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Mr. Hain: I am surprised that the hon. Gentleman rose, because it is a matter of record what the Tory party's policies are on child trust funds, child tax credits and other such matters. The Tories were wrong on the recession, and they are wrong on the recovery. Their plans for early and savage public investment cuts would choke off the recovery. They have no plans for growth-they have only a plan for austerity.
Our Labour Government investment has ensured that, despite the worst global economic recession in more than 80 years, we have avoided the spectre of industrial decline, long-term unemployment and run-down public services-those are the kind of problems that Welsh people lived through to such terrible effect in the 1980s and 1990s.
Albert Owen (Ynys Môn) (Lab): This September, my wife and I will be celebrating our 27th anniversary. In the 1980s, we bought our first house and interest rates were 13 per cent. Mortgage rates varied in the '80s and '90s between 13 and 17 per cent., and house repossessions were at a record high. Is not the big distinction that the inflation rate is 3.5 per cent. now, not 13.5 per cent.? That lower rate not only helps couples to stay in their homes, but helps small businesses and the economy to recover.
Mr. Hain: First, may I congratulate my hon. Friend on an excellent 27 years of marriage? He is right to say that many people like him who bought their first house in the late 1980s were immediately plunged into negative equity as a result of the disastrous policies of the then Conservative Government. As I have said, our Labour Government investment has ensured that we have avoided the worst consequences of this recession and that employment levels and other indicators are better than they were in the 1980s and 1990s.
Mr. Hain: May I finish this point? Our record speaks for itself. There are still 95,000 more people in work in Wales than when Labour came into office in 1997. Long-term unemployment in Wales is more than 55 per cent lower than it was in 1997, despite the recession. It is almost 70 per cent lower than it was at the height of the last home-grown recession in the 1990s. Average house prices in Wales are more than 140 per cent. higher than they were when we came to power in 1997. Repossessions in Wales are 39 per cent lower than they were in 1991. The average household has nearly £5,000 more disposable income now than in 1997 and gross value added per head in Wales has risen by 49 per cent. since 1997. In the early 1990s recession, many more businesses failed in Wales, with the company liquidation rate two and half times higher than the current rate. On that high note, I give way to the hon. Member for Chesham and Amersham (Mrs. Gillan).
Mrs. Gillan: I am grateful to the Secretary of State for giving way, because it gives me the opportunity to congratulate the hon. Member for Ynys Môn (Albert Owen) and his wife on 27 years of happy marriage. Many congratulations to them.
It is not good enough for the Secretary of State to say one thing in this place and another outside. Will he get his stories right? I believe that he said on BBC Wales online on 22 April last year that if efficiency savings had been made
"earlier on at a time of rising spending...I think"
"would have been in a better position to move forward."
Which is it? Have his Administration messed up or does this wonderful picture that he is trying to paint for us now show what has happened? While I am on my feet, let me mention that he said in The Western Mail that characterising the situation as a case of
"'nice' Labour reductions in public spending"
"'nasty' Tory cutbacks would be a mistake".
That is a mistake that he is making now.
Mr. Hain: The planned Tory cutbacks would be nasty in their effect on Wales.
The difference between a Tory Government and this Labour Government is as I have just described: repossessions are relatively low; average house prices are higher; average household income has risen; unemployment is lower; and the rate of business failures is much lower than it was during the home-grown, Tory-induced recessions of the early 1990s and early 1980s, which were unlike the global recession from which we have suffered in recent times. That is the difference between a Tory Government and this Labour Government. A Tory Government leave people on their own, and a Labour Government are on those people's side.
Mr. Philip Dunne (Ludlow) (Con): On the subject of business collapse, does the Secretary of State appreciate what has happened in the petrol filling station arena? More than 111 petrol filling stations have closed in the past five years as a direct result of what the Labour Administrations here and in the Assembly intend to introduce with the business rates revaluations. Increases without any transitional relief, such as that in England, are putting at risk the remaining 572 petrol stations in Wales, of which 206 are in rural areas. One of those is facing an increase in business rates of 725 per cent. How does he expect that business to survive that kind of increase?
Mr. Hain: I know that there is concern about business rates and the changes in Wales, but 60 per cent. of businesses benefit from those changes according to the Welsh Assembly Government. The reasons for petrol station closures are much broader than the hon. Gentleman suggests, and not least among them are the extremely cheap prices from supermarkets. To my regret-as a result of market forces, not of action by this Government-they are forcing too many local petrol stations to close.
Mr. Roger Williams (Brecon and Radnorshire) (LD): The Secretary of State claims credit for his Government for the fact that this recession is not as acute and difficult as the last one. Individuals have made a contribution, too, by working part time and by cutting their hours. There has been a huge amount of suffering as a result of the recession, but individuals have played their part in helping. I am sure that the Secretary of State wants to congratulate them on that.
