Pre-Budget Statement (Implications for Wales)

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Mr. Wayne David (Caerphilly): The question that I posed this morning to my right hon. Friend the Secretary of State for Wales concerned the National Assembly's national economic development strategy, ``A Winning Wales''. I raise that again now, because it is important for us to recognise that if we are to create a new and prosperous Wales of full employment, there must be partnership.

That strategy is an ambitious document, setting out clear targets for the development of the Welsh economy in the next decade. It talks about the creation of 135,000 extra jobs in Wales and has less specific targets on improving learning opportunities and electronic communications. The document says that the National Assembly will be working towards an increase in Welsh GDP from 80 per cent. to 90 per cent. of the United Kingdom average. Ultimately, the aim is parity within the UK. That is an extremely ambitious target and it is important to recognise that it will be achieved only when we work collectively for the common good of our country. Such partnership requires working with local authorities, which are a vital part of the equation.

Equally, we must recognise that Wales has a role to play in the wider European Union and we must ensure that the structural funds that we fought so hard to receive, particularly objective 1 funds, are put to the best possible use. I am pleased that, despite the undoubted initial difficulties, structural funds for objective 1 areas in west Wales and the valleys are now being put to very good use. We shall see a material benefit from those grants.

Of course, the support of the British Government is also vital. As we heard this morning, it is beyond doubt that Britain's macro-economic policies have been outstandingly successful since 1997. We have low inflation, low interest rates and a stable economy, rather than boom and bust, which was such a liability in the past. However, the role of central Government, here in London, goes beyond providing that macro-economic framework. It still has a vital role concerning broader economic policy and especially labour market policy. We must recognise that although great progress has been made in Wales in recent years, there is still a problem with unemployment, particularly long-term unemployment, in communities that have experienced acute social deprivation.

I was pleased a few weeks ago when the Under-Secretary for Wales came to Llancaiach Fawr in my constituency to make an award to the 25,000th young person in Wales to have found a job under the new deal. I was pleased and proud that it was presented in my constituency, although the recipient came from my hon. Friend's constituency. Real opportunities are being provided for young people in Wales. However, more work needs to be done to provide support, assistance and encouragement for the long-term unemployed. That is important for those who are experiencing unemployment and in tackling the wider issue of social exclusion. I firmly believe that social exclusion will be brought to an end only when we have full employment in Wales.

I turn to my own experience of one of the more innovative methods that have been adopted in south Wales to encourage people off welfare into work. An employment zone has been established covering the boroughs of Merthyr Tydfil, Blaenau Gwent, Torfaen and Caerphilly and it has been very successful in the past 18 months. Some 1,800 people, mostly over the age of 25, have been given support, training and encouragement—600 have found work, 89 per cent. of whom have remained in work after 13 months. Those are impressive figures because the people concerned had been unemployed for long periods. Many had never worked and some are working for the first time in middle age. They are creating new life chances for themselves. Within the employment zone is an action team that is working with some of the most disadvantaged and disaffected individuals. I am pleased that that pilot scheme will be extended in the very near future and that there will be three schemes: one in north Wales and two in south Wales.

Such innovative measures to create real job opportunities for the long-term unemployed are a huge step forward. The Government's commitment to such innovative action was reaffirmed in the Chancellor's pre-Budget report. I am also pleased that, as we have heard this afternoon, more resources will be provided in Wales so that innovative measures such as the job transition service will be reinforced still further.

The Chancellor's statement was very good. It included a number of important measures for Wales. I have referred to labour market measures, but there were others, not least the reduction in stamp duty on property sales up to £150,000, which will help constituencies throughout Wales that experience poverty and deprivation. I welcome the support for research and development, the simplification of the VAT regime for businesses and the widening of the 10p corporation tax band for small businesses, which will encourage innovation, enterprise, growth and, ultimately, prosperity.

Hon. Members may say, ``We'd expect Wayne David to make warm comments about the statement.'' However, I ask them to read today's edition of The Western Mail. That newspaper sometimes gets things wrong when expressing its own opinions, but when it quotes other people, it usually does so accurately. I should like to share with the Committee some quotes that reflect the general response of people in Wales to the pre-Budget statement. Felicity Williams, deputy general secretary, Wales TUC, said:

    ``The Chancellor's announcements are welcomed. He has rightly rejected those calling for him to choose between public services and fighting poverty.''

We might expect the deputy general secretary, Wales TUC to say that. However, the Chancellor also had a vote of confidence from John Foster Thomas, senior tax partner of Deloitte & Touche in Cardiff, who said:

    ``The measures announced will continue the Chancellor's drive to encourage enterprise for all—measures that will be of particular benefit to the SME-dominated Welsh economy.''

