Mrs.
Gillan: I very rarely agree with the hon. Gentleman and I
do not agree with him now. Any fool can boast about spending money, and
that is basically the problem with our economy at the moment. There
will be a spending squeeze, as the Labour Minister in the Assembly
Government has said. This morning, the National Institute of Economic
and Social Research revealed that to rebalance the Budget will cost the
equivalent of a 15p tax rise for everyone in the country. Let us pause
and think about that—a 15p tax rise. That is together with the
need to extend the working life of everyone until at least 70 years of
age. For a Prime Minister who claimed to have ended boom and bust that
must make chilling reading, as it does for the rest of
us.
Lembit
Öpik: Will the hon. Lady confirm that if the
Conservatives form a Government, they will not raise
taxes?
Mrs.
Gillan: The hon. Gentleman is sometimes accused of being a
little frivolous, and his question borders on that. To ask Opposition
Members to design a budget, a year out from a possible general
election, and say what they plan to do, would be irresponsible. I shall
not be drawn on that.
Mrs.
Gillan: I am not giving way to the hon.
Gentleman.
Mrs.
Gillan: I am not frightened—quite the reverse. I am
protecting the hon. Member for Montgomeryshire from himself—he
had better keep his
place.
Lembit
Öpik: On a point of order, Mr. Caton. In
a Budget debate, is it in order to ask the Opposition whether they
would raise
taxes?
The
Chairman: It is entirely a matter for the hon. Lady
whether she gives way.
Mrs.
Gillan: Government Members are always
keen—
Mr.
Murphy: She has lost her
way.
Mrs.
Gillan: I had lost my papers because I was so
flabbergasted by that spurious point of order. Government Members are
always keen to go back in history, and we should remind ourselves of
the economic legacy that the Prime Minister and the Labour Government
inherited in 1997.
“When
Gordon Brown was entrusted with the keys to the Exchequer, in 1997, he
was able to look at a set of public sector accounts that showed the UK
to be in good shape. Indeed, in his first Budget, Mr Brown was able to
forecast that by 1998-99, borrowing would be down to just £4
billion. This was largely because the previous Government had taken
action to reinforce
the tax base and to control public spending (and it might be remembered
that Gordon Brown promised to adhere to the Conservatives’
spending plans for two years). As it happened, the then
Chancellor’s forecasts proved too pessimistic, and the public
sector recorded a net budget surplus of £4.5 billion in 1998-99,
rising over the next two years to £18.3 billion in 2000-01. From
here, however, things started to go badly wrong.” Those are not my words,
but those of Richard Jeffrey from the capital management company
Casenove.
Things did
indeed go badly wrong. Only yesterday, a summary from Kevin Morgan, the
professor of governance at Cardiff university, set out the results in
Wales after 10 years of devolution and 12 years of a Labour
Government. The original target of an incoming Assembly Government was
to reduce the GVA—gross value added—gap between Wales and
the rest of the UK from 80 to 90 per cent. In fact, it
declined to 77 per cent. and has widened in every year since 1997,
apart from stagnating briefly in 2001. Only the west midlands has seen
slower growth since 1999. We have the lowest private sector spending on
research and development and the lowest full-time weekly wages in the
UK. We are at the bottom of the UK rankings for tests for 15-year-olds,
and our graduate retention rate is the worst in the country. As if the
recession does not present us with enough of a hill to climb, it would
appear that for Wales the slopes are even steeper, as we now start
further behind the rest of the
country. The
UK, according to outside commentators, is one of the worst-placed
countries in the developed world to withstand the recession and Wales,
as the poorest part of the UK, is bearing the brunt. It is quite a
burden to bear. After the pre-Budget report and now the Budget, we have
almost become desensitised to the borrowing figures that the Chancellor
announces: £348 billion, £434 billion, £703
billion, and a total debt that will rise to £1.4 trillion. If we
think about that, it means a debt of 79 per cent. of our gross domestic
product by 2013, which means that every child born in the country today
is born owing
£22,500.
Mr.
Hain: I commend the hon. Lady for her work on the Autism
Bill, which is extremely good. Since she is putting many figures to the
Committee, may I ask about those figures that were derived from the
Institute for Fiscal Studies? The institute points out that the
stimulus since last year’s Budget accounts for about £26
billion of a nearly £400 billion increase in Government debt to
2012. In other words, only one fifteenth is down to the
Government’s fiscal stimulus. The rest of it—the fourteen
fifteenths—is due to the global financial
crisis. The
hon. Lady seems to be denying that we are in the middle of such a
crisis, which her cuts would make even worse. Does she agree with those
figures—that the Government’s contribution towards
increased borrowing and spending is infinitesimal compared with the
global financial
crisis?
