Budget Statement

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Mr. Wayne David (Caerphilly): As we all know, the emphasis in the Budget is on the national health service. We warmly welcome that because nothing is closer to the hearts of the people of Wales than the national health service. It was formulated in the south Wales valleys by Aneurin Bevan and it was his idealism and determination that enabled the greatest achievement of the 1945 Labour Government to come into being. Significantly, the hon. Member for Ribble Valley, who is leaving the Room, could not give an alternative to the Government's proposals. We heard plenty of criticisms, moans, groans and whingeing—and were taken on an interesting grand tour of Europen countries, which I am sure Conservative Members have visited over the past few months—but no constructive alternatives.

Mr. Chris Bryant (Rhondda): They wanted to get used to using the euro.

Mr. David: Let us hope so and that their modest conversion to European ideas will extend over the next few months.

The people of Wales generally have welcomed the Budget and it has been particularly welcomed in my constituency of Caerphilly. It will take us a little closer to the new hospital for which the people of the area have argued for many years. At the moment, people in the Caerphilly constituency have to travel for their health needs to Merthyr Tydfil, the Royal Gwent hospital in Newport and the Heath hospital in Cardiff and it is high time that a state-of-the-art hospital was built inside the Caerphilly borough—preferably in my half of it. I also hope that the money allocated from the Treasury to Wales will be spent as effectively as possible. I hope that in-depth discussions will take place with the Welsh Assembly Government to ensure that the money is effectively spent. I hope that we can debate that in future.

Like my hon. Friend the Member for Monmouth (Mr. Edwards), I believe that attention should also be given to tackling the fundamental causes of ill health in Wales. Prevention is far better than cure. If there is a single cause for the prevalence of ill health in many parts of Wales, it is the high incidence of poverty and the Townsend report clearly demonstrated that. If we are concerned about improving health and ending deprivation, we must focus on one policy above all others—ending long-term unemployment. The

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Government have rightly pointed to their proud record of reducing unacceptably high levels of unemployment. Constituencies throughout Wales have seen dramatic falls in unemployment, despite the difficulties associated with manufacturing that we all acknowledge. However, pockets of high unemployment remain in many of our valleys communities. The further up the valleys we go, the more social problems we see, and the higher are the levels of unemployment. I welcome the Government's recognition of that and their acknowledgement that there is no room for complacency.

I am pleased to welcome specific measures proposed to tackle endemic social problems. I particularly welcome the increase in the minimum wage, which will help to make work more attractive. Lone parents are also encouraged into work. I also welcome the extension of new deal 25-plus and the extension of gateway to work to several pilot areas—four across the country and one in Swansea.

Kevin Brennan (Cardiff, West): Will my hon. Friend acknowledge that the same sort of hard-core and difficult long-term unemployment exists in parts of Cardiff—Ely in my constituency, for example? The Government have introduced a welcome pilot, the step-up programme, in an attempt to purchase jobs and get people back into work.

Mr. David: I certainly acknowledge that reality. The prevalence of long-term unemployment tends to be greater in the valleys, but that is not to deny pockets of high unemployment in other parts of Wales.

The Budget is important for its emphasis on enterprise. Wales is inherently an enterprising country. No one can tell me that entrepreneurship has never existed in Wales when we can point to the incredible figures that the labour movement has produced—people with the most radical and innovative ideas that this country has ever seen. I welcome the fact that the National Assembly has brought forward its own entrepreneurship action plan, an innovative strategy for encouraging the indigenous enterprise of the people of Wales. The objective 1 programme also emphasises the development of enterprise. We must recognise the need for a partnership between the National Assembly and the central Government in respect of the successful pursuit of various measures.

It has rightly been acknowledged that small and medium-sized enterprises are vital. They are the backbone of the Welsh economy. It was once believed that full employment was achievable in Wales simply by attracting and relying on footloose investment from outside, but those days are behind us. We must rely on the capacity of our own people to generate wealth through small and medium-sized businesses. Budget measures such as the reduction in corporation tax and simplification of VAT make it more attractive for people to set up small businesses and create the wealth that we all need.

The Budget is exciting. It has already secured the support of large swaths of the population. Indeed, a

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grudging political consensus is emerging that this Budget is a huge step forward. Its trenchant opponents are certainly politically marginalised, not just in Wales but throughout the United Kingdom.

