The
Committee consisted of the following
Members:
Chairs:
Martin
Caton
,
†Albert
Owen
†
Bebb,
Guto (Aberconwy)
(Con)
Brennan,
Kevin (Cardiff West)
(Lab)
Bryant,
Chris (Rhondda)
(Lab)
†
Cairns,
Alun (Vale of Glamorgan)
(Con)
Clwyd,
Ann (Cynon Valley)
(Lab)
†
Crabb,
Stephen (Preseli Pembrokeshire)
(Con)
David,
Mr Wayne (Caerphilly)
(Lab)
†
Davies,
David T. C. (Monmouth)
(Con)
†
Davies,
Geraint (Swansea West)
(Lab/Co-op)
†
Davies,
Glyn (Montgomeryshire)
(Con)
†
Edwards,
Jonathan (Carmarthen East and Dinefwr)
(PC)
†
Evans,
Chris (Islwyn)
(Lab/Co-op)
†
Evans,
Jonathan (Cardiff North)
(Con)
Flynn,
Paul (Newport West)
(Lab)
†
Francis,
Dr Hywel (Aberavon)
(Lab)
Griffith,
Nia (Llanelli) (Lab)
†
Hain,
Mr Peter (Neath)
(Lab)
†
Hanson,
Mr David (Delyn)
(Lab)
†
Hart,
Simon (Carmarthen West and South Pembrokeshire)
(Con)
Havard,
Mr Dai (Merthyr Tydfil and Rhymney)
(Lab)
Irranca-Davies,
Huw (Ogmore) (Lab)
†
James,
Mrs Siân C. (Swansea East)
(Lab)
†
Jones,
Mr David (Parliamentary Under-Secretary of State for
Wales)
†
Jones,
Susan Elan (Clwyd South)
(Lab)
†
Llwyd,
Mr Elfyn (Dwyfor Meirionnydd)
(PC)
Lucas,
Ian (Wrexham) (Lab)
†
Michael,
Alun (Cardiff South and Penarth)
(Lab/Co-op)
Moon,
Mrs Madeleine (Bridgend)
(Lab)
†
Morden,
Jessica (Newport East)
(Lab)
†
Murphy,
Paul (Torfaen)
(Lab)
Ruane,
Chris (Vale of Clwyd)
(Lab)
†
Smith,
Nick (Blaenau Gwent)
(Lab)
†
Smith,
Owen (Pontypridd)
(Lab)
Tami,
Mark (Alyn and Deeside)
(Lab)
†
Williams,
Hywel (Arfon)
(PC)
Williams,
Mr Mark (Ceredigion)
(LD)
†
Williams,
Roger (Brecon and Radnorshire)
(LD)
†
Willott,
Jenny (Cardiff Central)
(LD)
James Rhys, Committee
Clerk
† attended the
Committee
The following also attended,
pursuant to Standing Order No.
102(4):
Gillan,
Mrs Cheryl (Secretary of State for
Wales)
Newmark,
Mr Brooks (Lord Commissioner of Her Majesty's
Treasury)
Welsh
Grand
Committee
Wednesday 1
December
2010
(Afternoon)
[Albert
Owen
in the
Chair]
Comprehensive
Spending
Review
2.30
pm
Question
again
proposed,
That the
Committee has considered the implications for Wales of the
Government’s comprehensive spending
review.
The
Chair:
Before I call Mr David Davies, I remind Members of
the time element. Although I cannot impose time restrictions, the
briefer people are, the more Members I will be able to
call.
David
T. C. Davies (Monmouth) (Con):
I shall keep that very much
in mind, Mr Owen. I am quite missing the shadow Secretary of State for
Wales, because for all his many faults he has a similar effect on me as
reading the Daily M
ail in the morning does, in that as
soon as I have heard him speak I want to get up and do likewise, at
great length and with great passion. But as with so many other things,
when one starts off with great passion and is cut off halfway through,
it is hard to maintain the same level of enthusiasm.
[
Laughter.
] I feel the same about sports; I do not
know what right hon. and hon. Members are laughing
at.
I
came back to the Committee Room early, and I amused myself with a few
mathematical calculations. On my little piece of paper, I drew a
depiction of 1 cm, and I thought, “If that centimetre equals
£1 million, what would equal £1 billion?” I did
the maths, and found out that it would be 10 metres, so a graph showing
£1 billion would stretch halfway down the room. To properly show
£160 billion, which is the deficit that the previous Government
left us, we would need a graph stretching back to Waterloo station, and
if we wanted to show the £1 trillion debt, the graph would
stretch to somewhere to the west of Hammersmith bridge. That all goes
to show that the previous Government left us with a mighty
problem.
The
shadow Secretary of State for Wales made a load of comparisons. He
talked about the bond market, but ignored the fact that that market was
clearly reacting to the presumption that any Government formed after
the election would cut spending in this country. He made some
comparison with Japan, but Japan is not a very good country for anyone
to compare themselves with. It has had the lost decade, with some of
the worst debt of any country and a huge economic collapse; yet it was
mentioned twice. I suppose that it is an improvement on Rwanda, with
which the right hon. Gentleman once compared
Wales.
The
right hon. Gentleman kept making the point, in various ways, that debt
as a percentage of gross domestic product was not that great. I hear
that phrase a lot, and I do not understand it. The reality is that if a
country’s spending is £680 billion and its earnings are
£520 billion,
the deficit is £160 billion, which is a serious problem. It is
all very well saying, “Compared with GDP, it is not that
bad,” but if one’s income is £52,000 and
one’s spending is £68,000, that is a
problem.
Owen
Smith (Pontypridd) (Lab):
Perhaps I could explain the debt
to GDP ratio issue for the hon. Gentleman. The point that my right hon.
Friend the Member for Neath made was that when we came to power in 1997
the debt to GDP ratio was 42%, and by the time we left office it had
gone up. However, at the end of 2008 it was down to
36%.
The
Lord Commissioner of Her Majesty's Treasury (Mr Brooks
Newmark):
No, it was
not.
Owen
Smith:
Yes, it was. As debt to GDP that is absolutely what
it was, and I will show the hon. Gentleman the figures in a minute if
he likes. The ratio is now up at 77%, compared with 75% in Germany, 82%
in France, 118% in Italy and 225% in Japan. The debt to GDP ratio
matters because it is a reflection of this being a global crisis, which
struck at the end of 2008 with the collapse of Lehman
Brothers.
David
T. C. Davies:
I thank the hon. Gentleman for that
intervention, but I suggest that having a large deficit with a smallish
debt is still a worse situation to be in, in many ways, than that of a
small deficit and a very large debt. At some point—I hope by
about 2014 or 2015—we will have the debt under control and the
deficit will be down to zero, but at the moment the deficit is running
completely out of control and that is what is likely to scare the
financial markets. That is the situation that the previous Government
bequeathed us. I am suggesting that the deficit is even more of a
problem than the actual size of the debt.
I will not
spend a long time reciting an economic history of the country since
1992, fun though that would be, but it would show that the Conservative
party’s record on the economy has at all times been good. We
could go back to the 1940s and show that every Labour Government have
precipitated a financial collapse that the Conservative party has had
to clear up. Clement Attlee almost ruined the country and was only able
to set up the welfare state on the back of American war loans. It was
Harold Wilson who devalued sterling and said that the pound in our
pocket would remain exactly the same, and it was Jim Callaghan who came
out with the line, “Crisis? What crisis?” That was just
before practically everyone went on strike, which was the last time we
had to go to the International Monetary
Fund.