Mrs.
Gillan: I do not want to bandy quotes with the right hon.
Gentleman, but as he well knows, many outside commentators, including
other international politicians, have acknowledged that there is a
major problem with the UK
economy. The
problem is—I am sorry to coin this phrase—that the
Government did not fix the roof when the sun was shining. We are worse
placed, and now we will have to
pay nearly three times the Assembly budget just to meet the interest
charges every year. If that was not enough, the Prime Minister and the
Chancellor are set to borrow more than every other Government since
1694, pushing out all those Governments up until 1997. That puts the
debt in
perspective. Mr.
Hain: Will the hon. Lady give
way?
Mrs.
Gillan: I give way to the right hon. Gentleman, but for
the last time, as I have quite a bit to get through and would like to
make some
progress.
Mr.
Hain: I am genuinely grateful to the hon. Lady for giving
way. When she uses the phrase “fixing the roof while the sun is
shining”, which hospitals would she not have built that we did?
Which schools would she not have opened that we did? Which teachers
would she have sacked whom we recruited? Which nurses would she have
denied opportunities to care for Welsh patients? The point is that the
investment was desperately needed. If it had not been put in place, we
would be in a far worse
position.
Mrs.
Gillan: As I said before, anybody—any
fool—can spend money. “Which failed IT projects would
have been scrapped?” is more to the point, as the right hon.
Gentleman knows. He can make a good case, but everybody knows the
truth, which is that one would not run a household or a business like
that. Why on earth do the Government think that they can run a country
like
that? Nick
Ainger (Carmarthen, West and South Pembrokeshire) (Lab):
Will the hon. Lady give
way?
Mrs.
Gillan: No, I will not, because I have quite a bit to get
through, and I think that I have been particularly generous—as
generous as the Secretary of State—in giving way. I might give
way later, although I have a little more to say than had the Secretary
of State, and a little more content in my
speech. As
a result of the downturn and the management of the economy,
unemployment across the UK is rising at a faster rate than under any
Conservative Government—indeed, faster than under any
Government. Unemployment in Wales is rising faster than in any other UK
nation. The Secretary of State referred in his opening remarks to
75,000 people being unemployed. That indicates a real problem, because
the latest figures show that 108,000 people are unemployed in Wales.
That first figure is from earlier in the year—before Hoover,
Hotpoint, Corus and each and every business in the supply chain that
depended on those companies started to shed their employees one by
one. It
is far from pessimistic to say that over the coming months we can
expect significant jumps in the number of those losing their jobs. The
casualties cover the complete skills spectrum and age
range—there are no exceptions. As the order books fall, we can
brace ourselves for more. The number of bankruptcies in England and
Wales has hit a new record. The Government’s Insolvency Service
reported a record 19,062 bankruptcies in the first three months of this
year, and 10,713 individuals have filed individual voluntary
arrangements. Overall, nearly a quarter of the working population in
Wales is
economically inactive, which is a staggering figure. That is 433,000
people, and it includes hundreds of families in which no one is
working. We really do
need help. To be fair, the Secretary of State claims to be offering
real help and economic summits, and he has at last produced figures for
the programmes that have been laid out. I have asked him to reveal the
names of the companies and the number of jobs that have been saved. If
he says that such information is commercially in confidence, there will
be some difficulties, because those companies are receiving Government
subsidy. None the less, I am delighted that he has now been able to
provide quantification, because it has not been readily available when
my hon. Friends and I have asked for
it. Any
help given in the Budget seems, however, to be diluted by the negatives
in the small print or that have been carried over from the pre-Budget
report. For example, the Government announced the trade credit
insurance scheme and the temporary increase in capital allowances, but
then hit businesses with the national insurance
rises. The
Government also offered additional funding for Jobcentre Plus to help
those who are out of work, but when the Secretary of State was boasting
about that, he failed to mention the number of jobcentres that have
been closed. There have been such substantial office closures that, as
part of an emergency phase, jobcentres are having to recruit personnel
to deal with the vast number of people who are coming to them, many
seeking work for the first time, although few vacancies are to be
found. Finally,
the Secretary of State has promised employment and training for young
people who have been on jobseeker’s allowance for more than 12
months, but what will happen to the vast majority of claimants who do
not fall into that category?
These are
tough times for ordinary families, and I am concerned that the lifeline
that they need is at best a thin thread and at worst non-existent.
Ordinary families and businesses will be hit by the increases in fuel
tax and alcohol duty, which punish the many, not the few. It is
understandable that the Chancellor wants to maximise the tax yield
because, alarmingly, the Treasury is taking in only £3 in tax
for every £4 that it spends, which will cause even more
problems. However, the Government are using fuel duty and alcohol duty
as money spinners, shifting the tax burden on to businesses and
families, particularly in rural areas, which have been badly let down
by this Labour Administration.
