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Legislative Programme and Budget Statement (Wales)
The Committee consisted of the following Members:
Alan Sandall, Eliot Wilson, Committee Clerks
† attended the CommitteeThe following also attended, pursuant to Standing Order No. 102(4):
The Secretary of State for Wales (Mrs Cheryl Gillan): On a point of order, Mr Sheridan. As this is our first Welsh Grand Committee, may I use this point of order formally to welcome you to the Chair? Your colleague chaired this morning’s lively session and I am sure that this afternoon will be equally lively. I wish you well in the Chair, and we are proud to have you presiding over our proceedings.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC): I agree with what has just been said. I hope that you have a convivial and rewarding afternoon, Mr Sheridan, which I am sure is likely in the Welsh Grand Committee.
With regard to the Parliamentary Reform Bill, I will not go over what has been said already about the equalisation of constituencies. Suffice it to say that the constituency I have the honour of representing, Dwyfor Meirionnydd, is 100 miles from north to south and about 95 east to west, so heaven knows what will happen if it is equalised with anything. It has a sparse population and therefore great care has to be taken in dealing with it, otherwise there will be the accusation of gerrymandering. I know that nobody wants to start down that path now, but it will be a very difficult job, so let us hope that we can exercise the highest form of care.
We are very much in favour of a lobbyists’ register, which is common in European Parliaments, and I understand there is also far more transparency on the issue in the Welsh Assembly. I hope that the gist of the Elected Representatives (Prohibition of Deception) Bill, which was introduced by a member of my party and has received the support of the Liberal Democrats, might be included too.
A major issue for Wales is the commitment to a referendum, which we understand from the Secretary of State will be in spring 2011. There is little doubt that the legislative competence order process, even when it works comparatively well, is bureaucratic and time consuming, taking 27 different processes to create Welsh legislation. That really cannot continue.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op): Does the hon. Gentleman accept though, that over the past year or two, 14 transfers of powers to the Welsh Assembly have been carried out expeditiously and efficiently due to the cross-party co-operation that we have enjoyed on the Welsh Affairs Committee?
The Holtham commission, which is very important to us in Wales, reported last year. In the Liberal Democrats’ Welsh manifesto, their Welsh leader called on UK Ministers to “act immediately” on the commission’s findings. The lady concerned, Kirsty Williams, said:
It is now time to get that work done and move forward. I understand that there will be a commission and I am a bit disappointed about that; I hope it is not kicking the ball into the long grass. I hope against hope that something will be done fairly shortly.
Alun Cairns (Vale of Glamorgan) (Con): Does the hon. Gentleman not recognise that there has been a significant shift in the Government position from that of the Administration before the election? The previous Chancellor of the Exchequer said that he thought that Barnett was fit for purpose and he was committed to maintaining it, whereas this Administration have recognised that the funding for Wales is insufficient and the issue needs to be resolved when the commission has considered it.
Mr Llwyd: Yes, I hear what the hon. Gentleman says, which makes it even more perplexing that when introducing the 25% cuts across all Departments the Chancellor did not take that into account in Wales. Therefore, by definition, Wales was hit hardest—[ Interruption. ] Yes, of course, it is. It has to be. The logic of the argument is absolutely unimpeachable, and some allowance should have been made for that. However, there is recognition of it now, so we need to build on that and get something done.
As we know, it is estimated that convergence will cost Wales about £300 million a year. At the least, there should be a Barnett floor to prevent that from happening, something described by the Holtham report as an interim measure before fuller reform of the formula. We and others across the board want to look at a needs-based formula, something that I am sure will be ongoing. It has been referred to so many times in this Committee that I shall not dwell on it now. There is a contrast between enacting the Calman commission recommendations and where we are with regard to this commission, but I shall take things in good faith and hope that we can move forward expeditiously.
As for the police reform Bill, I am not at all impressed by the idea of elected police chiefs. I am concerned that, in some way, the process would become politicised. We all know that policing is by consent, and that consent will break down if it becomes politicised. I hope therefore that such points will be discussed. There is a danger of going down the politicisation road and one thing that we can say about the police service is that it is not
Geraint Davies (Swansea West) (Lab/Co-op): Does the hon. Gentleman accept that in many areas, police chiefs are meeting AMs, MPs and councillors? Indeed, I regularly meet Superintendent Mark Mathias in Swansea. The demographic mandate that police chiefs already engage in is very wide, and there is a real danger that if they were elected, they could be interfacing with only 10% or 20% of the electorate, ignoring other democratic representatives and thrust into office on a platform of popularity because of the problems of antisocial behaviour, but not paying attention to counter-terrorism or the other important behind the scenes priorities.
Mr Llwyd: That is an obvious example of what can go wrong when politics becomes mixed up with policing. We can think of American examples and there is the question of priorities, as the hon. Member for Swansea West rightly said. I sincerely hope that the Government will pause and think about the way forward, and ensure that we do not go down that road in the interests of us all.
We can build on the green agenda put forward by the Government, and it would be useful to do so. As for high-speed railways, unfortunately we are not likely to have electrification of the line from the border across Wales. When things improve in the medium term, I hope that we shall have electrification of the south Wales main line as well as the line in north Wales. It is absolutely bizarre in this day and age that a country does not have some electrified lines, which unfortunately is the position in Wales.
Mr Peter Hain (Neath) (Lab): I support what the hon. Gentleman is saying. Does he agree that the Paddington to Swansea high-speed electrification line is precisely the sort of infrastructure project that will create jobs and promote growth for the future, and should still be included in the Government’s programme?
Mr Llwyd: That is no doubt true. Indeed, not so long ago I heard that some Korean entrepreneurs were on their way to the old county of Clwyd with a view to setting up a business. Their train broke down at Chester, and they had to go home again. That is the norm nowadays. The right hon. Gentleman is absolutely right. We must get the infrastructure correct and we must press for equal treatment of our transport system because it is vital to aid recovery, which we all want to see.
On the balance between cuts and tax rises, I am concerned about the likely effect of cuts to the welfare budget. I preface that by saying that although there may be people who should not have welfare payments, I have dealt with about 200 disability living allowances appeals since I became a Member of Parliament and failed in only five—I would have pursued none of them if I knew people were swinging the lead. That was not because I am a brilliant advocate, although hopefully some might
I mentioned a case earlier, in passing, of a young woman who is desperately ill; her kidneys are failing and unless she has a transplant in the next 18 months I am not sure what will become of her. She has to dialyse four times per day, but the doctor who saw her said that she can walk 100 metres without any problem, which is an absolute lie, and that she can walk up stairs without any problem, which is also an absolute lie. Even though she was on dialysis, she was failed in the first instance. There is something wrong with such a system. We have to purge that kind of practice. I am prepared to do the appeals, but what about the worry that people go through? That appeal went in last summer but was heard in Aberystwyth only on Monday. I am not happy with the current process, let alone with what might be coming.
Mrs Gillan: I heard what the hon. Gentleman said earlier about that case and it worries me deeply. If he feels that my office can afford any service to him and his constituent in making a case, I would be delighted to help. I have regular meetings with the First Minister and would be delighted to make the services of my office available, if he feels it appropriate.
Mr Llwyd: I am grateful to the right hon. Lady and I may well take up that offer. One of our problems is with the forms, which are not user-friendly—people filling them in do not have the room to elaborate on their condition. It is a tick-box system, which is clearly inappropriate, and I am sorry to say that many of the medical examiners are compromised—they pick up the £135 as a little extra pin money for going through the process with people, and it is over in half an hour. I mentioned the issue on the Floor of the House, and I was waiting for a barrage of letters from GPs, but had only two phone calls, one from Swansea and one from my own constituency, saying, “We agree with what you say, it is a flawed system.”
I am concerned because some whispers going around are that the medic will be the final arbiter. That can never be right. I hope that common sense prevails and that we adopt a different set of criteria to determine whether people are worthy of DLA. As I said earlier, I would not undertake any cases that I knew to be false, because that is a waste of everyone’s time and effort, but it remains one of the ironies of our society that we seem to spend more time on perceived benefits cheats than we do on cracking down on tax evasion and avoidance.
Guto Bebb (Aberconwy) (Con): Obviously I accept fully the point the hon. Gentleman has just made about the system being fair to everyone—no one would want to see the constituent in question suffering as he described. However, when we look at the figures for the Budget as laid out in the Red Book, we are currently aiming to spend £194 billion of social protection this year, with income tax receipts of £150 billion. Does the hon. Gentleman think that is sustainable?
Ironically, we should give higher funding to Her Majesty’s Revenue and Customs, to look at tax evasion and avoidance. A recent TUC report estimated that £3 is lost for every £1 saved in efficiencies. We will need to look at the whole issue of tax havens and so on. We should be serious about looking at financial deficits, as the hon. Gentleman said—I agree—but we must also be serious about UK taxes being paid at the higher rate and more regularly.