Chris
Evans (Islwyn) (Lab/Co-op):
Will the hon. Gentleman give
way?
David
T. C. Davies:
I will give way because I like opposition
and I want to hear what the Opposition have to say for
themselves.
Chris
Evans:
The hon. Gentleman’s remarks are a complete
symptom of what is happening on the Government Benches: economic
illiteracy. What about 1981? Who was in power then? Mrs Thatcher. Let
us
not forget 1990 and 1991, which saw the worst economic recession, with
businesses going to the wall and people losing their houses. What about
that? We are again seeing history being rewritten by Members on the
Government
Benches.
David
T. C. Davies:
What happened in 1991 was a direct result of
the steps that had to be taken to clear up the mess left in 1979, which
is exactly why Tony Blair, in his excellent and interesting
biography—I recommend it to hon. Members—made the point
that he had to accept that a lot of what Mrs Thatcher did was
absolutely
right.
Alun
Cairns (Vale of Glamorgan) (Con):
My hon. Friend talked
about the implications of the deficit increasing out of control and the
contribution that that would make to the debt in the long run, but is
the situation not even worse than he has stated? There is also
£1 trillion of debt off balance sheet, which is a further 80%
debt to GDP
ratio?
David
T. C. Davies:
My hon. Friend makes an excellent point,
because the official figures of course do not take into account the
public sector pension deficit, private finance initiatives, things such
as Metronet or debts accrued by Railtrack. An independent study has
shown that the actual figure is about twice the official figure. Many
hon. Members wish to speak, so I will not go on. I could go
on—[Hon. Members: “Yes, go
on.”] No; I always think that in most situations it is best to
leave people wanting more. I assure hon. Members that I and everyone
else on the Government Benches are committed to getting the deficit
under control, starting to repay the debt in around 2014-15 and handing
over to the next Government an economy that is in good shape. We hope
that the next Government, whoever they are, take note of that and do
not ruin
it.
2.38
pm
Paul
Murphy (Torfaen) (Lab):
I welcome you to the Chair, Mr
Owen, as this is the first time you have chaired the Committee. I know
that you will do an excellent job and we all wish you well on this and
other such
occasions.
The
hon. Member for Monmouth, whose constituency neighbours mine, said that
he did not like the legacy that the Labour Government had left his
constituents and mine, but my constituents and his—I know plenty
of them—would have welcomed the legacy of more hospitals,
schools, teachers and police officers, the minimum wage and all the
other things that the Labour Government did over the past 13
years.
Alun
Cairns:
rose—
Paul
Murphy:
I knew he would stand
up.
Alun
Cairns:
I am grateful to the right hon. Gentleman for
giving way. That might be some of the legacy, but our constituents
certainly did not like the legacy when Wales became the poorest part of
the United Kingdom. The right hon. Gentleman’s constituency is
one of the poorest in Wales.
Paul
Murphy:
On the contrary, my constituency, as far as
unemployment is concerned, did better in the last dozen
years—until just before we had the problems with the
banks—than it had done in the previous 30 years. There is no
question about that. The unemployment rate in my constituency fell
dramatically, and there were more people in work in Torfaen than there
had been for 30 or 40
years.
Nick
Smith (Blaenau Gwent) (Lab):
I remind my right hon. Friend
and neighbour that Ysbyty Aneurin Bevan hospital in Gwent, a Labour
legacy, is due to open in just a few days. We have also had a new
railway line running from Cardiff to Ebbw Vale, and we had much better
employment under Labour than we ever had under the
Tories.
Paul
Murphy:
That is the message that consistently comes from
our
constituents.
I
want to refer to the different context in which the comprehensive
spending review is now undertaken. When, years ago, Governments came to
the Welsh Grand Committee to discuss how money was to be spent, the
Secretary of State ran Wales through the then Welsh Office, but it is
now different. The relationship between the devolved Administrations
and the United Kingdom Government is necessarily different from what it
used to be. The Secretary of State for Wales will know that not long
ago the First Ministers of Scotland, Northern Ireland and, of course,
Wales jointly issued a statement declaring that Government economic
policy, which she and her colleagues outlined this morning, was
fundamentally wrong. There is a real difference of view about how we
should tackle the economy and the deficit between those who head the
three devolved Administrations, the Government and the
Opposition.
The
shadow Secretary of State, my right hon. Friend the Member for Neath,
has made an excellent case to show that the issue about the deficit is
not what Ministers have described today. It may happen before we finish
this afternoon, but none of the speeches so far today has mentioned the
word “bank,” which is also never mentioned in the
Chamber. It is an inconvenient word for the Conservatives, because they
know that the deficit we faced was overwhelmingly caused by the banking
crisis. I know that, because I was then a member of the Cabinet and of
the National Economic Council. Every day, we knew that the Government
had to take decisions to tackle the fundamental problems of the crisis,
otherwise all our constituents in Wales would have gone to the holes in
the wall in town centres and no money would have come out. As a
consequence of a collapse of the banking system, society as we know it
would have collapsed. Overwhelmingly, the deficit was the consequence
of the banking crisis. The world knew that; the only people who do not
know it are the
Conservatives.
Simon
Hart (Carmarthen West and South Pembrokeshire) (Con):
Actually, I had the word “bank” written on the page in
front of me, so the right hon. Gentleman has stolen my best line, but I
have a question for him. At the early stages of the previous Labour
Government, a commitment was made to regulate the banking system. How
does he think that
went?
Paul
Murphy:
I think, with hindsight, that the regulation could
have been better—of course it could—but we did not have
any help from the Conservatives over the crisis.
Every decision that we had to take they ran away from. They were wrong
on Northern Rock and on how to deal with the banks, because they ran
away from the issue. I remember that in the week that the big decisions
had to be taken, they were nowhere to be found, because they could not
come to a decision on what to do.
[
Interruption.
]
The
Chair:
Order.
Paul
Murphy:
There is a fundamental difference between us and
the Government on how to deal with the deficit. There is no difference
over the principle that we have to deal with it—of course, we
have to. Our view is that it was caused by the international banking
crisis and most of our constituents would agree. Of course we have to
deal with the deficit. The difference between us is that we think the
deficit is being cut too deeply and too quickly. I think that some
members of the Government—I do not say this of the Secretary of
State—may be using the argument that they have to deal with the
deficit in that way as a cover for the ideology of their own
party.
Geraint
Davies (Swansea West) (Lab/Co-op):
My right hon. Friend is
making a strong case to show that the deficit was the cost of avoiding
a depression. Does he agree that supporting the banks was not bailing
them out, but taking a public stake in them at a time when their prices
were low and they needed our support? That stake will appreciate over
time and will be paid back more than once downstream as economic growth
proceeds. It was therefore a good investment, yet it is portrayed by
some Government Members as just bailing out the banks, which is
outrageous.
Paul
Murphy:
I entirely agree. Over the past 11 years, in every
Welsh Grand Committee that I have had the privilege of taking part in,
on and off, and at which the Government announced, for example, major
hospital building or extra money for the Assembly—the Welsh
people never had more money than they did under the Labour
Government—I never heard the current Secretary of State or her
predecessors complain. Indeed, the junior partners in the coalition
certainly did not complain about the money going to Wales. In fact,
they did the opposite and said, “We want more—and more
and more.” Saying we spent too much during the past
13 years is nonsense. It was not said at the
time.
Susan
Elan Jones (Clwyd South) (Lab):
We are seeing a paradox in
the position taken by Government Members. On one level they speak for a
certain ideological doctrine, but on another they will not tell us
where they wish the cuts to fall. For
example—[
Interruption.
