The Budget Statement and its Implications for Wales

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Mr. Wiggin: I am delighted by the example that the hon. Gentleman chose, and I am glad that he is keen to show such an interest. Perhaps he can tell the Committee exactly what the new deal costs per person, as I have not been able to find out. It would be a helpful statistic for everyone to have.

Huw Irranca-Davies: I do not have the figures, and the hon. Gentleman would not expect me to have them. He has raised the matter before and, as I said before, lifting someone out of unemployment, and possibly out of crime related to unemployment and other social factors, results in an immense saving. If the calculation could be done, the hon. Gentleman would support the cost-benefit ratio involved in bringing someone off incapacity benefit or out of the unemployment queues and into work. There are massive savings to be made.

I say it every year, but we still have more to do. In Ogmore and Garw, there are areas of great prosperity. In some ways, my constituency is fortunate because of its proximity to the M4. It benefits both from the large manufacturing base that is thriving along that route and because of the commuting distance from Cardiff. However, we still have more firmly entrenched pockets of economic inactivity, and there are people who need a lot of resources and help thrown at them. Our Government have been good at doing that. The Labour party has been good for the UK, for Wales and for Ogmore, and I hope that we will continue to work hard for the people of Garw and the whole of Ogmore.

2.26 pm

Mr. Wayne David (Caerphilly) (Lab): May I begin by saying how pleased I am to see you here, and by congratulating you on your appointment to the Chairmen's Panel, Mr. Caton? I am certain that you will bring competence and gravitas to your new role.

The Budget has been good in many ways. It is good for pensioners in all parts of Britain, but particularly for Wales because we have so many senior citizens—250,000 pensioner households in Wales will benefit from the extra £100. It is also good for businesses in Wales.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): The hon. Gentleman's glorious leader, who is not here, says that the figure is 170,000. I doubt that it is even that high, but that is his figure.

Mr. David: Well, whether my figure or the hon. Gentleman's figure is right, a heck of a lot of senior citizens will benefit and that is the main point. It is a tremendous fillip.

Mr. Llwyd: It seems I must withdraw what I said.

Mr. David: I am correct and the hon. Gentleman is wrong—that is fine. It gives me another opportunity to reinforce the point that senior citizens in Wales will receive those benefits and 250,000 households will profit.

Businesses will benefit, not least from the change in VAT arrangements. Research and development are

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vital for the health of the economy. A new definition of R and D will provide great help for many companies across the country. Enterprise looms large, with some of the most deprived wards in our country receiving special support. On education and health, the Chancellor suggested that there will be an extra £99 million in 2006–07 for the Welsh Assembly, and an extra £219 million in 2007–08. All those aspects undoubtedly paint a positive and rosy picture.

There has also been an increasing emphasis on employment opportunities. The best support that the Welsh economy gets from central Government, and from the Chancellor's Budget, is the provision of long-term macro-economic stability. There is no danger of a return to boom and bust. We have consistently low interest rates and inflation combined with sensible policies on taxation and consistent policies on public expenditure. Those features are central to the Budget, which was presented so successfully.

There are specific measures aimed at realising the historic mission of the Government and the Labour movement: full employment. Since its launch in 1998, the new deal has been a great success story for the Government. It has been vital to their ongoing and developing strategy. The new deal, in its various forms, has helped to ease 59,220 individuals in Wales into work. That is one of the reasons why unemployment across Wales has fallen by 41.4 per cent. since 1997.

It has often been said that the country is experiencing an historically long period of continued and sustained growth—the greatest period of such consistent growth since the industrial revolution. In Wales, we are seeing an unprecedented attack on long-term unemployment—the most successful attack in the history of modern Wales.

Alan Howarth (Newport, East) (Lab): My hon. Friend rightly stresses the importance of the new deal. The commitment of the Labour Government's new deal illustrates the important contrast in values between the Labour party and the Conservative party. As far as one can see, the Conservative party continues to believe that there is no such thing as society. We believe that there is, and that it is a primary responsibility of Governments to strengthen its bonds. When the hon. Member for Leominster asks my hon. Friend about the cost of the new deal, he seems not to take into account the human cost of simply abandoning people to their fate.

Mr. David: I could not agree more. It is very important to recognise that the policies have not been plucked out of thin air. We must acknowledge and celebrate the fact that the Government's proposals have a coherent moral and intellectual basis. True, the Government are not concerned about economic success in the abstract, but about the individuals who make up our society. That is the most impressive thing about this Government: they combine the idea of economic efficiency and success with social justice, and see no contradiction between the two.

Mr. Wiggin: The right hon. Member for Newport, East (Alan Howarth), perhaps uncharacteristically, and certainly unkindly, misrepresented my question to the hon. Member for Ogmore (Huw Irranca-Davies).

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If those statistics were available, it would be perfectly right for the cost of the new deal to be balanced against the social costs involved, as he put it. I simply asked what the numbers were. I do not believe that that was unfair, and I would be grateful if any of his colleagues could tell me the actual cost of the new deal per capita.

