Pre-Budget Statement (Implications for Wales)

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Mr. Simon Thomas: The hon. Gentleman said that the Liberal Democrats had answers to the difficulties in the NHS. Perhaps he might offer an answer to this problem, for which the Liberal Democrat coalition in Cardiff is responsible. There is a 900 per cent. increase in the waiting time for first out-patient appointments; 59,919 people had been waiting more than six months as of 30 September. Though he is correct in some of his criticisms of the Conservatives, that is down not to the Conservatives but to the Administration in Cardiff. How would he improve that?

Lembit Öpik: Primarily, of course, these are resource matters. I can assure the hon. Gentleman that my hon. Friend the Member for Brecon and Radnorshire (Mr. Williams) will respond fully to that point—thankfully, after lunch.

I have tried to explain the historical context because it is important. It is all very well condemning the Conservatives for their inaction, but we should remember that once in government the Labour party was committed to carrying on with the very spending plans that it condemned in the run up to the 1997 general election. Although the Liberal Democrats were frustrated by the Conservatives' poor performance in Wales, we were equally disappointed when Wales' economic woes were not addressed in the first two or three years of a Labour Administration who promised more of the very economic policies that had brought many Welsh industries to their knees.

There has been a kind of double-talk. Time and again, the Chancellor and the Prime Minister said that there was nothing that they could do and that all the problems had been caused by the Conservatives, but the Government could have taken a different approach. That is why Labour must take some blame for the problems that are at the heart of the health service's woes, including waiting lists.

In his pre-Budget statement, the Chancellor makes clear the need for serious investment in the health service, and that is to be applauded. As he said, we must have a serious long-term review. We must not be dogmatic about it—we must consider all options. Although I am sceptical about public-private finance initiatives, I accept that we must investigate them in a pragmatic and objective way to see whether they can deliver results. However, as we move on from Conservative plans and three wasted years of the Labour Administration, it is important to focus on the outcomes that we want for Wales.

Some specifics in the pre-Budget statement have already been mentioned, and I shall briefly deal with a few other points. It is clearly right to try to simplify the taxation system and VAT for small businesses, as the hon. Member for Meirionnydd Nant Conwy said. However, I should give one warning. We have heard such things before, but implementation has let the strategy down. We have observed Ministers' high ambitions to simplify the taxation and red tape regime, only to discover that the regime has been changed rather than simplified. Ministers must have the courage to empower civil servants to reduce bureaucracy, even if doing so jeopardises certain safeguards. In general, such simplifications to the administration process are not made because civil servants spot that they will give rise to possible loopholes.

Some measures are being introduced, one assumes, to avoid or reduce the danger of recession. That is a high ambition, but it is worth noting that Britain has something of a two-speed economy that is split between a manufacturing sector in recession and a reasonably buoyant, if slowing, services sector.

Manufacturing in Wales has suffered. We all know about the Corus debacle, and Alcan, the aluminium manufacturer, has also suffered greatly. There are various reasons, and I will come to the exchange rate in a moment. We need to recognise that Wales has been particularly hard hit in those ways. The pre-Budget statement is too late for the jobs that have been lost, but we can only hope that, if we make the Government's intentions in the statement clear, other companies on the ropes can plan through the dark times until some of the fairly laudable initiatives there take effect.

The Liberal Democrats have, on balance, been more in favour of the single currency and Britain's entry to it than other parties represented here. That is on the basis not of a deep principle, but of an economic judgment. We feel that the benefits of entering far outweigh the costs and that jobs in Corus and elsewhere might have been saved had we entered the euro at the right level.

The exchange rate is all-important. To enter the euro at too high a level would be to re-live the experiences of the late `80s when we entered the exchange rate mechanism at the wrong level. It would, however, be helpful if the Chancellor could go even further than he went yesterday and put his cards on the table as a supporter of us entering the single currency. For some individuals, perhaps even in this Room, that is anathema. The word euro can be like a cross to a vampire. There is huge scepticism about it, but I strongly encourage the Government to speed up. Every month that goes by puts more jobs in Wales at risk.