] I do not know which
schools Government Members attended, but mine was much better in terms
of discipline. Let me remind Conservative Members that we have a Welsh
Assembly—even though most of them did not want it—where
they have a leader of the Welsh Conservatives. He now thinks that it
would be totally acceptable to have a 20% cut in education. Will they
tell us which schools they want the cuts to fall on? No, they will not.
We see a total contradiction. Does the former Secretary of State
agree?
Paul
Murphy:
Of course, I agree. The Conservatives do not know
where they are at all, certainly with their coalition partners. In
terms of what happens on the
cuts, something is said in Cardiff and something is said here in London.
As for the Liberal Democrats, they are changing the constitution as we
go along. I spent 17 years teaching young people about the British
constitution and collective Cabinet responsibility. Yesterday, that
particular doctrine disappeared. The textbooks will have to be
rewritten. The Business Secretary said that he is going to abstain on
the issue of tuition fees. [
Hon. Members:
“No, he didn’t.”] Well, he has changed his mind
then. Yesterday, the junior coalition partners could not decide what to
do about the cuts that have led to the increase in tuition fees. I am
not saying that the principle of tuition fees is wrong—far from
it, because the Labour Government introduced them. I am simply not sure
what the Government are doing about individual cuts to individual
services, because they are all over the place, with cuts in education
and
elsewhere.
On
the electrification of the railway line from our capital city to the
capital city in England, the Secretary of State for Wales indicated
that we must wait for news. I hope that the news will be good, because
she and I, and others, have fought for a long time for the
electrification of the line. However, there are other troubling
issues.
The
hon. Member for Vale of Glamorgan must be worried about what is going
to happen to the St Athan project. We were given an indication that
some of it might continue, but we do not yet know. All of us are
worried about the 40% cut in capital spending on projects in Wales.
That is a huge worry, because reducing capital spending has a
consequence for unemployment and so
on.
Alun
Cairns:
As the right hon. Gentleman invited me to speak by
naming me in his speech, I reassure him that I have complete confidence
that St Athan is still a viable location for defence training and for
other military operations. I do not know why he has such
doubt.
Paul
Murphy:
It is a question of uncertainty. An announcement
is made one week, and then another is made the next week. We have the
passport office in Newport closing, but the Secretary of State says
that she has helped to save some jobs there, so the situation changes
all the time. By the way, in First Minister’s questions in the
Welsh Assembly yesterday, the First Minister indicated that he has not
yet had a reply from the Secretary of State’s colleague. I urge
her to talk to her colleague to ensure that a proper response is given
to the First Minister for
Wales.
Alun
Michael (Cardiff South and Penarth) (Lab/Co-op):
The hon.
Member for Vale of Glamorgan appears to have some line that suggests
there is still hope for the St Athan project. That would be good news.
However, can he be invited to explain why the answers to parliamentary
questions that I received a couple of days ago seem to be adamantly
closed in terms of any hope in that
direction?
Paul
Murphy:
We shall have to wait and
see.
Alun
Cairns:
As I have been invited to respond, I can only
report on the discussions with the Secretary of State for Defence and
with the Minister. I also recognise the support of the Secretary of
State for Wales and the Under-Secretary of State for the project. I am
upbeat
about the opportunities of St Athan within the budget approach
available. St Athan is the right location, as is recognised by many in
the
military.
Paul
Murphy:
I share that view, but discussions are one thing,
and a result is quite another. I had plenty of discussions over the
years with my ministerial colleagues, but I did not get my way all the
time. I hope that the hon. Gentleman is right, but we will wait and
see.
The
Secretary of State sits on Cabinet Committees, as I did, and her job on
such committees is to fight the Welsh corner. I am sure that she is
doing her job in that respect, but my fear is that many people in the
British Cabinet and, certainly, on the Government Benches in the House
of Commons—I exclude all Members here—really do not know
much at all about the business of Wales and how we operate. We now have
a totally different situation for dealing with the spending review from
when the Government had the responsibility. The context in which we are
dealing with spending and other issues in Wales has been deeply
distorted by complete ignorance on the part of Members of Parliament
not from Welsh constituencies—they may be on the Government
Benches or, possibly, in the Cabinet. They see things in a very
different
way.
Devolution
means that the Welsh Assembly, the Scottish Parliament and the Northern
Ireland Assembly are not Departments of the Government, but are now
Governments, Parliaments and Assemblies in their own right, and they
have to be dealt with in a certain way. That is the new constitutional
settlement, and I am not sure it is being dealt with in that
respect.
The
Secretary of State for Wales (Mrs Cheryl Gillan):
Did the
right hon. Gentleman face the same issue when he was appointed
Secretary of State for Northern Ireland? Did the right hon. Member for
Neath (Mr Hain) have the same
problem?
Paul
Murphy:
In Northern Ireland?
Mrs
Gillan:
The right hon. Gentleman was a Welsh MP in
Northern
Ireland.
Paul
Murphy:
No; I am not referring to the fact that I was not
a Northern Ireland MP. That is not my point at all. I make no criticism
of the Secretary of State whatever—in fact, I exempt her from
what I am saying. My point is that there is a lack of knowledge about
how the constitutional settlement works and about how we deal with such
issues in the House of Commons. Nowhere was that more vividly expressed
than in our debates on the constitutional Bill—the Parliamentary
Voting System and Constituencies Bill. There is a relationship with the
comprehensive spending review, because my fear is that if, as proposed,
we reduce the number of our Welsh MPs by 25%, it will mean a 25%
reduction in the pressure on the Government and Parliament over the
issues we are talking about. The voice of Wales will be
different.
I
do not expect English Members of Parliament on the Conservative Benches
to understand the issue of Wales in a bigger context or a bigger
state—that is totally ignored. However, I would have thought
that the Liberal Democrats would understand that the idea of
the representation of Wales in a bigger unit is an issue. It has a huge
impact on what we are dealing with today; in fact, there can be no
bigger impact, because the biggest impact that any Government can have
on their citizens is in how much money they are allowed to spend on
services to improve their quality of life. If our representation is to
be reduced, which it will be, we are facing a serious
issue.
The
Secretary of State must continue to fight the cause of Wales in the
Cabinet and its Committees, but I am not at all convinced that her
colleagues are listening, whether in terms of the constitutional
settlement or of the comprehensive spending review. That is a great
pity, because our job as Welsh Members of Parliament, in the Welsh
Grand Committee and on the Floor of the House of Commons, is quite
specific: to defend the interests of our constituents. Everything that
has been said today about the cuts—whether capital spending,
revenue spending or other issues—and every single decision made
by the Government through the Chancellor of the Exchequer and the
Treasury will have a direct impact on our constituents in Wales. That
is why it is so important that we have sufficient representation in
this place to fight our
cause.
David
T. C. Davies:
The right hon. Gentleman said something that
surprised me. He said that it is our duty—I think he said our
only duty—to fight for our constituents. Surely, he recognises
that sometimes we must think about the interests of our entire
country.
Paul
Murphy:
In that respect, I do not think there is a
difference. The hon. Gentleman and I are fundamentally divided on how
we would deal with the deficit, but not on the fact that a deficit has
to be dealt with. He is arguing that we have to do it quickly and
deeply, while I am arguing the opposite. We tried to do that in the
1930s, when we had the biggest depression in the history of the past
200 years. We would not have got out of it had there not been a war.
The second world war brought us out of depression and stimulated
production.