Time is pressing so I shall move on quickly to the whole issue of bilingual juries, which I have been concerned about for a long time. I am disappointed that the response earlier this week noted that there were not enough Welsh speakers—the worst response I have heard in my life. I hope that at some point there will be a consensus across the board on the issue, and I am sure there will be. It does not cut across random selection; there are enough Welsh speakers, even in places considered anglicised—where there are often more Welsh speakers—and we need to address that.
The call for bilingual juries has always been supported by the Liberal Democrats, who, as we all know, are all things to all men—and women, of course. Members who have had a classical education will know about Janus and that in Roman times he was depicted as having two faces or heads facing in opposite directions. Apparently, he was the god of gates, doors, doorways, beginnings and endings—there being no god of actually sitting on the fence. However, that is an appropriate description of where the Liberal Democrats currently sit or stand, depending on the day of the week.
I will give a few examples. On Trident, the student vote was garnered by saying, “We are against Trident.” Yes, they were, but the Liberal Democrats were also in favour of another form of weapon of mass destruction—on a smaller platform—or so we understand from their party’s spokesman on the Astute class submarine. That is a clever move. If we launch a Trident missile from an Astute class submarine, one of the unfortunate side-effects is sinking the submarine, so I am not sure how detailed their thinking is on that. I wish they had finished the sentence with, “We are against Trident but we are still in favour of nuclear weaponry”, because that would have been the honest position. They were garnering votes and carrying them in thousands from the colleges in Aberystwyth, Cardiff Central and everywhere else. It really is not good enough.
Mr Mark Williams (Ceredigion) (LD): I was not aware that the hon. Gentleman was at the public meetings that we held in Aberystwyth with the student communities and others. Perhaps his friends were. He came to Ceredigion on one occasion to a shabbily attended meeting in
On capital gains tax, the Liberal Democrat idea was a good one and I fully supported it, but it did not come through. It was not the 40% or 50% that they wanted; it was 28%. The Lib Dem policy that a £10,000 income should be tax-free was compromised. On value added tax, we had the wonderful performance of his hon. Friend the Member for Brecon and Radnorshire, who one day said, “I am against it; I will vote against it; I will do this, that and the next thing.” But within a matter of hours, he voted in favour. That is pretty sad. As I have said, the Lib Dems are all things to all men and they are capable of the most fantastic U-turns when they put their minds to it.
Mr Williams: I consider the hon. Gentleman a friend; we share a border in our constituencies. Is he honestly saying that every single issue on which Plaid Cymru fought the previous Assembly elections has manifested itself in Assembly Government policy? Is he honestly saying that there are not issues that he is disappointed have not been achieved by Plaid Cymru in government that it campaigned for in the election?
Mr Llwyd: Of course the Lib Dems cannot enforce the whole manifesto or indeed have it accepted, but—for heaven’s sake—when they stand up to the electorate and say, “There will be a Tory bombshell of a VAT rise,” they spend hundreds of thousands of pounds doing it, and then turn around weeks later and say, “We will vote for it”, it is not good politics, my friend.
Alun Cairns: If the hon. Gentleman is looking for consistency in policy, can he tell me how he squares the nuclear energy policy of Plaid Cymru’s leader, Ieuan Wyn Jones, with the party’s policy, which is opposed? We are in favour in Anglesey, opposed as a party, but the leader is allowed to run on both sides of the fence.
I will conclude because time is pressing. I believe that the Liberal Democrats will be punished for what they have just done next summer and at the next Westminster election. The best classical comparison may not be Janus but Icarus: flying too close to the heat and dying.
This morning was a bad start for the Committee in this Parliament. When the Secretary of State was my shadow and the shadow of my right hon. Friend the Member for Neath, we always discussed the issue of ministerial statements together to arrange proper time for the Committee to deal with the issues before us. We did not have that this morning. We had an exceedingly unexciting statement from the Chief Secretary, who gabbled his way through it probably because he wanted to get out of the room as quickly as possible. It did not add anything to the debate that we are having now or the debate we could have had if things had been done properly. I hope that we will see a better way of dealing with the Committee’s business in the months ahead.
This morning’s events show what this Tory Government with Liberal Democrat support, propose to do on the constitution, parliamentary procedures and how we govern ourselves. This morning’s example was classic: riding roughshod over convention, the Opposition and the sensible policies that have been adopted over the years regarding our constitution. For example, we were told in the Queen’s Speech that we will have a constitutional or a political reform Bill on which the Deputy Prime Minister will lead. That will not deal—although we are told that the issue will be before us—with the stuffing and packing of the House of Lords with people from the Conservative and the Liberal Democrat parties to, again, ride roughshod over the democratic processes in the other place.
This morning I spoke briefly about the 1832 Reform Act. Those who know the history—I was taught by the great author of “The Great Reform Act”, Michael Brock—know how the then weak Liberal Government had wanted to pack and stuff the House of Lords to get the 1832 Act through. We are now in different circumstances, but the methods are exactly the same. The Committee will know that for 13 years the Labour Government had no majority in the House of Lords. They could have stuffed and packed it with peers from the Labour party, but they did not do so. The other thing that the Government are doing—it will also be part of the Bill—is to change the procedures for a vote of confidence in the House of Commons. I have no doubt that there is universal opposition to that outside the House by those who know about such matters.
I want to the concentrate on the part of the Bill that will directly affect Wales, and that is the changes to our parliamentary constituencies. The logic on which that daft policy is based is that it is a popular thing to do. Well, it is a populist thing to do, which is not quite the same. I have not come across, in my constituency or elsewhere during the election campaign, any reference whatsoever to the need to reduce the membership of this House to satisfy the populist ambitions of the Conservative and Liberal Democrat parties. I said this morning that in 1832 there were 32 Welsh Members of this House when Wales had a population of less than 1 million. We now have 3 million people with 40 MPs, which is an increase of eight seats. However, if you look at the country as a whole, there has been a 3% increase in the number of House of Commons seats since 1950, but a 25% increase in the size of the electorate of Great
Jonathan Evans (Cardiff North) (Con): Is the right hon. Gentleman saying that the current disparity between Wales and the rest of the UK should be maintained? Or is he arguing that we should have more Members of Parliament from England and a House that is significantly larger?
Paul Murphy: It is certainly not for a Welsh Grand Committee to argue for less representation for Wales. It is not for Welsh Members of Parliament to argue for less representation for Wales. We should be arguing for proper representation for Wales, which we have had over decades and centuries.
Another issue that affects all that is the lack of consultation and negotiation with our colleagues in the Welsh Assembly Government on the implications of the Government’s policies. The Government have been in office for only a matter of weeks and in those weeks they have, on a number of occasions, ignored the proper consultation process between the Government and the Welsh Assembly Government. The Secretary of State for Work and Pensions talked about the “on your bike” policy for council houses, forgetting that the issue of council housing is devolved in Wales. He should have talked to either the First Minister, or the relevant Welsh Assembly Minister. The Secretary of State should talk to the First Minister not only about the implications of the appalling Budget on the people of Wales, but the implications for Wales of the so-called parliamentary reform Bill.
Mrs Gillan: I assure the right hon. Gentleman that there has been a great deal of contact with the Welsh Assembly Government. I am meeting the First Minister yet again on Monday. I am also meeting the Cabinet of the Welsh Assembly Government. I asked whether it was suitable for the First Minister to allow me to have that meeting. Jane Hutt, the Minister for Business and Budget in the Welsh Assembly Government, has already met the Chief Secretary to the Treasury. The Prime Minister, of course, chaired the Joint Ministerial Committee and the Foreign Secretary chaired the Joint Ministerial Committee on Europe.
The right hon. Gentleman will find that there has been a great deal of effort from the Government to engage in a mature fashion so that we can move forward constructively on matters that are of interest to Wales. However, if the right hon. Gentleman has any more suggestions about the frequency with which we should meet, I would be very willing to look at those representations. I think that he will find that the amount of contact that we have had in just a few weeks is almost unprecedented.
Paul Murphy: It is all very well having meetings, but if nothing comes of them what is the point? It is likely that there will be a 25% reduction in the public budget for Wales in the coming months. We can have meetings till our heads fall off, but if a quarter of the public budget in Wales is cut, the implications for jobs and the people of Wales are enormous.
On the issue of constituencies, the Secretary of State should be meeting constantly with the First Minister and the Cabinet. She will know, as we said this morning, that if the proposed reduction in the number of Welsh seats—probably to 30—goes ahead, the implications for the Welsh Assembly are enormous. You will know, Mr Sheridan, from your Scottish experience, about the complications involved in that. The Welsh Assembly simply cannot function with 45 Members. It will not have sufficient Members to deal with scrutiny or the other business of the Welsh Assembly.
