Budget Statement and its Implications for Wales

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Mr. Elfyn Llwyd (Meirionnydd Nant Conwy): May I first associate myself with the tributes to you, Mr. Jones? I sincerely wish you well for the future, as I do the hon. Member for Brecon and Radnorshire, who has been a valiant Member of Parliament for his area and always a sincere debater. We will feel a great sense of loss after both those departures.

[Continued in Welsh] I shall begin by quoting the Chancellor's remarks as reported in last Thursday's Western Mail:

    ``Because employment and the economy is growing and we are saving billions of pounds in debt repayments, we can target more help on Wales' priorities.''

That is exactly what Plaid Cymru has been saying for the past few years. The British economy is in fair shape but the chance to target economic policies to less well-off regions has been missed. Common sense tells us that some of that £16 billion surplus should be used to regenerate less advantaged areas in the UK, but what the Chancellor is saying and doing are two different things.

Unfortunately, it again represents a lost opportunity for Wales. It does not enable us to create jobs in objective 1 areas. Wales is losing much and its problems are not being addressed. Some small businesses will welcome the VAT relief that will lessen bureaucratic burdens but generally the Budget has done nothing to help our industry. Manufacturing industry in Wales has suffered much over the past few months but Plaid Cymru believes that the country is strong and vibrant with a strong work force. That great potential should be used so that we can enjoy a success similar to that of south-east England. Unfortunately, the taxation incentives will have no effect on coal and steel industry areas such as Ebbw Vale. The Chancellor wants to do away with stamp duty, but will Ebbw Vale—an area that does not have money in the first place—benefit from that? Will it benefit from the reduction in the derelict land tax? Why is the Chancellor giving help to Corus rather than helping people on the dole? A policy for the future should already be in place if the plans for Corus are to go ahead. I support the members of the Committee who asked the Government to reconsider the matter, even at the 11th hour.

Some members of the Labour party accuse us of asking for an unreasonable amount of money to regenerate the Welsh steel areas. I assure them that we have considered the costs in detail, and about £200 million is needed. That is not unreasonable, bearing in mind the job losses. The objective 1 guidelines suggest about £55,000 for every new job in deprived areas. The task of the new Labour party is to list figures for the new jobs that it has created. Of course, creating new jobs is important; new jobs have been created and we are glad of that. However, it is as important to retain jobs.

1 pm

Sitting suspended.

2.1 pm

On resuming—

Mr. Llwyd (Translation): As I was saying, 20,000 manufacturing jobs in Wales have disappeared since new Labour came to power. Reducing national insurance payments by employers, for example, would boost employers' ability to retain capital and jobs, which in turn would encourage the recruitment of staff. A reduction in corporation tax would also be an incentive to invest further. Plaid Cymru has for some time been asking for that policy to be implemented in objective 1 areas, but time after time the Chancellor has refused to listen.

Since Labour came to power, the rural economy has also suffered. The agriculture sector is crucial to the development of Wales and the continuance of rural areas and the economy. The current situation is the worst that we can remember. A succession of crises, including BSE and then foot and mouth disease, has been enough to kill the industry completely. It has also had to cope with a disadvantageous exchange rate. Even before the outbreak of foot and mouth disease, jobs in agriculture were being lost at a rate at 73 a week, which is on a par with the closure of a large factory every year.

The average income for a United Kingdom farmer is £4,500 a year, but for those farming on high ground, which covers about 80 per cent. of the Welsh landscape, it is £3,800. I am very concerned about the decline of that figure following the outbreak of foot and mouth disease. Unfortunately, the Government have dragged their feet on the claim for compensation for agriculture to overcome the problems caused by the strength of the pound. It took a crisis such as foot and mouth disease to get money from the Government, but that is not for compensation. Farmers were suffering hardship well in advance of the first outbreak, and the agriculture industry is crying out for compensation, without which the rural economy in general and jobs will be in real danger. That compensation needs to be extended, and other parties have supported that. The loss of certain breeds, for example, has resulted in a loss of profits.

What will be the fate of other industries such as haulage, abattoirs and tourism in rural Wales? So far, the Chancellor has turned his back on them, but according to today's edition of The Times some discussion is taking place and the Minister of Agriculture, Fisheries and Food will in turn discuss extending the compensation to those who rely on the industry. That is vital for a complete, rather than a one-sector, economy. For example, in Plas y Brenin in Capel Curig, there is a centre for walkers where 25 jobs have disappeared, at least temporarily. We have heard that 18 jobs have disappeared at Llangoed hall. I understand that the Minister is considering that, and I sincerely hope that he will extend the basis for compensation, because in many constituencies in Wales, perhaps in all of them, tourism is the biggest industry.

Mr. Gareth Thomas (Translation): As the hon. Gentleman acknowledges the importance of tourism to the rural economy of Wales, does he agree that the racist comments of Councillor Seimon Glyn creates an impression that will undermine the tourism industry?