There
is a fundamental divide. We cannot solve our country’s problems,
be it the economy or the deficit, unless we stimulate production and
demand. There is a basic difference between us, but I am sure that the
hon. Member for Monmouth would agree that the economic fortunes of the
country and our constituents’ interests are related. However,
the hon. Gentleman and I, and others, may not be back next time to make
that case, because of the reduction in the numbers of MPs. That is a
real, deep
shame.
Geraint
Davies:
Does my right hon. Friend accept that, in this
year’s election, many Welsh constituents—in particular
those voting Liberal Democrat—thought that there would be no
increase in VAT, that there would not be rapid cuts to public services
and so voted in good faith for something that did not happen? Now, they
find that a quarter of their MPs are to be cut. Those facing the
biggest cuts will have their ability to respond to that lie taken away.
That is absolutely
disgraceful.
Paul
Murphy:
My hon. Friend makes a valid point. The problem
with the creation of the coalition is that it has left our Welsh people
confused about what the
Government stand for, because of the nature of the coalition. We have
elections next year, and it will be up to the Conservatives and the
Liberal Democrats to persuade the people of Wales of the merits of the
comprehensive spending review and its associated cuts. I would not want
to be in their place when they have to do
that.
Roger
Williams (Brecon and Radnorshire) (LD):
The right hon.
Gentleman is as courteous as ever in giving way. Will he explain why it
was left to the coalition Government to undertake a comprehensive
spending review, when we were waiting for one from the previous
Government? Of course, the previous Government would then have had to
say where the cuts would come from, because cuts had been
accepted.
Paul
Murphy:
There is no doubt that, had my party won the
election, there would have to have been a review. There is no question
about that. Of course, we would have faced the same situation. By the
way, I think the hon. Gentleman’s moustache is great. Anyway,
lots more people need to speak in this important debate, which the
Secretary of State was right to call. I only wish she had called one on
the other issue as well—we are having another on energy in the
weeks ahead—because, as this debate is proving, MPs who
represent Welsh constituents, from all parties, can express their views
and their constituents’ views in a special way. I hope that when
my colleagues speak they will say the same as me. Our chief interest is
in creating the best quality of life for the people of Wales. The only
way that we can do that is by ensuring that our services are kept up to
scratch, but I am not convinced that will
happen.
2.58
pm
Guto
Bebb (Aberconwy) (Con):
It is a pleasure to be here today.
This is my second Welsh Grand Committee, and it has been much better
behaved than my first. I was expecting this debate to be on the
comprehensive spending review and its impact on Wales, yet it appears
that we still have to look at the reasons for and context of that
review. Opposition Members will still not acknowledge why we have to
make difficult decisions as a coalition Government. It is worth
remembering that, when the coalition was formed, we were looking at a
deficit for this financial year of £155 billion. A deficit is
not the debt; it is the increase in the debt in this financial year
alone. It would have been irresponsible not to deal with the deficit.
Because we want to deal with the £155 billion
deficit, we will provide the opportunity for businesses to invest with
confidence.
Owen
Smith:
We made our position absolutely clear. We would
have dealt with the deficit—half of it—over the spending
period, and that would have been a responsible way to do it.
[
hon. Members: “How?”] Had we got
into government, we would have spelled out precisely
how.
Guto
Bebb:
That is the crux of the issue. The Opposition
continually state that they would have dealt with the matter by
reducing the deficit by half within this Parliament, but where is the
detail? You keep saying no to every
single proposal that the coalition makes, and you sit in Committee
unwilling to explain to the people of this country, and of Wales, how
you would have dealt with the matter. Your own Chancellor, Alistair
Darling, stated that if the Labour party were re-elected, its cuts
would be worse than any that happened in the
1980s.
The
Chair:
Order. Will the hon. Gentleman please refer to hon.
Members
correctly?
Guto
Bebb:
I apologise.
Geraint
Davies:
The recent autumn forecasts for economic growth
have been massively pared down since the Conservative-coalition Budget.
The current deficit is £30 billion less than was forecast in the
pre-Budget report. The answer to the hon. Gentleman’s question
is that there would have been more growth, and savings would have been
spread out over time, so less harm would have been inflicted on
communities and we would not have an extra £6 billion a year
cost when unemployment goes up by a million—that is how it adds
up.
Guto
Bebb:
With all due respect, the hon. Member for Swansea
West should consider the impact of the Leader of the
Opposition’s questioning of the Prime Minister this afternoon,
and refrain from making such comments. It is important to point out
that the report stated that growth was looking positive—the
Office for Budget Responsibility’s statement was
positive.
Returning
to the deficit, we must recognise that we cannot continue with a
situation in which a Government propose to borrow £1 for every
£4 that are spent. We are unable to carry on in that way, so the
coalition is willing to take difficult decisions. Opposition Members
are unwilling to tell us how they would perform the necessary
changes.
Nick
Smith:
It is interesting to listen to the “children
of Thatcher”, as they were described by the Prime Minister
today. This morning, I asked the Economic Secretary to the Treasury
what percentage of the £530 million that is supposed to be
invested in broadband across the UK will come to Wales. She could not
answer. Will someone from the Government answer me
now?
Guto
Bebb:
I am as disappointed as the hon. Gentleman about the
broadband application. The issue is quite clear: the Welsh Assembly
made a mess of the application—that is the unfortunate fact of
the matter. I respectfully request that the hon. Gentleman raise that
issue with his colleagues in the Welsh Assembly.
We face a
situation in which we are borrowing more than we are spending on the
NHS and the defence budgets put together, which is unsustainable. If
Opposition Members are happy to see the country continue to pay
£120 million a day in interest, so be it. I feel proud to be
associated with the coalition, which believes that taxation should be
used for the benefit of the people of this country—and that
means that we reduce the cost of interest payments.
The
coalition’s decisions have undoubtedly been good, and have been
recognised as such by the markets. As I said this morning, it is clear
that the long-term interest
rates that the country faces have reduced dramatically since the
coalition came to power. The credit reference agencies have responded
positively to the way in which the coalition has dealt with that
matter. If we consider how the international markets now regard the UK
situation compared with other eurozone countries, it cannot be denied
that the decisions that we have taken have been extremely positive.
Those were reflected in the OBR statement on Monday.
Opposition
Members have stated strongly that the coalition is going to reduce the
deficit by decimating the public sector, but I do not believe that to
be the case. Within the public sector there is a need for efficiency
and a need to ask ourselves whether we can do things better than we
have done in the past. In May, the OBR stated that we would lose
490,000 jobs in the public sector; the new report, which was announced
on Monday, shows that the figure has been reduced to 330,000. Yet there
has been no positive response from Opposition Members to that huge
development.
I made the
point this morning—and I shall make it again, because it is
important—that the difference between the OBR statement in May
and that announced on Monday is some 10,000 public sector jobs in the
Welsh context. As a Committee, we should welcome that
development.
It
is important to point out that the public sector job losses indicated
in the OBR reports are modest compared with the losses suffered by the
private sector under the previous Government. It is important to
contrast the way in which Opposition Members are making a huge issue
about the potential loss of jobs in the public sector and how they were
relatively quiet when the private sector was being decimated in
Wales.
Chris
Evans:
I was here this morning when the hon. Gentleman
welcomed people losing their jobs. There are people in my constituency
who still think that the Government believe that unemployment is a
price worth paying to bring the deficit down. If they lose their jobs
and are about to lose their houses, what message does he think he is
giving
them?
Guto
Bebb:
With all due respect, the hon. Gentleman is making a
claim about what I said this morning. I welcomed the fact that there
will be 10,000 fewer job losses, and I would be grateful if I could see
the same welcome coming from him.
