Mr.
Crabb: I think that there is at least one other Member who
wishes to speak, so I shall try to be as brief as possible. I welcome
this important debate, which is timely, given the seriousness of the
economic problems and challenges facing Wales.
During the
course of the debate, reference has been made by numerous Members to
the need to learn from history. I think that we have been treated to an
element of historical revisionism from a number of Government Members
in their belief that, somehow, pre-1997 was when all of Wales’s
problems began and that since 1997 all that there has been is a steady
stream of solutions to those problems. That is not the case at
all.
Mrs.
Siân C. James (Swansea, East) (Lab): That is not
what people tell me on the doorstep.
Mr.
Crabb: No, it is not what they tell the hon. Lady on the
doorstep, because it bears no relation to the facts at all.
I should
like to pick up on a couple of points made by the Secretary of State,
who spoke about the economic diversification that has taken place in
his constituency in recent years—the loss of jobs in heavy
industry and the replacement of these jobs with a broader range of
industry. We applaud that and recognise it as a positive point.
However, the economic diversification that has been going on in parts
of south Wales started well before 1997. In the late 1980s and early
mid-1990s, enormous sums of inward investment came into Wales both from
other parts of the UK and from places such as south-east Asia, America
and throughout the world, generating new business ventures. That is
what helped drive a large part of this economic
diversification.
However,
there are parts of Wales which have become less economically
diversified in the past 10 years. There are areas of Wales like mine in
Pembrokeshire in west Wales where the state—that hugely
important component of the economy—has become even more dominant
in the local economy. As a result, the economy has become less
diversified. Certainly, the light manufacturing sector in Pembrokeshire
has become a lot thinner in the past 15 years.
The economic
situation facing the country in general, and Wales in particular, is
extremely grave. We are undergoing an economic trauma, the likes of
which we have not experienced—certainly not in my lifetime, and
probably not in the lifetime of anybody else here either. There is no
question but that the economic crisis is global in nature and that it
affects all parts of the world. I have not heard anybody from the
Opposition suggesting that somehow the problem started in Britain, but
there has been an attempt honestly to recognise and appraise those
elements of the crisis occurring in the UK. An example is the risky
lending in the sub-prime mortgage market. Identical things were
happening in the Mississippi
housing market, and Northern Rock was doing the same kinds of thing as
some lenders in the US. We share some of the origins of the problem:
the same kind of high-risk, highly leveraged, enormous bets that were
being placed by hedge funds and investment banks in the City of London
were being placed in America as well. Let us avoid the impression that
Labour Members are trying to present that somehow the problems started
outside the UK and that we are just feeling the chill from that. We
need to face up to and appraise the problems—the failures of
managerial oversight in some of those banks and the failures of
regulation in the UK itself. The hon. Member for Carmarthen, West and
South Pembrokeshire and I serve on the Treasury Committee, and we have
heard evidence about that in recent
weeks. So
here we are—the party is over. The decade of debt-fuelled
economic growth has come to an end. The public finances are smashed to
pieces. The cupboard is empty. I should like to highlight a few areas
where some of the failures over the last 10 years have left Wales in a
more vulnerable position than it might otherwise have been. Those areas
are critically important as we look to the future and to Wales’s
re-emergence from the economic downturn. The first point, which has
been made by several hon. Members, relates to the physical
infrastructure in Wales, particularly transport. The Institution of
Civil Engineers in Wales has produced a damning report on the state of
our physical infrastructure. At the launch of that report in October,
Keith Jones, the director,
said: “Current
levels of funding for transport and services are inadequate to meet the
needs of modern
Wales” Describing
the physical infrastructure in Wales, the report referred to
“inadequate
funding, limited public transport provision and poor transport
links”. There
is much evidence to demonstrate the link between investment in
infrastructure and the way in which it feeds into the drive for
productivity and economic growth in future. We need to return to that
and focus on the set of projects that Wales needs. The right hon.
