Dr.
Francis: I have just given the hon. Gentleman a very good
explanation on the importance of recognising that we cannot simply
accept all the adverse characteristics of globalisation. We can engage
through solidarity, recognise that we can make a difference and bring
about social cohesion and a reasonable change in our circumstances by
those internationalist connections.
Adam
Price: Perhaps I can help. The problem with the hon.
Member for Preseli Pembrokeshire is that he cannot accept that
the arch-neo-liberal views that
he represents have been thoroughly discredited by the developments of
the last few months. Those ideas began when Milton Friedman flew from
Chicago to help Augusto Pinochet. It has taken 30 years for the
world to realise it, but those views have led us into the
terrible mess that we are
in.
Dr.
Francis: As ever, I am very grateful to the hon.
Gentleman.
David
T.C. Davies (Monmouth) (Con): Will the hon. Gentleman give
way?
Dr.
Francis: I thought that I had finished this speech, but it
is beginning to warm up. I welcome the interventions and hope that this
one will be about the miners’
strike.
David
T.C. Davies: Actually, I was going to ask the hon.
Gentleman whether Milton Friedman was also responsible for the chaos in
1979, the devaluation of the pound under Harold Wilson, the new
Jerusalem of 1947, which was built on the back of American war loans,
the great crash of the 1930s and every other depression going back to
the south sea bubble.
Dr.
Francis: I think I welcome that intervention. I would not
say that the debate is degenerating into a seminar, but there are
occasions where we can learn from history. In praise of the hon. Member
for Carmarthen, East and Dinefwr, I think that he was endorsing the
main thrust of Government policy, which is in the great tradition of
Roosevelt. The sense that the Government need to intervene in a
critical situation, both nationally and internationally, should be
warmly endorsed. It is in that great benign tradition of Roosevelt that
the Government are now responding positively to the global crisis, and
that is being endorsed both in this country and
internationally.
Several
hon. Members
rose—
The
Chairman: Order. The predicted time of the vote this
afternoon falls particularly inconveniently for our debate. I will try
to bring matters to a conclusion by five minutes past four, which is
when we expect the vote to be. I will call the Front-Bench spokespeople
to begin winding up from 3.45. That will allow both of them only 10
minutes. If everybody can be brief, more hon. Members will be able to
speak.
2.54
pm Mr.
Roger Williams (Brecon and Radnorshire) (LD): It is a
great privilege to follow the hon. Member for Aberavon. I commend him
for his role as Chairman of the Welsh Affairs Committee—together
with other members of that Committee—in holding to account
Government Departments that are still of great relevance to Wales on
reserved matters, and in helping in the clumsy and complicated system
of legislation that involves the Welsh Assembly. I hope that in future
we shall have a system that is simpler, more direct and more readily
understandable by politicians and the public.
This debate
falls just before the festive season, but it will be a time of great
sadness and misery for individuals and families who have been, and
continue to be, affected by the recession in Wales. If the problem were
theoretical, it might be fun to set out the global and national
situation, which no one could have guessed a year ago,
and have a competition to provide the best solution. But it is not like
that for the many people who are affected. The people of Wales and of
the United Kingdom are not much taken with the spectacle of political
knockabout in these circumstances. Anything that I say today—I
do not agree with everything that the Government have
proposed—should be taken as constructive criticism. Together we
can perhaps formulate a successful solution, rather than try to score
political
points. The
pre-Budget report came at a crucial time for the Welsh economy. There
were some welcome measures in it, but some disappointments. Wales is in
the grip of worrying news about job cuts—Hoover, Bosch and
others have been mentioned today. My hon. Friend the Member for
Ceredigion is not here because he is meeting Protherics, a
pharmaceutical company in his constituency, which is planning to cut 25
highly skilled jobs at its manufacturing
plant. The
issue that we take greatest exception to is the headline-grabbing VAT
cut, which both we and Plaid Cymru Members believe will not stimulate
the economy as the Government hope. We have already heard today that in
shops prices have been cut by 20 or even 50 per cent. A further cut of
2.5 per cent. might put some money back into the economy, but I do not
think that it will start the recovery that we all
need. I
would like to mention two areas that the Government could have thought
through more carefully—fuel, and beer and the pub trade. The cut
in VAT to businesses does not mean much because they are recovering VAT
anyway through the VAT system. However, the Government have increased
the fuel duty by the same amount as the cut in VAT, and that represents
a real increase in business costs. I know some transport haulier
businesses. One of them, AE Gough, was represented in a group that I
took to see the hon. Member for Ogmore when he was a Minister in the
Wales Office, to discuss the problems caused by the crippling cost to
transport companies of the then very high fuel prices. That problem has