Jonathan
Evans (Cardiff North) (Con):
My hon. Friend is surely
bored of these chants about people losing their jobs. Does he not find
it a bit surprising that even though the latest statistics showed that
unemployment in Wales had fallen by 12,000, that it was falling faster
in Wales than any other part of the UK, and that it has been falling
for three successive months, there has not been a word of praise from
the
Opposition?
Guto
Bebb:
My hon. Friend makes an excellent point. That is
indeed the situation in the county of Conwy, where my constituency is
located.
Owen
Smith:
I thank you for giving away
again.
The
Chair:
Order. I remind new Members that we do not use the
word “you”.
Owen
Smith:
I am grateful to the hon. Member for Aberconwy for
giving way. I want to point out a simple fact. He repeated several
times today that unemployment rose under Labour. Yes, it rose at the
end of our period in government. However, when we came to office,
2 million people were unemployed. At the end of 2008, when
the financial crisis struck, 1.5 million people were unemployed, and
then it rose due to the crisis. [
Interruption.
] It
is not selective.
The
Chair:
Order. I call Guto
Bebb.
Guto
Bebb:
The economic inactivity rates showed very little
change in the period that the Labour party was in
government.
Mrs
Gillan:
My hon. Friend is making a sterling speech, and
there are no bounds to his generosity in allowing people
intervene.
My hon.
Friend will be pleased to know that I checked up on a written answer
given to the right hon. Member for Cardiff South and Penarth, who, I
believe, left the Committee with the impression that St Athan did not
have a future. I have taken advice and checked the written answer from
my right hon. Friend the Secretary of State for Defence, and in fact it
states no such thing; the line on St Athan has not changed at all. I am
sure all Members, on both sides of the Committee, will welcome the fact
that we think
that
“technical
training co-located on as few sites as possible remains the best
solution for our armed
forces”,
and
that
“we
have a new programme in place to assess requirement and
options”—[Official Report, 23 November 2010; Vol.
519, c.
220W.]
—something
that the Labour party did not do when it was in
government.
Guto
Bebb:
I am obviously delighted to hear that clarification,
and I am sure that my hon. Friend the Member for Vale of Glamorgan will
be delighted to hear it.
We heard that
the Welsh settlement has been particularly bad, and that the coalition
Government have been extremely ungenerous towards Wales. I am staggered
at that response. We are looking at a cut of around 2% a year in
revenue terms. As someone who has come to the House with a background
in business, I know that if someone went to a small business in my
constituency and said that it would have to save 2% a year from its
revenue cost, it would say that it would do that as a matter of course.
I fail to see why the Government should be excluded from the discipline
that private businesses are employing in constituencies the length and
breadth of Wales. Why should the Government be excluded from those
efficiencies?
Paul
Murphy:
The hon. Gentleman is making an interesting
speech. He is right to say that it is important for public bodies to be
businesslike and ensure that they deal with efficiencies in a proper
way. However, he represents a constituency, as I do, where a large
percentage of people work in the public sector. What happens if those
public sector jobs go and there are no private sector jobs to take
people on? That is a problem.
Guto
Bebb:
I shall come to that point. My constituency is less
dependent on the public sector than many in Wales, and we are
particularly proud of that. Small businesses make a huge contribution
to the economy of Conwy and Aberconwy. We would argue that those small
businesses know that they have to cut their cloth according to their
income, which is apparently mysterious to Opposition
Members.
Jonathan
Edwards:
In terms of the Welsh block grant, does the hon.
Gentleman not acknowledge that over the term of the spending review
there will be a cumulative cut of £4.6 billion? That is not
small
money.
Guto
Bebb:
It is important to note that the reduction is
subject to the Barnett formula. One could argue, and some Opposition
Members would, that the Barnett formula needs to be looked at. Why,
during 13 years of Labour Government, was that issue not addressed? The
settlement is subject to the Barnett formula and, as such, that is an
issue for the hon. Gentleman to raise with his party’s coalition
partners in Cardiff
bay.
Plaid
Cymru should acknowledge that, before the general election, it was very
proud of its economic consultant, Eurfyl ap Gwilym. I doubt whether
anyone in this room failed to enjoy his appearance on
“Newsnight”, but he has made it clear that the settlement
is significantly better than the Welsh Assembly was planning for prior
to the May election. It is interesting to note that the economic guru
of Plaid Cymru, as he was described, welcomes the settlement, and I
would be interested to know whether Plaid Cymru Members also welcome
the
settlement.
I
shall now focus on the key issue, which is the need for the Welsh
economy to grow and to create private sector employment. The Welsh
dependence on public sector jobs is not the solution; it is part of the
problem. We have created a situation in Wales in which we are totally
dependent on the public sector in too many parts of the country and in
too many communities. The challenge should be to ensure that we have a
private sector that grows and creates employment. To put the cuts in
context, we are now looking at potentially 18,000 public sector jobs
being lost in Wales. That means that, over the next three years, we
need to see the private sector generating some 7,000 jobs a year. Well,
7,000 jobs a year is equivalent to one in 30 Welsh businesses creating
a job each year over the next three years. I have confidence that our
private sector companies can do that, and I am mystified by the lack of
confidence shown in Welsh businesses by Opposition Members. It is clear
that, if such jobs are created in all parts of the United Kingdom, this
Committee, of all Committees in the House, should send out a message
that we have confidence in the Welsh business community and in the
people of Wales, and that we can create those jobs. I would
argue that if we cannot see our way to creating 7,000 private sector
jobs a year over the next three years, we are in serious
trouble.
When
one considers the Labour party and the Labour representation that we
have in Wales, it is important to point out that the concept of
creating jobs in the private sector, of depending on businesses for
growth and prosperity, is perhaps difficult for Labour to grasp. When
one looks at statistics on those areas of Wales that have the least
dependence on the private sector, the
areas that come out on top are: Merthyr Tydfil, which is traditionally a
Labour area; Blaenau Gwent; Neath-Port Talbot; Caerphilly; and Torfaen.
Those areas have shown confidence in the Labour party, and that
confidence has been misplaced, because they have ended up with a
dependence on the state and on the public
sector.
I
ask the Committee to compare and contrast. When one looks at Wales and
asks where those areas in which people generate their own jobs and in
which there is a high degree of self-employment are, I would be glad to
tell hon. Members.
Geraint
Davies:
The coalition Government have proposed that
council tenants earning more than a certain amount should be evicted.
What signal does that send to people who have small businesses or
generate employment? What about the council tenants? Is that not
dumbing down innovation? There are further impositions, too, which is a
ridiculous
recipe.
Guto
Bebb:
That is an interesting view of the policies that
have been put forward. Council tenants who want to buy their own houses
should be allowed to do so, but it seems that that view is not shared
by the coalition Government in Cardiff, who want to have state control
in
Wales.
Nick
Smith:
Does the hon. Gentleman therefore deny that if
someone is on jobseeker’s allowance for more than a year, their
housing benefit will be cut by 10%? Does he defend that
decision?
Guto
Bebb:
It is part of a package of measures that have been
taken because of the mess that was left to us by the previous Labour
Administration. It is important to point that
out.
Going
back to self-employment, if we are to create an economy in Wales that
is not dependent on the public sector and public spending, we need
businesses that create jobs and wealth. Areas without any real business
involvement are generally those represented by the Labour party, and
areas that are creating self-employment on a large scale are Powys and
Ceredigion, which are represented by the coalition, Pembrokeshire,
which is represented by the Conservatives, Monmouthshire, represented
by my hon. Friend the Member for Monmouth, and of course my own county
of Conwy. Those areas are creating jobs and wealth, and leading to a
better
Wales.