Mr. Wayne David (Caerphilly): Does the hon. Gentleman agree that consideration of entry to the single currency is realistic only when economic conditions are right?

Lembit Öpik: I certainly do not. We could have a debate now on whether we would enter at that point. We could decide that we want, positively and proactively, to drive this country's thinking towards a yes vote in a referendum. I am not sure where the hon. Gentleman stands on the euro, but if he is simply making the rather more trivial point that we should enter when the economic conditions are right, I agree. The hon. Gentleman nods at that, so I can see that we violently agree. I am happy with his support for my point.

The Chancellor must recognise that there is scepticism about public-private partnerships in many quarters, not least because of the disastrous effects of privatisation, which we have recently seen most ignominiously with Railtrack. I know that PPPs are slightly different, but they are in the same family of political initiatives. The Liberal Democrats respect the importance of looking at all the options, including for the health service. It would be dogmatic not to do so.

However, we must make sure that there is a clear value for money test. For example, many people find it hard to see how there can be such improvement in efficiency that it more than offsets the drain from the economy or investment that is required to pay profits or returns to shareholders. That kind of question would come up in a value for money investigation. I do not want to go much further on PPP, because other people, including my hon. Friend the Member for Brecon and Radnorshire, will want to comment on it.

I hope that the Secretary of State will pass on my thanks to the Government for the money that has been committed to helping rural areas that have been badly hit by foot and mouth disease. It is tragic that the rural economy in Britain, let alone Wales, has been brought to its knees due to circumstances entirely beyond its control. If the money comes through quickly, it may be substantial enough to make a difference, but I am afraid that many smaller farms are ready to close or will close soon. The money must come through speedily to protect those areas.

I request the Secretary of State to discuss with appropriate Ministers in the Welsh Assembly how best we can support a strategy to protect family and small farms, which are the backbone of many rural communities in Wales and which have often suffered most.

With regard to the future and the partnership to which the Secretary of State rightly alluded, all political parties have been finding their feet in the new arrangements between the Welsh Assembly and Westminster and there is still suspicion and perhaps tension between the two bodies. We must be honest about that. If devolution is to work, we must be proactive in developing the partnership instead of reactive, believing that it will develop whether or not we play a positive role. For example, it would be extremely helpful in the context of yesterday's Budget if we could revisit the Barnett formula positively and co-operatively with a true dialogue between Assembly Members and Members of Parliament. We could perhaps have a formal meeting to discuss how best to ensure equity for Wales, where the GDP per head is 89 per cent. of the United Kingdom average.

Albert Owen (Ynys Môn): Does the hon. Gentleman agree that more effort, determination and delivery is needed in the partnership between ourselves and the National Assembly for Wales and that those in the Assembly who call for more powers undermine that partnership? It is not the devolution settlement that is flawed, but the nationalists' ideology.

Lembit Öpik: Tempting as it is to take a swipe at Plaid Cymru, I shall resist doing so because I sit next to them and the hon. Gentleman does not. However, criticism of the barriers to the evolving relationship cannot be put at one door or another. It is human nature that when power relationships change, there are inevitably frictions as people get used to the new arrangement. It is incumbent on us, as much as on the Assembly, to assume a co-operative and positive position regarding the relationship between Cardiff and Westminster and then to ask how best can we make that partnership work, not for political parties or politicians, but for the people of Wales. That is not implausibly idealistic and if we do not do that the people of Wales could rightly criticise us for not making a new structure work when the majority of us in this Room encouraged them to vote for it in the referendum.

Mr. Llwyd: The hon. Gentleman was generous in his comments to the Government on the £2.7 billion for the rural economy following foot and mouth disease. Perhaps I should disabuse him about the figure. The pre-Budget report states:

    ``The Government acted decisively to contain and eradicate FMD . . . spending an additional £2.7 billion''.

There is no new money. Perhaps the hon. Gentleman has fallen into the trap again.

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Prepared 28 November 2001