As the hon. Member for Dwyfor Meirionnydd just mentioned, the Government proposals for shaping and re-shaping the parliamentary constituencies have a particular resonance in Wales. In our valleys in the south we cannot play about with constituency boundaries too much—a valley is a valley. All our communications are north to south and south to north—not east to west. Messing about with that will lead to the most artificial concoctions of constituencies—far too big and unmanageable without any link between MP and constituency. Conservatives have always said that they do not agree with proportional representation because it takes away the link between an MP and his or her constituency. Keeping too rigidly to 75,000 or 78,000 electors would destroy at a stroke in Wales the basis of the community nature of our constituencies. The hon. Member for Brecon and Radnorshire is not here, but if the proposals go through, he will not have a constituency. Montgomeryshire will go. If Brecon and Radnorshire is added to it, the constituency would start at Crickhowell and end up in Wrexham—the size of Paris and with 100,00 people. Those are the sort of daft creations that will result from the parliamentary reform Bill. They ought to drop it. We will fight it all the way—in this Committee, in the House of Commons, in the Lords and outside—because the parliamentary proposals were not agreed by the people of Wales. It will destroy the relationship between the Assembly and Parliament. It will reduce the proper representation of Welsh people here in the House of Commons and, fundamentally, it is the wrong thing to do.
David T. C. Davies (Monmouth) (Con): It is clear that the thrust of today’s speeches—notwithstanding the previous one, which was interesting—is the cuts in the budget for Wales and the cuts in services that that are likely to follow. I get a sense of déjà vu whenever I hear the shadow Welsh Secretary speak, because he frequently regurgitates his speeches, changing them only slightly to suit the proceedings. I am also reminded of Harold Wilson, who famously told a Labour party conference in the late 1970s that, although they used to think that it was possible to tax and spend their way out of a recession, that option no longer existed.
David T. C. Davies: Perhaps it was Callaghan, but that was a fair summary of what was said. In fact, Callaghan and Wilson pioneered the Conservative party’s monetarist policies of the 1980s, and the Labour party cleverly ensured that we took the blame for them before
If nothing else, the situation shows that the Welsh Affairs Committee will have an important role to play over the next few years. I am honoured and delighted to have been appointed Chairman of that Committee, and pay tribute to the previous Chairman, the hon. Member for Aberavon, who did an excellent job. He understood, as I do, the importance of seeking consensus if any of that Committee’s reports are to have any effect. I admit that seeking consensus has not been one of my strong points over the past 11 years in Parliament and the Welsh Assembly—I am on a learning curve.
Dr Hywel Francis (Aberavon) (Lab): I thank the hon. Gentleman for his praise and congratulate him on his election to the Chair of the Welsh Affairs Committee. I note his observation, both now and previously, about the need to be objective and impartial. However, it is also the task of the Welsh Affairs Committee to be the voice of the Welsh people in Parliament. One 19th-century Welsh newspaper was called “Tarian y Gweithwyr”—the shield of the workers; will the hon. Gentleman be “tarian y werin” and ensure that the Welsh Affairs Committee will be the shield of the Welsh people and protect them against the austerity Budget?
David T. C. Davies: I shall be “tarian y gweithwyr”, but “tarian y cwmnïau hefyd”—the shield of companies also—because it is important to remember the employers. If we did not have employers, we would not have employees. I will try to remember what the hon. Gentleman said, but I will also remember that if we do not make these cuts, we will be in a perilous situation. A business supplement headline in The Sunday Times a few months ago read, “Britain will not be downgraded—yet”. That “yet” was the killer word, because only a few months ago, a national newspaper was discussing the fact that Britain was not about to be downgraded just at that moment.
David T. C. Davies: I will in a moment, but let me make my point first. If our triple A rating had been downgraded, it would have been virtually impossible for us to borrow any of the £150 billion a year that we need to square the books. That would have put workers and companies in a very perilous situation indeed.
Geraint Davies: Does the hon. Gentleman accept that one way to reduce the deficit may be to relocate some Whitehall Departments from London to Wales? Does he also accept that, if the number of Welsh MPs is reduced from 40 to 30, our negotiating leverage to achieve that and to get a decent grant for the Welsh Assembly will be reduced?
David T. C. Davies: I accept the first part of the hon. Gentleman’s statement, but I do not necessarily accept the second, because Members of Parliament have a wider national role. It should not simply be to say, “Come to my constituency because a number of us have ganged together and think it’s a good idea.” If we are serious about cutting the deficit, we need to look, yes, at maybe moving people around if they are willing to do that, but also at making sure it is cost efficient to do so.
Mrs Gillan: I add my congratulations to my hon. Friend on being elected to the Chair of the Welsh Affairs Select Committee. It may interest him to know that I have already written to my Cabinet colleagues to suggest that if any parts of their Departments need relocating outside the expensive metropolis, Wales would be a very good recipient of them. Perhaps through his good offices, he will know that I have been a loud voice for Wales on that point.
David T. C. Davies: I am grateful for that. I believe that the hon. Member for Swansea West will be a member of the Committee, and such a matter is the sort of thing it may well wish to examine. We may not agree on the level of cuts that will take place—I am sure we will not—but we can look at ways to mitigate the effect on people, and we may be able to find agreement. For example, only yesterday, I had an e-mail from a constituent who had cleverly put in a freedom of information request and discovered that Gwent police had spent £35,000 or so on putting out leaflets telling people effectively what a good job they are doing. The leaflets were newsletters and the sort of thing that Members of Parliament used to put out—I plead guilty to that one as well. However, we have been told that we can no longer do that because times are hard. We might wish to ask whether the police authorities should be putting out leaflets telling everyone what a good job they are doing when times are hard, particularly as there are 43 police authorities across England and Wales.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC): Is the hon. Gentleman not concerned that overt fiscal consolidation based on expenditure cuts will lead to a double-dip recession—if not at a macro-level, definitely at a Welsh level?
David T. C. Davies: It could do. I do not know because I am not an economist. Lots of people are saying that such an approach will lead to a double-dip recession, but I do not think many of them are qualified to say that. Winston Churchill once said that if two economists are put in a room and asked a question, you
Everyone talks about the deficit in terms of GDP. Again, I am not an economist; I like to understand things in a simple way. If our tax revenue is £520 billion a year but our spending is £670 billion a year, that is a phenomenal hole that we have to fill. I am certain that if we do not take action to stem the deficit, we will almost certainly have the double-dip recession about which the hon. Gentleman is concerned.
Susan Elan Jones (Clwyd South) (Lab): Does the hon. Gentleman agree that if it is a “tarian” of anything, it is “tarian y toriadau”—a shield of cuts? When he speaks of economists having different views, the kind of people we are talking about are, for example, the US Treasury Secretary—Timothy Geithner—who expressed such a fear at the weekend. Does he have any comment about the fact that the Business Secretary confessed only last week that the Government’s whole approach on the issue was “a gamble?”
David T. C. Davies: We are going a long way from the remit of a humble Chair of the Welsh Affairs Committee. The Chief Secretary was here earlier; why am I getting all the financial questions? I do not like the word “gamble” but, of course, we cannot be 100% certain of the outcome of all this. We cannot be certain what the outcome would have been if our credit rating had been downgraded, but it would have been dire for all of us in Wales. I hope that I will be “tarian y gweithwyr” and I am sorry that the Welsh word for cut, “toriad”, is so similar to one of the more pejorative terms for the word “Conservative.”
Alun Cairns: Clearly, there are different views among many different economists on the risk of a double-dip recession. However, has not the new independent Office for Budget Responsibility concluded that there are greater risks in not making those essential cuts? Its director has recognised that there is a greater risk to the economy in Wales and elsewhere if we do not make the cuts necessary to bring public spending under control.
David T. C. Davies: My hon. Friend is correct but, again, I am veering a long way from where I wanted to be. Let me simply say this. We all recognised the need to reduce public spending. There is no point shying away from that. If there are to be cuts in public spending, we could look at where they need to fall. For example, I was very sorry to hear that Gwent theatre is to have its funding from the Arts Council of Wales cut and may even be forced to close. I am sure that many people will ask where else the Arts Council of Wales is spending money and whether that cut is the most appropriate for it to make.
I have heard talk, although not in the House yet, about reducing the number of people who go to prison. That would concern me because I do not necessarily accept that reducing prison numbers will save costs, nor do I accept the figures that have been bandied around in some newspapers.
I know that the referendum will be a big issue for the Committee and the Assembly. There is no point in insulting each other’s intelligence: we all know that there are big divisions. There are divisions within our own parties and in Wales about it. It is not our job to widen those divisions. The job of the Committee will be to try to look for agreement on issues relating to the fairness of the referendum. Whatever happens, that result will be a difficult one for people in Wales to take if they are on the losing side.