Nigel Lawson of the Federation of Small Businesses in Wales—[Interruption.] I was just making sure that hon. Members were paying attention—Russell Lawson said:

    ``I welcome the Chancellor's Pre-Budget report but I feel that the proposals don't go far enough.''

That is reasonable praise from the federation. Finally, David Rosser, director of CBI Wales, was unequivocal. He said:

    ``I applaud Mr. Brown for delivering a sensible and supportive pre-budget package at a time when there is economic uncertainty.''

That is praise indeed, and the spirit of those objective, honest statements is shared by the great mass of people in Wales. That is why I believe that the report is one that is good for business, for enterprise, for the least well-off people in Wales and, above all, for Wales as a whole.

5.16 pm

Mr. Roger Williams (Brecon and Radnorshire): I support the plea of the hon. Member for Vale of Glamorgan (Mr. Smith) to establish Cardiff airport as an international airport. That would make an important contribution to the economy of south Wales. It is even more important to improve access to the airport. The first time that I drove there, I almost gave up because I did not know where I was going—I thought that I was disappearing into deep countryside rather than making my way to the airport.

Mr. John Smith: Is the hon. Gentleman aware that when the film star Michael Douglas and his new Welsh wife, Catherine Zeta Jones, arrived at Cardiff, the local taxi drivers sneaked through the lanes of the Vale of Glamorgan, describing that as the scenic route to Swansea, because they were terrified of getting stuck in a traffic jam?

Mr. Williams: The hon. Member for Vale of Glamorgan was very encouraging about the state of the economy in Wales. Perhaps, given all the encouragement and opportunities that he enjoys because his constituency is on the M4 corridor, and the resulting advantages for the economy, he has a more sanguine view of the economy than I do. Having gone round my constituency and the rest of Wales, I am less optimistic about it.

We must admit that many of the manufacturing industries in Wales are having a very tough time. The uncertainly about our entry into the euro and the inept handling of the currency configuration means that our exchange rate does not reflect our relative competitiveness. Therefore, many companies are finding it difficult to export and many others have difficulty competing against the volume of cheap imports coming into the domestic market. The manufacturing industries are not the only ones that are suffering from the exchange rate—agriculture is virtually being blitzed out of existence, suffering from the competition of cheap imports and the effect on subsidies that are paid in the European currency.

Speaking of agriculture, the foot and mouth epidemic has been horrific. A huge amount of public money has been spent on it; money that would have been welcome had it been spent on public services in Wales and the rest of Britain. I have done a little research, and believe that the £2.7 billion that was mentioned by the Chancellor is money that has already been spent; it is not new money. His announcement yesterday provided was no additional money for farming and rural businesses affected by the epidemic.

Lord Haskins has recently produced a report on the state of the rural economy in Cumbria, as a result of which the Government have agreed to give £24 million to the area to aid its recovery. I understand that the money will be in addition to that in the rural recovery fund, which has operated regionally. Is such money being made available in Wales? The Farmers Union of Wales said in a press release that nothing had been done for the consequential losses suffered by farming and rural businesses.

The Minister might be aware that some of my constituents and people from Cumbria, Devon and other areas in Britain are contemplating a class action in law against the Government. It would be better if the Government responded to their needs and the imperative to secure their businesses by meeting them and talking about the problem rather than letting the matter go to court.

Buried deeply in the statement is a commitment to review the way in which annuities operate in relation to pensions. I was impressed by the constructive contribution made by the hon. Member for Newport, West on pensions in general. We all believe that pensioners, who have given so much to our country through their work and their contribution to society and communities, should be rewarded in their old age. It is a disgrace that although we are the fourth largest economy in the world, we cannot treat our pensioners better. Some parts of yesterday's announcement make us optimistic, but too many pensioners still find life tough.

I want to speak about pensions for the self-employed, who do not have the benefit of occupational pensions and have to make provision for themselves. They are being urged to do so, but their aim to provide for themselves and give themselves independence in retirement has been dealt four great hammer blows. The abolition of advanced corporation tax, one of the Government's first measures on taking office, meant that the potential pension fund of all those who planned responsibly for their retirement would be 20 per cent. less than they had expected. The poor performance of the pension funds, which is linked to poor stock market performance, and high charges by the pension providers have also had a significant effect. The Government should consider what is happening and how they can tackle it, especially in relation to high charges. The current low rate of annuities means that people who planned for their retirement will have virtually half the pension that they had expected. That will make the difference between living comfortably and in absolute poverty.

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Prepared 28 November 2001