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Session 2003 - 04
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Welsh Grand Committee Debates

The Budget Statement and its Implications for Wales

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Welsh Grand Committee

Wednesday 24 March 2004



[Mr. Win Griffiths in the Chair]

The Budget Statement and its Implications for Wales

8.50 am

The Chairman: It may be helpful if I remind hon. Members of the timing of the debate. We have from now until 20 past 11. We shall then meet again at 2 o'clock and sit until 4 o'clock. Of course, if things take a unique turn and we finish before time, that will be in order.

The Secretary of State for Wales (Mr. Peter Hain): I beg to move,

    That the Committee has considered the matter of the Budget Statement and its implications for Wales.

Your last remarks, Mr. Griffiths, sounded as if they might perhaps be an incentive to members of the Committee.

This year's Budget has given another lift to the Welsh economy, with the Government's commitment to economic stability and to fiscal discipline greatly benefiting Welsh business, industry, jobs and prosperity. Because of Labour's successful economic policies, employment in Wales has risen by more than 80,000 over the past two years, and unemployment has nearly halved since we came to power in 1997.

The UK is benefiting from the longest period of low, sustained inflation since the 1960s and interest rates are at their lowest levels since 1955. Above all, we have had the longest period of sustained growth for 200 years, during a period when none of the major economies with which we trade has had the same success.

Of course, the constant change in today's global economy means that we must, from time to time, contend with some job reductions, such as this morning's announcement that 550 jobs are to be lost at the Defence Aviation Repair Agency at St. Athan, which I very much regret. I know that my hon. Friend the Member for Vale of Glamorgan (Mr. Smith), who is a longstanding champion of the work force, is concerned about that. However, I assure him and the Committee that DARA has a strong future. The red dragon project still holds great promise for the economy of south Wales and defence still accounts for around 6,500 permanent jobs in Wales. I assure my hon. Friend that the responsible agencies will do all they can to assist those who will be affected by the decision.

The strong overall state of the UK economy is a great help in facilitating retraining, and in providing new employment opportunities. That means that, in contrast to the grim 1980s and 1990s, for anyone unfortunate enough to lose their job, another opportunity opens up under the Labour

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Government. That picture has been reflected in Wales, where we are on the path to closing the prosperity gap and developing a world-class economy.

That was shown by last week's important announcement by the global IT company LogicaCMG of 700 top-quality new jobs in Bridgend—I am sure that the company was attracted by the quality of the Member of Parliament—and the recent decision by Sharp to build photovoltaic panels in Wrexham, bringing 90 jobs. Significantly, Logica emphasised the importance of our excellent universities and higher education institutions as a factor in its investment decision.

Another positive economic indicator last week came from the steel maker Corus. Announcing a substantial recovery in its financial position, it paid tribute to the remarkable performance by its plants in Wales and the significant contribution that they made to the improved results. I pay my own tribute to the 7,800 Corus employees in Wales who in recent years have been through such difficult times and who I hope can now look forward to a more positive future.

Average weekly earnings in Wales increased by more than 17 per cent between 1999 and 2003. It enjoyed the third fastest rise in earnings anywhere in the UK in 2002–03.

Albert Owen (Ynys Môn) (Lab): In my right hon. Friend's announcement of jobs, he omitted to mention the important news from north-west Wales of 60 additional IT and other jobs in the port of Holyhead. The jobs are being moved from Ashford. Stena's UK headquarters will be in Holyhead. Will he welcome that? The development comes on the back of investment that he and the Under-Secretary of State for Wales helped to secure for the berth in Holyhead. People now have the confidence to invest in north-west Wales.

Mr. Hain: I very much welcome that important new investment. I pay tribute to my hon. Friend. From my visits to his constituency, I know that he is an energetic, dynamic Member of Parliament for his locality.

New job investment in Anglesey of the kind that my hon. Friend mentioned shows that Wales is on the right path. I remember visiting Holyhead with my hon. Friend a long time ago, before he was a Member of Parliament. It was a depressed place 10 years ago, but it is now on the up, owing to our economic policies and the work of local people, my hon. Friend included.

