Mr.
Williams: I thank the hon. Gentleman for those comments. A
number of Select Committees are conducting inquiries that relate to
this subject. The Environment, Food and Rural Affairs Committee, on
which I serve, has an inquiry into fuel poverty and we have heard from
a number of people who have presented very good evidence; we have
raised this point as well. For the first time since I have been an MP
the case of people who are not on mains gas is being
realised—the scope and scale of the problem and the difficulty
of living in an isolated house, which is likely to be difficult to
improve in terms of energy efficiency. Those people are losers in many
different ways but at last their case is being addressed.
I want to
comment on the speech made by the right hon. Member for Neath in terms
of the local government settlement in Wales. A number of us were
disappointed by its scale and by how much poorer the local government
settlement in Wales is than that in England. In Powys
we expected a poor settlement—at one stage we expected probably
to have a nil settlement. We are very pleased that, thanks to work done
by Assembly Members, a base was put in of 1.5 per cent. The hon. Member
for Ynys Môn and a number of other local authorities will be in
the same situation as Powys with an increase of 1.5 per cent. In this
time of recession it is not the best way forward. Councillors in Powys
and across Wales are working on the budget at this moment, but with
wage increases of around 3 per cent. it will be difficult to get to a
balanced budget without difficult decisions. Whether it is too late or
not, it is something that we might look back on in the recession,
thinking that perhaps if we had done things a little differently it
might have produced some change. There are
concerns about the efficiency savings mentioned in the PBR and about
how they are to be passed on to Wales. The hon. Member for Carmarthen,
East and Dinefwr gave us his analysis based on the Barnett formula. We,
and I think Plaid Cymru, believe that the Barnett formula underfunds
Wales so it may be harder for the Welsh Assembly to find those savings.
It will be very difficult if the figures that the hon. Gentleman gave
us prove correct. The Welsh Liberal Democrats have made a submission to
the Holtham commission which is currently looking at the issue of the
Barnett formula in Wales; Calman is looking at it in Scotland. If there
is a strong case for a needs-based formula, will the Secretary of State
put this forward to Cabinet? The Chancellor promised to publish a
factual paper on the Barnett formula before the summer recess. We would
like to know whether progress is being made on that and when it will be
produced.
We hope that
the Government will be successful in tackling this recession and the
challenges ahead, because if they are not, many people will have a sad
Christmas and an even sadder 2009. Anything that we can do to put
forward constructive solutions, we will be pleased to
do. 3.15
pm
Albert
Owen: It is a pleasure to follow the hon. Member for
Brecon and Radnorshire. I wholeheartedly support his campaigning on
energy issues in particular, and we have worked together on several
topics. I shall repeat my intervention: there is an opportunity now,
when we are in recession, to think outside the box and make big public
works projects happen for the benefit of our
constituents. We
are facing a real financial and economic crisis, as many hon. Members
have said. I do not use the word lightly, although our friends in the
media and the Opposition describe anything that goes wrong as a crisis.
We really are facing an economic crisis. However, the Conservative
notion that this recession somehow started in Britain and is a British
phenomenon is irrational and wrong.
Mr.
Crabb: No one said that.
Albert
Owen: From a sedentary position, the hon. Gentleman said
that nobody said that, but, week on week, the Leader of the Opposition
makes that accusation in the House. It is completely wrong and it is
nonsense.
The Irish tiger economy—our near neighbour—was one of the
first in Europe to be tamed and to go officially into recession. One
reason for that was the collapse in house prices and the impact on the
construction industry. The Welsh Affairs Committee recently visited the
Republic of Ireland when it was taking the opposite stance from the UK
to deal with the problems. The Irish Government had an emergency Budget
to increase taxation across the board with a levy, and cut welfare. I
do not want to see a British Government taking that slash and burn
approach and I am glad that we are taking the current steps. To be fair
to Ireland, it reacted quickly with the bank guarantee system, which
has brought benefits. It has also had to take the recapitalisation road
that Britain and many others have taken.
We have
heard about the financial meltdown in Iceland. The hon. Member for
Carmarthen, East and Dinefwr says that we should be careful about the
links between the financial reliability of Britain and Iceland, but he
should be careful because, a few months ago, he boasted about Iceland
being a model for Wales. It has gone into economic and financial
meltdown. It may be a small country and feel that there is room to
manoeuvre, but it manoeuvred into decline quicker than most European
economies.
Adam
Price: Does the hon. Gentleman accept that the size of the
country is irrelevant to this debate? The United States is a very large
country with one of the largest economies in the world and it faces
serious problems. Small countries face similar problems. Surely he
accepts that size is irrelevant.