Susan
Elan Jones:
How does the hon. Gentleman feel about the
fact that the Federation of Small Businesses in north Wales, which we
can assume contains business people at least as well qualified as him,
is totally opposed to the rise in
VAT?
Guto
Bebb:
As a small business owner, I would obviously be
against increasing any taxes, but I accept that we are in a difficult
situation. I would not have come into this House with a view to
increasing taxes, but we have to deal with the deficit. Returning to my
main points, we need to have stable finances as a country to ensure
that we have the opportunity for businesses to grow, and I welcome the
fact that as a coalition we are looking to reduce corporation taxes,
and to reduce national insurance on new employment.
In
Wales, the dead hand of generations of Labour control lies over too
many parts of the country and, as a country we can, and must, do
better. Wales needs a more balanced economy, and that will come as a
result of a coalition Government who believe in enterprise and in the
people of Wales. This is an opportunity for us to change the political
mindset in Wales, and to show the people of Wales that they can act on
their own behalf. It is not Governments that produce jobs but people
and businesses, and we will give them the opportunity to do
that.
3.18
pm
Mrs
Siân C. James (Swansea East) (Lab):
I make no
apology for talking about rail electrification today. My background is
very much steeped in rail; one could say that I am gamekeeper turned
poacher. As I have worked for the industry, made every excuse possible,
including the well-known hackneyed phrase, “leaves on the
line,” and explained to irate people how members of their family
have got lost on the Welsh rail network, I have got to know the
industry very
well.
Swansea
is a rail city. That might not mean a great deal in today’s
terminology, but it means a great deal to us in Swansea. We have
inherited the mantle of Isambard Kingdom Brunel. He built this railway
to last—a legacy that would continue long into the future. The
news that the finances for the electrification of the south Wales main
line had been shelved was a bitter disappointment to us in Swansea. I
was bitterly disappointed that another prestigious project in Wales had
been shelved, and the decision did not meet great acceptance in
Swansea.
We
have all heard about the battles between Cardiff and Swansea, about how
we have to have what Cardiff has, and that we have to have everything
that is going because we are Swansea—the second major city in
Wales. But it is important. We are the gateway to west Wales. There are
Government Members who rely on the service. They have to make the
journey down to Pembrokeshire and beyond, and it is not easy.
When I joined
the rail industry, we had a regular service to Fishguard and further
west—I mean to the west [
Laughter.
] My
mistake, but we would have gone further if we could have. We saw that
wither on the vine. I am afraid that if we do not stand up for Swansea
and if I do not stand up for rail electrification in Swansea, we will
in effect become that extra bit at the end of the line. The thought of
people hopping off electric trains when they get to Cardiff and then
hopping on to tired old rolling stock and making a further, longer
journey on older trains cannot be contemplated and must not be allowed
to
happen.
Dr
Hywel Francis (Aberavon) (Lab):
I congratulate my hon.
Friend on her work in championing the cause of electrification and also
her work in the all-party group on rail in Wales. Does she agree that
in the new year that group should invite the Secretary of State for
Wales and the Secretary of State for Transport to explain to it why
there has been this delay in the announcement of
electrification?
Mrs
James:
That is an excellent idea. We have written on
several occasions to the Transport Minister, but as yet he has been
unable to attend. However, I am sure that the Secretary of State for
Wales will be happy to do so in future.
Jenny
Willott (Cardiff Central) (LD):
Does the hon. Lady agree
that it is not helpful to describe the project as having been shelved?
My understanding is that the decision is still to be made. There is a
great deal of support and strong feeling on both sides of the House
among Welsh MPs that we need to pull together and lobby as hard as we
can on this to make sure that it goes
ahead.
Mrs
James:
I thank the hon. Lady for that contribution. My
concern is that we have been here before on several other projects.
Delay at this point will create more than a delay at the end of the
line, pardon my pun; it will mean that we fall behind. When we talk
about working for the railways, we mean a European network, a modern
network, a network that plugs into Europe-wide travel. I do not want
Wales consigned to being like Moldova and Albania, without a millimetre
of electrification. We need to be up there and we need to be up front.
If we talk about development and bringing jobs in now, we have to have
modern transport and communication
networks.
Jonathan
Evans:
I should like to follow up the point made by my
hon. Friend the Member for Cardiff Central because many of us have been
lobbying on this issue. The Secretary of State for Transport made it
clear at the time of his announcement that he has to make a decision
about whether rolling stock, particularly engines, should be fully
electric or hybrid electric or diesel, and on that may turn the issue
of electrification, primarily because of the challenge of
electrification in the Severn
tunnel.
Mrs
James:
We heard about the Severn tunnel very early in the
debate, when it was used as an excuse for not bringing electrification
into Wales. It is funny what a bit of pressure did at that point
because when we talked to Network Rail, it overcame those problems. One
can overcome problems. We know that the Severn tunnel is old but it has
been well maintained and is extremely fit for purpose. We have other
issues with that tunnel but we have overcome the electrification
one—after a great deal of pressure. Somebody has already talked
about £1 billion for a railway station in London and
£1 billion for electrification. I was on the Select Committee
that considered the Crossrail Bill for 23 months. They made a mistake
because, unlike a lot of the people on that Committee, I am what is
known in rail terms as a chuffernutter, so I was quite happy to discuss
rail and I enjoyed the visits to various exciting rail places such as
Royal Oak, which we pass on our journeys in from south
Wales.
Mrs
Gillan:
I am almost tempted to say, “from one
chuffernutter to another”, because the first job I wanted when I
was little was train driver from Cardiff. I know the hon. Lady shares
my concern and my interest in making sure that we have good
connectivity from south Wales. May I reassure her that the fact that my
right hon. Friend the Secretary of State for Transport is taking time
over this decision is not sinister? The previous Labour Government made
that announcement during a brief trip to Wales by the then Prime
Minister, who held a Cabinet meeting there. I think it was probably one
of his first—and perhaps only—visits to Wales. An awful
lot of work needs to be done on the proposal. Even on that off-the-cuff
announcement, without the
money to back it up, the Labour Government were not going to commence
the work until 2017, as I understood it. So she should be very pleased,
and she should welcome the announcement of the electrification down to
Didcot. It takes 15 minutes off the journey to south Wales, which is
good news, and I want to reassure her that we will do everything we can
to ensure that the business case is made.
Mrs
James:
I am grateful to the Secretary of State for those
comments, but it is not just me, her, or anybody else here who relies
on that line and will benefit. It is an opportunity, because 4.5
million people depend on that service, so both the transport and the
upgrade are essential. What was exciting about the opportunities that
the then Prime Minister announced that day—and I was there when
Lord Adonis made some of the announcements—was that we would at
last address this issue. I urge the Secretary of State and Transport
Ministers: please, please keep to that plan, because we need
it.
Didcot is a
means to an end, but if we want Cardiff, Swansea, Newport and Bristol
to be really relevant to the future development of the country, we must
have electrification. We need to grow and prosper, and it needs to be a
line with a future—I think that the future is bright there. We
have heard a great deal from the coalition Government about how they
are going to bring jobs to difficult places, where jobs have not been
available before. Without a modern train system, and without modern
forms of transport, we will never achieve that. The whole idea of
me—ha, ha!—trying to ride a bike from Swansea to Cardiff
does not bear thinking about. We do not need that, and I could not do
it anyway—[
Interruption.