I make no secret of the fact that I am a Unionist. I opposed the creation of the Welsh Assembly and there is no point in denying that I would vote against further powers for it. I respect the views of Opposition Members who say that strengthening the Welsh Assembly would strengthen the Union, and of those who quite openly would prefer Wales to leave the Union altogether—at least, that is my understanding of their position. It is possible to respect that and I hope that the views of people who genuinely fear that further powers for the Assembly could lead to Wales losing its place in the Union will also be respected. All I would seek is a referendum that is fair to all sides so that they can get their arguments across. The question has to be fair to all sides. Then, when the voice of the people of Wales is heard, all sides can respect the answer, whatever it is. Surely that is good for all of us.
David T. C. Davies: My right hon. Friend said that she will remain entirely neutral to ensure fairness. As the Chairman of the Welsh Affairs Committee, I will remain neutral as well, but if I am asked how I will vote —I will have a vote in Wales—I will not hide the answer. I will not try to pretend that the past 11 years have not happened. I will say quite honestly what my view is and at the same time try to ensure fairness. I do not think that those two things are incompatible.
From the perspective of 11 years in Parliament and the Assembly, I got some things wrong about the Assembly. I sneered at the family-friendly hours when they were set up. I thought it was a bit of shirker’s charter. I am not sure whether I put it in those terms but I was certainly dismissive. I look around here after five years and this place is a breaker of families. We have all gone through the mill in the past year. We could learn a lot from some of the Welsh Assembly’s working practices and it behoves people like me who have been negative about it to accept that and to admit that it got some things right.
The whole thing was set up from scratch in 1999. We are still running this place like an 18th century London gentleman’s club, coming in at 2.30 in the afternoon and finishing at 10 or 11 o’clock at night. Why do we have to do that? I do not know. Again, that is veering a long way from Welsh affairs. Suffice it to say, the Welsh Assembly has got some things right. It could learn from our Select Committee system, which, from what I have
One of the roles of the Welsh Affairs Committee can be to offer constructive criticism and solutions to the Welsh Assembly and the Secretary of State for Wales, remembering at all times that, if we can do it unanimously with opinions as diverse as mine and—I could say those of my hon. Friend the Member for Montgomeryshire, but perhaps I should look at Plaid Cymru Members, it is likely that those reports will carry some weight. Many of us in the past year must have asked ourselves what we are doing here when we get so much antipathy, hatred and lack of understanding from the press and many in the outside world. Yet we all won our seats. People wanted us to come here and represent them. If it is not too trite and clichéd, although it probably will sound it, I think we all know that we can make a difference in ways big and small. The Welsh Assembly can play a role in making a difference, and I hope that we can all work together to achieve that.
The Chair: Order. I will make a point before I call the next speaker, which is no reflection on her. At the beginning, we appealed for brevity. If contributions and interventions continue to be as long as they have been, there is no way that some people will be called, which would be extremely unfortunate.
Susan Elan Jones: Thank you for calling me, Mr Sheridan. I promise to be as brief as possible. There is a great difference between delivering a speech in this forum and delivering a maiden speech. When many new Members deliver their maiden speeches—especially those of us who represent rural and semi-rural Welsh constituencies—they take a tour of many of the scenic aspects of the seat.
The scene that I describe today, however, is not of the picturesque aspects of the seat. It is based on facts about Clwyd South, as it is now: the fact that in March, long-term unemployment was more than 31% below what it was in 1997; the fact that last December there were 8,400 families and 13,000 children benefiting from tax credits; the fact that last August there were 5,000 beneficiaries of pension credit; the fact that in 2008-09, 11,740 households and more than 16,000 people living there benefited from winter fuel payments; the fact that in the school year of 2008-09, 53% of students in the county borough of Wrexham achieved five or more GCSE grades A to C, which was up 12% from 1996-97, and that the comparative figure for the county borough of Denbighshire was up 11% for the same period; the fact that the number of pupils leaving education without any qualifications has decreased form 3.1% in 2004-05 to 0.1% in 2008-09 in Wrexham county borough, and from 4% to 1% in Denbighshire county borough; and the fact that there are now 226 more police officers across north Wales than was the case in March 1997.
Those facts do not make the pretty postcards that we associate with many parts of our constituencies, but they show how 13 years of Labour Government in the UK, and Labour-led Administrations in Cardiff, have
“As for the Conservative party, they recently admitted that they want to slash spending immediately, which will have a damaging effect on the Welsh economy given its strong reliance on the public sector.”
Today, a mere two months later, I believe that she was right. It is difficult not to believe that what has driven the Conservative-Lib Dem Budget is an ideological preference against state investment.
My former Conservative opponent in Clwyd South has a fondness for writing letters to local newspapers—I believe that he should be greatly encouraged to do so. Only last week he wrote about the kind of investment that 13 years of Labour Government delivered:
“As the massive investment increases in, mostly wasted, spending on education, health, welfare and public sector jobs starts to dry up, we will see that there has been little improvement to show for it.”
Perhaps he should tell that to the 8,400 families who are benefiting from child tax credits, the 5,000 pensioners in Clwyd South who are benefiting from pension credit, the families that have seen hospital waiting lists slashed or the children who have better educational qualifications.
Recently, a local newspaper in my area asked residents for their verdicts on the Budget. It was abundantly clear that they still think that the VAT rise is regressive, as did the hon. Member for Brecon and Radnorshire only 10 days ago. A mother mentioned the rise in the cost of household goods, clothes for adults and some food items. A local taxi driver, who brings in £250 a week, commented:
“We cannot afford to put our fares up because we are really down on turnover, it’s really bad. Our costs are going to go up with the VAT, but we are going to have to absorb it even though we are struggling.”
“The things which will have the biggest impact on people will be the cap on public sector workers earning over £21,000 a year, the rise in VAT from 17.5% to 20% and the change to a whole range of benefits. I can foresee these things will mean that many more people will be coming to us for loans to help balance their family budgets.”
Jonathan Evans : I visited the Table Office earlier in order to take advice on this speech, because this is the first time that I have made a speech in Parliament since returning to the House after an absence of 13 years— 10 of those being spent on missionary work in the European Parliament. I asked whether this counts as a maiden speech, and I was generously told that my maiden speech took place 18 years ago. That is not an invitation to intervene, but it does set the context, which is that I will reflect the tone of such speeches by first paying tribute to my predecessor, Julie Morgan. There is nowhere better to do so than in this Committee, not least because as I look across the Committee, I see so many people who worked so hard to try to ensure that I did not return to the House. [ Interruption. ] The result was indeed very close, which was a strong reflection of the high regard in which Julie Morgan was held in the constituency—she was well regarded here in the House, too. It was a testament to her personal service in the constituency that she secured only 40 fewer votes than in 2005.
Having said that, I am delighted to be here, because I feel that I have arrived at a rather historic time, in which we are living new constitutional history. In that context, I remind the Committee of the remarks made by Mervyn King during the election campaign, which were not announced publicly but which were subsequently leaked. He said that the party that won the election would be out of office for a generation. I do not know whether that will prove to be true, but we would do well, in the context of this debate, to reflect on those words. Why did he say that? He said that because he recognised the enormity of the financial challenges that faced our country. In the time that I have been back in the House, I have not received the impression that that is totally appreciated by Opposition Members, so I will remind the Committee of a few facts.
We already know that the budget deficit is £153 billion —it is endlessly discussed—but we do not speak so much about the level of personal debt that was racked up over the course of the Labour Government. The hon. Member for Clwyd South discussed the advances that she feels that her constituents have experienced; the reality is that her constituents, along with my constituents and those of all Committee members, are more heavily indebted personally than they have ever been. Personal debt is equal to 100% of GDP, and savings are at their lowest level since the 1950s. That is a stark picture, not only in the personal finance sector but in the company finance sector, because although personal debt represents 100% of GDP, company debt makes up 110%.
Sure, we had all those years in which the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) and Tony Blair were cutting the ribbon of Lehman Brothers and the rest in the City of London and getting the resources from that growth in the financial sector, but the reality during that period was that many of those companies were themselves existing on significant debt. I repeat: the amount of company debt in our country represents 110% of GDP.
When the tsunami of the financial crisis hit us, it was claimed that our country was best placed to withstand the recession. That was not true. It was the worst placed, and if anybody doubts that, a McKinsey report published in January described our country as the most indebted in the world. That is the stark message.
I was surprised when, within a day of the election, having come so near to an overall majority, my right hon. Friend the Member for Witney (Mr Cameron) gave a speech offering the opportunity of a real, open coalition with another political party. I thought subsequently that that was a brave move on his part, because it was not universally popular on my side of the House. Going into coalition was a big challenge not only for our party, but for our Liberal Democrat colleagues, given the slings, arrows and insults that they have received. That is, however, a recognition of the enormity of the problems that we have been left and that have to be grappled with.
During the election campaign, Labour recognised that those challenges had to be faced and that £40 billion had to be cut from the Budget, but watching Prime Minister’s questions or other debates, or what took place earlier in this Committee, that would be hard to believe. I have not heard any specific proposal on reductions in Government spending that has been accepted by Labour Members. That is a matter for the Opposition, but the reality is that it falls to us to try to address the challenges that we face.
