Budget Statement and its Implications for Wales

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Mr. Simon Thomas (Ceredigion): Will the Secretary of State confirm that if the Government are in power in 2003-04, they will—according even to the Chancellor's forward forecast figures—spend less on public expenditure as a proportion of our national wealth than the Conservatives did for 15 of their 18 years? Does that not underline the fact that those who voted new Labour in 1997 got Tory spending plans?

Mr. Murphy: I shall take the hon. Gentleman's second point, about Tory spending plans, first. He knows full well that we would not be in the position that we are in unless we had ensured a strong and stable base. We did so in a way that has made ours one of the strongest economies in not just Europe, but the world. Spending has also been affected by the fact that there are fewer people on the dole. We do not have to pay out unemployment benefit, but we have taxation coming in. We are managing the economy and investing in our public services.

Mr. Ruane: Several Plaid Cymru Members raised the issue of taxation. Is my right hon. Friend aware that £10 billion is raised in taxes in Wales while £16 billion is spent there, leaving a £6 billion fiscal deficit? Has he any idea how that money would be raised in an independent Wales?

Mr. Murphy: None whatsoever; it could not be. The argument for an independent Wales is a perfectly legitimate one for which people should be able to vote, but they must do so with the understanding that all the attacks on so-called middle England, south-east England and so on come to naught because we need to be part of the United Kingdom to ensure proper resources for Wales. Do we think for one second that that would occur if there were an independent, separate Wales? Of course it would not. We would be reduced to penury. We simply could not afford an independent Wales.

I talk Wales up because it is important, as part of the United Kingdom. We cannot separate a Budget that essentially raises money from a spending review that sets spending plans. Last year, Wales had the biggest spending review ever; £2 billion more over three to four years. That is the biggest increase in resources. The Budget has also ensured that an extra £100 million goes directly into the coffers of the National Assembly to improve the quality of life of Welsh women and men. That is an enormous increase. We would receive nothing like that sum if we were separate from the rest of the United Kingdom. Of course it is important for Wales to have a devolved assembly and our status as a special country within the United Kingdom must be recognised, but it is only within the United Kingdom that we receive those benefits.

Mr. Ipik: I wish that I had heard what the Secretary of State was about to say about us before I got to my feet. As he knows, the Liberal Democrats have never supported independence for Wales.

Mr. Wigley: Neither has Plaid Cymru.

Mr. Ipik: To the horror of its activists.

On indirect taxation, does the Secretary of State agree that a principle is at stake? Indirect taxation can never be as fair because it is not proportionate to one's ability to pay. The hon. Member for Meirionnydd Nant Conwy made a good point when he criticised the Government's shift in strategy, which occurred, perhaps, to hide the increase in taxation. Although an increase may have been necessary to meet spending commitments, the money was raised in a way that was less fair to those with less income.

Mr. Murphy: The purpose of the tax cuts and increases of my right hon. Friend the Chancellor of the Exchequer was to target poorer families. The hon. Gentleman knows that the changes in taxation in respect of children, older people and others—he can see the figures—happened to help those who are less well off.

Mr. Jon Owen Jones: Does my right hon. Friend the Secretary of State realise the hypocrisy of statements made by the Liberal Democrats? One of their policies is to increase direct taxation on cigarettes, which might be a good idea. However, they also want to introduce a carbon tax, even though they got a little worried during the petrol crisis. What is a carbon tax, if not indirect taxation?

Mr. Murphy: Of course, that is an inconsistency. The Liberal Democrats know full well—as does Plaid Cymru, to a certain extent—that they will never form a Government of the United Kingdom.

Mr. Ipik: That is not very nice.

Mr. Murphy: But it is true. The Liberal Democrats can propose things in the knowledge that they will never have to deliver them.

Mr. Ipik: That is exactly what the Liberals said of the Labour party 100 years ago; we have learnt our lesson.

Mr. Murphy: I am not responsible for what might happen 100 years in the future. I do not know precisely what will happen in the next 100 days or weeks. However, I am prepared publicly to put a bet on there not being a Liberal Democrat Government in the United Kingdom.

Mr. Ipik: £10.