been relaxed a little, but it does not help the transport industry for
the Government to increase fuel duty in these circumstances. Wales,
like any country—perhaps more so than others—needs to get
goods and services around an often rural and dispersed
community. The
hospitality and tourism trade is particularly important to Wales. When
I travel around Wales, I am sad to see more and more pubs closed down,
with their shutters up and their windows boarded up. That does nothing
to make Wales an attractive place to visit. We hope that one of the
consequences of the change in the value of the pound against the euro
and the dollar will be that more people come to Wales and the UK, and
that more people in the UK stay in the UK and take their holidays at
home. The sight of boarded-up pubs does not help, and increasing the
duty on beer and spirits does nothing to support the hospitality trade,
which is one of the fundamental and successful industries in
Wales. As
for the Liberal Democrat proposals, for a long time we have been saying
that the income tax system needs to be rebalanced. People on lower and
middle incomes are carrying an inappropriate burden of taxation, while
people on higher incomes in many cases are paying a much smaller
proportion of their income. We
would have cut the basic rate of income tax by 4p, which would have put
more money directly into the pockets of those who need it most, but
also of those people most likely to spend rather save it—the
lower and middle-income families. Our policy is fully costed, and we
would have taxed capital as income, so that we would not have had the
obscenity of people who make their money from capital gains rather than
income paying less tax than the people who clean their
offices. Albert
Owen: I do not disagree with what the hon. Gentleman is
saying about putting tax into the pockets of those on the lowest
income, but does he not accept that the Chancellor has done that, by
altering the tax bands and by giving pensioners a one-off payment and
increasing their pensions well in line with inflation? That is real
help for real people at real
times.
Mr.
Williams: I welcome those proposals. In some ways, the
equivalent to a 4p cut in the basic rate of income tax could have been
achieved by an even bigger increase in personal allowances. Increases
in personal allowances are a good way forward and something I would not
argue
against. However,
I am concerned that, being unable to make a taxation gain in other
areas by taxing capital gains and taking away some of the tax
allowances from those on the higher rate of income tax, we shall end up
with a huge amount of borrowing for future generations to service.
People who pay a higher rate of income tax have a greater incentive to
save for a pension than those on the basic rate of income tax. They
have the most resources and the greatest capacity to save for a
pension, yet they are given the greater incentive. That seems very
strange.
Nia
Griffith: Is the hon. Gentleman aware of the Saving
Gateway Accounts Bill, which is being brought in during the Session,
and the immense help that it will give to savers on low
income?
Mr.
Williams: Indeed. I do not know the detail, but in general
I have no difficulty with the
principle. I
am concerned that the Chancellor has effectively forced the hand of
future Governments on their tax plans. An unprecedented level of
borrowing will inevitably mean taxes rising in the future. It will not
be just the 45 per cent. rate that the Government pledged to
introduce after the election; that will not come near to filling the
black hole that the pre-Budget report measures are
creating. How
much confidence can we have in the Chancellor’s forecast that
borrowing will return to normal by 2015-16? If that is the case,
notwithstanding that it is hard to predict what will happen with the
economy in its current state, we need to know on what basis those
figures were given. The recession has, if anything, highlighted the
need to examine seriously what we do on tax. The tax system needs to be
fundamentally rebalanced in favour of those on lower and middle
incomes. The
Government have taken some welcome measures to help small businesses,
but I fear not enough to help the many small businesses in the current
climate. We welcome the instruction to HMRC to defer tax payments in
certain cases. I understand that 170 businesses have
received assistance from that scheme so far. It is important that as
many businesses as possible get that help. There are, though, still
many concerns for small businesses. I have already spoken about
business rates, so I shall not go into that again, but it is a key
issue. If we are really going to support small businesses, we need to
look at that particular burden. I am also concerned about the Business
Rate Supplements Bill, which will allow councils to charge an extra
levy to pay for capital projects, but will not allow them to reduce
business rates to keep businesses alive and
functioning. The
difficulty in securing lending from banks has been well documented, and
the need to look at ways to increase lending has been well discussed
today. I am pleased that the Government are introducing another Bill to
meet that objective, but it would be good to hear the Minister
acknowledge that we might have to take extreme measures to achieve the
increased lending facilities. Aside from businesses being unable to get
new lending, some have found that the terms of their lending have been
changed overnight and are facing new charges. That is unacceptable, and
I hope that the Government will take action to address that.