As the
Secretary of State knows, raising alcohol duty will not tackle the
problems of binge drinking, but it will hit our pubs across Wales.
Those pubs are closing at a shocking rate, and many are at the heart of
our local communities, which are already denuded of their shops,
schools and post
offices. Equally,
raising fuel duty imposes a large and direct cost on families and
businesses across Wales, with farmers and hauliers being particularly
badly affected.
Mr.
Roger Williams: Although any increase in tax on beer and
other alcohol is not really welcome, does the hon. Lady agree that the
real issue is the more than competitive nature of the supermarkets?
Does she agree
that a minimum price on alcohol in supermarkets would restore the
balance between them and the pubs, which we so want to encourage and
support?
Mrs.
Gillan: That is an idea for the Government to consider. I
am alarmed that the Secretary of State says that we are talking about
only a penny a pint, because that is a lot of money to someone without.
That extra increase might mean the difference between going out to meet
friends in the community or staying at home.
The measures
in the Budget are not all wide of the mark. The poverty package and the
jobs package have been welcomed, but they must be paid for, and the
money simply is not there. With borrowing rising to record levels, the
Institute for Fiscal Studies has identified a £45 billion black
hole in the Budget, which is equivalent to a tax rise of £1,430
for every family—that is a
mess. Conservatives
have sorted out Labour’s mess before, and we are ready to do it
again, but this time really is bad. The NIESR said this morning that
the state of our economy is worse than it was in 1931 and that the
Prime Minister is rapidly winning the race with Ramsay MacDonald for
worst ever position of the UK economy.
We need to
recognise that we have to start by living within our means and address
the burden that Labour has placed on families, businesses, pensioners
and jobseekers, yet we hear this morning that the Prime Minister is
pressing ahead with the national ID card scheme, which simply cannot be
afforded at the moment, even if it was desirable, and with the tax
rises that will hit the many, not the few. The national insurance rise
will hit everyone earning £20,000 or more, and addressing that
would be our first priority.
With
unemployment soaring, it is simply wrong to raise taxes on jobs. The
road to recovery is to maintain jobs and to get businesses investing in
Wales, so that we have the jobs to offer people who are desperate to
get back to work.
We have a
great advantage in Wales in that we have a relatively low cost base
compared to other parts of the United Kingdom. We should be
highlighting that fact to any business seeking to enter the UK or to
move within the UK, when the economy is now at its lowest ebb, so that
they can take advantage of the recovery when it comes.
We should be
talking Wales up, not talking it down. However, the Secretary of State
seems more intent on attacking the Tories than on talking up Wales. It
is almost impossible to set out plans in any detail, as people well
know, because the Government have presided over the virtual bankruptcy
of the
country. Far
from doing nothing, my hon. Friend the Member for Tatton
(Mr. Osborne) has already set out some costed plans that we
would implement if we were in government. We would cut taxes on new
jobs with a £2.6 billion package of tax breaks to get people
into work, funded by money that would otherwise go on unemployment
benefits. That is not doing nothing. We would also cut the main rate of
corporation tax to 25p and the rate for small companies to 20p, which
would be paid for by scrapping complex reliefs and allowances. Again,
that is not doing
nothing. We
would give small businesses a VAT holiday, funded by the 7.5 per cent.
interest rate on delayed payments. That is not doing nothing.
Furthermore, we would
introduce a much larger, big and bold £50 billion national loan
guarantee scheme to get credit flowing and to get to the heart of the
problem, because the banks are still not lending to businesses in Wales
or in the rest of the United Kingdom. Once again, that is not doing
nothing. We
would help pensioners and families through this difficult time and
encourage an atmosphere of financial responsibility. We would also
abolish tax on savings for basic rate taxpayers, as well as increasing
the personal allowance for pensioners by £2,000. That is not
doing nothing.
This
Government have led this country into a real economic crisis, through
poor stewardship and hubris. For years, the Prime Minister has told us
that the choice was between Tory cuts and Labour investment, but it has
turned out to be Labour cuts that we are all facing and the investment
that so many people have made in their own futures has crumbled before
their
eyes. This
Budget did little to restore confidence. The Welsh voter has been
relatively faithful to the Labour party, but that was when Labour
claimed to offer a better future than a Conservative Administration.
Sadly, Welsh voters have been kicked in the teeth by Labour in
government, and the reality has proved to be so very different.