Mr. Hain: I am grateful to the hon. Gentleman for giving me the opportunity to do so. I was openly arguing that the recession has been very tough for people; I said that right at the beginning. Individuals have made sacrifices such as working fewer hours and, as a result, having lower earnings, and that has helped us to get through this terrible recession, which has been a worldwide recession, in better shape than we would have been-this is my point-if we had followed the policies of the Conservative Opposition. Had they been in government, everybody in Wales would have been far worse off. That is indisputable.
Mark Pritchard: Will the Secretary of State give way?
Mr. Hain: I shall take one final point from the hon. Gentleman.
Mark Pritchard: I am grateful to the Secretary of State, who is being very generous in giving way. I think that I might be the only person in the House who has worked in a petrol filling station-Cymmer Afan petrol station in Cymmer, where I used to live in Wales. Cymmer Afan petrol station had been there for years and was run by a wonderful family, but it closed down just before Christmas. I am shocked by the Secretary of State-I know that he has been busy celebrating his 60th birthday this week, but he should not forget that unemployment is not low in Wales, but high at 8.6 per cent. Forgive me, but I believe that the Secretary of State's complacency is breathtaking.
Mr. Hain: The hon. Gentleman will find in the official record, as everyone else in the House will have noticed, that I quoted that figure of 8.6 per cent. earlier in my speech. My point was not that it was not of concern-of course it is. I represent a Welsh constituency where people have lost their jobs. My point is that without Government action and that if we had followed the Conservative prescription, which he supports, of cutting public investment-
Mark Pritchard indicated dissent.
Mr. Hain: That is what the Conservatives have said. They have said that we spent too much money on business support, job support programmes and so on over the past year. If we had taken that course, those problems would have been far worse.
Dr. Kim Howells (Pontypridd) (Lab): I thank my right hon. Friend and hope that he can now get on with the substantive part of his speech. He will recall that in the 1980s, after the terrible onslaught on our basic industries, Wales reinvented itself. The industrial areas of Wales reinvented themselves, and we will do so again. Will he tell the House something about how the Government see the way forward for breaking with the enormous dependence on the public sector? If Wales does not reinvent itself as a home for entrepreneurs, for small businesses and for high-technology industries, we will miss out on the new generation of industries in the future.
Mr. Hain:
I cannot agree more with my right hon. Friend. May I take this opportunity to pay tribute to him for his long service in the House and for his excellent record as a Labour Minister and to express my personal disappointment that he is standing down, although
I understand his reasons for that? This will be his last Welsh affairs debate. I agree with him absolutely. A little while ago, I made a speech in the House in which I said that we had to strengthen our private sector and could not rely on the public sector to the extent that we had. However, that requires new investment to support the new industries and businesses of the future and to unleash the entrepreneurial spirit and innovation that we need, particularly in low-carbon industries and the digital economy. That requires Government support-it does not happen on its own. Individual entrepreneurs and small businesses need to grow with Government backing, not to have that support stripped away from under their feet so that they are unable to deliver what they are capable of.
Mrs. Gillan: Will the right hon. Gentleman give way?
Mr. Hain: I think I need to make a bit of progress.
Mrs. Gillan: I am grateful to the right hon. Gentleman for giving way, but I want to give him the opportunity to set the record straight. I believe that I heard him say earlier that fewer companies have gone to the wall in Labour's recession. I understand that more companies have gone bust in Labour's recession than in any other recession since records began. There were 26,978 corporate compulsory liquidations and company voluntary arrangements. That information comes from the Office for National Statistics time series and the Insolvency Service's "Company liquidations in England and Wales 1960 to present". Will he confirm that he did not make an error when he said that he felt that fewer companies had gone bust in this recession? I think that these statistics prove that he was wrong in this instance.
Mr. Hain: What I said-I shall read again to the hon. Lady from my speech-was that in the early 1990s recession, many more businesses failed in Wales, with the company liquidation rate two and a half times higher than the current rate. That is my point-not that the current rate of liquidations is acceptable or that any business failure is acceptable. Things were relatively far worse in the 1980s and 1990s, and specifically in the 1990s in that respect.
Our action both in Westminster and in Wales has delivered real help to individuals, families and businesses across Wales, and we will continue to do that as the Welsh economy recovers. To cut off support now, as the Conservatives and right-wing commentators propose, would wreck the recovery. With oil prices rising, international volatility and the weak eurozone, and with countries such as Greece and Ireland facing serious crises, we must prevent this fragile recovery from sliding back into recession or, even worse, from causing a severe, prolonged depression.
Ann Clwyd (Cynon Valley) (Lab): I know that my right hon. Friend supports the idea, as does the Prime Minister, of a Robin Hood tax on global financial transactions that would spread both benefits and risks more fairly. Will my right hon. Friend elaborate on his support for that tax?