] Thank
you.
We have heard
a great deal about the facts and figures; this morning, the Secretary
of State mentioned the savings that electrification would bring. They
are significant, and we are all waiting for them. Trains are 20%
cheaper to ride and 35% cheaper to operate. They travel 40% further, on
average, than a diesel train before it needs maintenance. It is not
only that; we have the exciting prospect of regenerative brakes, which
convert lost heat back into power and energy and make the trains even
more efficient. Such benefits are tangible. Not only do they provide
cleaner, better, faster trains, but they are good for the environment.
The idea of electrification is not a passing fancy or a fad; it is
needed.
I am glad to
hear that the Secretary of State feels that she has been fighting
Wales’s corner on this. I urge her to keep up the pressure on
our behalf, as we will on this side of the House. We deserve that
upgrade and we need it. It will create more opportunities and in
particular, as the upgrades come along, I am sure it will create job
opportunities.
I make no
apologies for calling for this expenditure. It is a huge amount of
money, and, in difficult times, it may appear unfair. Some may say that
we could spend the money in other ways, but even if it is not a cheap
option, it is one we cannot afford to miss. The consequences of failing
at this point are critical and do not bear thinking about. Swansea is a
rail city, first and foremost, with a long association of inter-city
services, and services that are provided for people who are going
beyond our
borders to Ireland, and so on. So, from an Irish and a European point of
view, it is important. On Thursday evening, when I catch the 8.15 pm
from Paddington, I get home near to midnight. A difference of 20
minutes—wow!—is very tempting, as it is for anybody who
commutes along that route. Those cuts to the overall travelling time
will benefit us all.
I want to see
Swansea and west Wales grow and prosper, and I have been pleased to
hear today, both inside and outside this room, about the support for
the project. I urge everyone to keep up the pressure. In many ways,
Swansea should not be the end of the line; it should be a prime and
important player in the rail network of Great Britain and a gateway to
better services for west
Wales.
The
Chair:
Order. Before I call the hon. Member for Carmarthen
West and South Pembrokeshire, I inform the Committee that we will begin
the winding-up speeches at 4.10 pm. There are eight Members who wish to
catch my eye, so the briefer the contributions, the more Members we
shall get
in.
3.30
pm
Simon
Hart (Carmarthen West and South Pembrokeshire) (Con):
Thank you, Mr Owen. I will take your advice to
heart.
One
of the depressing features of the sorts of conversations that we have
had today is the lack of reference to our voters’ views. It has
been about politicians and political parties for politicians and
political parties. I know that he would not mind my saying this, but it
is not often that I regret not being in the same room as the right hon.
Member for Neath, the former Secretary of State, but on this occasion I
want to follow up on a point that I made earlier about the election
result, which was, of course, the last opportunity that anybody had to
express a view about the various offers on the table. He said, kindly,
that bad election results have many reasons behind them, but he failed
to articulate a single one, and I simply want to put this to him. In
May, we had a situation in Wales where, and I quote from my favourite
local newspaper, the Carmarthen
Journal:
“In
a move seen as rolling out the big
guns,”—
their
words, not
mine—
“the
cabinet minister strolled through Llanelli and Carmarthen town centres,
warning against letting David Cameron seize
control.”
The
right hon. Member for Neath
said:
“I
believe as people face up to the choice for the country, do they want a
Tory Government back in power or a Labour Government taking
Carmarthenshire forward, then I think they will come back to
Labour.”
I
had an opportunity to thank the right hon. Gentleman for his help,
because we managed to achieve a slightly above-average swing from
Labour to the Conservatives in Carmarthenshire, and that was with 39%
of the electorate being public sector
workers.
More
importantly, whether you consult a private citizen or a small, medium
or large business in west Wales, these are the expressions—their
words, not mine—that come up time and time again; hon. Members
on both sides may have similar experiences:
“exasperation”, “let down by Labour” and
“please sort out the mess”. Those expressions were put to
us before and since the election by people who had no particular axe to
grind.
The
reasons given include banks, which the right hon. Member for Torfaen, a
former Secretary of State, mentioned. Of course, banks and lending
policy form a major part of that. Over 13 years, the lack of regulation
exasperated small and medium-sized businesses in my area. The approach
to increasing, overwhelming and strangling red tape and regulation was
something that completely confused and, in some cases, frustrated the
progress of those businesses. Yet, over 13 years, the Labour party
could only ever approach those kinds of problems with two answers:
create a new law or write a cheque. Neither of those two solutions
worked when it came to the deregulation of business in
Wales.
Mr
David Hanson (Delyn) (Lab):
Does the fact that there were
26 elected Members out of 40 not give the hon. Gentleman a little bit
of recognition that there was some support for the Labour party at the
election?
Simon
Hart:
I am not for one moment denying that in certain
solid areas, not much changed, but the shift was significant. Let us
not forget that it took 35.5% of the vote to deliver that number of
people. The constitutional reforms, which our hon. Friends in the
Chamber are debating, will actually remove the
inherent—
The
Chair:
Order. Will the hon. Gentleman come back from the
election to the comprehensive spending
review?
Simon
Hart:
Indeed, Mr Owen, I apologise. I was so carried away
by the right hon. Gentleman’s intervention that I forgot what I
was trying to argue—not for the first
time.
I
want to talk about the exasperation of small and medium-sized
businesses in west Wales. I also want to touch on the exasperation of
ordinary voters, who possibly supported the Labour party over many
years but were driven, much against their better judgment in some
respects, to desert the party of their choice because of the sheer lack
of progress in important areas such as education and health. For most
of the voters in Carmarthen West and South Pembrokeshire, it is no good
at all turning around to say that some things are devolved, some are
not and some might be a little devolved—as far as they are
concerned, they just want good, honest and transparent government, and
they do not really care where it comes
from.
Alun
Cairns:
May I share some helpful figures? At the last
election, the Labour party gained 531,601
votes—
The
Chair:
Order. Let us stick to the comprehensive spending
review.
Simon
Hart:
The most frustrating thing of all is the absolute
failure of the former Government to accept any responsibility for
anything that went wrong. This morning, I felt that I had arrived on a
different planet, as though the past 13 years had never happened.
I cannot believe, and no one has yet persuaded me, that the
previous Government were a shining example of competence and
honesty—they simply were not. The result in May surely reflected
that; people lost faith and trust in that Government in exactly the
same way as they did in the Conservative Government in
1997.
Chris
Evans:
When will the hon. Gentleman mention the
comprehensive spending review? I am tired of analysis of the election.
I want to hear what he thinks about what his Government are doing to
communities in
Wales.
Simon
Hart:
Like a good race horse, the hon. Gentleman is a few
lengths ahead, but I will be catching up, I assure
him.
Most
people—whether they are citizens, whether they are old or young,
whether they are wealthy or not—recognise the grim reality of
our situation. Out in the real world, there is no denial. Outside the
political bubble, people realise that serious things must be done to
address a serious situation. The fact that we have somehow
redacted—to use a recently created expression—the past 13
years seems to lie at the heart of people’s mistrust of
politics.
I
want to finish by dealing with the CSR and with why people have
confidence in what the coalition is doing, even though they recognise
that it comes with a certain amount of pain. As with all good doctors,
sometimes the advice or surgery has to be a little painful; nothing is
different in this case. I shall quote a few things from my little patch
of west Wales. Let us forget the big political message, the spin and
all the parliamentary announcements, and drill down to Carmarthen West
and South Pembrokeshire to hear what people have to
say.
