Pre-Budget Statement (Implications for Wales)

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Mr. Bryant: Will the hon. Gentleman give way?

Adam Price: No. I have given way already.

I greatly welcome the statement in the report that there will be an economic impact study of all departmental expenditure across the UK. For many years, we have said that there is a hidden subsidy within departmental expenditure, certainly for the south-east of England, and we will welcome the result of the review. We ask the Government to consider relocating public administration to regions such as Wales. That was done in previous eras, when the Royal Mint and the Driver and Vehicle Licensing Agency were relocated. We hope to build bridges with all hon. Members to maximise pressure for decentralistion of public administration.

Other hon. Members will refer to some of the welfare changes; one omission struck me—the £1.4 billion social fund, which, as many hon. Members know, is a lifeline for the poor. The Select Committee on Social Security said earlier this year that the fund was working against the Government's key aim of reducing child poverty. In opposition, Labour promised to replace the fund with something bigger and better but they have not done so. After five years, the budget for grants has fallen in real terms. Until benefits are adequate, there will continue to be a need for help with sudden or expected costs. The social fund is a key issue because it is a finite fund, which often runs out of resources.

Putting sectarian politics aside, we need to have a serious debate on issues that affect the Welsh economy. I would welcome a genuine commitment by the Government to a regional economic policy and I would work with them on that. I welcome the statement made by the hon. Member for Merthyr Tydfil and Rhymney (Mr. Havard), who is not in his place at the moment, about creating a forum for debate about the valleys, but I respectfully suggest that it needs to be a cross-party debate. On all those issues, including social and economic development, what unites us in our fundamental motivation and aspirations for society is far more important—

Mr. Bryant: Will the hon. Gentleman give way?

Adam Price: No, I am just winding up.

What unites us is far more enduring that anything that divides us. If we are serious about making connections, we must put the valleys first and the parties second. We need a serious debate, and I look forward to engaging with hon. Members in years to come.

12.45 pm

Kevin Brennan: I was interested in the concern of the hon. Member for Montgomeryshire about being available to speak when television cameras were on. I know that he was keen on it. He was perhaps thinking that we could have an edition of ``Ready, Steady, Speak''—I saw one of his most recent appearances on television. Perhaps we could bring in new innovations. We could hold up red tomatoes for Labour speeches and green peppers for Plaid Cymru. I could not think of a blue food so I am glad that the Tories have gone. We could have yellow bananas for the Liberal Democrats, which the hon. Gentleman could no doubt use to bake a media tart.

I welcome the Chancellor's pre-Budget statement and praise him in particular for the macroeconomic position. The hon. Member for East Carmarthen and Dinefwr (Adam Price) took pleasure in going through the minutiae of statistics and picking his periods carefully to fit his thesis. The most fundamental factor for people in Wales is the macroeconomic underpinning of the economy. The position in which we find ourselves in these times of economic uncertainty around the world is remarkable. We have record low inflation and unemployment, and that applies to Wales as well as to anywhere else. We have record low interest rates and the highest projected growth of any of the G7 nations. That is the reality of our economic position and the sort of thing that economic text-books used to claim was impossible. We were told that we could not have low inflation and low unemployment, or high growth and low interest rates at the same time, but that is what we have. We are in a virtuous circle due to the effective management of the economy by the Chancellor.

Macroeconomic stability is essential to the health of the Welsh economy. I will quote again the document entitled, ``Productivity in the UK: The Regional Dimension'', which was published this week by the Treasury and the Department of Trade and Industry. On page 29, it says:

    ``Macroeconomic stability is an essential precondition for creating an environment in which underperforming regions can increase their sustainable rate of growth. Macroeconomic instability has increased regional inequalities frequently in past recessions, particularly in the 1930s and the early 1980s.''

The Chancellor has done Wales proud by ensuring that macroeconomic stability underpins the Welsh economy.

Mr. Simon Thomas: I note that the hon. Gentleman did not carry on reading his Government's report, which says:

    ``Regional inequalities in themselves may also exacerbate overall macroeconomic volatility.''

In an intervention on my hon. Friend the Member for East Carmarthen and Dinefwr, the hon. Gentleman said that regional inequalities in Wales and between Wales and the rest of the United Kingdom have existed since the 1920s. Does he not feel that it is shameful that Wales has been in that position since the 1920s? We have been consistently let down by Governments. Does he not agree with my hon. Friend that we should have seen some measures in the pre-Budget report to put that situation right?