Geraint Davies : During the election campaign, the Conservative party suggested that there should be £8 in cuts for every £1 of tax raised, while the Liberal Democrats suggested that there should be £2.50 in cuts for every £1 of tax raised. Does the hon. Gentleman accept that there is not an equal coalition and that it is an overwhelmingly Conservative mandate? Does he also accept that one can balance economic growth, tax, and cuts as part of a portfolio to solve the deficit?
Jonathan Evans: One thing must happen if we are going to address the deficit: the Opposition have to accept that there will be cuts. They have to recognise the areas in which they are going to accept them, but they have not done that so far.
I respond to the hon. Gentleman’s second point by using the word “compromise”. Our party has had to compromise. In our manifesto, there were proposals that I spent a great deal of time trying to persuade voters in my constituency to support, but that we cannot carry forward. That is because, no matter how often the Opposition claim it, this is not a Conservative Government—[Hon. Members: “Yes it is.”] I know it is in the Opposition’s interest to cackle that it is, but the reality is that this is a coalition Government of two parties.
Jonathan Evans: I will definitely let a Member from Tredegar intervene in a moment, but I will make one point first. The Opposition also have to understand that although they sit there looking as though they outnumber us—
Jonathan Evans: But is it? In Wales, 36% of the electorate supported the hon. Gentleman’s party while 46% supported my party and that of our hon. Friends, the Liberal Democrats. Before anybody says “proportional representation”, those Members who have known me the longest will know that, for 20 years, that issue, like Europe, has been one on which I have not been a mainstream Conservative thinker. I strongly believe in proportional representation, and I will develop that point in a moment, but Labour Members should realise that, although there are 26 of them, there would be 10 fewer under a proportional system.
Nick Smith: I thank the hon. Gentleman for giving way. It is typical of the good manners of men and women from Tredegar that we speak up for others from the same town, although, of course, we have very different politics. I note that the hon. Gentleman’s brother has Labour politics.
There has been a lot of talk about collaboration and progressive politics today. I want to comment on the gulf in the seating arrangements. Frankly, we could channel the River Taff into the differences between the two Government parties. It is interesting that Liberal Democrat Members are embarrassed by their coalition—I just want to make that point.
I have known the hon. Member for Brecon and Radnorshire for more years than the Committee may realise. In his maiden speech, he pointed out not only that I formerly represented him in Parliament, but that at one stage he was my landlord. We have discussed political matters in challenging ways over the years, and I was one of the last people to think that we would end up in this coalition, but the reality is that the circumstances of today demand that arrangement in the interests of our country.
Mrs Gillan: I am grateful to my hon. Friend for giving way, because I can welcome him back to the House of Commons. We are both of the class of ’92 and made our maiden speeches then. Does he agree that it is ironic that Opposition Members are so busy trying to run down the coalition Government, who are working so well? That compromise is in the interests not of party political advancement, but of the advancement of the country. Is it not ironic that Labour and Plaid Cymru are in coalition in Cardiff, where they seem to co-exist quite happily? Is the lack of a respect agenda from the Opposition Members a sad reflection on the Labour party today?
Jonathan Evans: The reality is that we live in a country of multi-party politics in Wales. It is inconceivable that we will have one-party rule in Wales. Labour struggled with that idea but subsequently formed alliances with the Liberal Democrats on one occasion and Plaid Cymru
I hope that the Liberal Democrats will not be offended, but, as a long-standing supporter of electoral reform, I do not agree that the alternative vote system is a system of electoral reform. In my view, it does not address any issue in relation to proportionality. The disparity between Members and votes that we see in the Committee today, where the votes are on this side and the Members are on the other side, might not change much with AV. I would certainly support a change that introduced proportionality, even though it is anathema to many other Conservatives, but the AV system would not achieve that.
I am bearing your comment in mind, Mr Sheridan, and I will draw my remarks to a close by making an observation about the forthcoming referendum. In the Queen’s Speech, there were a number of measures by which we will be endeavouring to devolve power to local communities. We will try to devolve power on planning to local councils, without having them second-guessed from above. We have concepts on the delivery of free schools, and we anticipate the empowerment of voluntary bodies. That agenda has a great deal to commend it, and it should have more cross-party support than we have heard so far.
One concern is that the referendum debate is all about, “Should we have more powers in the National Assembly?” rather than, “Should the National Assembly engage with the agenda of ensuring that powers are devolved to local communities, voluntary groups and the rest?” When we have the debate, I want that question to be addressed by those people who argue most strongly for powers to be devolved to the National Assembly. If that can be satisfactorily addressed, and if we—and the National Assembly, too—believe in ensuring that we win local empowerment, I for one would enthusiastically support the transfer of those powers. If elsewhere in the country such powers end up in local communities, but in Wales they stay in the National Assembly, people in Wales need to know that before voting in the referendum.
Albert Owen: It is a genuine pleasure to follow the hon. Member for Cardiff North. I am sure that the whole Committee welcomes the remarks that he made about his predecessor, Julie Morgan. He has graciously done that on several occasions. It is also good to hear in this place from a one-nation Conservative—from Wales, as well.
I will be brief, because of the time constraints following several interventions and long speeches by Front Benchers, but like the hon. Member for Dwyfor Meirionnydd, I want to start by welcoming—genuinely—some of the measures in the Queen’s Speech, particularly the energy and green investment Bill. There is consensus among all the parties in the House of Commons on the desirability of a green investment bank. I want that to succeed, and I will support it. There is currently a debate in the
I also agree with the hon. Gentleman on the Equitable Life payments scheme Bill, which I hope is taken forward. In the previous Parliament, the Conservatives—I joined them on occasions—said that they would rapidly implement the ombudsman’s recommendations on compensation. There was to have been a quick resolution after the general election, whichever party won, but I hope that the Bill will now be pushed through.
I also welcome some of the remarks the Chancellor made in the Budget statement about helping business outside south-east England. I am not sure how that will work or how companies will benefit from the national insurance measures, but I think that companies might benefit, as they might from a further reduction in corporation tax. Corporation tax was reduced in the previous Parliament, and we need more reductions in the future. I have put this point to the Chief Secretary, but the change to the fuel rebate is a sensible idea, on which I have campaigned for several years. It is unfair that one company sells petrol at considerably dearer prices in rural areas of the United Kingdom.
I am concerned about the regressive nature of the Budget, however. The 2.5 percentage points increase in VAT will wipe out any possible rebate on fuel, which will hurt rural areas very badly. There is no doubt that the Budget is regressive. The Government say that it is tough and fair. Well, they are half right—it is tough, but it will not be fair. I will not go over the comments made by my right hon. Friend the shadow Secretary of State, who referred to articles in The Observe r. Now that many organisations and experts have had time to examine the Red Book and the Budget measures, it is clear that the poorer will be worse off because of the Budget’s regressive nature. Some families will be six times worse off than the richest, because increasing income tax allowances benefits everybody, but the poorest in society form the highest proportion of those who buy goods, so the VAT increase will clobber them.
On debt reduction, the Chancellor is misleading the country when he says that this is the worst debt in peace time. It is not. Historically, we can learn from Neville Chamberlain’s Budget in the 1930s, when debt was 177% of GDP and the interest on that debt was 40%. If we look at the current Red Book, the debt in 2010-11 was 69.1% of GDP—I know that that is high, but it is not as high as in many countries, and certainly not as high as it was in the 1930s—and the interest on that debt is 6.3% of public expenditure.
We need to put that into its proper context, and we have to learn from the ’30s, which we—the previous Government—did. The fiscal, global, international, economic crisis of the 1930s saw mass unemployment. We have seen high rises in unemployment, but they have been nowhere on the scale seen in the 1930s because of the fiscal stimulus that the Labour Government introduced. That created the extra burden of debt, but the fiscal stimulus can, I believe, help us to grow out of recession, in addition to raising taxation and making difficult choices and cuts. That triple act is the fairest way of reducing the debt. I still believe that raising national
Alun Cairns: The hon. Gentleman talks about national insurance increases for employers, but what analysis has he made about the impact of that on, for example, the health service? It is Wales’ largest employer, and his party would have returned money to the Treasury through those increases, instead of spending it on health.
Albert Owen: The Treasury wants money, and that is why the Government are making huge cuts—to bring money back in. It is a little rich of the hon. Gentleman, although I know that he is a new Member. I voted for an increase in national insurance in my first Parliament. The current Prime Minister voted against it. That measure was for investment into the health service. The Government are trying to lecture us about not increasing national insurance, but we voted for that measure because we wanted to see more money going into the health service, to raise it to European standards. I know that the Government are against raising national insurance, but I feel that it is fairer.