My
two local councils, Carmarthenshire and Pembrokeshire county councils,
recognise that they got a better than expected settlement, which will
be tough but deliverable. They are not expecting meltdown in west
Wales—I see nods from the hon. Member for Carmarthen East and
Dinefwr—they can do this. Dyfed-Powys police recognise that they
are in for a tough time, and that policing will not be the same as in
the past, but they can do it and still genuinely look after the
interests of the community, given the settlement on offer. Local
business men, in important industries such as tourism, agriculture and
energy production scattered around my constituency, employing anything
from two to 200 people, recognise that the measures in place are
essential and will deliver proper, long-term growth and prosperity,
which will I hope absorb any possible job losses in the public
sector.
Everyone
understands what has to be done to restore growth in our economy,
apart, it seems, from the Opposition. That is why people recognise that
the comprehensive spending review acknowledges the problems discussed
by other Members. People also recognise the importance of
infrastructure, whether broadband, road or rail. I was talking to
someone who was a Member of this place many years ago; he was bemoaning
the closure of the sleeper service that used to run from Paddington to
Haverfordwest. Those were the days—he would have finished his
dinner by the time he got to Reading. However, things have moved on a
little way since then. Decentralisation and deregulation are key
aspects covered in the comprehensive spending review, and they have
been
welcomed.
I
finish with a quick reference to my good friend Mr John
Starzewski, who runs a company called Magstim in Whitland, which is
right on the border between Pembrokeshire and Carmarthenshire. He met
the Prime Minister and the Chancellor of the Exchequer last
week, which indicates how seriously the Prime Minister and the
Chancellor are taking the regrowth of small and medium-sized businesses
in Wales. There were only 18 people around the table, including a
proper representative from Wales. In their conclusions they recognised
that employment laws created by the previous Government form a barrier
to SME recruitment; that although the value of interns is good,
employment law discourages the opportunity to learn; that banks are not
a useful source of advice; that without real-world experience one
cannot make decisions at local level; and, finally, that people and
skills are a crucial part of expansion and the emphasis on the value of
knowledge transfer partnerships and research and development tax
credits has been restricted by over-zealous HMRC people. They
recognised that a number of measures that were passed by the previous
Government—often with the best of intentions—frustrated
private sector growth. Those discussions last week were at the highest
level, and involved business people from small and medium-sized
enterprises in Wales.
That
should be a reflection that the comprehensive spending review is
realistic, even if at times it is a painful pill that we have to
swallow. I have every confidence that it will deliver the proper
balanced economy to which my hon. Friend the Member for Aberconwy
referred in his excellent speech.
3.41
pm
Jonathan
Edwards (Carmarthen East and Dinefwr) (PC):
I will take
your advice, Mr Owen, and cut my speech in half. I will concentrate
only on the effect of the CSR on Wales rather than engaging in the
wider debate on fiscal consolidation, on which I was eager to have my
say.
It is obvious
that the cut of 11.4% in real terms over the next four years, which is
an accumulative sum of £4.6 billion, will have a massive impact
on the ability of the Welsh Government to deliver the services under
their remit. Without the ability to borrow or increase their revenue,
the Welsh Government have had little choice but to make some seriously
difficult decisions over the course of the spending review. The scale
of the cutbacks will inevitably result in job losses in the Welsh
public sector and a reduction in services.
The case has
been made in the CSR for Barnett reform. Leaving aside the fact that
the formula underfunds Wales by at least £300 million per annum,
it gave Wales a worse deal than any other devolved Government because
of the way that it calculates the consequentials on non-domestic rates.
I have read Gerry Holtham’s excellent article on this on the
Institute of Welsh Affairs blog a number of times, but I still
can’t get my head around it, to be perfectly honest.
Essentially, because national non-domestic rate payments are devolved
in the case of Scotland and Northern Ireland they had better
settlements under the CSR than we
did.
Jonathan
Evans:
I have read Gerry Holtham’s blog, too; he
suggests that there has not actually been a request for non-domestic
rates to be devolved to Wales.
3.43
pm
Sitting
suspended for Divisions in the House.
4.16
pm
On
resuming—
The
Chair:
Order. I remind the Committee that under Standing
Orders we have to finish at 4.30 pm. I ask the hon. Member for
Carmarthen East and Dinefwr, who was halfway through his speech, to
give us a brief overview of it before I call the Front-Bench
spokespeople.
Jonathan
Edwards:
As I was saying, Barnett is bad for Wales in the
good times, and also plainly bad for Wales in the bad times. The effect
on the block grant under Labour’s budget plans would have been
much the same as the Wales Audit Office had reported. The big
difference between the Labour and Tory plans was, of course, in the
reserve budgets, which account for about 38% of spend in Wales. The
savage cuts now being implemented by the UK Government will have a
disproportionate effect. In social protection, for example, spend on
welfare benefits and those sort of areas equates to 116% of UK average
spend, so the severe cutbacks that we will see there will have an
effect on local economies and on the most vulnerable in
society.
I
was going to talk about the fact that there are four main areas that
drive economic growth. In the CSR, three of those elements have been
attacked severely: we are aware of the 19% cut in public expenditure.
Housing spending will obviously be hit because of the legacy of
consumer debt, which is 100% of GDP, and exports will be held back due
to the sluggish growth of our main trading partners. That leaves only
private investment, and that is why my party believes strongly that
countervailing measures are important, as they will give the Welsh
economy and the private sector a competitive advantage. I shall finish
there, to let the Front Benchers wind
up.
4.18
pm
Owen
Smith:
It is a great pleasure to serve under your
chairmanship, Mr Owen. Given that we are very short of time, I shall
address some of the factual areas that we have heard about today, and
perhaps offer a few
truths.
The
debate has been instructive about the real dividing lines between the
Opposition and the Government. Those dividing lines are between what I
believe is the truth about the causes of the deficit that was born in
2008-09 as a result of what happened with the banks, and the
revisionism regarding those causes that we are seeing from the
Government. That revisionism has been repeated throughout
today’s debate. There is also a stark contrast between the
honesty of our position now on the economic prospects in the light of
the cuts that we are about to see, and the Government’s blind
hope and optimism. Our honesty is in tune with the views of the City,
to which we have so often been bid to
look.
Right
now, the City agrees with us, not with the Government—certainly
on growth. A factual inaccuracy about growth has been repeated several
times today, sometimes from a sedentary position. The Office for Budget
Responsibility has revised its growth figures for 2011 downwards, from
2.3% to 2.1%. It has revised this year’s June to December
numbers up to 1.8% from 1.2%, but that is not much of a claim when a
revision is done in December.
Lastly, there
is a real difference between the Opposition’s interest in and
understanding of Wales and its particular needs, including the
long-term systemic problems that we have in our economy as a result of
our post-industrial heartlands, and the callous indifference, or
disinterest, that we see from the Government. That indifference was
most harshly exemplified by the welcome, but sadly lacking, response
from the Economic Secretary on the CSR’s impact on Wales. We had
a rehash of the Chancellor’s speech on the CSR. There were no
specific details about the impact on Wales; in fact, there was the
temerity repeatedly to present issues that related to only England,
with a blind reading-out of that which had already been read out by the
Chancellor.
I fear also
that when we heard from the Economic
Secretary—[
Interruption.
]
The
Chair:
Order. I am afraid that I have to suspend, and then
adjourn the
Committee.
4.22
pm
Sitting
suspended for a Division in the
House.
4.30
pm
The
debate stood adjourned (Standing Orders Nos. 108 and 88 and
Order of the House, 25
November
)
.
Committee
adjourned.