Adam Price (East Carmarthen and Dinefwr) (PC): There was one other major jobs announcement, namely the loss of 40,000 jobs in the Department for Work and Pensions and the Revenue departments. Has the Wales Office had an opportunity to assess the impact of those losses in Wales? There is a great deal of uncertainty in Wales among workers of those employers.

Mr. Hain: I understand the hon. Gentleman's point. We have been in discussion with the Department for Work and Pensions and will consult with other Departments. The process is at an early stage. The programme of job transfers and closures will take

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place over four years. Intensive discussions with the trade unions have already begun. Only a few days ago, I discussed the matter Mark Serwotka, who is the general secretary of one of the leading civil service unions. The process will involve consultation, natural wastage and voluntary redundancy.

I am sure that everybody in Wales would support the principle that, if we transfer resources from back-office staff to front-line staff, we can recruit even more nurses, teachers, police officers, doctors and benefits staff to serve people, to help them through the new deal and to deliver a better quality of service. I am sure that we would all support that. Equally, those in existing jobs need the protection and support that they will be given through the consultation that is due to take place.

Mr. Roger Williams (Brecon and Radnorshire) (LD): I hope that the Secretary of State can reassure me that the cut in civil service jobs will not mean a reduction of services in rural areas. For instance, the Inland Revenue in Brecon gives a huge service to small businesses, operating the pay-as-you-earn scheme. Removing that provision would deal a blow to small businesses in the area.

Mr. Hain: It would. The hon. Gentleman gives an example of an office that operates a front-line service. The focus of the Government's policy is to deliver more to the front line and have less resource concentrated in the back office. That is not to say that such jobs are not important, not least to those who do them. However, as we all know, information technology and other efficiency procedures enable us to transfer that work. Many of those affected will have the chance to undertake retraining and reskilling, in order to take advantage of the opportunities that will arise.

The background to what the hon. Gentleman described is important. Under the Lyons review, some 20,000 or more jobs are to be transferred from London and the south-east, which is a congested, overheated part of the economy, to Wales and to other regions of the United Kingdom. There are great opportunities for more public sector jobs in Wales. Indeed, there has been a massive expansion of public sector jobs—often criticised by the Conservatives, I might add—amounting to some 600,000 across the United Kingdom, which includes many thousands in Wales. The process is part of an upward picture.

Paul Flynn (Newport, West) (Lab): The greatest concentration of civil service jobs in Wales, and possibly in the whole of Britain, is in Newport. The Patent Office and the Office for National Statistics are located in Newport. There is a passport office there. There was obviously some apprehension about the Budget statement. Will my right hon. Friend therefore reassure me that the other side of the statement is the welcome news that, under the Lyons review, large numbers of civil service jobs will be relocated? If there are job losses, and even if there are not, there will be a wonderful welcome in Newport for new civil service jobs. Sites and factories at various locations are available for civil servants to move in immediately. I am sure that any relocation to Newport will be as

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brilliantly successful as the relocation of the three offices that I have mentioned.

Mr. Hain: Indeed, Newport is a brilliant location for inward investment and for precisely the kind of jobs that my hon. Friend describes. I am sure that he will be encouraged by the fact that the initial assessment under the Lyons review has identified Newport and Cardiff as prime locations, and there will be other sites.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): Will the Minister give way?

Mr. Hain: I will in a moment. I have said that, brilliant locations though Newport and Cardiff are, there are other issues. Newport serves the valleys around it, which are in prime need of jobs. That has been an increasing feature of the employment pattern across south Wales, but I want the opportunities provided by the Lyons report to be spread throughout Wales. The Swansea area, for example, has huge potential and has shown, through the success of the Driver and Vehicle Licensing Agency, what it can offer. Other parts of Wales, such as Wrexham, also have a great deal to offer. We will make the case for jobs to come to Wales by identifying key sites, and I am working with the First Minister to make a persuasive case to Whitehall.

Huw Irranca-Davies (Ogmore) (Lab): I am sure that my right hon. Friend would consider it remiss if he did not mention the cultural industries and the growing confidence in the cultural sector in Wales. I am thinking not least of the innovative proposals for a development off a new junction 34A between Bridgend and Swansea, which would bring one of Wales's foremost all-weather tourist attractions and the largest film studio in the whole of Europe to that site. Will he join me in wishing those involved all success and in urging them to make haste in getting the project off the ground?


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