Member for Neath mentioned the delays in the heads of the valleys road
project. I could also mention the A40 dualling project, which is badly
needed to open up the west Wales economy and to secure economic
growth. We
have discussed time and time again in this Committee and elsewhere in
the House the failure to deliver broadband. It is shameful that after
10 years of economic growth, 10 years of subsidies to BT, and 10 years
of rural broadband schemes, large numbers of people throughout rural
west and north Wales do not have access to broadband, which will be a
critically important part of the business toolkit for doing business in
Wales in the 21st
century. Finally—I
know that the hon. Member for Llanelli wants to speak and I want to
give her as much time as I can—if there is going to be a
rebalancing of economic growth, we need to export a lot more as a
country. There is an important role for the UK Government and the
Assembly Government to look at how they can better support Welsh
exporters to take advantage of the sharp fall there in the value of
sterling and the opportunities that that creates for exporting more and
doing more to support Welsh businesses that are doing business
overseas.
3.38
pm
Nia
Griffith: I share with other hon. Members the very real
concern about how best to deal with the current economic situation.
Particularly at this time, we want close collaboration between the
Wales Office and the Welsh Assembly Government. I welcome the way in
which the Secretary of State has been working with the First Minister.
One of the lessons we have learnt in the last few months is the sheer
scale and unpredictability of events. We are seeing the very uneven
impact of the economic downturn, with some sectors very badly affected
indeed and others, as yet, hardly affected at all. Some sectors are
much more fearful about jobs than others, and such factors are often
not easy to predict, because they are dependent not just on our market
conditions but on those
abroad. There
is considerable concern in places such as my constituency, where we are
very dependent on automotive industries. Clearly people will need to
buy everyday necessities, but fewer people will be considering securing
money to buy a car at the moment. Those are the areas where we need to
ensure that we get flexible help as soon as we can. It is far better to
help existing manufacturing industries that have already gone through
all the trauma of making themselves as productive as possible, rather
than letting them go to the wall and have to start all over again later
on. We need to be ready to work with the Welsh Assembly Government to
respond flexibly and sensitively to those particular
needs. In
my constituency we have had two lucky reprieves. The Avon Inflatables
plant is still open, in spite of the threat by the French company to
close it down. One way we can help companies such as Avon
Inflatables—a company that produces excellent inflatable boats
for the Ministry of Defence—is through our public procurement
policy. In the same way as we are introducing capital expenditure
projects, we should be making absolutely sure that in all our public
procurement policies we do our utmost to support our own manufacturing
industry. As my hon. Friend the Member for Aberavon mentioned earlier,
Corus is experiencing a bit of a boom with the sale of the tins, but we
have to remember that the economic climate for the steel industry is
still difficult and we certainly cannot be
complacent. We
need to be careful that when we reskill people and help them to be
flexible for the future labour market, we do not get into a time warp
by giving them skills that are needed now but will not be needed in the
future. We need to look carefully and imaginatively at how we
do
that. In
Euro-speak, west Wales is a “peripheral” area, in that we
are a long way from the major markets. I ask our Ministers in the Wales
Office to take account whenever possible of the additional difficulties
that we in west Wales can encounter in attracting new industries, and
to ensure that we keep our fair share of public sector jobs—in
the Driver and Vehicle Licensing Agency and in Her Majesty’s
Revenue and Customs offices, for example. In that context, I ask my
right hon. Friend the Secretary of State for Wales to talk to the
Deputy Minister for Economy and Transport in the Welsh Assembly
Government about extending the recently announced western valleys
initiative to include not only part of the Amman valley but
the whole of the Gwendraeth valley.
We have made
enormous progress in helping our economy in west Wales to grow over the
past 11 years, but it is still fragile in some areas. We need to be
absolutely sure that our policies are directed at those areas that will
find it most difficult to get through this economic downturn, and those
that will need most help to take advantage of the upturn when it
comes. 3.42
pm
Mr.
Jones: I think that all members of the Committee agree
that this is a timely, if rather sombre, debate, coming as it does in
the midst of what the Minister for the Olympics recently described
as “a
recession deeper than any that we have
known”. The
Committee has expressed some realism about the problems that Wales and
the whole of the UK face. It would be tempting to indulge in political
knockabout today, but the people of Wales would not thank us for
that. The
right hon. Member for Neath set the tone of the debate when he pointed
out the difficulties that businesses are having in obtaining
credit—a theme that has run through the debate. He described a
guarantee scheme that would provide the indemnity that banks need if
they are to start the process of lending to commercial borrowers again.