Perhaps, therefore, the Welsh voter will want to try another
way—a Conservative way—in the European elections and,
when it is finally called, at the next general
election. 10.28
am Ann
Clwyd (Cynon Valley) (Lab): I think that I have more
experience of the Welsh electors than the hon. Member for Chesham and
Amersham. It is 25 years ago this week that I was first elected to this
House, along with the hon. Member for Stone (Mr. Cash) and
Virginia Bottomley. We have not had a celebratory drink
together.
However, it
is 40 years ago that I fought my first election, in north Wales,
against what was then a Conservative majority of 26,000. I am very
pleased that, because of boundary changes and other reasons, that
majority has long since gone. One of my hon. Friends is now the Member
of Parliament for the area that I first stood for in 1970.
So I think
that I might be permitted, with your agreement Mr. Caton,
just a little bit of reflection. I joined the Labour party originally
because of its policy of social fairness. I would join it again for
exactly the same reasons. I am not going to mention personalities
today, or the leadership and direction of the party; mention of those
things will come on another occasion. There are enough people making
such comments without my adding to them. It is extremely important that
we rally together to fight the European
elections. I
was elected to the Cynon Valley in 1984 in the middle of the
miners’ strike. The editor of the Cynon Valley Leader was
aged 18 at the time—I am sure that he will not mind my saying
so. Then, there were still three pits in the Cynon Valley and miners
also travelled to work at 12 pits outside the valley; thousands of jobs
depended on coal. The big run-down in the coal and steal industries
started when I was an MEP in 1979. My European constituency included
Trostre and Felindre, and I took delegations of worried workers to the
European Parliament and the Council of Ministers to protest about the
intended closures of the time.
I was a member
of the European Parliament’s Committee on Employment and Social
Affairs. Most other European countries had planned for the change and
had social policies to cushion its effects. The then British
Government—a Conservative Government—actually scoffed at
that, and was criticised by the then Commissioner for Social Affairs
and Employment, Henk Vredeling. In the Ruhr, Germany, 5,000 men were
losing their jobs in the steel industry and nearly every man had
another job to go to. In 1984, in the Cynon Valley, one in five
had no
work. One
devastating health statistic of that time was the death rate from
respiratory disease: 73 per 1,000, compared with 50 per 1,000 for
England and Wales as a whole. I followed the struggle for compensation
for many years as a journalist and I am proud, again, that it was a
Labour Government who finally gave the miners that compensation. The
personal injury scheme is one of the biggest in the world; it was just,
and long overdue. Now, former coal miners suffering from osteoarthritis
of the knee—miner’s knee—will also be able to
claim compensation. Again, that is the result of sustained campaigning
by Labour MPs. The miners do not need to go to solicitors—they
did not really need to do so before—they can go straight to a
Government Department, as I advise those in my constituency to do. I
think many of my colleagues in other constituencies have given the same
advice.
As the
Chancellor said in his Budget statement, extra spending on tackling
youth unemployment, boosting house building, investing in key sectors
of the economy and providing help for pensioner savers reflects the
difference between Labour and the
Conservatives: “Everything
that we have done—whether supporting families now, maintaining
investment in our public services and putting the nation’s
finances on a stable path—is based on our values of fairness and
opportunity. Even at this time of global difficulty, we are determined
to continue building a fairer society.”—[Official
Report, 22 April 2009; Vol. 491, c.
248.] Having
seen unemployment in my constituency from 1984, I realise, as many
people in Wales do, its effects on individuals and families. The social
effects of unemployment are dire. The evidence shows that the longer
people are out of work, the more difficult it becomes for them to
re-enter the labour market. It is not in any Government’s power
to prevent all job losses, and even when the recovery is under way, it
will take time for unemployment to start falling. However, Governments
must give people targeted help to find new jobs as quickly as possible
and, where necessary, to gain the new skills to do so.
The core of
the Government’s approach has been the Jobcentre Plus network.
Its help has almost halved the average time that people spend out of
work, compared with previous recessions. The Government increased
resources for the Jobcentre Plus network and the new deal by
£1.3 billion, and have added an additional
£1.7 billion worth of funding so that everyone can
receive the highest quality support to which they are
entitled. As
the Chancellor said, he is determined to do even more to protect young
people from the damaging impact of long-term unemployment. The
alternative is a return to the days when a whole generation of young
people found themselves abandoned to a future on the scrap heap. We
will not repeat that mistake. I did a report for
the European Parliament on the social effects of
unemployment, and the findings of that survey remain true
today—as Labour Members realise
acutely. David
T.C. Davies (Monmouth) (Con): We all share the right hon.
Lady’s concern about unemployment, but has she not noticed that
it is now reaching 2 million? On top of that are many people on
long-term invalidity benefit who are effectively unemployed, and who
have been parked on to a different set of statistics. The overall
number of people out of work now is much higher than at any time in the
1980s.
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