Budget Statement

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Mr. Simon Thomas: We have had an interesting debate, which has zoned wide from France to Wales, and from the health service to manufacturing industry. I particularly welcome the new hon. Member for Ogmore to his first Welsh Grand Committee. I am sure that he will continue to contribute to our future deliberations. I hope that the Welsh Grand Committee will adopt a more legislative role in future, so that his comments, mine and everyone else's would become more useful. I am sure that he will want to take back to his constituency the remarks made about his predecessor.

Huw Irranca-Davies: So you will not be getting a membership form?

Mr. Thomas: I assure the hon. Gentleman that I am not seeking membership.

It is important to stress how much importance Plaid Cymru attaches to the Budget for the UK economy. As long as we continue to have such a political entity within these islands, it is vital to address how the Budget addresses the UK as a whole and the role of Wales within it. Of course we voted in favour of the Budget. We would have liked to see it four or five years ago. If so, the present Budget might have been still more radical. Nevertheless, we would not vote this Budget down because it represents an important step forward for the national health service.

Some elements are missing from the Budget, however, and it is right for the Opposition to criticise any shortcomings. We would have liked to see regional tax incentives targeted at objective 1 areas. Cuts in corporation tax and employer's national insurance contributions could have applied in such areas. We did not seek an overall increase in national insurance contributions, although we would have accepted release of the upper limit as a more progressive way to deal with people's contributions to national insurance and public services. We would have liked a penny on income tax and an increase to 50 per cent. top rate. We wanted less spent on nuclear armaments and I want to place it on the record that Plaid Cymru policy is to seek nuclear disarmament. We also oppose hidden subsidies to arms exports worth some £800 million a year.

We have heard surprisingly little, and only tangentially, about the Barnett formula and the Barnett squeeze, which will affect public services in Wales and further distance us from the increase in England.

Finally, manufacturing has been an important theme in our debate, and we wanted a £1 billion package for rebuilding manufacturing across the UK and particularly in Wales.

Chris Ruane: On the Barnett formula, is the hon. Gentleman aware that many Labour and Conservative MPs in England would like to revise it? Does the hon. Gentleman know why?

Mr. Thomas: I would be delighted if they joined our call for a revision of the Barnett formula, including the outcome of such a review—a truly needs-based formula. My hon. Friend the Member for East

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Carmarthen and Dinefwr demonstrated that regional inequality throughout the United Kingdom has grown under the present Government. That is why his hon. Friends and others in England are demanding a review of the Barnett formula—so that they can secure a better deal from central Government. Wales has nothing to lose from a review of the formula.

Chris Ruane: Are you sure?

Mr. Thomas: I am positive and I shall return to the subject later if I have time.

The Budget took £8 billion in tax, but only £4 billion is being spent on public services. The reason for that was hidden in the Budget, but the Chancellor mentioned it twice—a further fiscal tightening. It is an important Budget for the national health service, but it has not substantially moved the Chancellor from the neo-liberalism that he has been following, under the Prime Minister, to date.

In national health service spending in Wales, the Barnett squeeze is coming into play, with a 6.8 per cent. increase in NHS spending in Wales, rather than the 7.4 per cent. increase that England would have. In Wales, we already spend the European average on health, which is what the Prime Minister said he wanted to happen throughout the United Kingdom. A key question for Wales is how to ensure that that extra money is not wasted in bureaucracy or a black hole and is spent on dealing with our health concerns in Wales, which relate not only to the health service but to our communities and the effect on them of bad housing, poor transport links and a bad quality of life in many of our towns and cities.

Lembit Öpik: Does the hon. Gentleman not agree that there are substantial benefits in managing the Government debt and that we must accept that the gratification of doing that is a few years ahead? In fairness to the Government, there is good fiscal control.

