Mr.
Timms: My right hon. Friend the Chancellor will announce
rates of fuel duty at future Budgets and pre-Budget reports in the
normal way. We have seen very dramatic reductions in the price of fuel
and the world price of oil over the past few months. It is vital that
those reductions are passed on to customers such as the company in the
hon. Gentleman’s constituency. The fact that we have seen such
big reductions is helpful for companies in
Wales. Albert
Owen (Ynys Môn) (Lab): I welcome the Minister to
the Committee. I also welcome the additional support for pensioners
that he and the Chancellor have mentioned today. This is real money for
real people to help the real economy. Will he confirm that pensioners
will not have to claim that payment—it will be done
automatically—and can he give the Committee an indication of
when they will receive it? While we are on the important subject of
benefits for senior citizens, will the Treasury encourage local
authorities throughout the UK, and Wales in particular, to ensure that
people get the maximum and that they put in claims for council tax
benefit and housing benefit to help them at this difficult
period?
Mr.
Timms: My hon. Friend is absolutely right. The increase in
pension credit we have announced is the biggest since pension credit
was introduced. The increase in the state pension is in line with the
highest rate of inflation through the whole year—that is an
increase of £4.55 per week. With the expected fall in inflation
in the coming year, that will be a significant boost for pensioners, as
will the £60 payment that he mentioned. That payment will be
made early in the new year and will be on top of the winter fuel
allowance paid before Christmas. He is right that it will not need to
be claimed—it will be paid automatically to those who are
entitled to it. I agree with him about the importance of local
authorities doing all that they can to ensure the highest possible
take-up of the help that the Government are providing to
pensioners. Hywel
Williams (Caernarfon) (PC): The Minister mentioned the
very welcome 19,251 notified job vacancies, but he did not mention the
330,380 claimants who need those jobs. On a constituency basis, 56
constituents of the right hon. Member for Neath are pursuing every job,
58 in Llanelli are doing so and in the Cynon Valley, 81 people are
pursuing every job vacancy. Is not sanctioning people for not finding
non-existent jobs likely to be largely futile? Or does the Minister, in
the long tradition of London Governments, expect Welsh people to get on
their bikes?
Mr.
Timms: No. It is absolutely key that we give people
support once they lose their jobs to get back into employment as
quickly as possible. That is what the
proposals introduced by my right hon. Friend the Secretary of State for
Work and Pensions are designed to do, and I am confident that they will
do so effectively. The figure I gave for vacancies was the figure
simply for vacancies notified in October, as the hon. Member for
Caernarfon acknowledged, but the stock of vacancies is much larger. The
key is to ensure that people can move into those vacancies as quickly
as possible, and all the measures that the Secretary of State has
announced and that we are taking are targeted at that
goal. Chris
Ruane (Vale of Clwyd) (Lab): As the Member who represents
the Vale of Clwyd, which has one of the highest numbers of pensioners
in Wales, and some of the most vulnerable, I would like to pass on my
thanks to the Minister for the help he has given to pensioners in the
pre-Budget report, and especially for the help given to my 84-year-old
mother, who is as chuffed as Punch—she says that she has had so
much that she does not need a Christmas present from me. Will the
Minister say something about the historical perspective on the help we
have given pensioners since 1997? What help was there in1997, what has
been built up and what is there for the
future?
Mr.
Timms: I am grateful to my hon. Friend for his
contribution and ask him to extend my good wishes for a very happy
Christmas to his mother and to pensioners across Wales. He is
absolutely right: a large number of pensioners in 1997 were expected to
live on £70 per week. It is only through the introduction,
first, of the minimum income guarantee, and now of pension credit, that
we have been able to reduce substantially the number of pensioners
living below the poverty line who had been abandoned by the previous
Government. We have made important progress on improving the
livelihoods of pensioners, and we have helped every pensioner through
the increases in state pension, including the substantial increase just
ahead. The winter fuel allowances, the new payment of £60, and
free eye tests are among the great plethora of measures we have taken
that have been greatly appreciated not only by my hon. Friend’s
mother, but by pensioners across the
UK. David
T.C. Davies (Monmouth) (Con): Has not this financial
crisis been caused by individuals, companies, banks and Governments
using low interest rates and easy credit to borrow money that they
could not possibly pay back? Does the Minister think that the
Government borrowing up to £450 billion over the next few years,
and encouraging interest rates cuts and more easy credit will solve the
crisis, delay it or make it even
worse?
