants. They now face the prospect of waiting even longer, or perhaps never getting them. Housing relates to other critical areas, such as health, education and social patterns, so we must get it right. Let no one in Wales be under any misapprehension that those problems are the direct result of the underfunding of match funding for objective 1 in the Barnett formula.

To make objective 1 work effectively, we need operating aids within the objective 1 areas. In particular, we need the ability to vary corporation tax and national insurance in those areas. The Lib-Lab Government in Cardiff are actively seeking those powers and, as Plaid Cymru members, we shall support them in that. Incidentally, a former Secretary of State for Wales tried to move the matter forward a couple years ago, which is one example of how the Nice Euro-summit relates directly to Wales. The UK Government have secured confirmation that both taxation and social security are matters for member states, not the EU. It is for the Labour Government in London to deliver what the Lib-Lab Government in Cardiff are seeking—or to deny it, as the case may be.

To my mind, there is no question of a trade distortion occurring, as some people in Brussels have suggested. If a member state can vary tax or national insurance payments without distorting trade, there is that much less of an argument when variation occurs in a region of a member state.

Mr. Denzil Davies: The right hon. Gentleman's suggestion to vary corporation tax intrigues me. Is he saying that firms that operate in Wales should pay a lower rate of corporation tax than those that operate across the border in England, or that the variation should also apply to objective 1 areas in England?

Mr. Wigley: Yes, I am saying that the variation should apply to the other three objective 1 areas: Merseyside, Cornwall and South Yorkshire. I accept that there must be a corporation tax formula to cover companies operating multiple plants in the UK. That has been done in other countries, and it can be done here.

Mr. Davies: Will the right hon. Gentleman give way?

Mr. Wigley: I shall not give way, Mr. Jones, because your stricture was that I must try to complete my speech in 10 minutes.

In relation to the autumn statement, I want to discuss the critical effect of the high price of diesel in many rural areas. In a village in my constituency, diesel currently costs 92p per litre, which is devastating. That is hitting hauliers and, as a consequence, most rural businesses, especially hard. Two weeks ago, I met some hauliers from my constituency, one of whom had a fleet of 12 lorries. The increase in the price of diesel in the past year alone is costing him an additional £100,000 and he is now running at a loss.

Mr. Win Griffiths: Accepting the right hon. Gentleman's figures, how much of that increase is related to world prices, and how much is additional duty?

Mr. Wigley: It is true that the most recent increase of 5p a litre was related to world prices. Hauliers are being hit by a combination of factors, and what is needed is a mechanism that will establish stability and a fair and level playing field. Hauliers are paying much more than their counterparts in France, Belgium and Luxembourg, for example. It is interesting to note that last week's Irish budget reduced duty in the Irish Republic. As a result, those in Ireland who bring their lorries to Wales will find such work even more attractive.

The autumn statement inadequately attacked the basic problem of poverty. Many members of the Committee will agree that poverty affects many parts of Wales and must be regarded as a priority. The Irish budget to which I referred increased the income tax threshold to £7,000. As a result, 38 per cent. of the Irish work force will not pay income tax. Such a threshold increase is needed in the UK as well, so that those on the lowest level of income could be taken out of paying tax. That would directly address the problem of poverty.

This has been a rather thin Queen's Speech. When the general election manifestos are published, I hope that the governing party offers something more for Wales.

12.36 pm

Mr. Paul Flynn (Newport, West): I apologise in advance, Mr. Jones, for my absence this afternoon, when I shall attend a meeting of the body responsible for relationships with UNICEF. UNICEF co-ordinates the activities of the various children's commissioners throughout Europe, and it is a matter of great pride that I will be able to report that, unlike England, Wales will have a commissioner. During the sanctimonious piffle that we heard from the hon. Member for North Dorset, he forgot to mention that England has no commissioner.

On pensions, I am grateful to the hon. Member for Ceredigion for his on-going support for early-day motion 1. There is now a second early-day motion, which fairly congratulates the Government on current developments. For all the reservations about yesterday that were expressed by the party of yesterday, we can look forward to good news on pensions. Of the three main Government pension policies, two—the minimum income guarantee and the pension credit—will be increased in line with the top level of inflation. We have yet to convince pensioners, but the money is there and the final victory will be to ensure that the basic pension is linked to earnings levels. That will give pensioners what they currently lack—certainty that retirement and old age will be a period not of decreasing income, but one in which income will keep up with the true level of inflation. That is not a great deal to ask.

The hon. Member for Ceredigion had a go at me about farming. One of his constituents is a friend of mine—I am tempted to mention his name—whom I have known for 25 years. In the early 1970s, he and a colleague in the environmental movement set up a farm on soil that was apparently too shallow ever to be productive, and his farming neighbours tut-tutted and derided them for farming soil that could never be made to pay. Those farmers thought it terrible joke, but now it is they who are marching and asking for more subsidies. It is they—whose way of life and unique Welsh language we have a vested interest in preserving and supporting—who are in financial trouble.

My farming friend and his colleague, and many others like them, were far-sighted. Because they developed organic farms, they now have turnovers of many millions of pounds. We are in a similar position now. Farmers in Wales are not seeing the future clearly. The hon. Member for Ceredigion is asking for more subsidy for them; he is offering them the same medicine that has caused the present malady. I refer him to a splendid book on the history of the steel industry.

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