Energy bills
are a problem for businesses and individuals alike, and I was
disappointed not to see more action to address that outlined in the
pre-Budget report and the Queen’s Speech. I welcome
Ofgem’s announcement that energy companies have dropped
£300 million of unfair charges, mostly on prepayment meters, and
are set to add a further £200 million to assist those who are
not on the mains gas network. What action will be taken against
companies that have been shown to have been operating what some would
describe as unfair charges but that are not reducing their charges
alongside wholesale
prices?
Mr.
Llwyd: I agree with what the hon. Gentleman is saying. It
was mentioned earlier that one thing that seems to have been forgotten
is the huge increase in the cost of liquefied petroleum gas and,
crucially, coal. One coal merchant in my constituency was desperately
worried about that because he knew of an old lady up in Penmachno who
usually bought two sacks of coal a week. The price of that coal had
gone up by around £9 for a single week and the payment
came out of a small pension, so we need to look at regulation in that
regard.
Mr.
Williams: I thank the hon. Gentleman for his
intervention. LPG is of particular interest to me, and the Competition
Commission has already looked at that and proposed some regulation.
Whether that regulation will have the effect of making the market more
competitive I do not yet know, but it certainly needs to be looked at.
Coal is another issue that is not often approached. There are people in
old mining communities who receive free or subsidised coal, but there
are some who have kept to a system of solid fuel central heating
because coal had always been available and now find themselves facing
very high
prices.
Albert
Owen: I totally agree with what the hon. Gentleman said
and with the hon. Member for Meirionnydd Nant Conwy on the ludicrous
link between coal and LPG when compared with mains gas. Of course, many
customers have to bulk-buy and make
one-off payments for the whole winter, and that puts them in arrears in
many other ways as well. Does the hon. Member for Brecon and
Radnorshire agree that one of the solutions is to extend the gas mains
and that now there is a great opportunity to do that? Quite often the
hamlets, small towns and villages that we have been talking about are
only a few yards away from the mains, and if we do pursue the Warm
Front programme and others, we need joined-up thinking to get the
infrastructure in place and give people the choice to get connected to
mains
gas.
Mr.
Williams: I thank the hon. Gentleman for those comments.
In fact, together with the Assembly Member for Brecon and Radnorshire,
I have investigated how we could get mains gas into a village in my
constituency called Abercraf, which lies at the head of the Swansea
valley. The amount of money involved would be very large, but if the
Government are serious about attacking fuel poverty, that would be a
real way to do so, because those are the areas that do not have mains
gas and that also have people on relatively small incomes. Obviously,
the cost of fuel would be cheaper, but they would also get the benefit
of the rebate for having electricity and gas supplied together to the
same house. I welcome those comments, and anything that can be done to
achieve enough support and subsidy for that project is very welcome
indeed. We are still looking at
it.
Nick
Ainger: May I suggest that the hon. Gentleman looks at
this morning’s edition of Hansard, because there was an
interesting debate yesterday on energy prices and the report by the
Business and Enterprise Committee. Much of that focused on the issue of
fuel poverty but also the issue, which I raised as did many hon.
Members, that there is no social tariff for LPG, heating oil or coal.
Something like 5 million households are dependent on LPG, heating oil
or coal for their main source of heat and hot water. The issue is,
should Ofgem now be regulating those? There is a real case for that,
because there is plenty of evidence that oil companies in particular
are refusing to drop the price of heating oil and LGP as quickly as
they are prepared to put it up when crude oil prices rise. There is
also the issue of the social tariff. Does the hon. Gentleman agree that
those two issues are essential if we are to get a fair deal for those 5
million people, living in rural
Wales?
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