As The Guardian reports today, the cat is coming out of the bag on unemployment. There will be increases in unemployment in Wales. During the first decade of the Labour Government, there was an increase of 7,000 jobs in my constituency, which has structural problems of unemployment. From the mass unemployment of the ’80s and ’90s, we saw a 29% increase in employment in my constituency. This Budget and the Queen’s Speech put that at risk, and that worries me. The Secretary of State nods her head. Can she give me an assessment of what impact her party’s policies will have on unemployment in my constituency? I am dealing with the facts and what is actually happening, and I am worried that many more people will lose their jobs in the future because of the measures in the emergency Budget.
Mrs Gillan: I pay tribute to the hon. Gentleman, because, as everybody on this Committee would agree, he has always spoken up for his constituency. I have been particularly keen on the way that he has championed Wylfa. I think that he would agree that Anglesey’s economy would not be in its present state if his party had taken decisions on Wylfa sooner, which was disappointing. I assure him, however, that in the spirit of his representation. I will always look to Anglesey to see what I can do.
Albert Owen: I am sorry that I gave way, because the right hon. Lady did not answer my question whether she would make a prediction on future unemployment. The decision on Wylfa was made in 1987—the Conservative Government decided not to go ahead with Wylfa B because of the dash for gas. Between 1997 and 2001, the Government stalled the decision and the planning was bogged down. How will yesterday’s announcement on planning impact on decisions on matters such as a new Wylfa B, and who will make those decisions? Will it be the Department of Energy and Climate Change, or the Department for Communities and Local Government?
I will finish on the important issue of broadband. There has been huge investment in the infrastructure for broadband, and the Chancellor made big play of the subject in the emergency Budget, when he suggested that the Government will not go ahead with the so-called landline tax. I believe that that was a fair tax, because the United Kingdom should have universal broadband. I guarantee that if the Government do not invest in the infrastructure, the market will not deliver broadband to regions such as north-west Wales. The landline tax of 50p a month would have provided the investment that private companies were asking for.
The Conservative-Liberal Democrat Government’s alternative proposal—again, I ask the Under-Secretary to respond—is that money left over from the digital switchover, which they estimate will be £350 million in 2012, will be spent on two pilot schemes. I want that to be cleared up, because we could wait decades for fast broadband in north-west Wales. If universal broadband is not provided, places such as west Wales will suffer and will be in the second division. I am concerned that the measures announced in the Budget will mean that we will not receive the investment that 21st century companies want, and I hope that the Under-Secretary will address that.
Alun Michael: Welcome to the Committee, Mr Sheridan. You will be pleased to hear that the first successful prosecution in Wales under the Gangmasters (Licensing) Act 2004 took place a couple of weeks ago. That Act, which you guided through the House and on which I worked with you, is a positive measure.
It is sad that the Secretary of State has hidden behind the Chief Secretary, who, as my hon. Friend the Member for Clwyd South eloquently outlined, came to make the unbelievable claim that the Liberal Democrat and Conservative Budget is progressive. It is not. The increase in VAT to 20% imposes a regressive burden that will fall disproportionately on ordinary people and the less well off, and that will be especially true in Wales.
The Chief Secretary claimed that it is a fair Budget, which it is not, for the same reasons, and he claimed that the cuts are necessary and unavoidable to deal with the deficit, but the key challenge for the Government is to manage the tension between reducing the deficit and nurturing growth and recovery. The Budget cuts deep into the flesh of the economy, while failing to give those affected the time to plan and prepare. We all know that in-year cuts are expensive and inefficient and do far more damage than well planned and measured reductions. The Labour Government were realistic in facing up to the necessity of cutting public expenditure—let us remember that the need for cuts was caused by the international banking crisis—but they allowed time for the economy to recover.
We heard in the media today that the Secretary of State for Justice plans to cut prison numbers by depending less on short-term prison sentences and placing more emphasis on community sentences. So far, so good. That follows the Justice Committee’s recommendation on justice reinvestment, which was published a few months ago. That report, however, recommended a coherent set of changes, and three other elements are necessary for the Justice Secretary’s initiative to succeed. First, the police and every other element in the criminal justice system need to focus clearly on cutting crime and disorder at local level, yet the initiative was announced in the week in which the policing pledge was scrapped. Secondly, the initiative requires a partnership approach that uses the capacity of a variety of bodies to reduce offending by reducing the prevalence of drug dependency, alcohol-related issues, mental health issues and other problems that fuel offending. Thirdly, the initiative requires investment in the justice system’s capacity to deliver effective community sentences. We know that schemes such as restorative justice work, but they do not happen out of the blue or without appropriate resources.
Wales offers examples of success. There has been a 40% reduction, not in police numbers, nor in the number of people taken to court, nor in the numbers going to prison, but in the number of people going to A and E requiring treatment after being the victim of a violent offence. What victims want—other than not to have become a victim in the first place—is to know that they will not become a victim again. It is essential to get the criminal justice system to focus on reducing offending. That leads to savings for the NHS—through that 40% reduction in people coming for treatment—as well as savings in police time and a reduction in the number of victims. However, to achieve that requires a coherent, joined-up approach. To cut prison numbers while cutting all three of those necessary elements is a dangerous approach. I want policies that lead to a cut in prison numbers because crime has gone down, not an arbitrary decision to put a cap on prison numbers simply to save money. The cut to the policing pledge includes abandoning the emphasis on response times to 999 calls. That is not sensible.
Going back to the economy, I heard the chairman of the CBI in Wales the other week. While welcoming the cuts, for reasons that were slightly unclear, she told us that the CBI was upgrading its growth forecast from 1% to 1.3%. She acknowledged that things are not as black as this Government had portrayed them only a few weeks earlier. She spoke of fears about the impact of the cuts, in particular the danger of creating a generation of young people who are abandoned and who have no jobs or opportunity. That is not a fear: that is about to become a reality as a result of this Government’s decisions.
The Government have abandoned the pledge to give a job or a training place to every young person who is unemployed for a few months. Have they learned nothing from the appalling mistakes made by the heartless Government of the 1980s under Margaret Thatcher? That is what brought me into national politics— the experience of working in my city of Cardiff with unemployed young people who had been denied hope and opportunity, a job and a future. That is what the Thatcher Government gave us. What brought me into national politics was the desire to tackle and change that.
That contrasts massively with the steps taken by the Labour Government in recent months, in some of the most difficult periods, to say that we will guarantee a future for those young people and engage them to make sure that they stay in touch with the economy and are not abandoned by cuts that go too deep, too fast. The Labour Government were prepared to take difficult decisions to cut expenditure, but to do so in a sensible way that was designed to nurture growth and keep the future generation in touch.
Finally, the Chief Secretary claimed that this Government want to help small businesses. Wales is disproportionately dependent on public sector jobs. I share Carwyn Jones’s wish, rightly expressed, that we need to nurture the private sector and enterprise in Wales, but public sector employees spend money in the local economy, so the cuts, which will be disproportionate in the public sector in Wales, will also damage the private sector. That is the warning: the abandonment of young people, and pain for the private as well as the public sector in Wales. I call on Ministers to heed that warning and learn from the mistakes of their Conservative predecessors in the 1980s and 1990s.
Glyn Davies (Montgomeryshire) (Con): Thank you for giving me an opportunity to make my first contribution to the proceedings of this House, Mr Sheridan. I have not had much luck so far. I asked to make my maiden speech in a debate in Westminster Hall, but as soon as I said I wanted to speak, the proposer of the debate, my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), was immediately taken to hospital for treatment. I then asked if I could make my maiden speech in the Budget debate on Wednesday, but then I was taken to hospital for treatment and was there for three days. I hope Members are all well and nobody is feeling a bit sick at the moment.
I want to speak briefly about an issue that is important to me: the commitment in the Queen’s Speech to hold a referendum on moving to part 4 of the Government of Wales Act 2006. There has been a lot of discussion over the years on that issue. I remember that a lot of the Opposition parties in Wales felt that a Conservative Government would be so involved in dealing with the economic crisis that we believed we would be facing that we would not be prepared to do this. It was a huge event for Wales when, at Broughton, my right hon. Friend the Member for Witney, then the leader of the Opposition, committed the party to holding a referendum. Certainly for me that was a big deal, and I was very proud to be in the Chamber to hear a commitment to holding that referendum.
I will look very briefly at the history of where I and several other people come from. I was not in favour of devolution—establishing the National Assembly—in the first place, and in 1997 I campaigned against it. Travelling home from the count, however, I realised that the reality was that we now had a National Assembly and that it was here to stay. My hon. Friend the Member for
I certainly was not alone in that view, because in 2006 we had another Government of Wales Bill, which granted law-making powers to the National Assembly, but by a very complex route. Earlier, the right hon. Member for Cardiff South and Penarth referred to the number of legislative competence orders that have gone through, but many people believe that the system is far too complex and far too difficult to understand. A lot of people took the view that we needed to move very quickly to part 4 of the Act, under which, in effect, primary powers in all the areas devolved to the Assembly would be granted in one fell swoop, rather bit by bit, which is what is happening. I am very much in favour of that.