Mr.
Timms: The support that we are providing is exactly what
families and businesses in the UK need so that we can get through the
severe problems in the world economy in the best possible shape and do
so in a way that is fair to everyone. With regard to the hon.
Gentleman’s point about additional borrowing, I suggest he
listens to what his party leader has said about the automatic
stabilisers, which would lead to a substantial increase in borrowing
throughout this period. It is absolutely right—there is a
consensus about this—that borrowing should rise through the use
of the automatic stabilisers, and the fact that we have, at the start
of this downturn, the lowest borrowing as a proportion of
GDP of any of the G7 countries means that we are in a particularly good
position to have the flexibility to take the measures
needed. Mark
Pritchard (The Wrekin) (Con): I welcome the Financial
Secretary to the Committee. I accept that he was a few minutes late,
but I do not know what all the fuss was about. He is a generous,
courteous and thoughtful man, so I know that he will consider his
response. The fact is that in Wales people are losing their jobs, their
homes, their businesses and their livelihoods, as my hon. Friend the
Member for Chesham and Amersham said earlier.
I know that
the Financial Secretary reads his documents carefully, and he signed
off a document at about the time of the pre-Budget report. His proposal
was to increase VAT to 18.5 per cent. He has said today that the
reduction in VAT is a temporary reduction. If that is the case, when
are we likely to see an increase in VAT? Is it likely to go back to
17.5 per cent., or to rise to 18.5 per cent., which is clearly his
preferred target? Does he think that the measures the Government have
put in place are working, given that, as my hon. Friend the Member for
Monmouth said, they clearly are
not?
Mr.
Timms: The measures certainly are working. I thank the
hon. Gentleman for his sympathetic words about my delayed arrival in
Committee. As you know, Mr. Caton, unfortunately, I will
have to leave soon, but I am grateful for your understanding.
VAT will be
increased to its former rate of 17.5 per cent. at the beginning of
2010. The hon. Gentleman is alluding to controversy over a document
that appeared erroneously on a website. It referred to a future
increase in VAT to 18.5 per cent. I had not signed the document. In
fact, I had not set eyes on it either. No doubt, that point will be
covered in the debate later today. If thought about the document on the
website, we would know that there was a space for a Minister’s
name and that it was typed in. Admittedly, the typescript was italic
and a bit floral, but how anyone could mistake it for a signature is a
mystery to
me. We
have set out in the PBR the measures that we need to take throughout
the next few years to restore the public finances. Those steps will
involve in due course an increase in national insurance contributions
and the introduction of a new high rate of income tax for those earning
more than £150,000 a year, the net effect of which will be that
anyone earning less than £40,000, taking all those changes into
account, will pay less tax in future than they paid last year. That is
the right and fair way to restore the public finances, which we need to
do in the period
ahead.
The
Chairman: We now move to the main debate. I remind members
of the Committee of its timing. We have from now until 11.25 am. We
shall meet again at 2 pm and debate that the motion can
continue until 4.30 pm. I have no power to impose a time
limit on speeches, but brief contributions will enable me to call as
many hon. Members to speak as
possible.
Public
Expenditure10.23
am
The
Secretary of State for Wales (Mr. Paul Murphy):
I beg to
move, That
the Committee has considered the matter of Public Expenditure in
Wales. It
is good to serve under your chairmanship, Mr. Caton. I thank
my right hon. Friend the Financial Secretary for coming to the
Committee today.
Mrs.
Cheryl Gillan (Chesham and Amersham) (Con): Before the
Financial Secretary leaves the room, I also wish to thank him for
coming to the sitting and hope that this is the first of many
appearances before this
Committee.
Mr.