Mr. Thomas: The hon. Gentleman supports the Government on this occasion. Our Budget for the UK foresaw an extra £1.3 billion of borrowing. In fact, the Chancellor borrowed more than that, so perhaps we are with him in this case. However, we would have found other ways to obtain the extra money required. The Government are using only interest rates as a tool of economic slowdown and in relation to exchange rates and so on, when we should be considering cooling the consumer boom with taxes as well as interest rates. The Government have cut off their hands in dealing with such important matters.

Mr. Martin Caton (Gower): Will the hon. Gentleman give way?

Mr. Thomas: Not for the moment. I have a lot to say.

My hon. Friend the Member for East Carmarthen and Dinefwr went to the heart of the matter when he said that the Government said throughout their first term and during the general election that no tax rises were needed to deal with the NHS. We were told in 1997 that we had 24 hours to save the NHS; now we

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are told that we have 10 years. In that time, all that we have seen is prevarication on the part of the Government on the real reforms needed in the NHS.

The hon. Member for Cardiff, Central (Mr. Jones) discussed some of those issues. However, what he discussed is devolved, so what the Budget does is up to the National Assembly for Wales.

Mr. Jon Owen Jones (Cardiff, Central): Will the hon. Gentleman give way?

Mr. Thomas: I will not; I need to finish my point.

The hon. Gentleman obviously spends a lot of time hanging around toilets. He needs to answer a central question. How will PFI deal with his concerns and the difference he saw in a school and a hospital? Under PFI, team workers and cleaners are answerable to private contractors on long, 20 and 25-year contracts. We shall see in the health service conditions that are analogous to those on the railways, and we shall have less control over cleaning the toilets and the condition of our hospitals, not more.

Mr. Jones: The hon. Gentleman is too intelligent to miss my point completely. He chooses to miss it for party political reasons. He said that the matter to which I referred was devolved. In fact, it is not. The audit functions that we need to develop for the national health service require primary legislation. That is a matter for the House. It is not devolved.

Mr. Thomas: I accept that, of course, and we look forward to the introduction of that primary legislation. However, primary legislation can devolve matters, too. It should not be a status quo. The condition of the toilets in the Royal Gwent hospital is a matter for the local authority, not the House.

Conservative Members made a justified criticism of the disparity in costs and conditions of the national health service in Wales, but they failed to tell us how they would find the extra resources clearly needed for the national health service.

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

Mr. Thomas: I will not give away. I must make progress.

The leaders of the Conservative party have been going around Europe, looking at different models. What sort of models do they want to apply to this country? Is it the model of Greece, where nearly 4 per cent. of gross domestic product goes on health spending from private health insurance, and only 5 per cent. comes from the pockets of the Government? The Swedish model is good, because it is analogous to the one that we are developing. We have not heard from the Conservatives on how they would find the funding.

I must be careful on the subject of the Liberal Democrats because the hon. Member for Montgomeryshire was nice to me in a speech recently. However, he has allowed the Liberal Democrats to take the claim for everything and the blame for nothing. The central issue that his party will have to address, particularly in next year's Assembly elections, is that it is in a coalition, so the state of the

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NHS is down to it as much as any party in the Assembly.

The subject of families has been raised by several hon. Members, including the hon. Member for Ynys Môn. The Budget paints a mixed picture for families. During last year's comprehensive spending review, the Government claimed to have raised 1.3 children from poverty. A couple of weeks ago, it came out that the true figure was only about half a million.

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

Mr. Thomas: I will not give way. I have only four minutes.

The system greatly depends on means-tested benefits. As a result of the Budget, I can claim tax credits for my children. I did not expect that; it is surprising that my family will benefit from a Budget that is supposed to address poverty. That is strange. As a result of that system, under new Labour the gap between the top and lowest incomes has grown. The top 10 per cent. of earners now receive 22 times what the bottom 10 per cent. do. That is not reasonable or acceptable.

My hon. Friend the Member for Meirionnydd Nant Conwy has asked the Secretary of State and the Under-Secretary some questions about what they have done in the past few months, and he has received some interesting replies. For example, the Under-Secretary has received 19 letters in the past nine months.

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Prepared 24 April 2002