The point that is important to us, and which others have made, is that this has to be a decision of the people of Wales. I will probably argue for a yes vote in the referendum, but if I lose I want to be in a position where I have great respect for the other side of the argument and feel that it is a genuine decision of the people of Wales. I hope that we can go forward in the debate without rancour and that it will be a genuine debate, in which those of us who take different views argue our case and make it politely and with respect for others’ points of view. We can then all stand behind the decision that is taken. I feel that that is what we really want in the referendum, and that is what I am committed to doing.
Owen Smith : I shall return briefly to what I think has been the most important issue that we have discussed today: the Budget and the rather rushed rehash that we heard this morning from the Chief Secretary of last week’s speech by the Chancellor.
There was a moment in the middle of the right hon. Gentleman’s speech when I think we heard the kernel of the Government’s rationale and hopes for the Budget. I paraphrase slightly, but in effect the Chief Secretary said that the Budget was a credible plan to restore confidence and to allow the private sector to grow and to create jobs. That broadly sums up what the Government hope will come out of their Budget. I think that they are wrong on almost every count. It is not a credible plan, it does not restore confidence, and it will not allow the private sector to grow and expand. As someone who has worked in the private sector for the past five years, I have seen a great lack of confidence and I do not see that changing now.
We hear a lot of rhetoric in this place, but sometimes facts are worth bearing in mind. We should start to look at the facts, at how the markets have responded and at how those people who will make the decisions in the private sector about how we might see growth in the economy are responding. I think that the message is already clear. We have a Budget that was forged with the
Jonathan Edwards: The hon. Gentleman is making a fantastic point. Does he agree with the economist Joseph Stiglitz that negotiating with the markets is like negotiating with a crazy man: you might give him exactly what he wants, but he will still shoot you?
Owen Smith: I almost always agree with what Joseph Stiglitz says, and he was absolutely right about that. We have already seen the markets reneging. They pressed for a draconian Budget and radical cuts in the public sector and in public services, and they promised to sweep in, fill the gap and pick up the people who were thrown on to the scrapheap, but what do we see right now? We see the FTSE plummeting, as it did yesterday, bond yields declining dramatically and the gold price going up—all clear indicators that the Budget has not reassured the markets. The markets are much more worried about the long-term impact of a failure to re-stimulate growth in our economy and are concerned that the very thing that they did not want to see—a longer or double dip recession—might be exactly what is prompted by the cuts. A clear set of such indicators is already emerging from the City.
We can also look around the world. The other fundamental underpinning of the Budget idea for growth is that we would see export-driven growth, creating the fabled 2.5 million jobs in Britain through an export-driven economy over the next five years. Exactly where will we export those products? Only today we have seen slowing growth in China and, yesterday, figures out of the US saying that its economy is slowing dramatically. We anticipate further indications from the US that it, too, will not be buying our products when the non-farm payroll figures come out at the end of this week. We all know that Europe, our principal trading partner, is absolutely unable to buy our products and services.
We should therefore be worried about what we have seen of the Treasury figures brought to us this morning by The Guardian. The Office for Budget Responsibility concludes that there will be job losses—100,000 in the public sector and perhaps 140,000 in the private sector, per annum. Again, that gives the lie to the notion that we can cut the public sector without any impact on the private sector. They are symbiotically linked and if we cut one the other will bleed. Those job losses will arrive, the OBR says, and I see no indication that we can be hopeful, as the Prime Minister and the Secretary of State clearly are, of seeing that magical figure of 2.5 million new private sector jobs filling the void.
We should look at the facts. I wonder whether any hon. Member looked at yesterday’s statement from 12 of our leading companies—including Morrisons, the train company Arriva, Jaguar and the Co-operative—saying that they have no intention of expanding their work forces over the next 12 to 24 months. As I said, I worked in an industry, the biotech industry, which over the past five years has been doing what most of the big industrial players are doing—deleveraging, paying down their debt and getting ready to weather the long storm that they know is coming and which they know will be compounded by this Government’s Budget.
Mr David Hanson (Delyn) (Lab): I realise that time is pressing, so I shall make a couple of brief points. For the first time in 13 years, I have been able to speak in this Committee, so it is a pleasure to be here, although I am sorry to have to be speaking about a Budget that I believe is unfair and will damage the interests of Wales as a whole. I do so because the 26 Labour Members of Parliament represent the voice of Wales—we have a duty to stand up for Wales.
The Government had choices to make in the Budget but they have made the wrong choices. They have made the wrong choice on VAT, which will damage and hit the poorest people in our community. They have made the wrong choice on cuts in public spending, which will hit, as my hon. Friend the Member for Pontypridd said, not just those in the public sector but also the private sector companies that depend on the public sector for their income and support. In a range of ways, the Budget will hit the poorest people in our society as a whole.
I recognise that you want to commence the wind-ups at 20 minutes to 4, Mr Sheridan, so in the time available I want to make one particular plea. I mentioned the matter to the Under-Secretary of State yesterday. We have had a freeze on a major industrial project in north Wales, the A400M, based in the constituency of my hon. Friend the Member for Alyn and Deeside. The project was signed by my right hon. Friend the Member for Coventry North East (Mr Ainsworth), when he was Secretary of State for Defence, before the election. That major project for 22 planes would employ people in Bristol, south Wales and north Wales.
The fact that the Government have frozen the project, and are awaiting the strategic defence review before they confirm it has a major impact on future confidence in the airbus industry in north Wales. It is a matter that I hope the Minister will take away from the Committee today and I hope he will press hard for the commitment of the Secretary of State for Defence to reach an early decision so that we can ensure that the A400M is undertaken as a matter of urgency, that the contract is confirmed and that jobs come to north Wales and Bristol in one of the crucial manufacturing sectors in the United Kingdom.
The Queen’s Speech missed a great opportunity in relation to crime and policing—matters for which I had some responsibility in the previous Parliament. The cuts in the Budget impacted on north Wales by £1.4 million, Dyfed Powys by £900,000, Gwent by £1.3 million and south Wales by £2.8 million, which is a total of £6.4 million in cuts. The Government—the party of law and order—have also refused to endorse the previous Government’s position on DNA. People will potentially not be convicted of serious crimes. That surprises me coming from the so-called party of law and order.
We have a cooling on CCTV. We have the abandonment of the policing pledge and the confidence target, as my right hon. Friend the Member for Cardiff South and Penarth said. Cuts in police numbers are coming down the line. The Government will actually undo the great work done by the Labour Government in reducing crime by 37% during the past 13 years. Will the Government please ensure that their measures on CCTV, on DNA, on police funding, on confidence measures and on the
Jonathan Edwards: Rather than reciting the fine speech that I prepared on the Budget, I shall just make one brief point to which, hopefully, Members on the Front Bench will respond in their wind-up speeches. My party is concerned about the opacity of the cuts regarding Barnett consequentials. One of the recommendations of the Holtham commission was an annual publication showing the effects of Barnett consequentials so that we could see how the Treasury arrived at the figures. On 24 May, the new Government announced £6.2 billion of in-year cuts, of which £187 million were for Wales. I have asked several questions about the provenance of the cuts, including asking Departments to release the calculations, but none has been given.
I have also asked Departments for their non-devolved spending cuts in Wales. Is it not ridiculous that MPs can ask questions of the Treasury and other Departments, but receive the most opaque responses? How can funding for Wales possibly be transparent and open to scrutiny if we are told only the figures but not how they were arrived at? How can we establish whether they are correct? One of the questions I have submitted is to establish how much has been paid to Wales as a result of nuclear support to the former Soviet Union, following an answer that I received to an earlier question on 17 June that showed that Wales received a 100% consequential. As part of the new respect agenda, I should be grateful if Departments, when announcing spending cuts or investments for England only, clearly show the Barnett consequentials for Wales.
Mr David: We have had an interesting day. It began with a statement from the Chief Secretary to the Treasury. His appearance was certainly a surprise to Labour Members, but he did not stay that long. He scuttled off as soon as he could because he recognised the unwelcome atmosphere, certainly on the Labour side of the Committee. However, one consequence of his appearance was that many members of the Committee who had been planning to make speeches during the day were not able to do so. That underlines the need for proper consultation prior to such events.
Kevin Brennan (Cardiff West) (Lab): My hon. Friend is right; my right hon. Friend the Member for Cynon Valley and my hon. Friend the Member for Blaenau Gwent were both trying to speak. What surprised me was that the only Liberal Democrat Member who seemed interested in speaking today was the Chief Secretary to the Treasury, and we did not hear anything from other Liberal Democrat Members who were sat as far back as possible.
Mr Llwyd: This morning there was constant talk about whether or not we were told about the imminent visit by the Chief Secretary. I received an e-mail at the same time as the right hon. Member for Neath, but the interesting thing is that the Welsh press knew two days ago, which is unacceptable.