Mr. Llwyd (Translation): Does the hon. Gentleman think that the comments of one person will undermine the whole tourism industry? If so, he is more silly than I thought.

[Continued in English] Will there be full match funding for the objective 1 money to which Wales is entitled? New Labour seems to be happy for the deficit to be made up from block grant, even though it will take much-needed resources away from other sectors.The Chancellor proudly announces surpluses year after year—there is obviously room for pride—but why cannot some of the money be used to provide full match funding? The shortfall over the next four years will be in the region of £600 million. Labour likes to divert attention from that fact by concentrating on how much Wales would have to pay in match funding if it were independent. If it were independent, it would receive twice as much in grants from Europe and, unlike at present, it would be sure to receive 100 per cent. of those grants.

We should concentrate on what happens now. Although £600 million match funding is being taken out of the block grant, spending in other vital sectors is falling behind that of England. There was an 8.6 per cent. increase in health spending in Wales, but a 9.3 per cent. increase in England. If Wales received the same percentage increase as England, the health service would have an additional £22.2 million.

We have heard the mantra ``Education, education, education'', but the shortfall in that sector is even starker. Spending per head in England in 2000-01 is 2.3 per cent. higher than in Wales, and the gap will widen rapidly to become 9.7 per cent. by 2003-04. During those four years, the total spending on education in Wales will be £600 million less than it would be if the same were spent per head as in England.

Mr. Alan W. Williams: The hon. Gentleman is quoting percentage increases in expenditure in the public sector. Public spending in Wales is operated on the Barnett formula, which gives a public expenditure per capita for Wales 20 per cent. higher than the per capita expenditure in England.

Mr. Llwyd: I was coming to that point. I have said many times that the Barnett formula should be reconsidered to reflect need. That is not just my party's view; people in other parties say the same thing. We may need a completely different formula if it is to be needs-based.

Mr. Williams: The Barnett formula gives us an extra 20 per cent.

Mr. Llwyd: I accept what the hon. Gentleman says about the 20 per cent., but Wales is not being properly financed because there is no needs-based formula.

The Chancellor announced extra investment in education and health, which will result in an extra £100 million for Wales and that is welcome. However, services in Wales are desperate for even more money. The Chancellor makes less prominent the fact that the money must last us three years, making the amount £33 million a year—about £10 per head per person.

When Labour came to power in 1997, it promised a reduction in hospital waiting lists. In 1997, 6 per cent. of patients in Wales had to wait longer than six months for their first out-patient appointment. By the year 2000, that figure had increased by 458 per cent.

The Chancellor announced £200 million to aid teacher recruitment. Again, that is welcome, although the timing—just before an election—is interesting. The average age of teachers in Wales is about 40. We need to recruit more young people to the profession, and longer-term solutions are needed to tackle recruitment problems. Of course, better pay is welcome, but there is more to recruitment than that. For example, new teachers in Scotland are guaranteed a 35-hour working week, non-contract hours and a support system. In Wales in 1998, 900 teachers left the profession before retirement age. In 1997, new Labour introduced an early retirement package; it spent a fortune getting people to leave the profession and it is now spending a fortune to get them back.

I was disappointed that there was nothing in the Budget to help students. As I mentioned this morning, we know about the reduced numbers applying for further and higher education in Wales, while in Scotland, for example, applications have increased by 15 per cent. Help for students is another glaring omission from the Chancellor's statement.

There are good things in the Budget. I am the first to say that working families tax credit, assistance for younger families on low incomes, child care credit, and other measures are most welcome. However, some of the one-off pre-election investments are not good enough. We need to examine the way in which public services are funded. The Government have followed Tory spending plans and cut public expenditure to 38 per cent. of the GDP, which has led to reduced health and education budgets. Only now, with an election in view, is there an announcement of an increase in public spending. We need consistent investment, not stop-go short-term measures that might be designed to win votes.

Labour always says that a vote for Plaid Cymru is a vote for the Tories. However, people who vote for new Labour appear to get Tory policies. Plaid is the only party that offers a real alternative in Wales.

For some time now, I have been pushing the Government on miners' compensation and I am pleased to say that there is light at the end of the tunnel. For example, I had a debate on 6 February with the Minister for Energy and Competitiveness in Europe. He told me that the problem of widows having their pensions stopped when compensation was paid to them after their husbands had died did not exist. I advised him that there was a problem and that the Department of Trade and Industry was undertaking High Court action to ensure that the policy continued. The Minister was obviously shocked and was rude to me all day. Subsequently, we found that the policy has been reversed. I am pleased about that, but if hon. Members from other political parties had also done something, perhaps the Minister would have acted sooner.I am pleased that extra resources are going into public services. I appreciate that the Budget is finite, but the policy of continuing to claw back miners' compensation is ludicrous, immoral and wasteful.

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