Pre-Budget Statement (Implications for Wales)

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Mr. Murphy: I agree with the initial points made by my hon. Friend. If he and other members of the Committee considered the wards that would benefit from the abolition of stamp duty, which I referred to this morning, they would see that many wards in areas of traditional high employment and high prosperity were clearly highly deprived. There are pockets in rural areas and cities that can be as deprived as parts of my constituency, which, as a valley constituency, is traditionally associated with high levels of unemployment.

The problem is common throughout Wales but, by tackling pockets of high unemployment, we are getting to the cause of the difficulties that places such as Cardiff and Wrexham have had, despite the fact that they have seen tremendous economic inward investment and prosperity over several years.

Mr. Nigel Evans (Ribble Valley): I cannot let the Secretary of State get away with what he has said. The three measures that he has announced this afternoon are woefully inadequate. Jobcentre Plus is totally uncosted; we do not know how much extra money will be put into it. The rapid response service has £3 million a year for the whole United Kingdom, so Wales will be lucky to see £1 million and will probably get less. The transitional employment service will help 20 people in Cardiff next year, with Wrexham not coming on stream until the year after that, which will help an additional 20 people a year. The total cost will be £2.8 million over many years. Is it not about time that we had less spin and more substance so that we can help those in real need?

Mr. Murphy: The reality is that thousands of people who would not have been working had they been left to the devices of the last Conservative Government are working because of the measures that this Government have introduced, particularly under the new deal.

On Jobcentre Plus, I invite the hon. Gentleman to visit a jobcentre to see what is done for people. That will ensure that he realises that people go to such places to look for jobs.

Mr. Evans: How much additional money will there be?

Mr. Murphy: It is not simply a question of how much is spent. We could spend money on building jobcentres and that could be the end of the matter. What matters is what people do in them. If the hon. Gentleman visits the pilot schemes, he will see how they have transformed the way in which people look for work in Wales and elsewhere.

The hon. Gentleman speaks about the rapid response services as if the money is directly for people who are made redundant. That is not the case: it is for the advisers who help individuals who are made redundant. The £6 million for Great Britain marks an excellent advance towards achieving that.

The hon. Gentleman obviously missed the point about the employment transition service: it is in the pilot stage. The purpose of the schemes is to see whether the service works. If it does, it will be extended to other parts of Wales.

Pre-Budget Statement

Motion made, and Question proposed [this day],

    That the Committee has considered the Matter of the Pre-Budget Statement and its implications for Wales.—[Mr. Paul Murphy.]

4.16 pm

Question again proposed.

Mrs. Jackie Lawrence (Preseli Pembrokeshire): This morning, we occasionally debated minute details of the pre-Budget statement and I want now to consider its strategic aspects and its impact on my constituency. This morning's negativity was a little disappointing and I am pleased to be here to welcome the measures in the pre-Budget statement and their effect on my constituency.

Pembrokeshire has traditionally been one of the first areas to suffer in an economic downturn. Small businesses create and support the majority of jobs, about 95 per cent. of which are in firms that employ fewer than 10 people. In his speech, the Secretary of State referred to the sector's importance. Small and medium-sized enterprises provide a greater proportion of jobs in Pembrokeshire than in other parts of Wales. The remaining 5 per cent. of jobs are with large, multinational companies, which have occasionally come and gone as a result of external, often global pressures. Those jobs are, however, often the best paid and most highly skilled.

For those reasons, I welcome the Chancellor's outline of the state of the UK economy. Many of us were sometimes frustrated and bewildered during the first two years of the Labour Government, post-1997. Labour Back Benchers might not have made a noise publicly, but we continually grilled Ministers privately about their course of action. After 18 years of Tory under-investment and neglect, we wanted to make changes immediately. At times, the discipline of sticking to Tory spending limits for the two years following 1997 was difficult and it stuck in many of our throats. That was true not least of pensions, to which my hon. Friend the Member for Newport, West (Paul Flynn) referred. None the less, the Chancellor assured us that short-term prudence would pay long-term dividends. It is evident from this week's statement on the economy that it was right to hold faith with that assurance.

Individual measures in the pre-Budget statement will benefit the people of the UK in general and those of Wales in particular. However, the underlying economics in the statement offer us stability, particularly in these uncertain times following 11 September. They offer us a much better vessel in which to weather the international storm than we would have had had the Chancellor been less of an iron Chancellor and more of a flexible friend in the early days.

An abiding recollection of political campaigning in the 1990s is of the constant references to John Major overseeing a doubling of the national debt when he was Prime Minister. Many constituents asked me why the issue was so important and why it was continually raised. The message began to register when I pointed out that it the same as an individual repaying interest on an overdraft and it hit home only when I pointed out that the UK paid more in debt interest each year than it spent annually on education.

In the past four years, press commentators and Opposition politicians have questioned why we should repay the national debt, instead of having a one-off spend. Similarly, there were loud calls for us to spend the money from the licensing of the mobile phone spectrum in a one-off splurge—like an excited teenager with their birthday money. Again, however, the benefits of the Government's longer-term thinking have become clear in retrospect. Their thinking has resulted in the £1 billion that was saved on debt repayments being available to spend on the NHS throughout the UK. I shall refer in a moment to the £49 million destined for Wales.