The Chief Secretary to the Treasury was followed by the right hon. Member for Chesham and Amersham, who gave an inventive speech. She made a number of remarkable statements, not least declaring neutrality on the issue of a referendum. We believe strongly that there is a need for leadership on such a crucial issue—they cannot impale themselves on a fence. The people of Wales will want to know what the Government believe. Is it a good thing or a bad thing? What we want is leadership, not abdication.
Mr David: No, I will not give way, because the right hon. Lady did not give way to me—the phrase “hoist with her own petard” springs to mind. She is neutral about the governance of our country, but neutrality is not good enough. It was matched only by her indifference—about the representation of the people of Wales in this Parliament and in the Welsh Assembly; about unemployment, particularly in the public sector, where we are likely to see it increase rapidly; about the safety of communities when police numbers are cut; about the impact of VAT on the poorest members of our society and about the future of young people, who will be thrown to one side once the future jobs fund is eliminated. In short, what we have seen today is indifference and neutrality about the future of Wales.
We have heard contributions from other Members. We had positive ones from the hon. Member for Dwyfor Meirionnydd, my right hon. Friend the Member for Torfaen, my hon. Friends the Members for Clwyd South and for Ynys Môns, my right hon. Friend the Member for Cardiff South and Penarth, my hon. Friend the Member for Pontypridd, my right hon. Friend the Member for Delyn and the hon. Member for Carmarthen East and Dinefwr. All of them shared concern about what has been suggested, particularly in the Budget.
We also heard comments from the hon. Members for Montgomeryshire, for Cardiff North and for Monmouth. The contribution by the hon. Member for Cardiff North was good. It was parliamentary and decent to make the remarks he did about his predecessor, which was in marked contrast with some of the contributions from some other Conservative Members today.
A number of clear themes have emerged during our deliberations. The first is the Government’s ability to rewrite history. Although I welcome the Government’s capitulation on the housing LCO, let us be clear that in the run-up to the general election, the then Opposition, now the Government, were clearly opposed to it. They are now telling us that the LCO has not changed, and I look forward to many more U-turns in the near future.
Another clear theme is that the Budget will harm Wales. It will pay a high price for Tory dogma. We should not be surprised that the right hon. Member for
The so-called emergency Budget will harm the poorest in our communities. It will risk a double-dip recession, increase unemployment and create a Wales that is more unfair. Shame on the Liberal Democrats for giving it their support.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones): It is a pleasure to address the Grand Committee today. Frankly, given that this is the first Grand Committee of this Parliament, that it takes place against the background of the worst peacetime deficit that this country has known and a change of Government after the Labour party was defeated, one might have expected some more sobriety of tone from the Opposition—
Mr Jones: Indeed, as well as a touch more humility. But there was none of that—the shadow Secretary of State showed none. It is clear that he orchestrated the mass act of rebellion on the part of Opposition Members, and it is fairly clear, too, that he is bereft of anything positive to say, given that he resorted to the most appalling and personal attacks upon my right hon. Friend the Secretary of State.
Mr Jones: The right hon. Gentleman says he had no notice. He had a copy of the Chief Secretary’s statement in advance of his appearance, approximately the same notice that the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling) gave to the Committee 10 years ago. [ Interruption. ] The right hon. Gentleman may wish to continue heckling or if he wishes to intervene, I will take his intervention.
Mr Hain: The point is that we knew, at least a day and probably a week before, that the statement was being made by the Minister. That would have meant that the Grand Committee could adjust its proceedings and people would not have prepared speeches that they have not had time to give. That is the point; there was supreme discourtesy in not giving notice that the Chief Secretary was coming.
Mr Jones: All I would say is that a copy of the Chief Secretary’s statement was made available to the right hon. Gentleman. He had as much notice as the former Chancellor gave to the shadow Secretary of State for Wales 10 years ago. [ Interruption. ]
It is a huge pity that the shadow Secretary of State is clearly so bruised by the outcome of the election—clearly so petulant—that he could not bring himself to ask questions of the Chief Secretary to the Treasury, whose policy he spent the rest of his speech criticising. It is interesting that he criticised those policies and yet never gave any indication of what the Labour party would have imposed in the way of cuts. He tried to give the impression that it is possible to borrow one’s way out of a recession when clearly it is not. He tried to give the impression that cuts could be imposed without pain, which is a cruel deceit on the people of Wales. He knows full well that the cuts that his party would have imposed had it won the election would have caused pain. Yet he tries to pretend that it is possible to achieve the deficit reduction that this country needs without that pain. Frankly, it is unworthy of him and I hope that in future Welsh Grand Committees he will adopt a more positive approach.
We then heard from the leader of Plaid Cymru, the hon. Member for Dwyfor Meirionnydd who was much more positive and made a much more valuable contribution to the debate. He welcomed several measures that the
We had a contribution from the right hon. Member for Torfaen whose manner in addressing the Committee was much more moderate. I am glad to see him back in his place and I hope he enjoyed the introduction to the other place of his friend Lord Touhig, whom I am sure we all wish well in that new role. He commented upon the proposals to equalise the size of parliamentary constituencies and I understand fully that there are historical reasons for the current representation of Wales. Many of the points that he made are important. Certainly in parts of Wales the sparsity of population is a significant factor.
Nevertheless, when we live in a global village and we frequently communicate by telephone and the internet, it is worrying that a vote in parts of Wales is worth, in some cases, double that of a vote in the south of England. That needs to be addressed. I am sure that the right hon. Gentleman would understand that is wrong in principle that votes should carry different weight. It is also a matter of concern that the Welsh vote has not been looked at again at a time when we have the National Assembly and Wales has representation in another legislature. Therefore, while I understand the important points that he made, it is important to review whether the current arrangements are appropriate.
We heard from my hon. Friend the Member for Monmouth and I congratulate him on his election as chairman of the Select Committee on Welsh Affairs in succession to the hon. Member for Aberavon, whom I would like to commend. I regard him as a personal friend and he was also an excellent Committee chairman. I am sure that my hon. Friend will follow the tradition that he has set. The Select Committee has done some extremely important work and no doubt it will continue to do so.
My hon. Friend referred to the well known quotation from Jim Callaghan that it is impossible to borrow your way out of a recession. That point was echoed recently by the former Minister Lord Myners, who said:
“There is nothing progressive about a Government who consistently spend more than they can raise in taxation, and certainly nothing progressive that endows generations to come with the liabilities incurred by the current generation.”—[Official Report, House of Lords, 8 June 2010; Vol. 719, c. 625.]
That is what was particularly worrying about the Labour party’s policy. Had the Labour party won the last election it would have destroyed the opportunities that future generations should properly have expected.
We then heard from the hon. Member for Clwyd South who made her first speech in this Committee and it was very nearly her maiden speech. I am sure that we all welcome her to the Committee. She talked about the impact of cuts upon her constituency. It is good to see her standing up for her constituency, but there will
Mr Jones: Forgive me, but I have very little time. We heard from my hon. Friend the Member for Cardiff North, who proved that, in political terms at least, it is possible to lose one’s virginity twice by making his maiden speech in this Parliament. He made important points on the necessity of taking painful measures to address the deficit. He also commented on this country’s electoral system, which we will have the opportunity to debate in the weeks to come, and it was interesting to hear him say that he supports proportional representation. I have always found it difficult to understand how it is possible to have a fairer system than that whereby the candidate who gets the most votes wins. Nevertheless, I respect my hon. Friend’s views and I am sure that he will make a huge contribution to that debate.
Mr Jones: I am grateful, Mr Sheridan. The hon. Member for Ynys Môn was charitable and fair in welcoming several measures in the Queen’s Speech. He mentioned the Equitable Life Bill. One of the greatest shames of the previous Government was that they did not treat fairly the many thousands of people who were disadvantaged by the Equitable Life affair. The hon. Gentleman has always spoken out independently on behalf of his constituents who were affected by the Equitable Life failure. I am glad to see that he is still doing that.
Mr Jones: Forgive me, but I want to answer two points made by the hon. Member for Ynys Môn. He asked what impact the replacement of the Infrastructure Planning Commission would have on the Wylfa proposal. It has been announced that a major infrastructure planning unit will be formed, which will administer an extremely similar system to that operated by the IPC. It
The hon. Gentleman also raised the important issue of broadband, which is significant in much of rural Wales, including my constituency. He will recall, as a former member of the Welsh Affairs Committee, a report about broadband in the previous Parliament. My feeling was always that the then Government’s proposals were too unambitious.
Mr Jones: I am glad to say that this Government regards broadband as a vital issue. They propose to roll out superfast broadband and not the fast broadband that was proposed by the previous Government. To that extent, the Government are determined to go ahead to ensure that those not-spots in parts of rural Wales will be addressed.
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