I conclude by reflecting on recent events in France and the apparent success of Monsieur Le Pen. His modest advance in the first round of the presidential elections happened for many reasons, but no one can deny that he attracts some support from people who have experienced poverty, long-term unemployment and social exclusion, and who are looking for easy answers to complex problems. We must take note of what has happened in France and do everything possible to prevent fascists and people like them from gaining a foothold in Wales. One way of ensuring that that does not happen is to debate the contents of the Budget in full and ensure that they are implemented effectively.

5.25 pm

Mr. Martyn Jones (Clwyd, South): The NHS has rightly grabbed all the headlines on the Budget. I will not therefore repeat the main points in the excellent contributions by my right hon. and hon. Friends, except to suggest that the reforms tied to that extra money have not been stressed enough.

It gives me pleasure to see Opposition Members being comprehensively wrong-footed by the Budget. In fact, so wrong-footed were the nationalists that the hon. Member for East Carmarthen and Dinefwr spent a great deal of time trying to denigrate the Budget, while neglecting to tell his constituents and other hon. Members that he voted for it in the Lobby last night. Although that support was welcome, it also suggests the worst case of schizophrenia among Opposition Members that we have seen for many years. On reflection, however, I think that their behaviour is probably symptomatic of the special brand of confusion and doublespeak that they bring to Welsh politics.

I shall concentrate on the beneficial and positive effects that the Budget will have on Welsh business. In short, the Budget is very good for Welsh business and will prove to be a turning point for it. Indeed, the business sector's response to the Budget has been very encouraging. The package of reforms to reduce the corporation tax bills of more than 90 per cent. of tax-paying companies, and the cut in the starting rate of corporation tax from 10 per cent. to zero, mean that hundreds of companies throughout Wales will no longer pay corporation tax. The small companies rate was cute from 20 to 19 per cent., further reducing corporation tax bills for Welsh enterprise.

In delivering this Budget for business, the Government listened to business and trade unions by introducing a volume-based research and development tax credit—the fulfilment of an election pledge that will prove important to companies throughout Wales. There will also be £30 million of additional funding throughout the UK to help small firms to attain Investors in People status.

The Government have introduced initiatives to reduce red tape for business, to such an extent that they make the Conservative Administration—not that

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there is anyone here to represent them—look like Soviet-style central planners. If we add to that all the encouragement that the Government are giving to enterprise and investment in deprived areas, we can see that Welsh business will benefit enormously from last week's speech.

All that is taking place against a background of rising economic confidence in Wales. I was delighted to read in this morning's edition of The Western Mail a report about increasing optimism among Welsh manufacturers. In the words of Rudi Plaut, the chair of the CBI Wales economic trends panel,

    ''The rise in optimism is good news''.

Another important and welcome announcement in the Budget was the radical reform of beer duty for the small brewing industry. The new progressive regime will throw a lifeline to struggling independent brewers and could have a major impact on a brew very close to my heart, Wrexham Lager.

Huw Irranca-Davies: Did it have an effect on your stomach?

Mr. Jones: It does not have an effect on my stomach, because it is not brewed in Wrexham now, so I do not drink it. I hope that, because of that move by the Chancellor, an entrepreneur will be able to see his or her way clear to stepping into the breach and ensuring the brand's survival back in Wrexham.

The initiative brings UK breweries in line with those in other EU member states, particularly those with strong brewing heritages like that of Wrexham. The UK scheme will be one of the best-targeted, simplest and most generous schemes anywhere in the EU. The 50 per cent. relief for small brewers—the maximum available under European Community law—shows the Government's commitment to the industry and to variety and choice, which was largely removed by the implementation by the Tory Government in the 1990s of the infamous beer orders.

One small cloud on the economic horizon causes great concern and anger in people in Wales and throughout the UK. The Government should act to remove that cloud, because it is leading to an unhelpful cynicism about business and enterprise. It is not in the economic interests of Wales or, indeed, the rest of the UK. I am referring to the recent series of huge pay awards, mostly made by themselves, to executive directors of British companies. Like other Welsh Members, I am incensed by the 130 per cent. pay rise recently awarded to Sir Brian Moffat of Corus. My right hon. Friend the Secretary of State will know that that undisguised greed in the Corus boardroom has caused deep anger in Wales. His pay rise was grotesque and demonstrates an almost perverse business logic that rewards failure—failure on a commercial and, worse, a social level with 3,000 steel jobs axed and all the attendant consequences for steel manufacturing areas. Will my right hon. Friend use his influence in the Government to ensure that this sort of fat-cat greed is checked and is not allowed to undermine the wider economy? We have increased fairness at the lower end of pay scales and it is time to increase fairness at the higher end.

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5.30 pm

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Prepared 24 April 2002