That scheme bore an extraordinary similarity to the national loan
guarantee scheme that the Conservative party has proposed.
I mention
that, as I have done previously in this debate, because it seems that
the Government recognise that their measures for guaranteeing business
lending go nowhere near far enough. The principal vehicle that they
appear to propose is the small business finance scheme, but that is a
very small scheme compared to the size of the problem. It would provide
funds of a mere £1 billion, which would only scratch
the surface of the enormous problem that Members on both sides of the
Committee have recognised today. The Conservatives’ scheme would
provide funds of up to £50 billion and the Government need to
provide that sort of commitment.
I am
confident that in the fullness of time the Government will announce a
scheme that will probably not bear the same name as ours, but will bear
remarkable similarities to it. However, the crisis that now affects the
economy, as the hon. Member for Ynys Môn pointed out, is
unprecedented in the lifetime of anyone in the room. We need to address
it urgently and we need to be bolder, so I urge the
Minister—please—to consider a scheme along the lines of
the one that the Conservative party has proposed.
The hon.
Member for Carmarthen, East and Dinefwr delivered a very interesting
historical analysis and speculated how, with the benefit of knowledge
of history, one could ascertain how long and deep the recession would
be. The truth of the matter is that, despite the benefit of knowledge
of history, it is probably impossible to say, because, if we have
learned one thing from history, it is that it rarely repeats itself. It
will be interesting—albeit no doubt painful—to see just
how long the recession will be.
Adam
Price: Mark Twain said, history may not repeat itself, but
it does sometimes rhyme.
Mr.
Jones: Very true. Of course, Henry Ford once said, history
is bunk. I do not necessarily think that either analysis is entirely
correct.
The hon.
Gentleman pointed out quite properly that he was sceptical about
whether the cut in interest rates and the banks’
recapitalisation was working, and it is fair to say that one of the
most significant problems of the recapitalisation, which the
Conservative party fully supports, is that the liquidity criteria that
the Government and their agencies have set mean that, to a large
extent, the banks’ hands are tied. Again, I suggest the
need—
Nick
Ainger: Will the hon. Gentleman give
way?
Mr.
Jones: No, I will not. You will forgive me, Mr.
Caton, but I have only five minutes and I want to try to analyse as
many speeches as possible. The principal difficulty is that, to a large
extent, the liquidity criteria tie the hands of the banks. Again, the
Government can assist by providing a guarantee scheme to free up the
availability of credit.
The hon.
Member for Aberavon, the Chairman of the Select Committee on Welsh
Affairs, delivered his usual thoughtful contribution to the debate, in
which he pointed out that the Select Committee is currently engaged in,
and will shortly report on, two inquiries that are germane to the
issues with which we are concerned today: globalisation and
cross-border services. The hon. Gentleman also mentioned skills, and
one point that emerged during evidence to the Select Committee was the
mismatch between the skills qualifications on either side of the
border. Many witnesses from whom we heard were concerned about that,
and one lesson that we must learn is that, given that the Assembly has
devolved powers on education, it should ensure that whatever
qualifications it provides be portable across the border, because, in
an economic downturn, the qualifications issued on one side of the
border should be readily acceptable to employers on the other. The hon.
Gentleman did not, however, mention digital exclusion, which is to be
the subject of a forthcoming inquiry and is germane to the point that
my hon. Friend the Member for Preseli Pembrokeshire made, when he
talked of the difficulties that his part of Wales experiences with the
electronic infrastructure.
The hon.
Member for Brecon and Radnorshire expressed doubts about whether the
VAT cut would deliver what the Government say it will. I am bound to
say that I share his pessimism. When it is possible to walk into almost
any high street store and find reductions of 30, 40 and 50 per cent.,
it seems to me that a reduction of 2.5 per cent. only trims the edges
of the problem and will do nothing in real terms.
The hon.
Gentleman also expressed concern about the impact of the increase in
duty on the pub trade and I share that concern. Six public houses a day
close in this country, and quite apart from the impact on social life,
that is having an enormous impact on rural life. He was right to flag
that problem up and, with all due respect to the hon. Member for
Aberavon, I would rather see people drinking socially in pubs than
drinking miserably at home out of tin cans.
We heard
from the hon. Member for Ynys Môn who got nastily party
political. I could easily respond in kind.
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