Mr. David: I am sure that hon. Members will produce in due course the esoteric figures that the hon. Gentleman craves. Nevertheless, that does not invalidate the comments made by my hon. Friend the Member for Ogmore and my right hon. Friend the Member for Newport, East. The new deal is an undoubted success. It has got people out of unemployment and into work, and it has provided long-term employment. All of us who live in Wales know what a vital and positive impact the new deal has had on the lives of our communities and on the economy.

Alan Howarth: The difficulty for the hon. Member for Leominster is surely that his party has committed itself to abolishing the new deal.

Mr. David: Yes, it would be nice to know how much the hon. Gentleman intends to save by abolishing the new deal. Of course, we know what the real cost would be to the individuals who are benefiting from the new deal, and that communities would suffer. I reinforce that point by citing the example of my constituency, in which some 2,470 young people have found long-term employment since the new deal for young people was set up. Under the new deal for lone parents, 1,450 lone parents are engaging in the scheme and finding long-term employment. That is of tremendous benefit. God forbid that a Government should scrap the new deal. What on earth would be put in its place, if anything, and what would happen to those individuals who have benefited from it so far? That worries me immensely.

I have mentioned several issues that please me greatly. I am also extremely pleased by the Budget because it demonstrates the continued commitment to ensuring that we encourage more and more people off long-term welfare into sustainable employment. Certain Budget-related issues may not have not grabbed the headlines in the way that other issues have. Nevertheless, they are vital to the long-term success of our economy and to the enhancement of individuals' life chances and opportunities.

One of seven pilot pathway-to-work areas is in Bridgend and Rhondda Cynon Taff, and has already been extremely successful in tackling the problems experienced by long-term incapacity benefit claimants. The Budget introduces three new work force interviews for at least some incapacity benefit claimants. That is important because it will provide employment opportunities: it will show people what is out there and encourage them, in a way that has not happened before, to avail themselves of opportunities. Similarly, in the Bridgend and Rhondda Cynon Taff area, a job preparation premium is being piloted: current incapacity benefit claimants who take up activities that support a return to work will receive £20 a week. That is real hard cash to help individuals to ensure that they can take advantage of new job opportunities in our dynamic economy. These issues

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are vital because, as has been said in previous debates, welfare to work is important, as is tackling economic inactivity. I was particularly pleased this morning to hear from the Secretary of State that real progress has been made in that respect. I welcome that, although none of us should rest on our laurels and pretend that the measures that have been introduced go far enough. They do not, but they certainly take us in the correct direction. I look forward to more such measures being introduced over the next few years.

Tackling economic inactivity—which I believe is the central socio-economic issue facing modern Wales—is not simply an issue for central Government. In post-devolutionary Wales, the issue must be tackled by central Government and the National Assembly for Wales, working together in harmony and partnership. I welcome what is happening in Cardiff on the objective 1 programme. The mid-term review of that programme has clearly shown two things: first, it shows that a great deal of progress has been achieved so far; secondly, it has demonstrated that there is room for improvement. I am very pleased that the Welsh Assembly Government have taken that on board and have put in place a mechanism that is far more efficient at developing projects that people want, to contribute to the economic success of west Wales and the valleys. We should celebrate the fact that £750 million in investment has been committed already to more than 1,000 projects that are needed, helping some of the poorest parts of Wales. That will also make a huge contribution to the fulfilment of the National Assembly's national economic development strategy, ''A Winning Wales''.

It is important that central Government and the Welsh Assembly work together, and I should like to give a concrete example of how that complementarity of economic policy delivery has progressed over the past 12 months. I think that one of the Welsh Assembly's big success stories is the communities first initiative. Many hon. Members representing some of the less well-off parts of Wales know that many of their wards have been designated communities first areas, and the Assembly has provided resources and helped to mobilise local communities. People are, in a quite unprecedented way, being encouraged to take a leading role in restructuring and regenerating their communities.

Until fairly recently, there was no dovetailing between regeneration work and the job creation agenda. It is encouraging to see, for example, in the eastern valleys of south Wales, the welfare-to-work strategy partnership, which brings together Jobcentre Plus and the new deal. People who are funded by the Department for Work and Pensions here in London now work hand in hand with National Assembly officials and people who have been mobilised locally by the communities first programme. It is important that we all get value for money and pull in the same direction. We must not forget that the most effective way to regenerate a community is to provide full employment, so such a partnership should not happen

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only in the eastern valleys of south Wales but throughout our country.

Building on that, co-operation could be developed in the future between the welfare-to-work programme and the NHS in Wales. I sometimes hear Opposition Members castigating people who are on incapacity benefit as scroungers, as people who live off the state and do not deserve our support. That is totally wrong. We should recognise that many people who are on long-term incapacity benefit are in that situation through no fault of their own, often because of historic reasons related to the coal industry. We must do everything possible to improve their health, so that they become fit enough to engage in the labour market and find employment. For that to happen, it is vital that the programme of the Department for Work and Pensions in London runs in parallel with the priorities of the NHS in Wales. That issue must be examined.

In conclusion, I warmly welcome the Budget. It combines prudence with passion, and provides continuity alongside innovation. It will stand us in good stead for future developments. The Budget is good for Wales, for Britain and, most importantly, for my constituents and those of all hon. Members present.

2.42 pm

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