Legislative Programme

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Mr. Simon Thomas: The right hon. Gentleman talked about the use of resources. Does he agree that the key question is which resources are available for use? Does he share my concern at the National Assembly underspend of, for example, £50 million on health last year? An Assembly spokesman acknowledged that some of that was set aside to compensate for job losses in Wales, such as those at Corus. It undermines the general and financial relationship between Westminster and the National Assembly if, once again, the Assembly must set aside part of its core spending to meet what the right hon. Gentleman now says should have been foreseen, but which certainly was not.

Does the right hon. Gentleman also agree that central Government are providing insufficient funding to enable the Assembly to distribute resources to the communities that he wants to protect, and that we need to look again at the relationship between Westminster and the Welsh Cabinet on how extra spending is made available for Wales when crises arise?

Alan Howarth: All in all, substantial additional resources have been made available. The reform that the Government introduced in the previous Parliament was sensible, as it allowed budgeting on a longer cycle than had traditionally been so when handling public expenditure. We should not be slavishly concerned about spending everything before 31 March. However, I do agree that there should be no undue delay in finding appropriate ways to use the additional resources that the Government have provided.

Lembit Ipik: Does the right hon. Gentleman accept that a large proportion of people who are not directly involved in politics in Wales genuinely feel that under-investment in health and education is continuing in spite of the increases that he rightly says his party has, to some extent, introduced?

Alan Howarth: My hon. Friend the Member for the Vale of Clwyd made the powerful point earlier that the lead times for effective use of public investment, especially in the health service, are lengthy. There is impatience, but significant additional resources are already in the system and they will work through to yield beneficial results. During the election campaign, my experience was that most people understood and accepted that. Although, of course, they asked what had happened to delivery, they realised and acknowledged that the direction that had been set was right, and they knew that further resources would be coming through. For that reason, among many others, they chose to return a Labour Government with a large majority of parliamentary seats in Wales.

The Queen's Speech tells us that the Government's central objectives are economic stability, and investment and reform in the public services, which will lead to a more prosperous and inclusive society. I imagine that Conservative Members, along with the rest of us, would say amen to that. I want to talk about both economic policy and policy for public services.

My right hon. Friend the Chancellor has achieved financial stability and a prospect of sustained economic growth that had eluded all Chancellors and Governments for as long as any of us can remember. He deserves praise, as does the Governor of the Bank of England. Neither of them will forfeit precious stability and the prospect of sustainable growth. However, the specific decisions that they must take are by no means easy.

In the United Kingdom, we have at least a two-speed economy—a variable speed economy. This morning, we noted the news that engineering businesses are desperate for interest rate reductions and a weaker pound. Simultaneously, we heard that house prices are rising and are expected to continue to rise faster than previously projected. That conjunction alone vividly illustrates the enormous technical difficulty of taking the decisions necessary for the management of the economy.

My constituents call on the Government to engineer a reduction in the value of the pound. They are less clear, as are hon. Members who have echoed that call, about how the Chancellor can achieve that responsibly in the near future or even the medium term. Corus complained that it had had no option but to dismantle the steel industry in Wales on account of the level of the pound, particularly against the euro. That is something of an alibi, as manufacturing exports in the UK rose last year. Corus was magnificently served by its own employees, who achieved remarkable productivity and competitiveness. There was no reason why a company with Corus's depth of resources and strength should not have been able to weather those difficult financial conditions.

Calls for lower interest rates and a drastic devaluation of the pound to enable us to move quickly into membership of the single currency are dangerously seductive, but inflationary consequences would result from trying to go down that path, at least at any speed. That could put in peril everything that my right hon. Friend the Chancellor and the Government have achieved so far in their stewardship of the economy, and it would jeopardise in particular the progress that we want to make in public services.

If it is difficult to judge the appropriate interest rate for the United Kingdom, how much more difficult is it for the European Central Bank to judge the appropriate rate for the continent of Europe, given that the European Union bids fair to embrace enlargement? On behalf of my constituents in south-east Wales, I would be fearful if new arrangements meant that there had to be a single interest rate for the enormously diverse economies of Europe. We should perhaps pursue that debate another day, but let us have a snippet of it now.

Mr. Nigel Evans (Ribble Valley): It is only a snippet, but it affects the whole of Wales. The right hon. Gentleman has talked about the strength of the pound. He will recognise that the pound is not strong against the dollar and that several Welsh companies export to and import from the United States of America.

Alan Howarth: I agree with the hon. Gentleman.

Public services, even those that are more or less devolved, operate in a context created by the policies of the United Kingdom Government and are bound to take account of the precedents and models created elsewhere in the UK. I sometimes experience frustration and impatience because, under devolution, my constituents must often wait longer than I would wish for the benefits of Government policy to reach them. Our friends and colleagues in the Assembly need to move with maximum alacrity—a point made by the hon. Member for Montgomeryshire (Lembit Ipik)— to use the resources and pick up, should they wish to, the initiatives offered by the Government.

The Queen's Speech offered the prospect of a national health service Bill for Wales. As it will be a draft Bill, we will have an opportunity—either here or in the Assembly in Cardiff—to think carefully about how public services, and especially health services, should be delivered in modern circumstances. During the general election campaign, my right hon. Friend the Prime Minister made an interesting and important speech in Gravesend in which he said, with regard to public services, that it would be the policy of a Labour Government in their second term to ``Devolve. Diversify. Deregulate.'' The Prime Minister also spoke of the need for partnership and for investment to be matched by reform.

Anyone who believes in the importance of public services must welcome the prospect of reform. All of us who believe that the health service is precious and that education is of fundamental importance know that we have a duty not to be hidebound, simply sticking to antique formulas and methods, but to ensure that services are delivered to the highest possible standard. If that should lead to an alteration in the means of delivery, we must be prepared to contemplate it and we must certainly be prepared to examine it positively.

There need be no immediate panic at the suggestion that the private sector could have greater involvement in the delivery of public services; nor should that proposition be condemned. There has been a bit of a kerfuffle in the three weeks or so since the election on that general topic, and there is understandable anxiety on the part of those who work in the public services and a need to know where they stand. We need more clarification about what precisely my right hon. Friends and other Ministers have in mind. Our debate on the draft NHS (Wales) Bill will provide us with an opportunity to think about that.

What is surely beyond reasonable contention—although the hon. Member for North Dorset (Mr. Walter) differed on the point—is that the additional investment needed for the public services is huge, partly because we have experienced decades of institutional Treasury hostility to the public services, which at times seemed like Treasury nihilism. That damage has been compounded by periodic Treasury mismanagement. How many of us can recall the Treasury actually getting it right at any of the important economic turning points between the end of the war and 1997? In the past four years, we have seen a remarkable improvement in the management of the economy. However, whether we consider the mid-1970s, the second half of the 1980s or the early 1990s, we can see that the Treasury took catastrophically ill-judged decisions on the overall conduct of the economy, with famous boom and bust consequences and too little investment in public services—

It being One o' clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at Four o'clock.

Questions Not Answered Orally

Objective 1 Programmes

11. Chris Ruane: To ask the Secretary of State for Wales what discussions he has had with the First Secretary of the National Assembly about the progress of objective 1 programmes in Wales. [2238]

Mr. Paul Murphy: I refer my hon. Friend to the answer I gave earlier to the question from my hon. Friend the Member for Merthyr Tydfil and Rhymney (Mr. Havard).

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