Our national debt is now the lowest among the G7 countries and our major European competitors. That is a vital component in helping the UK to build the battlements to withstand the current global difficulties. Only time will tell how matters will develop, but we would not have been able to do that had we taken a short-term rather than a long-term view with an eye to fundamental stability.

Stability is all-important for Preseli Pembrokeshire. Our local economy has always relied heavily on a handful of multinational companies that are subject to global pressures. Small businesses provide the bulk of our jobs. The UK economy's underlying strength in global terms will, I hope, protect our multinationals. At the same time, the stability of the economy, the reductions in corporation tax and capital gains tax that were mentioned in the statement, the reduction in bureaucracy for small businesses' VAT returns, the £50 million fund to help small and medium-sized enterprises and the raising of the threshold for stamp duty for businesses and domestic purchasers in deprived areas will do much to support the small businesses that are the mainstay of local rural economies such as that in Pembrokeshire.

Despite the current international difficulties and their global implications, full employment and a job for everyone who needs one must continue to be the Government's goal, and I am pleased that the report makes it clear that that is the case. The base of stability is there to assist the businesses that provide our jobs, but another element is necessary: we must continue the system of tax credits to reward work and make it pay. Many families in my constituency have benefited by up to £520 a year from the working families tax credit, which was introduced last year. The measures that were announced yesterday to extend the principle to people on low incomes who do not have children is a further step in the right direction.

Figures from my constituency show a dramatic decrease in unemployment in the past four years. In January 1999, those unemployed for six months or more totalled 1,375, but the latest figure—for October 2001—has fallen to 659. Notwithstanding the impact of global recession, it is important that work continues to support that trend.

Pembrokeshire has a keen sense of its environmental value. I therefore welcome the Chancellor's commitment to introduce further tax incentives to encourage cleaner, energy-saving technologies in industry and transport. On cleaner energy production, the TotalFinaElf refinery in my constituency has led the way in the production of ultra-low sulphur diesel and petrol in the UK. It is a model of how forward thinking on environmental issues can generate economic advantages, not economic costs. The refinery is a much-valued local employer and a valuable contributor to the drive towards cleaner, less-polluting transport.

On another transport issue, haulage contractors that operate from my constituency will welcome the principle of making foreign companies pay to use UK roads. Our close proximity to Ireland means that haulage contractors in west Wales have felt at a distinct disadvantage in the past.

Everything that I have mentioned bodes well for jobs and businesses in Wales and further afield, despite the parlous international scene. Two other aspects of the statement are, however, vital to Wales and my constituency. There are more than 16,000 people of pensionable age in my constituency. Pensioners, who worked hard during their working lives, seek only security in their old age. The measures introduced last year—the minimum income guarantee, pension rises and winter fuel allowance—meant a great deal to my pensioners. I know that because many pensioners have approached me in the street to tell me so. The Government's continued commitment to their security outlined in yesterday's statement is only right and proper. I hope that the annual increase of at least £100 in the basic state pension, plus the guarantee of £200 winter fuel allowance for the life of this Parliament will mean that never again will pensioners have to choose between eating or heating, as has so often been the case.

I refer again to the short-term versus the long-term and the savings on national debt interest payments in relation to Wales. That long-term vision has freed £1 billion this year for the NHS UK-wide. Wales' share of that will be £49 million. It will obviously be for the Assembly to decide how to spend that money. That is the result of true partnership and, indeed, subsidiarity—the benefits gained by Welsh MPs at Westminster being passed to the Assembly to be used for the specific needs of Wales.

Health delivery in Wales is the Assembly's responsibility. Our role in Westminster is to strive for a fair share of funding for Wales. The Assembly's role, in partnership with Westminster, is to spend that money on the delivery of services for Wales. That is the true nature of devolution, not the separatism by any of a variety of names that newspapers say is advocated by Plaid Cymru. Those Labour Members who supported the setting up of the Assembly in 1997 had a vision of a new style of co-operative government—the Assembly working with Westminster for the good of Wales.

In the context of the pre-Budget statement, the Secretary of State's explanation of the evolutionary processes that surround primary legislation affecting Wales was useful. Indeed, the word ``processes'' played a prominent role in our discussions on devolution. As one who supported and continues to support the partnership offered by devolution, I believe that the definition of that word is best outlined by its industrial use, most notably in the oil industry, which is so important to Pembrokeshire.

The process in the oil industry is the transforming of bulk raw materials into a working form. The Assembly has the raw materials in the form of Treasury funding, but to an extent that never existed in the Tory years. It now has the opportunity and the challenge to turn that into a working form to fit the specific needs of Wales. To suggest anything else would constitute misrepresentation. I support the view so well articulated by my hon. Friend the Member for Cardiff, North (Julie Morgan) that it would mitigate against the spirit of devolution as agreed by the population of Wales in the referendum and by the House in supporting the Government of Wales Act 1998.

The political correspondent of The Guardian said yesterday that entrepreneurs, pensioners and the NHS seemed to be the main winners in the pre-Budget statement. That is only partly correct. It is a further step towards creating a fair society, with opportunity for all. The people of Wales and the UK as a whole are the real winners.

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