Mr. Hain: I am grateful to my right hon. Friend for that question. She is absolutely right to say that I have supported the Robin Hood tax, as most fair-minded people have. Indeed, the extent and breadth of support for it has been interesting. It is now backed by groups right across the board, from the Salvation Army to those such as Friends of the Earth, which we would have expected to support it. That is entirely consistent with the Prime Minister's international leadership in seeking to get an international tax on financial transactions, not least to provide insurance support to prevent the banks from collapsing and having to rely on the public purse in the future. I am glad that my right hon. Friend gave me the opportunity to make those comments.
The Tories have lost all credibility on the economy. First, they promised austerity, until they realised that that did not play well with their focus groups. Then they said they would cut the deficit "further and faster", but later realised that the sums did not add up. Now they have changed tack again and all they will say is that they will "make a start" on cutting spending. They are making it up as they go along, giving a nod to their baying right and then a reassuring wink to their worried left. They cannot be trusted and they would deliver a decade of austerity and low growth for Wales. They would cut support to the economy, which would lead to higher unemployment, bigger welfare bills and in turn to even higher borrowing and debt. They would bury hope with pessimism and would deliver a decade of austerity rather than the decade of growth that we plan.
In January, Britain emerged from the toughest recession since the 1930s. The growth figure, although modest, combined with the good news that unemployment in Wales fell for the first time since the recession began, means that we can be cautiously-I stress cautiously-optimistic. But things will not be easy; our priority now is to lock in the economic recovery. Access to finance from banks is still a major problem for too many businesses, especially small ones. I heard yesterday from representatives of small businesses in Cardigan whom the hon. Member for Ceredigion (Mark Williams) brought to see me with the hon. Member for Montgomeryshire (Lembit Öpik). Those businesses are having difficulties with the banks. Far too many businesses are unable to get loans from banks at rates that they can afford. The banks are charging small businesses ridiculously high rates of interest, as the hon. Member for Ceredigion explained to me.
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): I appreciate the Secretary of State's comments on this issue. We are all struggling with businesses that are unable to get reasonable credit, but was not the right time for the good Lord Myners to impose certain conditions in that regard when the deal was struck and the money was put into the banks?
Mr. Hain:
We have been pressing the banks. We have done so since the beginning and during negotiations that led to the support, without which the whole banking system would have collapsed. We have stressed that the priority is for the banks to get the money out into the real economy. They have spent most of the time recapitalising themselves. As the hon. Gentleman has raised this point, let me report briefly on the past couple of economic summits that have been convened by the First Minister in Wales with my support and with the participation of a wide range of groups, including
businesses and trade unions. One of the most telling points that everyone accepts, given the evidence that we have received, is that local bank managers no longer have-and have not had for the past 10 to 15 years-the autonomy to take certain decisions. That applies even though some of them have built up relationships with local businesses, know them and their directors and know the health of the economy. Instead of being able to sign off loans and continue credit arrangements, they have to pass decisions up the line to someone who sits at a computer, feeds material in and then says no.
Lembit Öpik: I know that it is not fashionable to do so, but I have to report two bits of good news. HSBC and the Royal Bank of Scotland have recently been quite helpful during detailed negotiations, but they are strapped by the recapitalisation demands on them. Nevertheless, does the Secretary of State agree that had the Conservatives been in government at the time and presided over the collapse of the banking system, there would have been no prospect whatever of economic recovery? It seems to me that that is what would have happened if they had carried out their promises at the time.
Mr. Hain: Again, the hon. Gentleman is absolutely right and speaks the truth. At that really difficult moment when the whole of the banking system could have collapsed, after which people would have lost their savings and much calamity would have resulted, if the disastrous policies that the Conservatives advocated had been followed, they would have made things much worse, whereas people accept that our policies have delivered results.
As I have said, it will not be easy to emerge from recession. We need to lock in the economic recovery, but finance from the banks is still a major problem. That is why we have committed another £500 million to the enterprise finance guarantee scheme, thereby enabling more businesses to access it. Currently, more than £33 million of loans have been offered to nearly 430 companies in Wales. Again, that support would be cut by the Conservatives.
Hywel Williams (Caernarfon) (PC): While the Secretary of State is in a happy and optimistic mood, will he tell us whether he is happy with the bonuses being paid by RBS? I think that the figure announced this morning was £1.3 billion. Is he sanguine about that?
Mr. Hain: I think that bankers have made themselves even more unpopular than politicians in recent times, and that is saying something. I do not like that level of bonuses. The chief executive of RBS has said that he is not taking a bonus. Obviously, the high bonuses for high earners have been restricted in all sorts of ways as a result of Government intervention, but the banks need to explain to the public, whose money has bailed them out, how they can possibly justify those very large bonuses. They need to give those explanations to the citizens of-in this case-Wales.
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