Kevin Brennan: Several measures in the pre-Budget report are intended to move towards the elimination of regional inequalities. I agree that inequalities in the UK are too wide, but the fundamental thread running through the report is clear. Macroeconomic instability would be far more damaging to the Welsh economy than any of the regional inequalities that we have discussed. I welcome the fact that every Welsh constituency will benefit from the changes to stamp duty rates. I could list many other measures, but I can see that the hon. Member for East Carmarthen and Dinefwr is keen to speak.

Adam Price: Is not the single most important factor in explaining the problems of Welsh manufacturing and other export industries over the past five years the persistently overvalued pound? What action will the Chancellor of the Exchequer take on that?

Kevin Brennan: I am happy to respond to that. The hon. Member is keen on a devaluation policy as a way of running the economy. It does not work. It will not work in the long run either. A constant devaluation of the currency, which is what he seems to advocate, is not the answer to Wales's problems. I note with interest that he recently came within two votes of persuading his party that Wales should not be in the euro. I have the quote from The Western Mail. Moreover, he confirmed earlier that he wants Wales to have full national status within Europe, which presumably means full national status outside the United Kingdom. If Wales has full national status within Europe but is not a member of the euro when perhaps the rest of the United Kingdom has joined, what will Wales's currency be? Perhaps it will be the Wigley, and 100 ieuans will equal one wigley.

Adam Price: There is only one Dafydd Wigley.

On the issue of the euro, I have made it clear that I support economic and monetary union, but I want stability of growth. The real point is that we need a devaluation to go into the euro. We need to go in at a competitive rate. The Chancellor could intervene in the money markets to bring it about. The Labour party did it in 1949 and in 1967. The trouble is it did it too late in 1967 and then lost the election.

Kevin Brennan: The hon. Gentleman should update his economic text-books if he is basing everything on the economy of the 1960s and 1940s. He needs to look at the modern economy a bit more carefully.

Lembit Öpik: Does the hon. Gentleman agree that the tale of calamity described by Plaid Cymru does not—

Mr. Llwyd: Oh, be quiet.

The Chairman: Order.

Lembit Öpik: The tale of calamity described by Plaid Cymru does not accord with reality. Does the hon. Member for Cardiff, West agree that the issue today is not whether Wales is about to become a third world state, but how the priorities should be balanced and, perhaps more important, the mechanisms for support? Does he agree that we should discuss the strategies rather than suggest a world picture that means that Wales is going to collapse?

Kevin Brennan: Of course we should discuss the strategies. The hon. Member for East Carmarthen and Dinefwr was trying to be sincere, but he should stop talking Wales down and engage in a serious conversation that does not paint a picture of Armageddon in the Welsh economy which is not true. There are problems in the Welsh economy. There have been job losses and factories have closed. Huge economic forces are at work. Those will mean that we will no longer be an assembly-line economy but move towards a knowledge economy. We must do that. There is pain on the way and the Government's role is to create a bridge between the old and the new economy. All that is correct and we can have an intelligent, adult discussion about it. However, we will not be helped by a parade of nit-picking lies, damned lies and statistics—I was not referring to the hon. Gentleman when I used the word ``lies''—and their selective use to paint a picture of doom and gloom and to talk down the Welsh economy.

It is right that we discuss the economic implications of what the hon. Gentleman and his colleagues propose for Wales and their true attitude to devolution. [Interruption.] I have been told about the pre-Budget statement today. Now I shall show why it is important to have a pre-Budget statement from a UK Chancellor and not what others would like to see. The truth is, strangely in these days, that Plaid Cymru is the most anti-devolution party of all the parties represented here.

Labour introduced devolution and we are still committed to it. We held a referendum and set up the Assembly. The Liberal Democrats are a pro-devolution party. We may have disagreements or differences of emphasis, but we believe in the United Kingdom and devolving power down to the right level. These days, even the Tories in Wales say that they do not want to get rid of the Assembly and are participating in its work.

Plaid Cymru's project, however, is to destroy devolution, which is why its members take every opportunity to undermine it. All that stuff about Scottish powers, tax-raising powers and so on is not a political principle; it is a political tactic to undermine devolution. Plaid Cymru is aiming for full national status—so-called—within Europe. [Interruption.] I do not know whether that would involve its own currency. As I pointed out earlier, that means full national status outside the UK. That is the antithesis of devolution, which is intended to strengthen the UK and decision making—

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Prepared 28 November 2001