Albert
Owen: Size is irrelevant in the sense that there is a cost
to economies across the world. I cannot quote the hon. Gentleman
verbatim, but The Western Mail regularly reported his
saying that Iceland was the model, that we should pull away from the
United Kingdom, become an independent nation and follow the Iceland
model. I do not want to get bogged down, but that is exactly what he
said. The point is that there has been financial collapse in
Iceland— Hywel
Williams: It is not to do with
independence.
Albert
Owen: My point is that we are better off being part of the
United Kingdom—I strongly believe that. Plaid Cymru Members feel
that breaking away and copying the Iceland model would somehow give
them something extra.
Adam
Price: The Iceland economic model was about developing a
financial services sector that was way out of proportion to the rest of
the economy and incurred vast external liabilities. The United Kingdom
has followed the Iceland model, which is why we are facing
difficulties: we have put all our eggs in that financial services
basket.
Albert
Owen: That is not the case. There is no way that the UK is
following Iceland. Iceland is an underdeveloped country in many ways
and it has been playing catch-up with the UK. I have visited it on a
number of occasions.
Mr.
Llwyd: Are you welcome there?
Albert
Owen: I am. I have gone there and supported the Welsh
football team—I used to go regularly. Iceland has many good
things, such as its geothermal aluminium smelters. It is ridiculous to
say that Wales should copy Iceland, and I cited the words that were
reported.
Mr.
Jones: To what extent does the hon. Gentleman think that
the Scottish Government could have bailed out the Royal Bank of
Scotland and HBOS had they been
independent?
Albert
Owen: I agree with the hon. Gentleman that for both Plaid
Cymru and the Scottish National party, citing Iceland, Ireland and
various other countries as models has proved dangerous and wrong in
these circumstances. The United Kingdom is better at dealing with these
situations in the mid and long term. That was my point, and I was glad
to pull it out of the hon. Member for Carmarthen, East and Dinefwr.
Perhaps Plaid Cymru Members will look for another model of a small
independent country to follow in
future. It
is true that the Government have acted and led the way in a global
response to an international problem. The hon. Member for Clwyd, West
will not agree with my next point. In fact, not many people agree with
the British Conservatives that there is an alternative way of looking
at this issue, apart from the Finance Minister of the German
Government, who was slapped down by his leader and then followed the
Europeans when they talked about bringing forward projects and
borrowing more. The German Government have borrowing and debts that are
bigger than the United Kingdom’s proposed debts, so we will not
take any lessons from the Germans, who are now the allies of the
British Conservative party.
The vast
majority of the world’s economies see the need for a radical
boost of monetary and fiscal stimulus. There has been much
concentration in debates in the Chamber on VAT, but that is just part
of the Government’s package. In the Chamber, we will shortly
face the choice of whether to support the cut, and I certainly will not
vote to increase VAT before Christmas. I have had one complaint about
VAT, and that was from a constituent who, on 2 December, complained
that a local store in north Wales had not reduced VAT to 15 per cent.,
because it could not do it. That company, Debenhams, could do only one
financial adjustment a week on its computer package. That is the only
complaint that I have had.
Mr.
Llwyd: Directly on that point, my hon. Friends and I will
reluctantly vote in favour of lowering VAT, but we think, as we have
said and will say again, that that £2.5
billion— [Interruption]—sorry, £12.5
billion, could have been better spent. For less than £2.5
billion, we could have taken many thousands of people out of the lower
bracket of income tax altogether, thereby directly giving them the
stimulus. We have had this debate before, and we believe that that
would be a preferable course of action. We are not going to vote the
thing down, but we will go through the Lobby with a heavy
heart.
Albert
Owen: I understand that, and I appreciate the support that
the hon. Gentleman and his party will give the Government on the
matter. There are tough choices,
but I remind him that the full package includes tax reductions for many
families, with the thresholds also changing. Certainly, pensioners will
benefit in ways other than through VAT. It is difficult to say whether
the decision on VAT has helped reduce prices in the shops, but my point
is that, if we decided to go down the road taken by the Conservative
Government in the last recession and raise VAT, there would be critics,
and I doubt whether the hon. Gentleman and Plaid Cymru would support us
in the Lobby. It is an important move and although it is not a panacea,
I think that it will
help. I
want to consider an important aspect of the partnership between
Parliament and the Welsh Assembly Government, which is the help
provided by the strategic capital investment fund. The fund is to
accelerate projects so that they can have an immediate benefit, thereby
moving funding. That is important and I welcome public works as a
response to this serious situation, as has happened in other serious
situations. I also welcome the economic summit. The coming together of
business representatives, workers’ representatives and
Government at all levels to look for solutions to problems is a
positive way forward, but I want to see action at the end of it. I
welcome the programmes that have been introduced, but they should go a
lot further. Public works are an important tool and I have some
suggestions for them.