Murphy: The idea of having Ministers from other
Departments giving statements on the subject that the Committee is to
debate is very good, and it receives cross-party support. It is
important that we debate not only the pre-Budget review—the
formal title of today’s debate—but the Welsh economy at
an extraordinary difficult time for all of us in the House who
represent the people of Wales. About an hour ago, we heard about very
difficult unemployment figures—figures that will affect each and
every one of us who represent Welsh constituencies. I shall return to
that in more detail later, but obviously the Government will do all in
their power to ensure that people are returned to work during such a
difficult
time. It
is also important for the Committee to understand how our economy in
Wales has been transformed in just over a decade, in such a way that
the diversity of employment in our constituencies is much greater than
it was 20 years ago. That diversity allows people who face unemployment
to go into other jobs—20,000 vacancies, at least—and to
bring their skills into those occupations, while perhaps reskilling,
too. Also, we should remind ourselves that the last time we had such a
situation, the people of Wales did not just face huge and dramatic
unemployment—however bad the news is today, let us take our
minds back to when there were 100,000 people out of work in
Wales—but inflation, high interest rates and an economy the rest
of which was in tatters. That is the difference between then and
now. Mr.
Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): I am grateful
to the Secretary of State for being generous in giving way, as usual.
Could he think again about the 500 job losses in the HMRC sector? There
are added burdens on those in HMRC because of Government initiatives.
The convergence areas are going to be devastated. I hope that, even at
the 11th hour, he might be able to
intervene.
Mr.
Murphy: The hon. Gentleman and I have talked about such
issues over the past few months. In my constituency an HMRC office is
to close in the next couple of years with the loss of 29 people, but
not with the loss of 29 jobs for those people. The importance of the
announcement was that, although the buildings will go, the jobs will
remain. They are not simply jobs in HMRC—if people cannot find
convenient jobs in HMRC, other civil service jobs will be found for
them. I am not
saying for one second that that is good news for his constituents or
mine, but it is about not the loss of the jobs but the loss of the
offices. That is
important. Earlier,
the Under-Secretary of State for Wales, my hon. Friend the Member for
Caerphilly, made a point about efficiencies. We can save and get value
for money—we constantly have to strive for that—in ways
that do not involve job losses: for example, through the use of IT,
which can be shared between Departments, or by rooting out inefficient
methods of working, and so on. Those are important things. We shall not
be thanked by our constituents if they think that Government are
spending money needlessly when it could be saved by having better value
for that money. That is important, too, because the money could be
directed to other areas, which can help people who face unemployment or
repossession. Mr.
Roger Williams (Brecon and Radnorshire) (LD): The
Secretary of State urges us to take comfort from this recession being
different from previous ones. This recession is also generating
increased unemployment, but in the last one we had high interest and
inflation rates. Although we do not understand recessions so well,
because one has not happened recently, if we have very low inflation or
even the
reverse—
Mr.
Williams: Deflation—that is a more difficult
economic problem to tackle. Does the Secretary of State agree that we
do not have the tools with which to tackle deflation, rather than
dealing with higher
inflation?
Mr.
Murphy: The fact is that those who are not out of work in
Wales at the moment are paying less for petrol, food and
mortgages—the cost of living is much less than it was. That is
not a great comfort to those who lose their jobs, and it is important
to ensure that we also help families who face redundancies. My general
point is that we faced all those things 15 to 20 years ago
and—my other point—the Government have to do something
about it. The great dividing line between us and the official
Opposition is that the Government here and the Government in Cardiff
are doing something positive to help Welsh families, pensioners and
businesses. We cannot simply sit down, ignore the recession and hope it
goes away. We have to ensure that the Government play their part
through intervention in every form that we think will be effective in
helping Welsh
people.
Mrs.
Gillan: I am grateful to the Secretary of State, who is
going to intervene before breakfast, lunch and dinner—I have
heard that before. I want to take issue with him on the diversity of
the economy, which he believes strengthens it in this downturn. Recent
OECD figures have shown that the British economy has become too
dependent on a small number of sectors, and that nearly 70 per cent. of
British economic growth since 1997 has been concentrated in just a few
sectors—finance, Government spending, housing and business
services. Only 50 per cent. of German economic growth has been driven
by those sectors since 1997. According to the
World Economic Forum, we are more exposed to a downturn because of our
reliance on that small number of sectors. How does that square with the
Secretary of State’s assertion that the Welsh economy has become
more diverse? It clearly has
not.
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