Mr. Murphy: Accepted. The hon. Gentleman can argue for this and that, but he knows that they will never have to deliver.

The real danger that besets the people of Wales is not whether there will be a Liberal Democrat Government or whether Plaid Cymru will increase its representation, but whether there will be a Conservative Government following the next election. The greatest danger to Wales is a return to those dreadful 20 years when the Conservatives ruled this country. In a convoluted way, the Conservative party is proposing cuts of £16 billion; perhaps Conservative Members will be able to explain those cuts in more detail. The Government have examined them and they are from the clouds. The Conservatives argue that they will save millions of pounds on regional assemblies. What regional assemblies? They do not exist.

Conservative Members raise points about fraud, but they can all be challenged, as they were by the Institute for Fiscal Studies. If the cuts that they promise came about, they would have an enormous and damaging effect on our public services in Wales; our hospitals and schools. They would damage the concept of devolution and undermine it by removing resources from the devolved assemblies. The fight of the next few months will be about whether people want a Conservative Government or a Labour Government in Westminster. The partnership that has been exercised between the Government and the Labour-led Administration in Cardiff has infinitely improved the quality of life for Welsh women, men and children. Wales is able to face the next century with greater confidence and enthusiasm.

The Chairman: I ask right hon. and hon. Members to make their speeches brief, because many want to participate in the debate.

11.45 am

Mr. Richard Livsey (Brecon and Radnorshire): I echo the words of the Secretary of State, Mr. Jones, in wishing you well when you leave the Westminster Parliament. I also wish well the other right hon. and hon. Members who are leaving. I would refer to many by name, but they are too numerous. However, I especially praise the right hon. Member for Caernarfon (Mr. Wigley), who has been in the House a very long time and served his party with great distinction. The time that we have spent with all these contemporaries has been a happy one, and they have served their country well. Although we come from different directions, we share an unblemished commitment to Wales. It is important that we try to do our best for our country and its people.

The Secretary of State referred to job losses and to new industries, and I will return to those topics. Geography is a factor in such matters, and I have watched his home area go through the many vicissitudes of economic activity that he described. That area has benefited from its geographic position in relation to the south-east of England and other parts of the United Kingdom, and good luck to it. However, other areas, such as the western valleys, have been less fortunate because they are further away, or sparsely populated.

Wales has a poor infrastructure. It has improved slightly over the years, but much remains to be done, which is largely the job of the Assembly. The state of the railways—the legacy of the previous Conservative Government—is appalling. This morning, it is taking people an additional 20 minutes to get through the Severn tunnel, and it has been estimated that journeys in the opposite direction may take an additional 40 minutes. Such a situation is tragic, given that we are living in 2001.

The infrastructure must be seized by the scruff of its neck. The Government have announced investment in the railways, but the structure, which the previous Government left in 100 different pieces, is totally inadequate. How well the railways run is sometimes said to be the test of a good Government. Most countries' railways run rather well, but our country has a very long way to go before its railways are run effectively.

As a nation we are clever, erudite and well behaved. Some of us sing well and others write poetry. We are ingenious, and capable of doing many things. We are far more self-confident now than Anne Robinson was at the time of her Liverpool memories, back in the 1950s. That is the only reference that I will make to her. As a result of devolution, we in Wales now have self-confidence and are making progress. Good things are happening in Wales, as the Secretary of State and other hon. Members have said. If we make the right strategic decisions, the future for Wales can be set fair.

The Chancellor has managed the macro-economy extremely well. However, other factors must be examined, and I will do so later. The social agenda in the Budget is, unquestionably, excellent. It harks back to old Labour, and there is nothing wrong with that. It is especially important that families and children be properly looked after, and I praise the Chancellor in that area. Mothers should get support to raise their families and be able to ensure that their children enjoy a good quality of life without having to scratch around for every penny.

It is also good that the minimum wage has been increased and the 10p income tax band extended. The Chancellor should be congratulated on all that. In terms of business investment, the Budget is somewhat mixed, but corporation tax has been cut and the adjustments to VAT will be welcomed by smaller businesses.

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Prepared 12 March 2001