We talked
earlier about railways and whether Wales can benefit from the rail
industry. It can. There has been an on-going programme in my
constituency in the port of Holyhead, whereby the port will be improved
as well as the link to the town. A further improvement will involve a
rail depot at which the maintenance for the west coast main line could
take place. Trains from London Euston to Holyhead currently have to go
to Manchester for main maintenance and return to Holyhead to start the
run in the opposite direction
overnight. It
is important that the project moves forward. It will create skilled
jobs in the area and help maintain the Arriva fleet as well as Virgin.
I know that there are many partners, but the Assembly could be bolder
in such matters. It is not something for which we need to blame London.
If the timetable set by the Welsh Assembly Government was brought
forward and the money used, it could help railway jobs. A Plaid Cymru
Member is in charge of the economy, and I raised the matter on Friday
and asked him to bring matters forward, and not just to blame London
when things go wrong. The Government in Cardiff have the tool in their
kit, and they should consider projects to create jobs and maintain the
UK fleet of Virgin and Arriva trains. It is a real challenge to use
this period of decline to help create jobs and principal rail depots in
areas such as
mine. I
support the pre-Budget report’s help for small businesses, and I
welcome what the Financial Secretary said this morning. Indeed, my
colleagues and I, along with the Financial Secretary and the Secretary
of State, met the Federation of Small Businesses. I support the small
business feasibility and loans scheme that the Government have set up.
It allows small businesses to borrow. Support is there, but I believe
that those mechanisms need to be made clearer so that businesses can
access them before they consider whether they need to fold or to lay
off
people. Another
opportunity on which we can expand in the next few years is the green
revolution in Wales. I support a mix of different energy sources,
including wind and
marine turbines. We should be looking at how to develop them and create
the construction jobs to go with that. It will provide an opportunity
for Wales, particularly north Wales, where the project has now been
given the green light, so it will happen. Mr.
Roger Williams: I agree with the hon. Gentleman that we
need huge investment. The sum of £12.5 billion that we could
have used if the VAT cut had not gone ahead could produce the green new
deal that the Liberal Democrats will announce
tomorrow.
Albert
Owen: Certainly, the scheme will have an impact because it
allows companies to borrow money. It will bring infrastructure projects
forward. We should be doing all those things as one package. We should
not just spend £20 billion on a green new deal, but the scheme
will provide great opportunities. We already have a skills base in
Wales that we need to keep, and the measure will give us a great
opportunity to do so. Some people are against all sorts of energy
sources, or they want things to happen elsewhere, but we need energy
security in Wales so let us be bold, let us go for the scheme and get
the benefits so that we keep the
jobs. I
am a big supporter of nuclear power. The extension to Wylfa should now
be announced so that it can help keep jobs in the area. It will also
give opportunities to young people to get transferable engineering
skills for the future. There are opportunities, and the Welsh Assembly
Government should be bolder, bring the schemes forward and come up with
new ideas,
too. I
am conscious of what you said, Mr. Caton, but I want to
consider help for pensioners. The reprofiling of the extra money in the
additional allowance—the winter bonus—will help people.
Many pensioners in my constituency live on very small incomes and to
get an extra £60—and £120 for a couple—on
top of the winter fuel allowance that they have already received and
income tax allowances, will help stimulate the economy. It will give
pensioners money in their pockets to spend locally and help them with
the bills that have increased and hiked over the year. Linking the rise
in the state pension to the highest inflation rate will help that
vulnerable
group.
A lot of
help has been given to stimulate the economy. I certainly support that
and I do not want to go back to the period of high unemployment of the
1990s if it can be avoided. We need to take radical steps. The issue of
borrowing has long been argued about by the Opposition, and I do not
think that there is an alternative. I honestly do not agree with the
Government that the Conservatives are a do-nothing party; if they were
in government they would do something. They would raise VAT and taxes
as they did in the past—pure monetarism—and they would
use unemployment as an economic tool, as they did in the 1980s to try
to weather the storm during the recession.
The
Conservatives are planning to bring in huge cuts, because they would
abandon Labour’s spending for the first two years if they came
into power. They would have to do something, which would be critical in
cutting expenditure to Wales. Some of the issues that Members have
raised would be far worse if we had that kind of
policy. Monetarist policies alone did not work then, and they would not
work now, which is why I back the report and the financial stimulus
that the Chancellor has announced. I will support the VAT decrease
today and I will certainly telling my constituents about the parties
that refuse to do so or offer real help to the people at a time when
they really need it. 3.31
pm
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